Document:

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                                                                     EXHIBIT 4.7

                               MYPOINTS.COM, INC.

                                       AND

                        WELLS FARGO SHAREHOLDER SERVICES

                                  RIGHTS AGENT

                        PREFERRED STOCK RIGHTS AGREEMENT

                          DATED AS OF DECEMBER 13, 2000

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                                TABLE OF CONTENTS

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

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

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

Section 4.     Form of Rights Certificates.......................................................8

Section 5.     Countersignature and Registration.................................................9

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

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

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

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

Section 10.    Record Date......................................................................14

Section 11.    Adjustment of Exercise Price, Number of Shares or Number of Rights...............14

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

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

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........................27

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

Section 21.    Change of Rights Agent...........................................................30
</TABLE>

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                                TABLE OF CONTENTS

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

Section 23.    Redemption.......................................................................31

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

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

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

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

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

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

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

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

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

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

Section 34.    Descriptive Headings.............................................................37
</TABLE>

EXHIBITS

Exhibit A......Form of Certificate of Designation

Exhibit B......Form of Rights Certificate

Exhibit C......Summary of Rights

                                     -iii-

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                        PREFERRED STOCK RIGHTS AGREEMENT

        This Preferred Stock Rights Agreement, is dated as of December 13, 2000,
between MyPoints.com, Inc., a Delaware corporation, and Wells Fargo Shareholder
Services.

        On December 13, 2000 (the "RIGHTS DIVIDEND DECLARATION DATE"), the Board
of Directors of the Company authorized and declared a dividend of one Preferred
Share Purchase Right (a "RIGHT") for each Common Share (as hereinafter defined)
of the Company outstanding as of the Close of Business (as hereinafter defined)
on January 29, 2001 (the "RECORD DATE"), each Right representing the right to
purchase one one-thousandth (0.001) of a share of Series A Participating
Preferred Stock (as such number may be adjusted pursuant to the provisions of
this Agreement), having the rights, preferences and privileges set forth in the
form of Certificate of Designations of Rights, Preferences and Privileges of
Series A Participating Preferred Stock attached hereto as Exhibit A, upon the
terms and subject to the conditions herein set forth, and further authorized and
directed the issuance of one Right (as such number may be adjusted pursuant to
the provisions of this Agreement) with respect to each Common Share that shall
become outstanding between the Record Date and the earlier of the Distribution
Date and the Expiration Date (as such terms are hereinafter defined), and in
certain circumstances after the Distribution Date.

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

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

                (a) "ACQUIRING PERSON" shall mean any Person, who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the Common Shares then outstanding, but shall
not include the Company, any Subsidiary of the Company or any employee benefit
plan of the Company or of any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall be deemed to be an Acquiring Person as the result of
an acquisition of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 20% or more of the Common Shares of the Company then
outstanding; provided, however, that if a Person shall become the Beneficial
Owner of 20% or more of the Common Shares of the Company then outstanding by
reason of share purchases by the Company and shall, after such share purchases
by the Company, become the Beneficial Owner of any additional Common Shares of
the Company (other than pursuant to a dividend or distribution paid or made by
the Company on the outstanding Common Shares in Common Shares or pursuant to a
split or subdivision of the outstanding Common Shares), then such Person shall
be deemed to be an Acquiring Person unless upon becoming the Beneficial Owner of
such additional Common Shares of the Company such Person does not beneficially
own 20% or more of the Common Shares of the Company then outstanding.
Notwithstanding the

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foregoing, (i) if the Company's Board of Directors determines in good faith that
a Person who would otherwise be an "Acquiring Person," as defined pursuant to
the foregoing provisions of this paragraph (a), has become such inadvertently
(including, without limitation, because (A) such Person was unaware that it
beneficially owned a percentage of the Common Shares that would otherwise cause
such Person to be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), or (B) such Person was aware of the extent of
the Common Shares it beneficially owned but had no actual knowledge of the
consequences of such beneficial ownership under this Agreement) and without any
intention of changing or influencing control of the Company, and if such Person
divested or divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), then such Person
shall not be deemed to be or to have become an "Acquiring Person" for any
purposes of this Agreement; and (ii) if, as of the date hereof, any Person is
the Beneficial Owner of 20% or more of the Common Shares outstanding, such
Person shall not be or become an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), unless and until such time as such
Person shall become the Beneficial Owner of additional Common Shares (other than
pursuant to a dividend or distribution paid or made by the Company on the
outstanding Common Shares in Common Shares or pursuant to a split or subdivision
of the outstanding Common Shares), unless, upon becoming the Beneficial Owner of
such additional Common Shares, such Person is not then the Beneficial Owner of
20% or more of the Common Shares then outstanding.

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

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

                (d) A Person shall be deemed the "BENEFICIAL OWNER" of and shall
be deemed to "BENEFICIALLY OWN" any securities:

                        (i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly, for purposes of Section
13(d) of the Exchange Act and Rule 13d-3 thereunder (or any comparable or
successor law or regulation);

                        (ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed pursuant to this
Section 1(d)(ii)(A) to be the Beneficial Owner of, or to beneficially own, (1)
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, or (2) securities
which a Person or any of such Person's Affiliates or Associates may be

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deemed to have the right to acquire pursuant to any merger or other acquisition
agreement between the Company and such Person (or one or more of its Affiliates
or Associates) if such agreement has been approved by the Board of Directors of
the Company prior to there being an Acquiring Person; or (B) the right to vote
pursuant to any agreement, arrangement or understanding; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to beneficially own,
any security under this Section 1(d)(ii)(B) if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report); or

                        (iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding, whether or not in writing (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent contemplated by the proviso to
Section 1(d)(ii)(B)) or disposing of any securities of the Company; provided,
however, that in no case shall an officer or director of the Company be deemed
(x) the Beneficial Owner of any securities beneficially owned by another officer
or director of the Company solely by reason of actions undertaken by such
persons in their capacity as officers or directors of the Company or (y) the
Beneficial Owner of securities held of record by the trustee of any employee
benefit plan of the Company or any Subsidiary of the Company for the benefit of
any employee of the Company or any Subsidiary of the Company, other than the
officer or director, by reason of any influence that such officer or director
may have over the voting of the securities held in the plan.

                (e) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in New York are authorized or
obligated by law or executive order to close.

                (f) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P. M.,
New York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next succeeding
Business Day.

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

                (h) "COMMON STOCK EQUIVALENTS" shall have the meaning set forth
in Section 11(a)(iii) hereof.

                (i) "COMPANY" shall mean MyPoints.com, Inc., a Delaware
corporation, subject to the terms of Section 13(a)(iii)(C) hereof.

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                (j) "CURRENT PER SHARE MARKET PRICE" of any security (a
"Security" for purposes of this definition), for all computations other than
those made pursuant to Section 11(a)(iii) hereof, shall mean the average of the
daily closing prices per share of such Security for the thirty (30) consecutive
Trading Days immediately prior to such date, and for purposes of computations
made pursuant to Section 11(a)(iii) hereof, the Current Per Share Market Price
of any Security on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the ten (10) consecutive Trading
Days immediately prior to such date; provided, however, that in the event that
the Current Per Share Market Price of the Security is determined during a period
following the announcement by the issuer of such Security of (i) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares or (ii) any subdivision, combination or
reclassification of such Security, and prior to the expiration of the applicable
thirty (30) Trading Day or ten (10) Trading Day period, after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the Current Per
Share Market Price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last sale price or, if such last sale price is not reported, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by Nasdaq or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Security selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Security, the fair value of such
shares on such date as determined in good faith by the Board of Directors of the
Company shall be used. If the Preferred Shares are not publicly traded, the
Current Per Share Market Price of the Preferred Shares shall be conclusively
deemed to be the product of (x) the Current Per Share Market Price of the Common
Shares as determined pursuant to this Section 1(j), as appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof, multiplied by (y) 1000. If the Security is not publicly held or
so listed or traded, Current Per Share Market Price shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.

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

                (l) "DISTRIBUTION DATE" shall mean the earlier of (i) the Close
of Business on the tenth day (or such later date as may be determined by action
of the Company's Board of Directors) after the Shares Acquisition Date (or, if
the tenth day after the Shares Acquisition Date occurs before the Record Date,
the Close of Business on the Record Date) or (ii) the Close of Business on the
tenth

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

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

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

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

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

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

                (r) "FINAL EXPIRATION DATE" shall mean January 29, 2011.

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

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

                (u) "POST-EVENT TRANSFEREE" shall have the meaning set forth in
Section 7(e) hereof.

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

                (w) "PRE-EVENT TRANSFEREE" shall have the meaning set forth in
Section 7(e) hereof.

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

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

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

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

                (bb) "RIGHTS AGENT" shall mean (i) Wells Fargo Shareholder
Services, (ii) its successor or replacement as provided in Sections 19 and 21
hereof or (iii) any additional Person appointed pursuant to Section 2 hereof.

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

                (dd) "RIGHTS DIVIDEND DECLARATION DATE" shall have the meaning
set forth in the recitals at the beginning of this Agreement.

                (ee) "SECTION 11(a)(ii) TRIGGER DATE" shall have the meaning set
forth in Section 11(a)(iii) hereof.

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

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

                (hh) "SHARES ACQUISITION DATE" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such; provided that, if such Person is determined not to have become an
Acquiring Person pursuant to Section 1(a) hereof, then no Shares Acquisition
Date shall be deemed to have occurred.

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

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

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

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

                (mm) "TOTAL EXERCISE PRICE" shall have the meaning set forth in
Section 4(a) hereof.

                (nn) "TRADING DAY" shall mean a day on which the principal
national securities exchange on which a referenced security is listed or
admitted to trading is open for the transaction of

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business or, if a referenced security is not listed or admitted to trading on
any national securities exchange, a Business Day.

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

        Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable, upon ten (10) days' prior written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise, and shall in no event be liable
for, the acts or omissions of any co-Rights Agent.

        Section 3. Issuance of Rights Certificates.

                (a) Until the Distribution Date, (i) the Rights will be
evidenced (subject to the provisions of Sections 3(b) and 3(c) hereof) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Rights Certificates) and not by
separate Rights Certificates and (ii) the right to receive Rights Certificates
will be transferable only in connection with the transfer of Common Shares.
Until the earlier of the Distribution Date or the Expiration Date, the surrender
for transfer of certificates for Common Shares shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Rights Certificate evidencing
one Right for each Common Share so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per Common Share
has been made pursuant to Section 11 hereof, then at the time of distribution of
the Rights Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates and may be
transferred by the transfer of the Rights Certificates as permitted hereby,
separately and apart from any transfer of Common Shares, and the holders of such
Rights Certificates as listed in the records of the Company or any transfer
agent or registrar for the Rights shall be the record holders thereof.

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

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<PAGE>   11

evidenced by such certificates registered in the names of the holders thereof
together with the Summary of Rights.

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

        THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF
        TO CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN
        MYPOINTS.COM, INC. AND WELLS FARGO SHAREHOLDER SERVICES, AS THE
        RIGHTS AGENT, DATED AS OF DECEMBER 13, 2000, (THE "RIGHTS
        AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN
        BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
        EXECUTIVE OFFICES OF MYPOINTS.COM, INC. UNDER CERTAIN
        CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS
        WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE
        EVIDENCED BY THIS CERTIFICATE. MYPOINTS.COM, INC. WILL MAIL TO
        THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT
        WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR.
        UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
        RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES
        AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS
        SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER
        CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY
        SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.

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

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

        Section 4. Form of Rights Certificates.

                (a) The Rights Certificates (and the forms of election to
purchase Common Shares and of assignment to be printed on the reverse thereof)
shall be substantially in the form of

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<PAGE>   12

Exhibit B hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or a national market system, on which the Rights may from time to time
be listed or included, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Record Date (or in the case of Rights issued with
respect to Common Shares issued by the Company after the Record Date, as of the
date of issuance of such Common Shares) and on their face shall entitle the
holders thereof to purchase such number of one-thousandths of a Preferred Share
as shall be set forth therein at the price set forth therein (such exercise
price per one one-thousandth of a Preferred Share being hereinafter referred to
as the "EXERCISE PRICE" and the aggregate Exercise Price of all Preferred Shares
issuable upon exercise of one Right being hereinafter referred to as the "TOTAL
EXERCISE PRICE"), but the number and type of securities purchasable upon the
exercise of each Right and the Exercise Price shall be subject to adjustment as
provided herein.

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

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

        Section 5. Countersignature and Registration.

                (a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its Chief
Financial Officer, its President or any Vice President, either manually or by
facsimile signature, and by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal (if any) or a facsimile thereof. The Rights
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and

                                      -9-
<PAGE>   13

delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Rights
Certificates on behalf of the Company had not ceased to be such officer of the
Company; and any Rights Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Rights Agreement any such person
was not such an officer.

                (b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its office designated for such purposes, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.

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

                (a) Subject to the provisions of Sections 7(e), 14 and 24
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the Expiration Date, any Rights Certificate
or Rights Certificates may be transferred, split up, combined or exchanged for
another Rights Certificate or Rights Certificates, entitling the registered
holder to purchase a like number of one-thousandths of a Preferred Share (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Rights Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Rights Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be transferred, split
up, combined or exchanged at the office of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 7(e), 14 and 24 hereof, countersign and deliver
to the person entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.

                (b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights

                                      -10-
<PAGE>   14

Agent for delivery to the registered holder in lieu of the Rights Certificate so
lost, stolen, destroyed or mutilated.

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

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

                (b) The Exercise Price for each one-thousandth of a Preferred
Share issuable pursuant to the exercise of a Right shall initially be Twenty
Dollars ($20.00), shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.

                (c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Exercise Price for the number of one-thousandths
of a Preferred Share (or, following a Triggering Event, other securities, cash
or other assets as the case may be) to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Rights
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the Preferred Shares (or make available, if the Rights Agent
is the transfer agent for the Preferred Shares) a certificate or certificates
for the number of one-thousandths of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets as the case may be) to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests or (B) if the Company shall have elected to
deposit the total number of one-thousandths of a Preferred Share (or, following
a Triggering Event, other securities, cash or other assets as the case may be)
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one-thousandths of a Preferred Share (or, following a Triggering
Event, other securities, cash or other assets as the case may be) as are to be
purchased (in which case certificates for the Preferred Shares (or, following a
Triggering Event, other securities, cash or other assets as the case may be)
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional shares in accordance
with Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt thereof,
deliver such cash to or upon the order of the registered holder of such Rights
Certificate. The payment of the Exercise Price (as such amount may be

                                      -11-
<PAGE>   15

reduced (including to zero) pursuant to Section 11(a)(iii) hereof) and an amount
equal to any applicable transfer tax required to be paid by the holder of such
Rights Certificate in accordance with Section 9(e) hereof, may be made in cash
or by certified bank check, cashier's check or bank draft payable to the order
of the Company. In the event that the Company is obligated to issue securities
of the Company other than Preferred Shares, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate.

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

                (e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Triggering Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such (a "POST-EVENT TRANSFEREE"), (iii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Company's Board of Directors has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e) (a "PRE-EVENT TRANSFEREE") or (iv) any subsequent
transferee receiving transferred Rights from a Post-Event Transferee or a
Pre-Event Transferee, either directly or through one or more intermediate
transferees, shall become null and void without any further action and no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to ensure that the provisions of this Section 7(e)
and Section 4(b) hereof are complied with, but shall have no liability to any
holder of Rights Certificates or to any other Person as a result of its failure
to make any determinations with respect to an Acquiring Person or any of such
Acquiring Person's Affiliates, Associates or transferees hereunder.

                (f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall, in
addition to having complied with the requirements of Section 7(a), have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.

                                      -12-
<PAGE>   16

        Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any Rights Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall deliver all canceled
Rights Certificates to the Company within eighteen months after cancellation of
the Certificates. The Company may then destroy the Certificates, after any
Securities and Exchange Commission required retention period.

        Section 9. Reservation and Availability of Preferred Shares.

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

                (b) If the Company shall hereafter list any of its Preferred
Shares on a national securities exchange, then so long as the Preferred Shares
(and, following the occurrence of a Triggering Event, Common Shares and/or other
securities) issuable and deliverable upon exercise of the Rights may be listed
on such exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable (but only to the extent that it
is reasonably likely that the Rights will be exercised), all shares reserved for
such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.

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

                                      -13-
<PAGE>   17

suspension is no longer in effect. The Company will also take such action as may
be appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction, unless the requisite qualification
in such jurisdiction shall have been obtained, or an exemption therefrom shall
be available, and until a registration statement has been declared and remains
effective.

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

                (e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the original issuance or delivery of the
Rights Certificates or of any Preferred Shares (or other securities of the
Company) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any transfer
or delivery of Rights Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts for the Preferred Shares (or
other securities of the Company) in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
to issue or to deliver any certificates or depositary receipts for Preferred
Shares (or other securities of the Company) upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.

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

        Section 11. Adjustment of Exercise Price, Number of Shares or
Number of Rights. The Exercise Price, the number and kind of shares or other
property covered by each Right and the

                                      -14-
<PAGE>   18

number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.

            (a) (i) Anything in this Agreement to the contrary notwithstanding,
in the event that the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares (by reverse stock split or otherwise) into a smaller number of
Preferred Shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, in each such event, except as otherwise
provided in this Section 11 and Section 7(e) hereof: (1) the Exercise Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification shall be adjusted so that
the Exercise Price thereafter shall equal the result obtained by dividing the
Exercise Price in effect immediately prior to such time by a fraction (the
"ADJUSTMENT FRACTION"), the numerator of which shall be the total number of
Preferred Shares (or shares of capital stock issued in such reclassification of
the Preferred Shares) outstanding immediately following such time and the
denominator of which shall be the total number of Preferred Shares outstanding
immediately prior to such time; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of such Right; and (2) the number of one-thousandths of a Preferred
Share (or share of such other capital stock) issuable upon the exercise of each
Right shall equal the number of one-thousandths of a Preferred Share (or share
of such other capital stock) as was issuable upon exercise of a Right
immediately prior to the occurrence of the event described in clauses (A)-(D) of
this Section 11(a)(i), multiplied by the Adjustment Fraction; provided, however,
that, no such adjustment shall be made pursuant to this Section 11(a)(i) to the
extent that there shall have simultaneously occurred an event described in
clause (A), (B), (C) or (D) of Section 11(n) with a proportionate adjustment
being made thereunder. Each Common Share that shall become outstanding after an
adjustment has been made pursuant to this Section 11(a)(i) shall have associated
with it the number of Rights, exercisable at the Exercise Price and for the
number of one-thousandths of a Preferred Share (or shares of such other capital
stock) as one Common Share has associated with it immediately following the
adjustment made pursuant to this Section 11(a)(i).

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

                                      -15-
<PAGE>   19

occurrence of the Triggering Event; provided, however, that the Exercise Price
and the number of Common Shares of the Company so receivable upon exercise of a
Right shall be subject to further adjustment as appropriate in accordance with
Section 11(e) hereof to reflect any events occurring in respect of the Common
Shares of the Company after the occurrence of the Triggering Event.

                (iii) In lieu of issuing Common Shares in accordance with
Section 11(a)(ii) hereof, the Company may, if the Company's Board of Directors
determines that such action is necessary or appropriate and not contrary to the
interest of holders of Rights and, in the event that the number of Common Shares
which are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit the exercise in full of the Rights, or
if any necessary regulatory approval for such issuance has not been obtained by
the Company, the Company shall: (A) determine the excess of (1) the value of the
Common Shares issuable upon the exercise of a Right (the "CURRENT VALUE") over
(2) the Exercise Price (such excess, the "SPREAD") and (B) with respect to each
Right, make adequate provision to substitute for such Common Shares, upon
exercise of the Rights, (1) cash, (2) a reduction in the Exercise Price, (3)
other equity securities of the Company (including, without limitation, shares or
units of shares of any series of preferred stock which the Company's Board of
Directors has deemed to have the same value as Common Shares (such shares or
units of shares of preferred stock are herein called "COMMON STOCK
EQUIVALENTS")), except to the extent that the Company has not obtained any
necessary stockholder or regulatory approval for such issuance, (4) debt
securities of the Company, except to the extent that the Company has not
obtained any necessary stockholder or regulatory approval for such issuance, (5)
other assets or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been determined by
the Company's Board of Directors based upon the advice of a nationally
recognized investment banking firm selected by the Company's Board of Directors;
provided, however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days following the
later of (x) the first occurrence of a Triggering Event and (y) the date on
which the Company's right of redemption pursuant to Section 23(a) expires (the
later of (x) and (y) being referred to herein as the "SECTION 11(a)(ii) TRIGGER
DATE"), then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Exercise Price, Common
Shares (to the extent available), except to the extent that the Company has not
obtained any necessary stockholder or regulatory approval for such issuance, and
then, if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If the Company's Board of Directors shall determine in good faith
that it is likely that sufficient additional Common Shares could be authorized
for issuance upon exercise in full of the Rights or that any necessary
regulatory approval for such issuance will be obtained, the thirty (30) day
period set forth above may be extended to the extent necessary, but not more
than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek stockholder approval for the authorization of such
additional shares or take action to obtain such regulatory approval (such
period, as it may be extended, the "SUBSTITUTION PERIOD"). To the extent that
the Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply uniformly
to all outstanding Rights and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any

                                      -16-
<PAGE>   20

authorization of additional shares, to take any action to obtain any required
regulatory approval and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the Common Shares
shall be the Current Per Share Market Price of the Common Shares on the Section
11(a)(ii) Trigger Date and the value of any Common Stock Equivalent shall be
deemed to have the same value as the Common Shares on such date.

                (b) In case the Company shall, at any time after the date of
this Agreement, fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling such holders (for a period
expiring within forty-five (45) calendar days after such record date) to
subscribe for or purchase Preferred Shares or Equivalent Shares or securities
convertible into Preferred Shares or Equivalent Shares at a price per share (or
having a conversion price per share, if a security convertible into Preferred
Shares or Equivalent Shares) less than the then Current Per Share Market Price
of the Preferred Shares or Equivalent Shares on such record date, then, in each
such case, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares and Equivalent Shares (if any) outstanding on such record date,
plus the number of Preferred Shares or Equivalent Shares, as the case may be,
which the aggregate offering price of the total number of Preferred Shares or
Equivalent Shares, as the case may be, to be offered or issued (and/or the
aggregate initial conversion price of the convertible securities to be offered
or issued) would purchase at such current market price, and the denominator of
which shall be the number of Preferred Shares and Equivalent Shares (if any)
outstanding on such record date, plus the number of additional Preferred Shares
or Equivalent Shares, as the case may be, to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Company's
Board of Directors, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights. Preferred Shares and Equivalent Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights, options or warrants are
not so issued, the Exercise Price shall be adjusted to be the Exercise Price
which would then be in effect if such record date had not been fixed.

                (c) In case the Company shall, at any time after the date of
this Agreement, fix a record date for the making of a distribution to all
holders of the Preferred Shares or of any class or series of Equivalent Shares
(including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular quarterly cash
dividend, if any, or a dividend payable in

                                      -17-
<PAGE>   21

Preferred Shares) or subscription rights, options or warrants (excluding those
referred to in Section 11(b)), then, in each such case, the Exercise Price to be
in effect after such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Per Share Market Price of a Preferred
Share or an Equivalent Share on such record date, less the fair market value per
Preferred Share or Equivalent Share (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a Preferred Share or Equivalent Share, as the case may be, and the
denominator of which shall be such Current Per Share Market Price of a Preferred
Share or Equivalent Share on such record date; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Exercise Price shall be adjusted to be the Exercise Price which
would have been in effect if such record date had not been fixed.

                (d) Anything herein to the contrary notwithstanding, no
adjustment in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1.0%) of the Exercise
Price; provided, however, that any adjustments which by reason of this Section
11(d) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a Common
Share or other share or one hundred-thousandth of a Preferred Share, as the case
may be. Notwithstanding the first sentence of this Section 11(d), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which requires such adjustment or
(ii) the Expiration Date.

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

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

                (g) Unless the Company shall have exercised its election as
provided in Section 11(h), upon each adjustment of the Exercise Price as a
result of the calculations made in Section 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment

                                      -18-
<PAGE>   22

shall thereafter evidence the right to purchase, at the adjusted Exercise Price,
that number of Preferred Shares (calculated to the nearest one
hundred-thousandth of a share) obtained by (i) multiplying (x) the number of
Preferred Shares covered by a Right immediately prior to this adjustment, by (y)
the Exercise Price in effect immediately prior to such adjustment of the
Exercise Price, and (ii) dividing the product so obtained by the Exercise Price
in effect immediately after such adjustment of the Exercise Price.

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

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

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

                                      -19-
<PAGE>   23

fully paid and nonassessable shares such number of one-thousandths of a
Preferred Share at such adjusted Exercise Price.

                (k) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the number of one-thousandths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one-thousandths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) upon the occurrence of the event requiring such
adjustment.

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

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

                (n) In the event that the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Shares payable in
Common Shares, (B) subdivide the outstanding Common Shares, (C) combine the
outstanding Common Shares (by reverse stock split or otherwise) into a smaller
number of Common Shares, or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, in each such event, except as otherwise
provided in this Section 11(a) and Section 7(e) hereof: (1) each Common Share
(or shares of capital stock issued in such reclassification of the Common
Shares) outstanding immediately following such time shall have associated with
it the number of Rights as were associated with one Common Share immediately
prior to the occurrence of the event described in clauses (A)-(D) above; (2) the
Exercise Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification shall be
adjusted so that the Exercise Price thereafter shall equal the result obtained
by multiplying the Exercise Price in effect immediately prior to such time by a

                                      -20-
<PAGE>   24

fraction, the numerator of which shall be the total number of Common Shares
outstanding immediately prior to the event described in clauses (A)-(D) above,
and the denominator of which shall be the total number of Common Shares
outstanding immediately after such event; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of such Right; and (3) the number of one-thousandths of a
Preferred Share (or shares of such other capital stock) issuable upon the
exercise of each Right outstanding after such event shall equal the number of
one-thousandths of a Preferred Share (or shares of such other capital stock) as
were issuable with respect to one Right immediately prior to such event. Each
Common Share that shall become outstanding after an adjustment has been made
pursuant to this Section 11(n) shall have associated with it the number of
Rights, exercisable at the Exercise Price and for the number of one-thousandths
of a Preferred Share (or shares of such other capital stock) as one Common Share
has associated with it immediately following the adjustment made pursuant to
this Section 11(n). If an event occurs which would require an adjustment under
both this Section 11(n) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(n) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii) hereof.

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

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

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

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

                        (ii) any Person shall consolidate with the Company, or
merge with and into the Company and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such merger, all or part of the Common Shares shall be changed into or exchanged
for stock or other securities of any other person (or the Company); or

                        (iii) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power

                                      -21-
<PAGE>   25

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

                        then, concurrent with and in each such case,

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

                        (B) 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;

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

                        (D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Shares) in connection with the consummation of any such transaction as
may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights; and

                        (E) upon the subsequent occurrence of any consolidation,
merger, sale or transfer of assets or other extraordinary transaction in respect
of such Principal Party, each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the Total Exercise Price as
provided in this Section 13(a), such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive had such holder,
at the time of such transaction, owned the Common Shares of the Principal Party
receivable upon the exercise of such Right pursuant to this Section 13(a), and
such Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.

                                      -22-
<PAGE>   26

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

                (b) For purposes of this Agreement, the term "PRINCIPAL PARTY"
shall mean:

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

                        (ii) in the case of any transaction described in clause
(iii) of Section 13(a) hereof, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if more than one Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred and each such portion would, were it not for the other
equal portions, constitute the greatest portion of the assets or earning power
so transferred, or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons is the issuer of
Common Shares having the greatest aggregate market value of shares outstanding;
provided, however, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), if the Common Shares of such Person are not at such time or
have not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of which are and have been so registered, the term "Principal
Party" shall refer to whichever of such Persons is the issuer of Common Shares
having the greatest aggregate market value of shares outstanding, or (3) if such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly by the same Person, the
rules set forth in clauses (1) and (2) above shall apply to each of the owners
having an interest in the venture as if the Person owned by the joint venture
was a Subsidiary of both or all of such joint venturers, and the Principal Party
in each such case shall bear the obligations set forth in this Section 13 in the
same ration as its interest in such Person bears to the total of such interests.

                (c) The Company shall not consummate any Section 13 Event unless
the Principal Party shall have a sufficient number of authorized Common Shares
that have not been

                                      -23-
<PAGE>   27

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

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

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

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

        In the event that at any time after the occurrence of a Triggering Event
some or all of the Rights shall not have been exercised at the time of a
transaction described in this Section 13, the Rights which have not theretofore
been exercised shall thereafter be exercisable in the manner described in
Section 13(a) (without taking into account any prior adjustment required by
Section 11(a)(ii)).

                (d) In case the "Principal Party" for purposes of Section 13(b)
hereof has provision in any of its authorized securities or in its certificate
of incorporation or by-laws or other instrument governing its corporate affairs,
which provision would have the effect of (i) causing such Principal Party to
issue (other than to holders of Rights pursuant to Section 13 hereof), in
connection with, or as a consequence of, the consummation of a Section 13 Event,
Common Shares or Equivalent Shares of such Principal Party at less than the then
Current Per Share Market Price thereof or securities exercisable for, or
convertible into, Common Shares or Equivalent Shares of such Principal Party at
less than such then Current Per Share Market Price, or (ii) providing for any
special payment, tax or similar provision in connection with the issuance of the
Common Shares of such Principal Party pursuant to the provisions of Section 13
hereof, then, in such event, the Company hereby agrees with each holder of
Rights that it shall not consummate any such transaction

                                      -24-
<PAGE>   28

unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with or as a consequence
of, the consummation of the proposed transaction.

                (e) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, effect or permit to occur any Section 13
Event, if (i) at the time or immediately after such Section 13 Event there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights, (ii) prior to,
simultaneously with or immediately after such Section 13 Event, the stockholders
of the Person who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(b) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates or (iii)
the form or nature of organization of the Principal Party would preclude or
limit the exercisability of the Rights.

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

        Section 14. Fractional Rights and Fractional Shares.

                (a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable, as determined pursuant to
the second sentence of Section 1(j) hereof.

                (b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions that are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions that are integral multiples of one one-thousandth of a Preferred
Share). Interests in fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided, that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one
one-thousandth of a Preferred Share, the Company shall pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of a Preferred Share. For purposes of this Section 14(b), the current
market value of a Preferred Share shall be the product equal to (x) one
thousandth

                                      -25-
<PAGE>   29

multiplied by (y) the closing price of a Common Share (as determined pursuant to
the second sentence of Section 1(j) hereof) for the Trading Day immediately
prior to the date of such exercise.

                (c) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares upon the exercise or exchange of Rights. In lieu of such fractional
Common Shares, the Company shall pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of a Common
Share. For purposes of this Section 14(c), the current market value of a Common
Share shall be the closing price of a Common Share (as determined pursuant to
the second sentence of Section 1(j) hereof) for the Trading Day immediately
prior to the date of such exercise.

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

        Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his or her own behalf and for
his or her own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his or her right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.

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

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

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

                (c) subject to Sections 6(a) and 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name the Rights
Certificate (or, prior to the Distribution

                                      -26-
<PAGE>   30

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

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

        Section 18. Concerning the Rights Agent.

                (a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises. In no event will the Rights Agent be liable for
special, indirect, incidental or consequential loss or damage of any kind
whatsoever, even if the Rights Agent has been advised of the possibility of such
loss or damage.

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

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

                (a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger

                                      -27-
<PAGE>   31

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

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

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

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

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

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

                                      -28-
<PAGE>   32

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

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

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

                (g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Chief Financial Officer, the Secretary or any Assistant
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for those
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the
date on which any officer of the Company actually receives such application,
unless any such officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.

                                      -29-
<PAGE>   33

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

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

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

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

        Section 21 .Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company and to each
transfer agent of the Preferred Shares and the Common Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Preferred
Shares and the Common Shares by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his or her Rights
Certificate for inspection by the Company), then the registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, which is authorized under such laws to exercise
corporate trust or stockholder services powers and is subject to supervision or

                                      -30-
<PAGE>   34

examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $100
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Preferred
Shares and the Common Shares, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

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

        Section 23. Redemption.

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

                                      -31-
<PAGE>   35

Current Per Share Market Price thereof at the time of redemption) or cash. Such
redemption of the Rights by the Company may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish. The date on which the Board of Directors elects to
make the redemption effective shall be referred to as the "REDEMPTION DATE."

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

        Section 24. Exchange.

                (a) Subject to applicable laws, rules and regulations, and
subject to subsection 24(c) below, the Company may, at its option, by action of
the Board of Directors, at any time after the occurrence of a Triggering Event,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
7(e) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "EXCHANGE RATIO"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding.

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

                                      -32-
<PAGE>   36

of any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The Company
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.

                (c) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with Section 24(a), the Company
shall either take such action as may be necessary to authorize additional Common
Shares for issuance upon exchange of the Rights or alternatively, at the option
of a majority of the Board of Directors, with respect to each Right (i) pay cash
in an amount equal to the Current Value (as hereinafter defined), in lieu of
issuing Common Shares in exchange therefor, or (ii) issue debt or equity
securities or a combination thereof, having a value equal to the Current Value,
in lieu of issuing Common Shares in exchange for each such Right, where the
value of such securities shall be determined by a nationally recognized
investment banking firm selected by majority vote of the Board of Directors, or
(iii) deliver any combination of cash, property, Common Shares and/or other
securities having a value equal to the Current Value in exchange for each Right.
For purposes of this Section 24(c) only, the Current Value shall mean the
product of the Current Per Share Market Price of Common Shares on the date of
the occurrence of the event described above in subparagraph (a), multiplied by
the number of Common Shares for which the Right otherwise would be exchangeable
if there were sufficient shares available. To the extent that the Company
determines that some action need be taken pursuant to clauses (i), (ii) or (iii)
of this Section 24(c), the Board of Directors may temporarily suspend the
exercisability of the Rights for a period of up to sixty (60) days following the
date on which the event described in Section 24(a) shall have occurred, in order
to seek any authorization of additional Common Shares and/or to decide the
appropriate form of distribution to be made pursuant to the above provision and
to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended.

                (d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Common Shares would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Common Share (as
determined pursuant to the second sentence of Section 1(j) hereof).

                (e) The Company may, at its option, by majority vote of the
Board of Directors, at any time before any Person has become an Acquiring
Person, exchange all or part of the then outstanding Rights for rights of
substantially equivalent value, as determined reasonably and with

                                      -33-
<PAGE>   37

good faith by the Board of Directors based upon the advice of one or more
nationally recognized investment banking firms.

                (f) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to subsection 24(e) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of rights in exchange therefor as has
been determined by the Board of Directors in accordance with subsection 24(e)
above. The Company shall give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall mail a notice of any
such exchange to all of the holders of such Rights at their last addresses as
they appear upon the registry books of the transfer agent for the Common Shares
of the Company. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the Rights will be
effected.

        Section 25. Notice of Certain Events.

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

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

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

                                      -34-
<PAGE>   38

                             MyPoints.com, Inc.
                             100 California Street, Suite 1160
                             San Francisco, California 94111

                             with a copy to:
                             Wilson Sonsini Goodrich & Rosati
                             Professional Corporation
                             650 Page Mill Road
                             Palo Alto, California 94304-1050
                             Attn: David J. Berger

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

                             Wells Fargo Shareholder Services
                             161 North Concord Exchange
                             South St. Paul, Minnesota 55075

                             Attention: Corbin B. Connell

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

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

                                      -35-
<PAGE>   39

Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares.

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

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

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

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

        Section 32. Governing Law. This Agreement and each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and

                                      -36-
<PAGE>   40

for all purposes shall be governed by and construed in accordance with the laws
of such State applicable to contracts to be made and performed entirely within
such State.

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

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

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

"COMPANY"                                   MYPOINTS.COM, INC.

                                            By: /s/ Layton Han
                                               ---------------------------------
                                            Name: Layton Han
                                            Title: President

"RIGHTS AGENT"                              Wells Fargo Shareholder Services

                                            By:  /s/ Corbin B. Connell
                                               ---------------------------------
                                            Name:  Corbin B. Connell
                                            Title:  Assistant Vice President

                                      -37-
<PAGE>   41

                                    EXHIBIT A

                CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES
                                AND PRIVILEGES OF
                     SERIES A PARTICIPATING PREFERRED STOCK
                              OF MYPOINTS.COM, INC.

        The undersigned, ____________and __________, do hereby certify:

        1. That they are the duly elected and acting President and Secretary,
respectively, of MyPoints.com, Inc., a Delaware corporation (the "CORPORATION").

        2. That pursuant to the authority conferred upon the Board of Directors
by the Restated Certificate of Incorporation of the Corporation, the Board of
Directors on December 13, 2000 adopted the following resolution creating a
series of 100,000 shares of Preferred Stock designated as Series A Participating
Preferred Stock:

        "RESOLVED, that pursuant to the authority vested in the Board of
Directors of the corporation by the Restated Certificate of Incorporation, the
Board of Directors does hereby provide for the issue of a series of Preferred
Stock of the Corporation and does hereby fix and herein state and express the
designations, powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions of such series of Preferred Stock
as follows:

        Section 1. Designation and Amount. The shares of such series shall be
designated as "SERIES A PARTICIPATING PREFERRED STOCK." The Series A
Participating Preferred Stock shall have a par value of $0.001 per share, and
the number of shares constituting such series shall be 100,000.

        Section 2. Proportional Adjustment. In the event that the Corporation
shall at any time after the issuance of any share or shares of Series A
Participating Preferred Stock (i) declare any dividend on Common Stock of the
Corporation ("COMMON STOCK") payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock or (iii) combine the outstanding Common Stock into
a smaller number of shares, then in each such case the Corporation shall
simultaneously effect a proportional adjustment to the number of outstanding
shares of Series A Participating Preferred Stock.

        Section 3. Dividends and Distributions.

                (a) Subject to the prior and superior right of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Participating Preferred Stock shall be entitled to
receive when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of February, May, August and November in each year (each such date being
referred to herein as a "QUARTERLY

<PAGE>   42

DIVIDEND PAYMENT DATE"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to 1,000 times the aggregate per share amount of all cash dividends,
and 1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Participating Preferred Stock.

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

                (c) Dividends shall begin to accrue on outstanding shares of
Series A Participating Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Participating
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Participating Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date fixed for the
payment thereof.

        Section 4. Voting Rights. The holders of shares of Series A
Participating Preferred Stock shall have the following voting rights:

                (a) Each share of Series A Participating Preferred Stock shall
entitle the holder thereof to 1,000 votes on all matters submitted to a vote of
the stockholders of the Corporation.

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

                (c) Except as required by law, the holders of Series A
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent

                                      -2-
<PAGE>   43

that they are entitled to vote with holders of Common Stock as set forth herein)
for taking any corporate action.

        Section 5. Certain Restrictions.

                (a) The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for consideration
any shares of Common Stock after the first issuance of a share or fraction of a
share of Series A Participating Preferred Stock unless concurrently therewith it
shall declare a dividend on the Series A Participating Preferred Stock as
required by Section 3 hereof.

                (b) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as provided
in Section 3 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not

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

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

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

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

                (c) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the

                                      -3-
<PAGE>   44

Corporation could, under paragraph (a) of this Section 5, purchase or otherwise
acquire such shares at such time and in such manner.

        Section 6. Reacquired Shares. Any shares of Series A Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein and in the Restated Certificate of Incorporation, as then amended.

        Section 7. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series A
Participating Preferred Stock shall be entitled to receive an aggregate amount
per share equal to 1,000 times the aggregate amount to be distributed per share
to holders of shares of Common Stock plus an amount equal to any accrued and
unpaid dividends on such shares of Series A Participating Preferred Stock.

        Section 8. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share equal to 1,000 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged.

        Section 9. No Redemption. The shares of Series A Participating Preferred
Stock shall not be redeemable.

        Section 10. Ranking. The Series A Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.

        Section 11. Amendment. The Restated Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preference or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority of the outstanding shares of
Series A Participating Preferred Stock, voting separately as a series.

        Section 12. Fractional Shares. Series A Participating Preferred Stock
may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Participating Preferred Stock.

                                      -4-
<PAGE>   45

        RESOLVED FURTHER, that the President or any Vice President and the
Secretary or any Assistant Secretary of this corporation be, and they hereby
are, authorized and directed to prepare and file a Certificate of Designation of
Rights, Preferences and Privileges in accordance with the foregoing resolution
and the provisions of Delaware law and to take such actions as they may deem
necessary or appropriate to carry out the intent of the foregoing resolution."

        We further declare under penalty of perjury that the matters set forth
in the foregoing Certificate of Designation are true and correct of our own
knowledge.

        Executed at San Francisco, California on ______, 2001.

                                            ------------------------------------
                                            President

                                            ------------------------------------
                                            Secretary

                                      -5-
<PAGE>   46

                                    EXHIBIT B

                           FORM OF RIGHTS CERTIFICATE

Certificate No. R-                                              _________ Rights

        NOT EXERCISABLE AFTER THE EARLIER OF (i) JANUARY 29, 2011, (ii)
        THE DATE TERMINATED BY THE COMPANY OR (iii) THE DATE THE COMPANY
        EXCHANGES THE RIGHTS PURSUANT TO THE RIGHTS AGREEMENT. THE
        RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
        AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
        AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
        OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
        ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
        AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
        NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
        CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS
        OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
        ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
        AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
        REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
        SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS AGREEMENT.]*

                               RIGHTS CERTIFICATE

                               MYPOINTS.COM, INC.

This certifies that ______________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of December 13, 2000, (the "RIGHTS AGREEMENT"),
between MyPoints.com, Inc., a [State of Incorporation] corporation (the
"COMPANY"), and Wells Fargo Shareholder Services ( the "RIGHTS AGENT"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M., New York time, on
January 29, 2011 at the office of the

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

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

<PAGE>   47

Rights Agent designated for such purpose, or at the office of its successor as
Rights Agent, one one-thousandth (1/1,000) of a fully paid and non-assessable
share of Series A Participating Preferred Stock, par value $0.001 per share (the
"PREFERRED SHARES"), of the Company, at an Exercise Price of $20 per
one-thousandth of a Preferred Share (the "EXERCISE PRICE"), upon presentation
and surrender of this Rights Certificate with the Form of Election to Purchase
and related Certificate duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of one-thousandths of a Preferred Share which
may be purchased upon exercise hereof) set forth above are the number and
Exercise Price as of January 29, 2001 based on the Preferred Shares as
constituted at such date. As provided in the Rights Agreement, the Exercise
Price and the number and kind of Preferred Shares or other securities which may
be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.

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

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

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

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

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

                                      -2-
<PAGE>   48

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

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

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

ATTEST:                                     MYPOINTS.COM, INC.

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

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

Countersigned:

Wells Fargo Shareholder Services
as Rights Agent

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

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

                                      -3-
<PAGE>   49

                   FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE

                               FORM OF ASSIGNMENT

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

        FOR VALUE RECEIVED _______________ hereby sells, assigns and transfers
unto

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

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

Dated: _______________, ____

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

Signature Medallion Guaranteed:

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

<PAGE>   50

                                   CERTIFICATE

        The undersigned hereby certifies by checking the appropriate boxes that:

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

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

Dated: _______________, ____

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

Signature Medallion Guaranteed:

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

<PAGE>   51

             FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE -- CONTINUED

                          FORM OF ELECTION TO PURCHASE

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

To:___________________________

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

Please insert social security
or other identifying number

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

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

Please insert social security
or other identifying number

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

Dated: _______________, ____

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

Signature Medallion Guaranteed:

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

<PAGE>   52

                                   CERTIFICATE

        The undersigned hereby certifies by checking the appropriate boxes that:

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

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

Dated: _______________, ____

                                            ____________________________________
                                            Signature

Signature Medallion Guaranteed:

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

<PAGE>   53

             FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE -- CONTINUED

                                     NOTICE

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

<PAGE>   54

                                    EXHIBIT C

                             SHAREHOLDER RIGHTS PLAN
                               MYPOINTS.COM, INC.

                                Summary of Rights

<TABLE>
<S>                                  <C>
Distribution and                     The Board of Directors has declared a dividend of one Right
Transfer of Rights;                  for each share of Common Stock of MyPoints.com, Inc. (the
Rights Certificate:                  "COMPANY") outstanding.  Prior to the Distribution Date
                                     referred to below, the Rights will be evidenced by and trade
                                     with the certificates for the Common Stock. After the
                                     Distribution Date, the Company will mail Rights certificates to
                                     the Company's stockholders and the Rights will become
                                     transferable apart from the Common Stock.

Distribution_Date:                   Rights will separate from the Common Stock and become
                                     exercisable following (a) the tenth business day (or such later
                                     date as may be determined by the Company's Board of Directors)
                                     after a person or group acquires beneficial ownership of 20% or
                                     more of the Company's Common Stock or (b) the tenth business
                                     day (or such later date as may be determined by the Company's
                                     Board of Directors) after a person or group announces a tender
                                     or exchange offer, the consummation of which would result in
                                     ownership by a person or group of 20% or more of the Company's
                                     Common Stock.

Preferred Stock                      After the Distribution Date, each Right will entitle the
Purchasable Upon                     holder to purchase for $20 (the "EXERCISE PRICE"), a fraction
Exercise of Rights:                  of a share of the Company's Preferred Stock with economic
                                     terms similar to that of one share of the Company's Common
                                     Stock.

Flip-In:                             If an acquiror (an "ACQUIRING PERSON") obtains 20% or more of
                                     the Company's Common Stock, then each Right (other than Rights
                                     owned by an Acquiring Person or its affiliates) will entitle
                                     the holder thereof to purchase, for the Exercise Price, a
                                     number of shares of the Company's Common Stock having a
                                     then-current market value of twice the Exercise Price.

Flip-Over:                           If, after an Acquiring Person obtains 20% or more of the
                                     Company's Common Stock, (a) the Company merges into another
                                     entity, (b) an acquiring entity merges into the Company or (c)
                                     the Company sells more than 50% of the Company's assets or
                                     earning power, then each Right (other than Rights owned by an
                                     Acquiring Person or its affiliates) will entitle the holder
                                     thereof to purchase, for the Exercise Price, a number of shares
                                     of Common Stock of the person engaging in the transaction
                                     having a then current market value of twice the Exercise Price.

Exchange Provision:                  At any time after the date on which an Acquiring Person obtains
                                     20% or more of the Company's Common Stock and prior to the
                                     acquisition by the Acquiring Person of 50% of the outstanding
                                     Common Stock, a majority of the Board of Directors and the
                                     Board of Directors of the Company may exchange the Rights
                                     (other than Rights owned by the Acquiring Person or its
                                     affiliates), in whole or in part, for shares of Common Stock of
                                     the Company at an exchange ratio of one share of Common Stock
                                     per Right (subject to adjustment).
</TABLE>

<PAGE>   55

<TABLE>
<S>                                  <C>
Redemption of the                    Rights will be redeemable at the Company's option for $0.001
Rights:                              per Right at any time on or prior to the fifth day (or such
                                     later date as may be determined by the Company's Board of
                                     Directors) after public announcement that a Person has acquired
                                     beneficial ownership of 20% or more of the Company's Common
                                     Stock (the "SHARES ACQUISITION DATE").

Expiration of the                    The Rights expire on the earliest of (a) January 29, 2011 or
Rights:                              (b) exchange or redemption of the Rights as described above.

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

Voting Rights:                       Rights will not have any voting rights.

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

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

        The foregoing is a summary of certain principal terms of the
Stockholder Rights Plan. It may be amended from time to time. A copy of the
Rights Agreement will be filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A dated January 18, 2001. A
copy of the Rights Agreement is available free of charge from the Company.

                                      -2-<PAGE>

                               ISONICS CORPORATION

                                       AND

                   CONTINENTAL STOCK TRANSFER & TRUST COMPANY

                              Amended and Restated
                                WARRANT AGREEMENT

                Dated as of December 12, 2000 but effective as of
                                January ___, 2001

              Amending and Restating that certain Warrant Agreement
            Dated as of June 1, 2000, as amended as of August 9, 2000

                                       1
<PAGE>

                               CLASS B and CLASS C
                              Amended and Restated
                                WARRANT AGREEMENT

     THIS WARRANT AGREEMENT (this "Agreement"), dated as of December 12, 2000,
by and among ISONICS CORPORATION, a California corporation (the "Company"), and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, INC., as Warrant Agent (the "Warrant
Agent"), and each of their successors and assigns, AMENDS AND RESTATES IN ITS
ENTIRETY that certain warrant agreement between the parties dated as of June 1,
2000, as amended as of August 9, 2000.

W I T N E S S E T H:

     WHEREAS, in connection with (i) the Company's underwritten initial public
offering pursuant to a registration statement on Form SB-2, an unaffiliated
party as underwriter sold on behalf of the Company 810,000 Units consisting of
810,000 shares of Common Stock (as defined in Section 1), and 810,000 Class A
redeemable common stock purchase warrants (the "Class A Warrants"), each warrant
entitling the holder thereof to purchase one additional share of Common Stock;
and (ii) the sale to the underwriter of warrants (the "Underwriter's Warrants")
to purchase up to 80,000 shares of Common Stock and/or 80,000 Warrants, the
Company issued 890,000 Warrants (subject to adjustment as provided herein and in
the Underwriter's Warrant Agreement); and

     WHEREAS, the Company has determined to offer the holders of the Class A
Warrants an incentive to exchange the Class A Warrants for Class B Warrants (as
defined elsewhere herein) pursuant to a registration statement on Form S-4 which
expires at the close of business in New York, New York, on April 30, 2001 (the
"Exchange Offer"); and

     WHEREAS, on December 13, 2000, the Company issued 337,500 Units consisting
of one share of Common Stock and two Class B Warrants. Under certain market
conditions each Unit holder may acquire an additional 112,500 Units (the
"Adjustment Units"). Upon exercise, the Class B Warrant holder will receive one
share of Common Stock and one Class C Warrant. Including the Adjustment Units:

     The total possible number of Common Stock shares which may be issued is
     450,000.

     The total number possible of Class B Warrants is 900,000 plus 810,000 Class
     B Warrants that may be issued in exchange for the outstanding Class A
     Warrants plus 80,000 Class B Warrants that may be issued in exchange for
     Class A Warrants which are issuable upon exercise of the Underwriter's
     Warrant.

     The total number possible of Class C Warrants is 900,000 plus 810,000 Class
     C Warrants that may be issued upon exercise of outstanding Class A Warrants
     if

                                       2
<PAGE>

     exercised before the Exchange Offer expires or upon exercise of Class B
     Warrants that may be exchanged for Class A Warrants, plus 80,000 Class C
     Warrants that may be issued in exchange for Class B Warrants if any are
     issued in exchange for Class A Warrants which are issuable upon exercise of
     the Underwriter's Warrant.

     WHEREAS, the total number of Common Stock shares that could be issued
assuming 100% exercise of all of the Warrants: (i) issued or issuable pursuant
to the December 13, 2000, placement is 2,250,000; (ii) 1,620,000 shares upon
exercise of the outstanding Class A Warrants or the Class B Warrants which may
be issuable in exchange for the Class A Warrants, together with the underlying
Class C Warrants; and (iii) 240,000 shares upon exercise of the Underwriter's
Warrant and all underlying Warrants (including warrants issuable in exchange for
the Class A Warrants issuable upon exercise of the Underwriter's Warrant;

     WHEREAS, the Company has determined it is appropriate and in its best
interests and in the best interests of its shareholders and the persons who may
become holders of Class B Warrants and Class C Warrants to amend certain
provisions of the Class B Warrants and the Class C Warrants to, among other
things stated herein, reduce the exercise price of the Warrants, extend the term
of the Warrants, provide for the redemption of the Class B Warrants, and amend
the redemption provisions of the Class C Warrants;

     WHEREAS, there are currently no persons who hold any Class B Warrants or
Class C Warrants except for the persons who purchased Class B Warrants in the
December offering who purchased such warrants on condition that these changes be
made;

     WHEREAS, certain persons who may exercise the Class A Warrants before the
expiration of the Exchange Offer or who may exercise the Class B Warrants are,
or will be, entitled to receive Class C Warrants (as defined elsewhere herein)
for no additional consideration; and

     WHEREAS, the Company desires to provide for the issuance of certificates
representing the Class B Warrants and Class C Warrants (collectively referred to
as the "Class B/C Warrants" or (when the context requires the "Warrants"); and

     WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange, and redemption of the Class B/C
Warrants, the issuance of certificates representing the Class B/C Warrants, the
exercise of the Class B/C Warrants and the rights of the holders thereof.

     NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Class B/C Warrants and the certificates representing the Class B/C
Warrants and the respective rights and obligations thereunder of the Company,
the holders of certificates representing

                                       3
<PAGE>

the Class B/C Warrants, and the Warrant Agent, the parties hereto agree to amend
and restate the agreement between them as follows and, since there are no
Registered Holders (as that term is defined herein) and since the amendment does
not adversely affect the interests of the holders of the Warrant Certificates,
without requiring the consent of any other person pursuant to Section 11 hereof
and the predecessor to this Agreement:

1.   DEFINITIONS. As used herein (and in addition to the definitions set forth
     above in the Recitals), the following terms shall have the following
     meanings, unless the context shall otherwise require:

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

     (b)  "Common Stock" shall have the meaning assigned to it in Section 8(h)
          hereof.

     (c)  "Class A Warrants" shall mean the outstanding Class A Redeemable
          Common Stock Purchase Warrants of the Corporation, which are subject
          to an agreement between the Corporation, the Warrant Agent, and the
          underwriter dated September 22, 1997.

     (d)  "Class B Warrants" shall mean the Warrants being offered in exchange
          for the outstanding Class A Warrants and the additional Class B
          Warrants sold in December 2000 as a part of a Unit consisting of one
          share of Common Stock and two Class B Warrants.

     (e)  "Class C Warrants" shall mean the Warrants issuable upon exercise of
          the Class B Warrants or upon exercise of the Class A Warrants, if the
          Class A Warrants are exercised before the Exchange Offer Expires.

     (f)  "Commission" shall mean the Securities and Exchange Commission.

     (g)  "Corporate Office" shall mean the office of the Warrant Agent (or its
          successor) at which at any particular time its business shall be
          administered, which office is located on the date hereof c/o
          Continental Stock Transfer & Trust Company, Inc., 2 Broadway, 19th
          Floor, New York, NY 10004.

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

     (i)  "Exercise Date" shall mean, subject to the provisions of Section 5(b)
          hereof, as to any Warrant, the date on which the Warrant Agent shall
          have received both (i) the Warrant Certificate representing such
          Warrant, with the exercise form thereon duly executed by the
          Registered Holder hereof or his attorney duly authorized in writing;
          and (ii) payment in cash or by official bank or certified check made
          payable to the Warrant Agent for the

                                       4
<PAGE>

          account of the Company, in the amount in lawful money of the United
          States of America equal to the applicable Purchase Price (as
          hereinafter defined) in good funds.

     (j)  "Exercise Price" shall mean, subject to modification and adjustment as
          provided in Section 8, $1.50 per share for the Class B Warrants and
          $2.50 per share for the Class C Warrants, and further subject to the
          Company's right, in its sole discretion, to decrease the Exercise
          Price on not less than thirty (30) days prior written notice to the
          Registered Holders.

     (k)  "Initial Warrant Exercise Date" shall mean the date of issuance with
          respect to the Class B Warrants and the Class C Warrants.

     (l)  "Initial Warrant Redemption Date" shall mean the date of issuance with
          respect to the Class C Warrants and May 1, 2001, with respect to the
          Class B Warrants.

     (m)  "Market Price" shall mean:

          (i)   if the Common Stock is listed, or admitted to unlisted trading
                privileges on a national securities exchange, or is traded on
                the Nasdaq National Market or Nasdaq, the last reported closing
                sale price on the five trading days prior to the date of the
                event to which such Market Price relates, or, if no such
                reported closing sale takes place on such date, then the average
                of the last reported closing sales prices for the last five
                trading days before such date, in each case as officially
                reported by the principal securities exchange on which the
                Common Stock is listed or admitted to unlisted trading
                privileges or by the Nasdaq National Market or Nasdaq, or

          (ii)  if the Common Stock is not listed or admitted to unlisted
                trading privileges, on any national securities exchange, or
                traded on the Nasdaq National Market or Nasdaq, but is traded in
                the over-the-counter market, then the average of the closing
                sale prices (or if closing sale prices are not reported, the
                average of the last reported bid and asked prices) of the Common
                Stock reported by the National Quotation Bureau, Inc. or similar
                bureau if the National Quotation Bureau, Inc. is no longer
                reporting such information on the date of the event to which
                such Market Price relates, and if no such prices are reported on
                such date, then the average of the last so reported bid and
                asked prices on the last five trading days on which such prices
                are reported immediately preceding such date; or

          (iii) if the Common Stock is neither listed, nor admitted to unlisted
                trading privileges on a national securities exchange, nor traded
                on

                                       5
<PAGE>

               the Nasdaq National Market or Nasdaq, nor traded in the
               over-the-counter market, then the fair market value of the Common
               Stock, not less than the book value thereof, as of the date of
               the event to which such Market Price relates, as determined in
               good faith (using customary valuation methods) by the Board of
               Directors of the Company, which determination shall be evidenced
               by a resolution of the Board of Directors and based on the best
               information available to it.

     (n)  "NASD" shall mean the National Association of Securities Dealers, Inc.

     (o)  "Nasdaq" shall mean the Nasdaq SmallCap Market.

     (p)  "Redemption Date" shall mean the date (which may not occur before the
          Initial Warrant Redemption Date) fixed for the redemption of the Class
          B Warrants or the Class C Warrants in accordance with the terms
          hereof.

     (q)  "Redemption Price" shall mean the price at which the Company may, at
          its option, redeem the Warrants, in accordance with the terms hereof,
          which price shall be $0.10 per Warrant, subject to adjustment from
          time to time pursuant to the provisions of Section 8 hereof and
          subject further to the provisions of Section 9, hereof.

     (r)  "Registered Holder" shall mean each person in whose name a Warrant
          Certificate representing any of the Warrants shall be registered on
          the books maintained by the Warrant Agent pursuant to Section 6.

     (s)  "Underwriter's Warrant Agreement" shall mean the agreement dated as of
          September 22, 1997, between the Company and Monroe Parker Securities,
          Inc. relating to and governing the terms and provisions of the
          Underwriter's Warrants.

     (t)  "Transfer Agent" shall mean Continental Stock Transfer & Trust
          Company, Inc., or its authorized successor.

     (u)  "Underwriting Agreement" shall mean the underwriting agreement dated
          as of September 22, 1997, between the Company and the underwriter
          relating to the Offering.

     (v)  "Warrant Certificate" shall mean a certificate representing one or
          more of the Warrants substantially in the form annexed as Exhibit A
          (with respect to the Class B Warrants) or Exhibit B (with respect to
          the Class C Warrants).

     (w)  "Warrant Expiration Date" shall mean, unless the Warrants are redeemed
          as provided in Section 9 hereof prior to such date, 5:00 p.m. (New
          York

                                       6
<PAGE>

          time): (i) with respect to the Class B Warrants, on December 31, 2005,
          and (ii) with respect to the Class C Warrants, on December 31, 2005,
          or if earlier, the Redemption Date as defined herein, whichever date
          is earlier; provided that if such date shall in the State of New York
          be a holiday or a day on which banks located in the State of New York
          are authorized to close, then 5:00 p.m. (New York time) on the next
          following day which, in the State of New York, is neither a holiday
          nor a day on which such banks are authorized to close. Upon prior
          written notice to the Registered Holders, the Company (in its sole
          discretion) shall have the right to extend the Warrant Expiration
          Date.

     (x)  "Warrants" mean, collectively, the Class B Warrants and the Class C
          Warrants.

2.   WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.

     (a)  Each Class B Warrant shall initially entitle the Registered Holder of
          the Warrant Certificate representing such Warrant to purchase at the
          Exercise Price therefor from the Initial Warrant Exercise Date until
          the Warrant Expiration Date one share of Common Stock and one Class C
          Warrant upon the exercise thereof in accordance with the terms hereof
          (subject to modification and adjustment as provided in Section 8).

     (b)  Each Class C Warrant shall initially entitle the Registered Holder of
          the Warrant Certificate representing such Warrant to purchase at the
          Exercise Price therefor from the Initial Warrant Exercise Date until
          the Warrant Expiration Date one share of Common Stock upon the
          exercise thereof in accordance with the terms hereof (subject to
          modification and adjustment as provided in Section 8).

     (c)  Upon execution of this Agreement, Warrant Certificates representing
          the number of Class B Warrants exchanged pursuant to the exchange
          offer (subject to modification and adjustment as provided in Section
          8) shall be executed by the Company and delivered to the Warrant
          Agent.

     (d)  Upon exercise of the Underwriter's Warrants as provided therein,
          Warrant Certificates representing all or a portion of 80,000 Warrants
          to purchase up to an aggregate of 80,000 shares of Common Stock
          (subject to modification and adjustment as provided in Section 8
          hereof and in the Underwriter's Warrant Agreement), shall be
          countersigned, issued and delivered by the Warrant Agent upon written
          order of the Company signed by its Chairman of the Board, Chief
          Executive Officer, President or a Vice President and by its Chief
          Financial Officer, Treasurer or an Assistant Treasurer or its
          Secretary or an Assistant Secretary.

     (e)  From time to time, up to the Warrant Expiration Date, the Warrant
          Agent

                                       7
<PAGE>

          shall countersign and deliver Warrant Certificates in required
          denominations of one or whole number multiples thereof to the person
          entitled thereto in connection with any transfer or exchange permitted
          under this Agreement. Except as provided herein, no Warrant
          Certificates shall be issued except: (i) Warrant Certificates
          initially issued hereunder and those issued on or after the Initial
          Warrant Exercise Date, upon the exercise of fewer than all Warrants
          held by the exercising Registered Holder; (ii) Warrant Certificates
          issued upon any transfer or exchange of Warrants; (iii) Warrant
          Certificates issued in replacement of lost, stolen, destroyed or
          mutilated Warrant Certificates pursuant to Section 7; (iv) Warrant
          Certificates issued pursuant to the Underwriter's Warrant Agreement;
          and (v) at the option of the Company, Warrant Certificates may be
          issued in such form as may be approved by its Board of Directors, to
          reflect any adjustment or change in the Exercise Price, the number of
          shares of Common Stock purchasable upon exercise of the Warrants or
          the Redemption Price therefor made pursuant to Section 8 hereof.

3.   FORM AND EXECUTION OF WARRANT CERTIFICATES.

     (a)  The Warrant Certificates shall be substantially in the form annexed
          hereto as Exhibits A and B (the provisions of which are hereby
          incorporated herein) and may have such letters, numbers or other marks
          of identification or designation and such legends, summaries or
          endorsements printed, lithographed or engraved 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 law or
          with any rule or regulation made pursuant thereto or with any rule or
          regulation of any stock exchange on which the Warrants may be listed,
          or to conform to usage. The Warrant Certificates shall be dated the
          date of issuance thereof (whether upon initial issuance, transfer,
          exchange or in lieu of mutilated, lost, stolen or destroyed Warrant
          Certificates) and issued in registered form. Warrants shall be
          numbered serially with the letters "WB" on the Class B Warrants and
          with the letters "WC" on the Class C Warrants.

     (b)  Warrant Certificates shall be executed on behalf of the Company by its
          Chairman of the Board, Chief Executive Officer, President or any Vice
          President and by its Chief Financial Officer, Treasurer or an
          Assistant Treasurer or its Secretary or an Assistant Secretary, by
          manual signatures or by facsimile signatures printed thereon, and
          shall have imprinted thereon a facsimile of the Company's seal.
          Warrant Certificates shall be manually countersigned by the Warrant
          Agent and shall not be valid for any purpose unless so countersigned.
          In case any officer of the Company who shall have signed any of the
          Warrant Certificates shall cease to be such officer of the Company
          after the date of signature but before the date of issuance of the
          Warrant Certificates or before countersignature by the Warrant Agent
          and issuance and delivery thereof, such Warrant

                                       8
<PAGE>

          Certificates, nevertheless, may be countersigned by the Warrant Agent,
          issued and delivered with the same force and effect as though the
          person who signed such Warrant Certificates had not ceased to be such
          officer of the Company. After countersignature by the Warrant Agent,
          Warrant Certificates shall be delivered by the Warrant Agent to the
          Registered Holder promptly and without further action by the Company.

4.   EXERCISE.

     (a)  Warrants in denominations of one or whole number multiples thereof may
          be exercised by the Registered Holder thereof commencing at any time
          on or after the Initial Warrant Exercise Date, but not after the
          Warrant Expiration Date, upon the terms and subject to the conditions
          set forth herein and in the applicable Warrant Certificate. Warrants
          may be exercised by their holders as follows: the exercise of Warrants
          shall be accomplished upon surrender of the Warrant Certificate
          evidencing such Warrants, with the Subscription Form on the reverse
          side thereof duly filled in and executed, to the Warrant Agent at its
          business office, together with payment to the Warrant Agent of the
          Exercise Price (as of the date of such surrender) of the Warrants then
          being exercised and an amount equal to any applicable transfer tax
          and, if requested by the Company, any other taxes or governmental
          charges which the Company may be required by law to collect in respect
          of such exercise.

     (b)  Payment of the Exercise Price and other amounts may be made by wire
          transfer of good funds, or by certified or bank cashier's check,
          payable in lawful money of the United States of America to the order
          of the Company and deliver such payment to the Warrant Agent who shall
          in turn deliver the payment to the Company. No adjustment shall be
          made for any cash dividends, whether paid or declared, on any
          securities issuable upon exercise of a Warrant. A Warrant shall be
          deemed to have been exercised immediately prior to the close of
          business on the Exercise Date and upon exercise thereof, the person
          entitled to receive the securities deliverable upon such exercise
          shall be treated for all purposes as the holder of the securities
          issuable thereby as of the close of business on the Exercise Date. If
          Warrants in denominations other than whole number multiples thereof
          shall be exercised at one time by the same Registered Holder, the
          number of full shares of Common Stock which shall be issuable upon
          exercise thereof shall be computed on the basis of the aggregate
          number of full shares of Common Stock issuable upon such exercise. As
          soon as practicable on or after the Exercise Date and in any event
          within five business days after such date, if one or more Warrants
          have been exercised in the manner described in this subsection (a),
          the Warrant Agent on behalf of the Company shall cause to be issued to
          the person or persons entitled to receive the same a Common Stock
          certificate or certificates for the shares of Common Stock deliverable
          upon such

                                       9
<PAGE>

          exercise, and the Warrant Agent shall deliver the same to the person
          or persons entitled thereto. Upon the exercise of any one or more
          Warrants, the Warrant Agent shall promptly notify the Company in
          writing of such fact and of the number of securities delivered upon
          such exercise and, subject to subsection (b) below, shall cause
          payment in cash or by check made payable to the order of the Company,
          equal to the Exercise Price of such Warrants, to be deposited promptly
          in the Company's bank account or paid directly to the Company, as
          specified by the Company.

     (c)  The Company shall not be required to issue fractional shares on the
          exercise of Warrants. Warrants may be exercised only in such multiples
          as are required to permit the issuance by the Company of one or more
          whole shares. If one or more Warrants shall be presented for exercise
          in full at the same time by the same Registered Holder, the number of
          whole shares which shall be issuable upon such exercise thereof shall
          be computed on the basis of the aggregate number of shares purchasable
          on exercise of the Warrants presented. If any fraction of a share
          would, except for the provisions provided herein, be issuable on the
          exercise of any Warrant (or specified portion thereof), the Company
          shall pay an amount in cash equal to such fraction multiplied by the
          then current Market Price of a share of Common Stock.

     (d)  Holders of Class A Warrants may, in their discretion, exercise the
          Class B Warrants at the same time the holders submit their Class A
          Warrants for exchange pursuant to the Exchange Offer.

     (e)  If at the time of exercise of any of the Warrants, the Company does
          not have in place an effective registration statement or is otherwise,
          in the good faith determination of the Board of Directors of the
          Company, precluded by applicable laws from issuing the shares of
          Common Stock issuable upon such exercise, the Company may (but is not
          required to), in lieu of issuance of those shares, elect to redeem the
          Warrants duly surrendered for exercise for a price per Warrant equal
          to the difference between the Market Price of a share of Common Stock
          on the date of such submission and the Exercise Price, and in the
          event of such redemption, the Company will pay to the Registered
          Holder the above-described Redemption Price in cash within ten (10)
          business days after receipt of notice from the Warrant Agent that such
          Warrants have been submitted for exercise.

     (f)  This Warrant shall not be exercisable by a Registered Holder in any
          state where such exercise would be unlawful.

5.   RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES; ETC.

     (a)  The Company covenants that it will at all times reserve and keep
          available

                                       10
<PAGE>

          out of its authorized Common Stock, solely for the purpose of issue
          upon exercise of Warrants, such number of shares of Common Stock as
          shall then be issuable upon the exercise of all outstanding Warrants
          except to the extent that, at the current time, there is insufficient
          authorized capital to do so. The Company covenants that all shares of
          Common Stock which shall be issued upon exercise of the Warrants
          shall, at the time of delivery thereof, be validly issued, fully paid
          and nonassessable and free from all preemptive or similar rights,
          taxes, liens and charges with respect to the issue thereof, and that
          upon issuance such shares shall be listed on each securities exchange,
          if any, on which the other shares of outstanding Common Stock of the
          Company are then listed.

     (b)  The Company covenants that if any securities to be reserved for the
          purpose of exercise of Warrants hereunder require registration with,
          or approval of, any governmental authority under any federal
          securities law before such securities may be validly issued or
          delivered upon such exercise, then the Company will file a
          registration statement under the federal securities laws or a
          post-effective amendment covering such securities, use its best
          efforts to cause the same to become effective and to keep such
          registration statement current on or after the Initial Warrant
          Exercise Date and while any of the Warrants are outstanding and
          deliver a prospectus which complies with Section 10(a)(3) of the Act
          to the Registered Holder exercising the Warrant (except, if in the
          opinion of counsel to the Company, such registration is not required
          under the federal securities laws or if the Company receives a letter
          from the staff of the Commission stating that it would not take any
          enforcement action if such registration is not effected; PROVIDED,
          HOWEVER, that if at the time of exercise of any Warrants the Company
          does not have in place an effective registration statement or is
          otherwise, in the good faith determination of the Board of Directors
          of the Company, precluded by applicable laws from issuing the
          underlying shares of Common Stock, the Company may, in lieu of
          issuance of the shares of Common Stock, elect to purchase the Warrants
          duly surrendered for exercise for a price per Warrant equal to the
          difference between the Market Price of the securities for which such
          Warrant is exercisable on the date of such submission and the Exercise
          Price of such Warrants, and in the event of such redemption, the
          Company will pay to the holder of such Warrants the above-described
          redemption price in cash within ten (10) business days after receipt
          of notice from the Warrant Agent that such Warrants have been
          submitted for exercise. The Company will use its best efforts to
          obtain appropriate approvals or registrations under state "blue sky"
          securities laws with respect to any such securities. However, Warrants
          may not be exercised by, or shares of Common Stock issued to, any
          Registered Holder in any state in which such exercise or issuance
          would be unlawful.

     (c)  The Company shall pay all documentary, stamp or similar taxes and
          other

                                       11
<PAGE>

          governmental charges that may be imposed with respect to the issuance
          of Warrants, or the issuance or delivery of any shares of Common Stock
          upon exercise of the Warrants; provided, however, that if shares of
          Common Stock are to be delivered in a name other than the name of the
          Registered Holder of the Warrant Certificate representing any Warrant
          being exercised, then no such delivery shall be made unless the person
          requesting the same has paid to the Warrant Agent the amount of
          transfer taxes or charges incident thereto, if any; PROVIDED, HOWEVER,
          that the Company shall not be required (i) to pay any tax which may be
          payable in respect of any transfer involved in the transfer and
          delivery of Warrant Certificates; or (ii) to issue or deliver any
          certificate for shares of Common Stock or other securities upon the
          exercise of any Warrant Certificate until any such tax shall have been
          paid, all such tax being payable by the holder of such Warrant
          Certificate at the time of surrender.

     (d)  The Warrant Agent is hereby irrevocably authorized as the Transfer
          Agent to requisition from time to time certificates representing
          shares of Common Stock or other securities required to be issued upon
          exercise of the Warrants, and the Company will comply with all such
          requisitions.

6.   EXCHANGE AND REGISTRATION OF TRANSFER.

     (a)  Warrant Certificates may be exchanged for other Warrant Certificates
          representing an equal aggregate number of Warrants of the same class
          or may be transferred in whole or in part. Warrant Certificates to be
          exchanged shall be surrendered to the Warrant Agent at its Corporate
          Office, and, promptly following satisfaction of the terms and
          provisions hereof, the Company shall execute and the Warrant Agent
          shall countersign, issue and deliver in exchange therefor the Warrant
          Certificate or Certificates which the Registered Holder making the
          exchange shall be entitled to receive.

     (b)  The Warrant Agent shall keep, at its office, books in which, subject
          to such reasonable regulations as it may prescribe, it shall register
          Warrant Certificates and the transfer thereof in accordance with
          customary practice. Upon due presentment for registration of transfer
          of any Warrant Certificate at such office, the Company shall execute
          and the Warrant Agent shall issue and deliver to the transferee or
          transferees a new Warrant Certificate or Certificates representing an
          equal aggregate number of Warrants of the same class.

     (c)  With respect to all Warrant Certificates presented for registration of
          transfer, or for exchange or exercise, the Subscription Form on the
          reverse thereof shall be duly endorsed or be accompanied by a written
          instrument or instruments of transfer and subscription, in form
          satisfactory to the Company and the Warrant Agent, duly executed by
          the Registered Holder

                                       12
<PAGE>

          thereof or his attorney-in-fact duly authorized in writing.

     (d)  A service charge may be imposed on the Registered Holder by the
          Warrant Agent for any exchange or registration of transfer of Warrant
          Certificates. In addition, the Company may require payment by such
          holder of a sum sufficient to cover any tax or other governmental
          charge that may be imposed in connection therewith.

     (e)  All Warrant Certificates surrendered for exercise or for exchange in
          case of mutilated Warrant Certificates shall be promptly canceled by
          the Warrant Agent and thereafter retained by the Warrant Agent until
          termination of this Agreement.

     (f)  Prior to due presentment for registration of transfer thereof, the
          Company and the Warrant Agent may deem and treat the Registered Holder
          of any Warrant Certificate as the absolute owner thereof and of each
          Warrant represented thereby (notwithstanding any notations of
          ownership or writing thereon made by anyone other than a duly
          authorized officer of the Company or the Warrant Agent) for all
          purposes and shall not be affected by any notice to the contrary.

7.   LOSS OR MUTILATION. Upon receipt by the Company and the Warrant Agent of
     evidence satisfactory to them of the ownership of and the loss, theft,
     destruction or mutilation of any Warrant Certificate and (in the case of
     loss, theft or destruction) of indemnity satisfactory to them, and (in case
     of mutilation) upon surrender and cancellation thereof, the Company shall
     execute and the Warrant Agent shall (in the absence of notice to the
     Company and/or the Warrant Agent that a new Warrant Certificate has been
     acquired by a bona fide purchaser) countersign and deliver to the
     Registered Holder in lieu thereof a new Warrant Certificate of like tenor
     representing an equal aggregate number of Warrants. Applicants for
     substitute Warrant Certificates shall also comply with such other
     reasonable regulations and pay such other reasonable charges and provide a
     bond (if necessary) as the Warrant Agent may prescribe.

8.   ADJUSTMENTS OF NUMBER AND KIND OF SHARES PURCHASABLE AND EXERCISE PRICE.
     The number and kind of securities or other property purchasable upon
     exercise of a Warrant shall be subject to adjustment from time to time upon
     the occurrence, after the date hereof, of any of the following events:

     (a)  DIVIDENDS, STOCK SPLITS, REVERSE SPLITS, ETC. In case the Company
          shall (i) pay a dividend in, or make a distribution of, shares of
          Common Stock or of capital stock convertible into Common Stock on its
          outstanding Common Stock; (ii) subdivide its outstanding shares of
          Common Stock into a greater number of such shares; or (iii) combine
          its outstanding shares of Common Stock into a smaller number of such
          shares, the total number of shares of Common Stock purchasable upon
          the exercise of each

                                       13
<PAGE>

          Warrant outstanding immediately prior thereto shall be adjusted so
          that the Registered Holder of any Warrant Certificate thereafter
          surrendered for exercise shall be entitled to receive, at the same
          aggregate Exercise Price, the number of shares of Common Stock which
          such holder would have owned or have been entitled to receive
          immediately following the happening of any of the events described
          above had such Warrant been exercised in full immediately prior to the
          occurrence of such event. Any adjustment made pursuant to this
          subsection shall, in the case of a stock dividend or distribution,
          become effective as of the record date therefor and, in the case of a
          subdivision or combination, be made as of the effective date thereof.
          If, as a result of an adjustment made pursuant to this subsection, the
          Registered Holder of any Warrant Certificate thereafter surrendered
          for exercise shall become entitled to receive shares of two or more
          classes of capital stock of the Company, the Board of Directors of the
          Company (whose determination shall be conclusive and shall be
          evidenced by a Board resolution filed with the Warrant Agent) shall
          determine the allocation of the Exercise Price among shares of such
          classes of capital stock.

     (b)  NO CHANGE IN AGGREGATE EXERCISE PRICE. In the event of any adjustment
          of the total number of shares of Common Stock purchasable upon the
          exercise of Warrants pursuant to subsection (a) above, the aggregate
          Exercise Price of each such Warrant shall remain unchanged, but the
          number of shares of capital stock obtainable on exercise of each such
          Warrant shall be adjusted as provided in subsection (a) above.

     (c)  REORGANIZATION OR RECLASSIFICATION. In the event of a capital
          reorganization or a reclassification of the Common Stock (except as
          provided in subsection (a) above or subsection (e) below), each
          Registered Holder of a Warrant, upon exercise of such Warrant, shall
          be entitled to receive at the same aggregate Exercise Price, in
          substitution for the Common Stock to which such Registered Holder
          would have become entitled upon exercise immediately prior to such
          reorganization or reclassification, the shares or other securities or
          property of the Company (or cash) that he would have been entitled to
          receive upon such reorganization or reclassification if such Warrant
          had been exercised immediately prior thereto; and in any such case,
          appropriate provision (as determined by the Board of Directors of the
          Company, whose determination shall be conclusive and shall be
          evidenced by a certified Board resolution filed with the Warrant
          Agent) shall be made for the application of this Section 8 with
          respect to the rights and interests thereafter of the Registered
          Holders of all then outstanding Warrants (including but not limited to
          the allocation of the Exercise Price among shares of classes of
          capital stock), to the end that this Section 8 (including the
          adjustments of the number of shares of Common Stock or other
          securities purchasable and the Exercise Price thereof) shall
          thereafter be

                                       14
<PAGE>

          reflected, as nearly as reasonably practicable, in all subsequent
          exercises of the Warrants for any shares or securities or other
          property (or cash) thereafter deliverable upon the exercise of the
          Warrants.

     (d)  CERTIFICATE OF ADJUSTMENT. Whenever the number of shares of Common
          Stock or other securities purchasable upon exercise of a Warrant is
          adjusted as provided in this Section 8, the Company will promptly file
          with the Warrant Agent a certificate signed by a Chairman or
          Vice-Chairman of the Board or the President or a Vice President of the
          Company and by the Chief Financial Officer, Treasurer or an Assistant
          Treasurer or the Secretary or an Assistant Secretary of the Company
          setting forth the number and kind of securities or other property
          purchasable upon exercise of a Warrant, as so adjusted, stating that
          such adjustments in the number or kind of shares or other securities
          or property conform to the requirements of this Section 8, and setting
          forth a brief statement of the facts accounting for such adjustments.
          Promptly after receipt of such certificate, the Company, or the
          Warrant Agent at the Company's request, will deliver, by first-class
          mail, postage pre-paid, a brief summary thereof (to be supplied by the
          Company) to all Registered Holders of the outstanding Warrant
          Certificates; provided, however, that failure to file or to give any
          notice required under this subsection, or any defect therein, shall
          not affect the legality or validity of any such adjustments under this
          Section 8; and provided, further, that, where appropriate, such notice
          may be given in advance and included as part of the notice required to
          be given pursuant to Section 12 hereof.

     (e)  MERGER OR CONSOLIDATION. In case of any consolidation of the Company
          with, or merger of the Company into another corporation (other than a
          consolidation or merger which does not result in any reclassification
          or change of the outstanding Common Stock) or in case of any sale or
          conveyance to another corporation of the property of the Company as an
          entirety or substantially as an entirety in a transaction involving as
          an element thereof the distribution of the consideration received by
          the Company therefrom, the corporation formed by such consolidation or
          merger or the corporation which shall have acquired such assets, as
          the case may be, shall execute and deliver to the Warrant Agent a
          supplemental warrant agreement provided that the Registered Holder of
          each Warrant then outstanding shall have the right thereafter (until
          the expiration of such Warrant) to receive, upon exercise of such
          Warrant, solely the kind and amount of shares of stock and other
          securities and property (or cash) receivable upon such consolidation,
          merger, sale or transfer by a holder of the number of shares of Common
          Stock of the Company for which such Warrant could have been exercised
          immediately prior to such consolidation, merger, sale or transfer.
          Such supplemental warrant agreement shall provide for adjustments,
          which shall be as nearly equivalent as may be practicable to the
          adjustments provided in this

                                       15
<PAGE>

          Section 8. The above provision of this Subsection 8(e) shall similarly
          apply to successive consolidations, mergers, sales, or transfers.

     (f)  EFFECT OF ADJUSTMENTS ON WARRANT CERTIFICATES. Irrespective of any
          adjustments in the number or kind of shares issuable upon exercise of
          Warrants, Warrant Certificates theretofore or thereafter issued may
          continue to express the same price and number and kind of shares as
          are stated in the Warrant Certificates initially issuable pursuant to
          this Warrant Agreement.

     (g)  ASSISTANCE OF ACCOUNTING FIRM IN MAKING COMPUTATIONS. The Company may
          retain a firm of independent public accountants of recognized
          standing, which may be the accountants regularly retained by the
          Company, selected by the Board of Directors of the Company or the
          Executive Committee of said Board, and not disapproved by the Warrant
          Agent, to make any computation required under this Section 8, and a
          certificate signed by such firm shall, in the absence of fraud or
          gross negligence, be conclusive evidence of the correctness of any
          computation made under this Section.

     (h)  "COMMON STOCK". The term "Common Stock" shall mean (i) the class of
          stock designated as Common Stock in the Certificate of Incorporation
          of the Company, as amended, at the date of this Agreement; or (ii) any
          other class of stock resulting from successive changes or
          reclassifications of such Common Stock consisting solely of changes in
          par value, or from par value to no par value, or from no par value to
          par value. In the event that at any time as a result of an adjustment
          made pursuant to this Section 8, the Registered Holder of any Warrant
          thereafter surrendered for exercise shall become entitled to receive
          any shares of capital stock of the Company other than shares of Common
          Stock, thereafter the number of such other shares obtainable upon
          exercise of any Warrant 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 Common Stock contained in this
          Section 8, and all other provisions of this Agreement, with respect to
          the Common Stock, shall apply on like terms to any such other shares.

     (i)  FAILURE TO MAINTAIN EFFECTIVE REGISTRATION STATEMENT. Subject to the
          following sentence, if the Company fails to maintain in effect a
          registration statement relating to the exercise of the Class B
          Warrants after June 12, 2001 during a period of time when the Market
          Price is in excess of the Exercise Price for the Class B Warrants, the
          Exercise Price of the Class B Warrants shall be reduced to $0.75
          unless, at the time a Class B Warrant is presented for exercise, the
          Company redeems the Class B Warrant for a Redemption Price equal to
          the difference between the Market Price and the Exercise Price as
          permitted (in the Company's discretion) by Paragraph 4(e) hereof. If,
          while a registration statement is in effect, material events occur
          that require the Company to suspend

                                       16
<PAGE>

          the use of the registration statement pending an amendment or
          supplement thereto, the suspension of the registration statement
          pending such filing shall not be deemed to be a breech of this duty to
          maintain an effective registration statement if such amendment or
          supplement is filed within fourteen days for that purpose or if the
          Company is able to redeem the Class B Warrants upon presentation as
          contemplated by Paragraph 4(e).

9.   REDEMPTION.

     (a)  Commencing on the Initial Warrant Redemption Date, the Company may, on
          thirty (30) days' prior written notice, redeem all, but not less than
          all, of the Class B Warrants, the Class C Warrants, or both, at ten
          cents ($0.10) per Warrant:

          i.   provided that at the time the notice of redemption is sent to the
               holders as required by Paragraph 9(b) there is a current
               registration statement that is effective under the Securities Act
               which permits the exercise of the Warrants being redeemed; and

          ii.  provided further that before any such call for redemption of
               Warrants can take place, the last reported closing sale price for
               the Common Stock as officially reported by Nasdaq, if the Common
               Stock is then traded on Nasdaq (or the last reported closing sale
               price on the Nasdaq National Market or a national securities
               exchange, if the Common Stock is then traded on the Nasdaq
               National Market or on a national securities exchange, in each
               case as officially reported by the Nasdaq National Market or such
               national securities exchange, or, if the Common Stock is not then
               traded on Nasdaq, the Nasdaq National Market or a national
               securities exchange, but is then traded in the over-the-counter
               market, then the average of the last reported bid and asked
               prices of the Common Stock reported by the National Quotation
               Bureau, Inc. or similar bureau if the National Quotation Bureau,
               Inc. is no longer reporting such information) shall have equaled
               or exceeded $3.75 per share (subject to adjustment in the event
               of any stock splits or other similar events as provided in
               Section 8 hereof) for at least twenty (20) out of the thirty (30)
               consecutive trading days ending not more than the third day prior
               to the date on which the notice contemplated by (b) and (c) below
               is given.

     (b)  In case the Company shall exercise its right to redeem all of the
          Warrants, it shall give or cause to be given notice to the Registered
          Holders of the Warrants by mailing to such Registered Holders a notice
          of redemption, first-class mail, postage pre-paid, at their last
          address as shall appear on the records of the Warrant Agent. Any
          notice mailed in the manner provided herein shall be conclusively
          presumed to have been duly given whether or not the Registered Holder
          receives such notice.

     (c)  The notice of redemption shall specify: (i) the Redemption Price; (ii)
          the

                                       17
<PAGE>

          Redemption Date, which shall in no event be less than thirty (30) days
          after the date of mailing of such notice; (iii) the place where the
          Warrant Certificate shall be delivered and the Redemption Price shall
          be paid; (iv) that the right to exercise the Warrant shall terminate
          at 5:00 p.m. (New York time) on the business day immediately preceding
          the date fixed for redemption; and (v) shall include a copy of the
          current effective prospectus relating to the exercise of the Warrants.
          No failure to mail such notice nor any defect therein or in the
          mailing thereof shall affect the validity of the proceedings for such
          redemption except as to a holder (a) to whom notice was not mailed; or
          (b) whose notice was defective. An affidavit of the Warrant Agent or
          the Secretary or Assistant Secretary of the Company that notice of
          redemption has been mailed shall, in the absence of fraud, be prima
          facie evidence of the facts stated therein.

     (d)  Any right to exercise a Warrant shall terminate at 5:00 p.m. (New York
          time) on the business day immediately preceding the Redemption Date.
          The Redemption Price payable to the Registered Holders shall be mailed
          to such persons at their addresses of record.

     (e)  On and after the Redemption Date, the Registered Holders shall have no
          rights with respect to the Warrants except to receive $0.10 per
          Warrant upon surrender of their Warrant Certificates.

10.  CONCERNING THE WARRANT AGENT.

     (a)  The Warrant Agent acts hereunder as agent and in a ministerial
          capacity for the Company, and its duties shall be determined solely by
          the provisions hereof. The Warrant Agent shall not, by issuing and
          delivering Warrant Certificates or by any other act hereunder, be
          deemed to make any representations as to the validity or value or
          authorization of the Warrant Certificates (except its countersignature
          thereof) or the Warrants represented thereby or of any securities or
          other property delivered upon exercise of any Warrant or whether any
          stock issued upon exercise of any Warrant is fully paid and
          nonassessable.

     (b)  The Warrant Agent shall not at any time be under any duty or
          responsibility to any holder of Warrant Certificates to make or cause
          to be made any adjustment of the Exercise Price or the Redemption
          Price provided in this Agreement, or to determine whether any fact
          exists which may require any such adjustments, or with respect to the
          nature or extent of any such adjustments, when made, or with respect
          to the method employed in making the same (except with respect to the
          exercise of Warrant Certificates after actual notice of any adjustment
          of the Exercise Price). The Warrant Agent shall not: (i) be liable for
          any recital or statement of fact contained herein or for any action
          taken, suffered or omitted by it in reliance on any Warrant
          Certificate or other document or

                                       18
<PAGE>

          instrument believed by it in good faith to be genuine and to have been
          signed or presented by the proper party or parties (except its
          countersignature on the Warrant Certificates and such statements or
          recitals as describe the Warrant Agent or action taken or to be taken
          by it); (ii) be responsible for any failure on the part of the Company
          to comply with any of its covenants and obligations contained in this
          Agreement or in any Warrant Certificate; or (iii) be liable for any
          act or omission in connection with this Agreement except for its own
          gross negligence, bad faith or willful misconduct.

     (c)  The Warrant Agent may at any time consult with counsel satisfactory to
          it (who may be counsel for the Company) and shall incur no liability
          or responsibility for any action taken, suffered or omitted by it in
          good faith in accordance with the opinion or advice of such counsel.

     (d)  Any notice, statement, instruction, request, direction, order, or
          demand of the Company shall be sufficiently evidenced by an instrument
          signed by the Chairman of the Board of Directors, Chief Executive
          Officer, Chief Financial Officer, President or any Vice President
          (unless other evidence in respect thereof is herein specifically
          prescribed). The Warrant Agent shall not be liable for any action
          taken, suffered, or omitted by it in accordance with such notice,
          statement, instruction, request, direction, order or demand reasonably
          believed by it to be genuine.

     (e)  The Company agrees to pay the Warrant Agent reasonable compensation
          for its services hereunder and to reimburse it for its reasonable
          expenses hereunder; the Company further agrees to indemnify the
          Warrant Agent and save it harmless from and against any and all
          losses, expenses and liabilities, including judgments, costs and
          counsel fees, for anything done or omitted by the Warrant Agent in the
          execution of its duties and powers hereunder except losses, expenses
          and liabilities arising as a result of the Warrant Agent's gross
          negligence, bad faith, or willful conduct.

     (f)  The Warrant Agent may resign its duties and be discharged from all
          further duties and liabilities hereunder (except liabilities resulting
          as a result of the Warrant Agent's own gross negligence or willful
          misconduct), after giving thirty (30) days' prior written notice to
          the Company. At least fifteen (15) days prior to the date such
          resignation is to become effective, the Warrant Agent shall cause a
          copy of such notice of resignation to be mailed to the Registered
          Holder of each Warrant Certificate at the Company's expense. Upon such
          resignation, or any inability of the Warrant Agent to act as such
          hereunder, the Company shall appoint in writing a new warrant agent.
          If the Company shall fail to make such appointment within a period of
          fifteen (15) days after it has been notified in writing of such
          resignation by the resigning Warrant Agent, then the Registered Holder
          of any Warrant Certificate may apply to any court of

                                       19
<PAGE>

          competent jurisdiction for the appointment of a new warrant agent. Any
          new warrant agent, whether appointed by the Company or by such a
          court, shall be a bank or trust company having a capital and surplus,
          as shown by its last published report to its stockholders deemed by
          the Company to be adequate, or a stock transfer company. After
          acceptance in writing of such appointment by the new warrant agent is
          received by the Company, such new warrant agent shall be vested with
          the same powers, rights, duties and responsibilities as if it had been
          originally named herein as the Warrant Agent, without any further
          assurance, conveyance, act or deed; but if for any reason it shall be
          necessary or expedient to execute and deliver any further assurance,
          conveyance, act or deed, the same shall be done at the expense of the
          Company and shall be legally and validly executed and delivered by the
          resigning Warrant Agent. Not later than the effective date of any such
          appointment the Company shall file notice thereof with the resigning
          Warrant Agent and shall forthwith cause a copy of such notice to be
          mailed to the Registered Holder of each Warrant Certificate.

     (g)  Any corporation into which the Warrant Agent or any new warrant agent
          may be converted or merged, any corporation resulting from any
          consolidation to which the Warrant Agent or any new warrant agent
          shall be a party, or any corporation succeeding to the corporate trust
          business of the Warrant Agent or any new warrant agent shall be a
          successor warrant agent under this Agreement without any further act,
          provided that such corporation is eligible for appointment as
          successor to the Warrant Agent under the provisions of the preceding
          paragraph. Any such successor warrant agent shall promptly cause
          notice of its succession as warrant agent to be mailed to the Company
          and to the Registered Holders of each Warrant Certificate.

     (h)  The Warrant Agent, its subsidiaries and affiliates, and any of its or
          their officers or directors, may buy and hold or sell Warrants or
          other securities of the Company and otherwise deal with the Company in
          the same manner and to the same extent and with like effect as though
          it were not Warrant Agent. Nothing herein shall preclude the Warrant
          Agent from acting in any other capacity for the Company or for any
          other legal entity.

     (i)  The Warrant Agent shall retain for a period of two (2) years from the
          date of exercise, any Warrant Certificate received by it upon such
          exercise.

     (j)  The Warrant Agent shall account promptly to the Company with respect
          to Warrants exercised and concurrently pay to the Company all moneys
          received by the Warrant Agent for the purchase of securities or other
          property through the exercise of such Warrants.

11.  MODIFICATION OF AGREEMENT. The Warrant Agent and the Company may by
     supplemental agreement make any changes or corrections in this Agreement:
     (i)

                                       20
<PAGE>

     that they shall deem appropriate to cure any ambiguity or to correct any
     defective or inconsistent provision or manifest mistake or error herein
     contained; or (ii) that they may deem necessary or desirable and which
     shall not adversely affect the interests of the holders of Warrant
     Certificates;

     (a)  provided, however, that this Agreement shall not otherwise be
          modified, supplemented or altered in any respect except with the
          consent in writing of the Registered Holders representing not less
          than 66-2/3% of the Warrants then outstanding; and

     (b)  provided, further, that no change in the number or nature of the
          securities purchasable upon the exercise of any Warrant, or to
          increase the Exercise Price therefor or to accelerate the Warrant
          Expiration Date shall be made without the consent in writing of the
          Registered Holder of the Warrant Certificate representing such
          Warrant, other than such changes as are presenting specifically
          prescribed by this Agreement as originally executed.

12.  NOTICES. All notices, requests, consents and other communications hereunder
     shall be in writing and shall be deemed to have been made when delivered or
     mailed first-class registered or certified mail, postage prepaid, as
     follows: if to the Registered Holder of a Warrant Certificate, at the last
     address of such holder as shown on the registry books maintained by the
     Warrant Agent; if to the Company at 5906 McIntyre Street, Golden, Colorado
     80403, Attention: CEO, or at such other address as may have been furnished
     to the Warrant Agent in writing by the Company; and if to the Warrant
     Agent, to the attention of the Compliance Department at 2 Broadway, 19th
     Floor, New York, NY 10004, or at such other address as any such party may
     have been furnished to the Company and the Warrant Agent in writing.

13.  GOVERNING LAW. This Agreement shall be governed by and construed in
     accordance with the laws of the State of California without reference to
     conflicts of laws or choice of law principles.

14.  BINDING EFFECT. This Agreement shall be binding upon and inure to the
     benefit of the Company, the Warrant Agent and their respective successors
     and assigns and the Registered Holders from time to time of Warrant
     Certificates or any of them. Nothing in this Agreement is intended or shall
     be construed to confer upon any other person any right, remedy or claim, in
     equity or at law, or to impose upon any other person any duty, liability or
     obligation.

15.  TERMINATION.

     (a)  This Agreement shall terminate at the close of business on the
          Expiration Date of all of the Warrants or such earlier date upon which
          all Warrants have been exercised or redeemed, except that the Warrant
          Agent shall

                                       21
<PAGE>

          account to the Company for all Warrants outstanding and all cash held
          by it and the provisions of Section 10 hereof shall survive such
          termination.

     (b)  The Company, at it sole discretion, may terminate this Agreement upon
          thirty (30) days prior written notice to the Warrant Agent.
          Termination of this Agreement will be without prejudice to the rights
          and obligations accrued pursuant to this Agreement or any other
          agreement between the Parties through the date of termination. The
          provisions of this Agreement survive its termination as set forth
          herein.

16.  COUNTERPARTS. This Agreement may be executed in several counterparts each
     of which shall be an original, but all of which taken together shall
     constitute a single instrument.

17.  HOLDERS OF WARRANTS NOT DEEMED SHAREHOLDERS. No holder of a Warrant, as
     such, shall be entitled to vote, receive dividends or be deemed the holder
     of Common Stock or any other securities of the Company which may at any
     time be issuable on the exercise of the Warrants represented thereby for
     any purpose whatever, nor shall anything contained herein or in any Warrant
     Certificate be construed to confer upon any holder of a Warrant, as such,
     any of the rights of a shareholder of the Company or any right to vote for
     the election of directors or upon any matter submitted to shareholders at
     any meeting thereof, or to give or withhold consent to any corporate action
     (whether upon any recapitalization, issuance of stock, reclassification of
     stock, change of par value or change of stock to no par value,
     consolidation, merger, conveyance or otherwise), or to receive notice of
     meetings or other actions affecting shareholders, or to receive dividend or
     subscription rights, or otherwise, until such Warrant shall have been
     exercised in accordance with the provisions hereof, including the receipt
     by the Company of the Exercise Price and any other amounts payable upon
     such exercise to the Warrant Agent.

18.  BENEFITS OF THIS AGREEMENT. Nothing in this Agreement or in the Warrant
     Certificates shall be construed to give to any person or corporation other
     than the Company, the Warrant Agent, and their respective successors and
     assigns hereunder and the Registered Holders of the Warrant Certificates
     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 Warrant Agent, their respective successors and assigns hereunder and
     the Registered Holders of the Warrant Certificates.

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

                                       22
<PAGE>

ATTEST:                                ISONICS CORPORATION

By:                                    By:
   ----------------------------           -----------------------------
Brantley J. Halstead, Secretary           James E. Alexander, President

ATTEST:                                CONTINENTAL STOCK TRANSFER & TRUST
                                       COMPANY, as Warrant Agent

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

                                       23
<PAGE>

Exhibit A

No. WB_____                                         VOID AFTER December 31, 2005

                                    WARRANTS

        CLASS B REDEEMAABLE WARRANT CERTIFICATE TO PURCHASE ONE SHARE OF
                 COMMON STOCK AND ONE CLASS C REDEEMABLE WARRANT

                               ISONICS CORPORATION

CUSIP # _________________

THIS CERTIFIES THAT, FOR VALUE RECEIVED ___________________________ or its
registered assigns (the "Registered Holder") is the owner of the number of Class
B Warrants (the "Warrants") specified above. Each Warrant initially entitles the
Registered Holder to purchase, subject to the terms and conditions set forth in
this Certificate and the Warrant Agreement (as hereinafter defined):

     one fully paid and nonassessable share of Common Stock of Isonics
     Corporation, a California corporation (the "Company"), and

     one Class C Redeemable Common Stock Purchase Warrant,

at any time commencing on the date hereof, and the earlier to occur of the
Expiration Date (as hereinafter defined) and the Redemption Date (as hereinafter
defined) upon the presentation and surrender of this Warrant Certificate with
the Subscription Form on the reverse hereof duly executed, at the corporate
office of Continental Stock Transfer & Trust Company, Inc., as Warrant Agent, or
its successor (the "Warrant Agent"), accompanied by payment of $1.50 per share,
subject to adjustment (the "Exercise Price"), in lawful money of the United
States of America in cash or by check made payable to the Warrant Agent for the
account of the Company.

     This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Amended and Restated Warrant Agreement (the "Warrant Agreement"),
dated December 12, 2000, amending and restating that warrant agreement dated as
of June 1, 2000, by and between the Company and the Warrant Agent.

     In the event of certain contingencies provided for in the Warrant
Agreement, the Exercise Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.

     Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrants represented hereby, the Company shall
cancel this Warrant Certificate

                                       24
<PAGE>

upon the surrender hereof and shall execute and deliver a new Warrant
Certificate or Warrant Certificates of like tenor, which the Warrant Agent shall
countersign, for the balance of such Warrants.

     The term "Expiration Date" shall mean 5:00 p.m. (New York time) on December
31, 2005. If each such date shall in the State of New York be a holiday or a day
on which banks located in the State of New York are authorized to close, then
the Expiration Date shall mean 5:00 p.m. (New York time) the next following day
which in the State of New York is neither a holiday nor a day on which such
banks are authorized to close.

     The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such securities
is effective or an exemption thereunder is available. The Company has covenanted
and agreed that it will file a registration statement under the Federal
securities laws, use its best efforts to cause the same to become effective, use
its best efforts to keep such registration statement current, if required under
the Act, following the date hereof and while any of the Warrants are
outstanding, and deliver a prospectus which complies with Section 10(a)(3) of
the Act to the Registered Holder exercising this Warrant; provided however, that
if at the time of exercise of any of the Warrants, the Company does not have in
place an effective registration statement or is otherwise, in the good faith
determination of the Board of Directors of the Company, precluded by applicable
laws from issuing the shares of Common Stock issuable upon such exercise, the
Company may, in lieu of issuance of those shares, elect to redeem the Warrants
duly surrendered for exercise for a price per Warrant equal to the difference
between the Market Price (as defined below) of a share of Common Stock on the
date of such submission and the Exercise Price, and in the event of such
redemption, the Company will pay to the Registered Holder the above-described
Redemption Price in cash within ten (10) business days after receipt of notice
from the Warrant Agent that such Warrants have been submitted for exercise. This
Warrant shall not be exercisable by a Registered Holder in any state where such
exercise would be unlawful.

     The term "Market Price" shall mean: (i) if the Common Stock is listed, or
admitted to unlisted trading privileges on a national securities exchange, or is
traded on the Nasdaq National Market or Nasdaq, the last reported closing sale
price on the five trading days prior to the date of the event to which such
Market Price relates, or, if no such reported closing sale takes place on such
date, then the average of the last reported closing sales prices for the last
five trading days before such date, in each case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
unlisted trading privileges or by the Nasdaq National Market or Nasdaq; or (ii)
if the Common Stock is not listed or admitted to unlisted trading privileges, on
any national securities exchange, or traded on the Nasdaq National Market or
Nasdaq, but is traded in the over-the-counter market, then the average of the
closing sale prices (or if closing sale prices are not reported, the average of
the last reported bid and asked prices) of the Common Stock reported by the
National Quotation Bureau, Inc. or similar bureau if the National Quotation
Bureau, Inc. is no longer reporting such

                                       25
<PAGE>

information on the date of the event to which such Market Price relates, and if
no such prices are reported on such date, then the average of the last so
reported bid and asked prices on the last five trading days on which such prices
are reported immediately preceding such date; or (iii) if the Common Stock is
neither listed, nor admitted to unlisted trading privileges on a national
securities exchange, nor traded on the Nasdaq National Market or Nasdaq, nor
traded in the over-the-counter market, then the fair market value of the Common
Stock, not less than the book value thereof, as of the date of the event to
which such Market Price relates, as determined in good faith (using customary
valuation methods) by the Board of Directors of the Company, which determination
shall be evidenced by a resolution of the Board of Directors and based on the
best information available to it.

     This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment and payment of any tax or other
charge imposed in connection therewith or incident thereto, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number of Warrants will
be issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.

     Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a shareholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.

     Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $0.10 per
Warrant, at any time during the term of this Warrant, provided that the last
reported closing sale price for the Common Stock as officially reported by the
Nasdaq SmallCap Market, if the Common Stock is then traded on the Nasdaq
SmallCap Market (or the last reported closing sale price on the Nasdaq National
Market or a national securities exchange, if the Common Stock is then traded on
the Nasdaq National Market or a national securities exchange, in each case as
officially reported by the Nasdaq National Market or such national securities
exchange, or, if the Common Stock is not then traded on the Nasdaq SmallCap
Market, the Nasdaq National Market or a national securities exchange, but is
then traded in the over-the-counter market, then the average of the last
reported bid and asked prices of the Common Stock reported by the National
Quotation Bureau, Inc. or similar bureau if the National Quotation Bureau, Inc.
is no longer reporting such information), shall have equaled or exceeded $3.75
per share for at least twenty (20) of the thirty (30) consecutive trading days
ending not later than the third day prior to the date on which the Notice of
Redemption, as defined below, is given (subject to adjustment in the event of
any stock splits or other similar events). Notice of redemption

                                       26
<PAGE>

(the "Notice of Redemption") shall be given not later than the thirtieth (30th)
day before the date fixed for redemption, or as provided in the Warrant
Agreement. On and after the date fixed for redemption, the Registered Holder
shall have no rights with respect to the Warrants except to receive the $0.10
per Warrant upon surrender of this Warrant Certificate.

     Prior to due presentment for registration of transfer hereof, the Company
and the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and the
Company's right so to treat the Registered Holder shall not be affected by any
notice to the contrary, except as provided in the Warrant Agreement.

     This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of California without reference to conflict of laws
or choice of law principles.

     This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.

     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile, by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.

Dated:

[SEAL]                        ISONICS CORPORATION

By:                                    By:
   ----------------------------           --------------------------
Brantley J. Halstead, Secretary        James E. Alexander, President

COUNTERSIGNED:

CONTINENTAL STOCK TRANSFER AND TRUST COMPANY
as Warrant Agent

By:
   -----------------------------
   Authorized Officer

                                       27
<PAGE>

SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO EXERCISE WARRANTS

The undersigned Registered Holder hereby irrevocably elects to exercise ________
Warrants represented by this Warrant Certificate, and to purchase the securities
issuable upon the exercise of such Warrants, and requests that certificates for
such securities shall be issued in the name of (PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER):

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

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

-------------------------------
(please print or type name and address)

and be delivered to

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

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

-------------------------------
(please print or type name and address)

and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.

Dated:
      -----------------------          -----------------------------------------
                                       (PLEASE SIGN NAME AS IT APPEARS ON THE
                                       FRONT OF THE CERTIFICATE)

ASSIGNMENT
TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO ASSIGN WARRANTS

FOR VALUE RECEIVED, __________________ hereby sells, assigns and transfers unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)

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

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

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

-------------------------------
(please print or type name and address)

________________________________________________________________ of the Warrants
represented by this Warrant Certificate, and hereby irrevocably constitutes and
appoints ____________________________________Attorney to transfer this Warrant
Certificate on the books of the Company, with full power of substitution in the
premises.

                                       28
<PAGE>

Dated:
      -----------------------          -----------------------------------------
                                       (PLEASE SIGN NAME AS IT APPEARS ON THE
                                       FRONT OF THE CERTIFICATE)

-----------------------------
Signature Guaranteed

THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S)
MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS, AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

                                       29
<PAGE>

Exhibit B

No. WC_____                                         VOID AFTER December 31, 2005

                                    WARRANTS

  CLASS C REDEEMABLE WARRANT CERTIFICATE TO PURCHASE ONE SHARE OF COMMON STOCK

                               ISONICS CORPORATION

CUSIP # _________________

THIS CERTIFIES THAT, FOR VALUE RECEIVED ___________________________ or its
registered assigns (the "Registered Holder") is the owner of the number of Class
C Redeemable Warrants (the "Warrants") specified above. Each Warrant initially
entitles the Registered Holder to purchase, subject to the terms and conditions
set forth in this Certificate and the Warrant Agreement (as hereinafter
defined):

     one fully paid and nonassessable share of Common Stock of Isonics
     Corporation, a California corporation (the "Company"),

at any time commencing on the date hereof, and the earlier to occur of the
Expiration Date (as hereinafter defined) and the Redemption Date (as hereinafter
defined) upon the presentation and surrender of this Warrant Certificate with
the Subscription Form on the reverse hereof duly executed, at the corporate
office of Continental Stock Transfer & Trust Company, Inc., as Warrant Agent, or
its successor (the "Warrant Agent"), accompanied by payment of $2.50 per share,
subject to adjustment (the "Exercise Price"), in lawful money of the United
States of America in cash or by check made payable to the Warrant Agent for the
account of the Company.

     This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated December 12,
2000, amending and restating that warrant agreement dated June 1, 2000, by and
between the Company and the Warrant Agent.

     In the event of certain contingencies provided for in the Warrant
Agreement, the Exercise Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.

     Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrants represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and shall execute and
deliver a new Warrant Certificate or Warrant Certificates of like tenor, which
the Warrant Agent shall countersign, for the

                                       30
<PAGE>

balance of such Warrants.

     The term "Expiration Date" shall mean 5:00 p.m. (New York time) on (i)
December 31, 2005; or (ii) the date fixed for redemption hereof, whichever date
is earlier. If each such date shall in the State of New York be a holiday or a
day on which banks located in the State of New York are authorized to close,
then the Expiration Date shall mean 5:00 p.m. (New York time) the next following
day which in the State of New York is neither a holiday nor a day on which such
banks are authorized to close.

     The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such securities
is effective or an exemption thereunder is available. The Company has covenanted
and agreed that it will file a registration statement under the Federal
securities laws, use its best efforts to cause the same to become effective, use
its best efforts to keep such registration statement current, if required under
the Act, following the date hereof and while any of the Warrants are
outstanding, and deliver a prospectus which complies with Section 10(a)(3) of
the Act to the Registered Holder exercising this Warrant; provided however, that
if at the time of exercise of any of the Warrants, the Company does not have in
place an effective registration statement or is otherwise, in the good faith
determination of the Board of Directors of the Company, precluded by applicable
laws from issuing the shares of Common Stock issuable upon such exercise, the
Company may, in lieu of issuance of those shares, elect to redeem the Warrants
duly surrendered for exercise for a price per Warrant equal to the difference
between the Market Price (as defined below) of a share of Common Stock on the
date of such submission and the Exercise Price, and in the event of such
redemption, the Company will pay to the Registered Holder the above-described
redemption price in cash within ten (10) business days after receipt of notice
from the Warrant Agent that such Warrants have been submitted for exercise. This
Warrant shall not be exercisable by a Registered Holder in any state where such
exercise would be unlawful.

     The term "Market Price" shall mean: (i) if the Common Stock is listed, or
admitted to unlisted trading privileges on a national securities exchange, or is
traded on the Nasdaq National Market or Nasdaq, the last reported closing sale
price on the five trading days prior to the date of the event to which such
Market Price relates, or, if no such reported closing sale takes place on such
date, then the average of the last reported closing sales prices for the last
five trading days before such date, in each case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
unlisted trading privileges or by the Nasdaq National Market or Nasdaq; or (ii)
if the Common Stock is not listed or admitted to unlisted trading privileges, on
any national securities exchange, or traded on the Nasdaq National Market or
Nasdaq, but is traded in the over-the-counter market, then the average of the
closing sale prices (or if closing sale prices are not reported, the average of
the last reported bid and asked prices) of the Common Stock reported by the
National Quotation Bureau, Inc. or similar bureau if the National Quotation
Bureau, Inc. is no longer reporting such information on the date of the event to
which such Market Price relates, and if no such

                                       31
<PAGE>

prices are reported on such date, then the average of the last so reported bid
and asked prices on the last five trading days on which such prices are reported
immediately preceding such date; or (iii) if the Common Stock is neither listed,
nor admitted to unlisted trading privileges on a national securities exchange,
nor traded on the Nasdaq National Market or Nasdaq, nor traded in the
over-the-counter market, then the fair market value of the Common Stock, not
less than the book value thereof, as of the date of the event to which such
Market Price relates, as determined in good faith (using customary valuation
methods) by the Board of Directors of the Company, which determination shall be
evidenced by a resolution of the Board of Directors and based on the best
information available to it.

     This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment and payment of any tax or other
charge imposed in connection therewith or incident thereto, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number of Warrants will
be issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.

     Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a shareholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.

     Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $0.10 per
Warrant, at any time during the term of this Warrant, provided that the last
reported closing sale price for the Common Stock as officially reported by the
Nasdaq SmallCap Market, if the Common Stock is then traded on the Nasdaq
SmallCap Market (or the last reported closing sale price on the Nasdaq National
Market or a national securities exchange, if the Common Stock is then traded on
the Nasdaq National Market or a national securities exchange, in each case as
officially reported by the Nasdaq National Market or such national securities
exchange, or, if the Common Stock is not then traded on the Nasdaq SmallCap
Market, the Nasdaq National Market or a national securities exchange, but is
then traded in the over-the-counter market, then the average of the last
reported bid and asked prices of the Common Stock reported by the National
Quotation Bureau, Inc. or similar bureau if the National Quotation Bureau, Inc.
is no longer reporting such information), shall have equaled or exceeded $3.75
per share for at least twenty (20) of the thirty (30) consecutive trading days
ending not later than the third day prior to the date on which the Notice of
Redemption, as defined below, is given (subject to adjustment in the event of
any stock splits or other similar events). Notice of redemption (the "Notice of
Redemption") shall be given not later than the thirtieth (30th) day before

                                       32
<PAGE>

the date fixed for redemption, or as provided in the Warrant Agreement. On and
after the date fixed for redemption, the Registered Holder shall have no rights
with respect to the Warrants except to receive the $0.10 per Warrant upon
surrender of this Warrant Certificate.

     Prior to due presentment for registration of transfer hereof, the Company
and the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and the
Company's right so to treat the Registered Holder shall not be affected by any
notice to the contrary, except as provided in the Warrant Agreement.

     This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of California without reference to conflict of laws
or choice of law principles.

     This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.

     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile, by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.

Dated:

[SEAL]                        ISONICS CORPORATION

By:                                    By:
   ----------------------------           --------------------------
Brantley J. Halstead, Secretary        James E. Alexander, President

COUNTERSIGNED:

CONTINENTAL STOCK TRANSFER AND TRUST COMPANY
as Warrant Agent

By:
   ----------------------------
   Authorized Officer

                                       33
<PAGE>

SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO EXERCISE WARRANTS

The undersigned Registered Holder hereby irrevocably elects to exercise ________
Warrants represented by this Warrant Certificate, and to purchase the securities
issuable upon the exercise of such Warrants, and requests that certificates for
such securities shall be issued in the name of (PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER):

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

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

-------------------------------
(please print or type name and address)

and be delivered to

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

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

-------------------------------
(please print or type name and address)

and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.

Dated:
      ------------------------         -------------------------------
                                       (PLEASE SIGN NAME AS IT APPEARS ON THE
                                       FRONT OF THE CERTIFICATE)

ASSIGNMENT
TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO ASSIGN WARRANTS

FOR VALUE RECEIVED, __________________ hereby sells, assigns and transfers unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)

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

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

-------------------------------
(please print or type name and address)

________________________________________________________________ of the Warrants
represented by this Warrant Certificate, and hereby irrevocably constitutes and
appoints ____________________________________Attorney to transfer this Warrant
Certificate on the books of the Company, with full power of substitution in the
premises.

                                       34
<PAGE>

Dated:
      ------------------------         -------------------------------
                                       (PLEASE SIGN NAME AS IT APPEARS ON THE
                                       FRONT OF THE CERTIFICATE)

----------------------------------
Signature Guaranteed

THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S)
MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS, AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

                                       35

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