Document:

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THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER FEDERAL OR
APPLICABLE STATE SECURITIES LAWS AND INSTEAD ARE BEING ISSUED PURSUANT TO
EXEMPTIONS CONTAINED IN SAID LAWS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH
RESPECT TO SUCH SECURITIES SHALL BE EFFECTIVE UNDER THE SECURITIES ACT OF 1933
(THE "SECURITIES ACT") OR (2) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO IT THAT NO VIOLATION OF THE SECURITIES ACT OR
SIMILAR STATE ACTS WILL BE INVOLVED IN SUCH TRANSFER; PROVIDED THAT IN THE EVENT
SUCH SECURITIES ARE TRANSFERRED PURSUANT TO RULE 144, OR ANY SUCCESSOR RULE,
UNDER THE SECURITIES ACT, NO SUCH OPINION SHALL BE REQUIRED UNLESS REQUESTED IN
WRITING BY THE TRANSFER AGENT OF SUCH SECURITIES. THE SECURITIES EVIDENCED
HEREBY ARE SUBJECT TO THE TERMS OF A CERTAIN SECURITIES PURCHASE AGREEMENT
PROVIDING, AMONG OTHER THINGS, FOR CERTAIN RESTRICTIONS ON TRANSFER WITHOUT THE
CONSENT OF THE COMPANY. A COPY OF SUCH SECURITIES PURCHASE AGREEMENT MAY BE
OBTAINED UPON WRITTEN REQUEST TO THE COMPANY.

                                     WARRANT

                                       TO

                              PURCHASE COMMON STOCK

                                       OF

                            RAKO CAPITAL CORPORATION

          This certifies that, for good and valuable consideration, Rako Capital
Corporation, a Nevada corporation (the "Company"), grants to Stanford Venture
Capital Holdings, Inc.. or its registered assigns (the "Warrantholder"), the
right to subscribe for and purchase from the Company the number of duly
authorized and validly issued fully paid and non-assessable shares of common
stock, par value $0.001 per share, of the Company (the "Common Stock") set forth
in Subsection 1.1 at the Exercise Price (as defined in Subsection 1.2). This
Warrant shall be exercisable at any time, and from time to time, from and after
the date hereof (the "Initial Exercise Date") to and including 5:00 P.M.,
Central Standard Time on the date that is five years after the Initial Exercise
Date (the "Expiration Date"). The Exercise Price and the number of Warrant
Shares are subject to adjustment from time to time as provided in Section 6.

SECTION 1.  NUMBER OF WARRANT SHARES; EXERCISE PRICE.

     1.1. NUMBER OF WARRANT SHARES. The Warrantholder shall initially have the
right to subscribe for and purchase hereunder 210,329 shares of Common Stock
(the "Warrant Shares"). The number of Warrant Shares that the Warrantholder
shall have the right to subscribe for and purchase from the Company is subject
to adjustment as provided in Section 6.

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     1.2. EXERCISE PRICE. The exercise price per Warrant Share shall be $2.50,
subject to adjustment as provided in Section 6 (the "Exercise Price").

SECTION 2.  DURATION AND EXERCISE OF WARRANT; LIMITATION ON EXERCISE; TAXES;
            TRANSFER; DIVISIBILITY.

     2.1. DURATION AND EXERCISE OF WARRANT. This Warrant is immediately
exercisable on the Initial Exercise Date and may be exercised, in whole or in
part, at any time and from time to time from and after the Initial Exercise Date
to the Expiration Date. The rights represented by this Warrant may be exercised
by the Warrantholder of record, in whole or in part, from time to time, by (a)
surrender of this Warrant, accompanied by the Exercise Form annexed hereto (the
"Exercise Form") duly executed by the Warrantholder of record and specifying the
number of Warrants Shares to be purchased to the Company at the office of the
Company located at Two North College Avenue, Fayetteville, AR 72701, Attention:
Lisa Trammell (or such other office or agency of the Company as it may designate
by notice to the Warrantholder at the address of such Warrantholder appearing on
the books of the Company), during normal business hours on any day (a "Business
Day") other than a Saturday, Sunday or a day on which the New York Stock
Exchange is authorized to close (a "Nonbusiness Day"), or after 9:00 A.M.
Central Standard Time on the Initial Exercise Date, but not later than 5:00 P.M.
Central Standard Time on the Expiration Date (or 5:00 P.M. on the next
succeeding Business Day, if the Expiration Date is a Nonbusiness Day), (b)
payment of the Exercise Price by delivery to the Company of (i) cash or
certified or official bank check in New York Clearing House Funds, of an amount
equal to the Exercise Price for the number of Warrant Shares specified in the
Exercise Form, and/or (ii) notice that the Warrantholder elects to effect a
cashless exercise as contemplated by Subsection 2.6, and (c) such documentation
as to the identity and authority of the Warrantholder as the Company may
reasonably request. Such Warrant Shares shall be deemed by the Company to be
issued to the Warrantholder as the record holder of such Warrant Shares as of
the close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid. Certificates
for the Warrant Shares specified in the Exercise Form shall be delivered to the
Warrantholder as promptly as practicable, and in any event within ten (10)
Business Days, thereafter. The stock certificates so delivered shall be in
denominations as may be specified by the Warrantholder and shall be issued in
the name of the Warrantholder or, if permitted by Subsection 2.4 and in
accordance with the provisions thereof, such other name as shall be designated
in the Exercise Form. If this Warrant shall have been exercised only in part,
the Company shall, at the time of delivery of the certificates for the Warrant
Shares, deliver to the Warrantholder a new Warrant evidencing the rights to
purchase the remaining Warrant Shares, which new Warrant shall in all other
respects be identical with this Warrant. No adjustments or payments shall be
made on or in respect of Warrant Shares issuable on the exercise of this Warrant
for any cash dividends paid or payable to holders of record of Common Stock
prior to the date as of which the Warrantholder shall be deemed to be the record
holder of such Warrant Shares.

     2.2. LIMITATION ON EXERCISE. If this Warrant is not exercised prior to 5:00
P.M. Central Standard Time on the Expiration Date (or the next succeeding
Business Day, if the Expiration Date is a Nonbusiness Day), this Warrant, or any
new Warrant issued pursuant to Subsection 2.1, shall cease to be exercisable and
shall become void, and all rights of the Warrantholder hereunder shall cease.

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     2.3. PAYMENT OF TAXES. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect of
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.

     2.4. RESTRICTIONS ON TRANSFER. Other than transfers to Affiliates (as that
term is defined in the Company's Stockholders Agreement), neither this Warrant
nor any of the Warrant Shares may be transferred or sold, in whole or in part,
without the prior written consent of the Company and except in compliance with
applicable United States federal and state securities laws. Subject to the
foregoing, this Warrant and all rights hereunder are transferable, in whole or
in part, by the Warrantholder and any such transfer is registrable at the office
of the Company referred to in Subsection 7.5(a) by the Warrantholder in person
or by its duly authorized attorney, upon surrender of this Warrant in accordance
with Section 4. The Company may not transfer or assign any of its rights or
obligations under this Warrant, or any portion thereof.

     2.5. DIVISIBILITY OF WARRANT. This Warrant may be divided into multiple
warrants upon surrender at the office of the Company referred to in Subsection
7.5(a) on any Business Day, without charge to the Warrantholder.

     2.6. CASHLESS EXERCISE. At the option of the Warrantholder, the
Warrantholder may exercise this Warrant, without a cash payment of the Exercise
Price, through a reduction in the number of Warrant Shares issuable upon the
exercise of the Warrant. Such reduction may be effected by designating that the
number of the shares of Common Stock issuable to the Warrantholder upon such
exercise shall be reduced by the number of shares having an aggregate Fair
Market Value as of the date of exercise equal to the amount of the total
Exercise Price for such exercise. For purposes of this Warrant, the "Fair Market
Value" of the Common Stock on any date in question shall be the average closing
sale price of the Common Stock on the principal stock exchange, stock market or
quotation market on which the Common Stock is traded for the thirty (30)
Business Days immediately preceding such date, as quoted in The Wall Street
Journal or other nationally recognized, reputable publication. If the Common
Stock is not listed or qualified for trading or quotation on a stock exchange or
stock market or national quotation system at such time, then the Fair Market
Value shall be determined using such method as the Warrantholder and the Company
shall agree. In connection with any cashless exercise, no cash or other
consideration will be paid by the Warrantholder in connection with such exercise
other than the surrender of the Warrant itself, and no commission or other
remuneration will be paid or given by the Warrantholder or the Company in
connection with such exercise.

SECTION 3.  RESERVATION OF SHARES.

     All Warrant Shares issued upon the exercise of the rights represented by
this Warrant, upon issuance and payment of the Exercise Price in accordance with
the terms of this Warrant, shall be validly issued, fully paid and
non-assessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issuance thereof other than taxes in
respect of any transfer occurring contemporaneously with such issuance. The
issuance of the

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Warrant Shares pursuant hereto will not be subject to, and will not violate, any
preemptive or similar rights. During the period within which this Warrant may be
exercised, the Company shall at all times have authorized and reserved, and keep
available and free from preemptive or similar rights, a sufficient number of
shares of Common Stock to provide for the exercise of this Warrant and of all
other options or rights to purchase or subscribe for Common Stock and the
conversion or exchange of all convertible or exchangeable securities of the
Company.

SECTION 4.  EXCHANGE, LOSS OR DESTRUCTION OF WARRANT.

     If permitted by Subsection 2.4 or 2.5, upon surrender of this Warrant to
the Company with a duly executed instrument of assignment and funds sufficient
to pay any transfer tax, the Company shall, without charge, execute and deliver
a new Warrant of like tenor in the name of the assignee named in such instrument
of assignment and this Warrant shall promptly be canceled. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor.

SECTION 5.  OWNERSHIP OF WARRANT.

     The Company may deem and treat the person or entity in whose name this
Warrant is registered as the holder and owner hereof (notwithstanding any
notations of ownership or writing hereon made by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer as provided in
Subsections 2.1 and 2.5 or in Section 4.

SECTION 6.  CERTAIN ADJUSTMENTS.

     The Exercise Price at which Warrant Shares may be purchased hereunder and
the number of Warrant Shares to be purchased upon exercise hereof are subject to
change or adjustment as follows:

     6.1. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly send by first class mail, postage prepaid, to the
Warrantholder, notice of such adjustment.

     6.2. PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION. In case of
any consolidation of the Company with or merger of the Company with or into
another entity or in case of any sale, transfer or lease to another entity of
all or substantially all the assets or stock of the Company, the Warrantholder
shall have the right thereafter upon payment of the Exercise Price in effect
immediately prior to such action to receive upon exercise of this Warrant the
kind and amount of shares and other securities and property which such holder
would have been entitled to receive after the happening of such consolidation,
merger, sale, transfer or lease had this Warrant been exercised immediately
prior to such action, and the Company or such successor or purchasing entity, as
the case may be, shall execute with the Warrantholder an agreement to that
effect. Such agreement shall provide for

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adjustments, which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 6. The provisions of this Subsection
6.2 shall apply similarly to successive consolidations, mergers, sales,
transfers or leases.

     6.3. ADJUSTMENTS.

          (a)     Stock Dividends, Distributions or Subdivisions. In the event
                  the Company at any time or from time after the date hereof
                  shall issue additional shares of Common Stock pursuant to a
                  stock dividend, stock distribution, subdivision, share split
                  or reclassification, then, and in each such case, concurrently
                  with the effectiveness of such event, the Exercise Price in
                  effect immediately prior to such event shall be
                  proportionately decreased with the number of Warrant Shares
                  purchasable upon exercise of this Warrant immediately prior to
                  such event shall be proportionately increased.

          (b)     Combinations or Consolidations. In the event the outstanding
                  shares of Common Stock shall be combined or consolidated, by
                  reclassification, reverse split or otherwise, into a lesser
                  number of shares of Common Stock, concurrently with the
                  effectiveness of such event, the Exercise Price in effect
                  immediately prior to such event shall be proportionately
                  increased and the number of Warrant Shares purchasable upon
                  exercise of this Warrant immediately prior to such event shall
                  be proportionately decreased.

          (c)     Issuance of Additional Shares of Common Stock.

                  (i)     In the event the Company at any time or from time to
                          time after the date hereof shall issue or sell
                          Additional Shares (as defined below) without
                          consideration or for a consideration per share less
                          than the Exercise Price in effect immediately prior to
                          the issuance, then the Exercise Price shall be reduced
                          to the price at which such Additional Shares are
                          issued. The total number of shares of Common Stock to
                          be purchased under the Warrant shall be increased by
                          dividing the new Exercise Price into the aggregate
                          exercise amount of the Warrant prior to the lowering
                          of the Exercise Price.

                  (ii)    In the event the Company shall issue Additional Shares
                          for a consideration per share less than the Fair
                          Market Value of the Common Stock as of the date of
                          such issuance, but greater than the Exercise Price in
                          effect immediately prior to the issuance, then the
                          Exercise Price shall be reduced (but in no event
                          increased) to the amount determined by multiplying
                          such Exercise Price by a fraction:

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                          (A)    the numerator of which is the number of shares
                                 of Common Stock outstanding immediately prior
                                 to the issuance of such Additional Shares plus
                                 the number of shares of Common Stock that the
                                 aggregate consideration, if any, received by
                                 the Company for the Additional Shares so issued
                                 would purchase at a price equal to the Fair
                                 Market Value of the Common Stock as of the date
                                 of issuance; and

                          (B)    the denominator of which is the number of
                                 shares of Common Stock outstanding immediately
                                 prior to the issuance of such Additional Shares
                                 plus the number of Additional Shares so issued.
                                 The total number of shares of Common Stock to
                                 be purchased under the Warrant shall be
                                 increased by dividing the new Exercise Price
                                 into the aggregate exercise amount of the
                                 Warrant prior to the lowering of the Exercise
                                 Price.

                  (iii)   If the Company issues Common Stock for a consideration
                          in whole or in part other than cash, the consideration
                          other than cash shall be deemed to be the fair value
                          thereof as determined by mutual agreement of the
                          Warrantholder and the Company.

                  (iv)    If the Company issues options or rights to purchase or
                          subscribe for Common Stock, securities convertible
                          into or exchangeable for Common Stock or options or
                          rights to purchase or subscribe for such convertible
                          or exchangeable securities, the following provisions
                          shall apply for all purposes of calculating the number
                          of shares of Common Stock outstanding under this
                          Subsection 6.3 upon the Exercise of the Warrants:

                          (A)    The aggregate maximum number of shares of
                                 Common Stock deliverable upon exercise
                                 (assuming the satisfaction of any conditions to
                                 exercisability including, without limitation,
                                 the passage of time, but without taking into
                                 account potential antidilution adjustments) of
                                 such options or rights to purchase or subscribe
                                 for Common Stock shall be deemed to have been
                                 issued at the time such options or rights were
                                 issued and for a consideration equal to the
                                 consideration, if any, received by the Company
                                 upon the issuance of such options or rights
                                 plus the exercise price provided in such
                                 options or rights (without taking into account
                                 potential antidilution adjustments) for the
                                 Common Stock covered thereby.

                          (B)    The aggregate maximum number of shares of
                                 Common Stock deliverable upon conversion of or
                                 in exchange

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                                 (assuming the satisfaction of any conditions to
                                 convertibility or exchangeability, including,
                                 without limitation, the passage of time, but
                                 without taking into account potential
                                 antidilution adjustments) for any such
                                 convertible or exchangeable securities, or
                                 options or rights to purchase or subscribe
                                 therefore, shall be deemed to have been issued
                                 at the time such securities were issued or such
                                 options or rights were issued and for
                                 consideration equal to the consideration, if
                                 any, received by the Company for any such
                                 securities and related options or rights
                                 (excluding any cash received on account of
                                 accrued interest or accrued dividends), plus
                                 the additional consideration, if any, to be
                                 received by the Company (without taking into
                                 account potential antidilution adjustments)
                                 upon the conversion or exchange of such
                                 securities or the exercise of any related
                                 options or rights.

                          (C)    In the event of any change in the number of
                                 shares of Common Stock deliverable or in the
                                 consideration payable to the Company upon
                                 exercise of such options or rights or upon
                                 conversion of or in exchange for such
                                 convertible or exchangeable securities,
                                 including, but not limited to, a change
                                 resulting from the antidilution provisions
                                 thereof, the Exercise Price, to the extent
                                 previously adjusted upon the issuance of such
                                 options, rights or securities, shall be
                                 readjusted to reflect such change, but no
                                 further adjustment shall be made for the actual
                                 issuance of Common Stock or any payment of such
                                 consideration upon the exercise of any such
                                 options or rights or the conversion or exchange
                                 of such securities.

                          (D)    Upon the expiration of any such options or
                                 rights, the termination of any such rights to
                                 convert or exchange or the expiration of any
                                 options or rights related to such convertible
                                 or exchangeable securities, the Exercise Price,
                                 to the extent previously adjusted upon the
                                 issuance of such options, rights or securities
                                 or options or rights related to such
                                 securities, shall be readjusted to reflect the
                                 issuance of only the number of shares of Common
                                 Stock (and convertible or exchangeable
                                 securities which remain in effect) actually
                                 issued upon the exercise of such options or
                                 rights, upon the conversion or exchange of such
                                 securities or upon the exercise of the options
                                 or rights related to such securities.

                          (E)    The number of shares of Common Stock deemed
                                 issued

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                                 and the consideration deemed paid therefore
                                 pursuant to Subsections 6.3(c)(iv)(A) and (B)
                                 shall be appropriately adjusted to reflect any
                                 change, termination or expiration of the type
                                 described in either Subsection 6.3(c)(iv)(C) or
                                 (D).

                          (F)    Notwithstanding the foregoing provisions of
                                 this Subsection 6.3(c)(iv), the adjustments
                                 required by this Subsection 6.3 with respect to
                                 the issuance of options under employee benefit
                                 plans of the Company shall be made, in the
                                 aggregate, only after the Warrantholder has
                                 notified the Company that it intends to
                                 exercise this Warrant, in whole or in part, at
                                 which time the required adjustments shall be
                                 made with respect to all such options that
                                 shall have been issued on or prior to the date
                                 of such notice and remain outstanding (it being
                                 understood that if any such options are
                                 actually exercised prior thereto, the
                                 appropriate adjustments, if any, shall be made
                                 pursuant to the applicable provision of this
                                 subsection 6.3(c) at the time of exercise).

                  (v)     "Additional Shares" shall mean any shares of Common
                          Stock issued (or deemed to have been issued as
                          contemplated by Subsection 6.3(c)(iv)) by the Company
                          on or after the date of this Warrant other than (i)
                          the Common Stock issued upon exercise of the Warrants,
                          (ii) the issuance and sale of, or the grant of options
                          to purchase up to 500,000 shares (subject to
                          adjustment in accordance with Section 6.3(a) or (b))
                          of Common Stock, after the date of this Warrant, to
                          employees, directors or officers of, or bona fide
                          consultants to, the Company pursuant to stock plans or
                          options or agreements adopted or approved by the
                          Company's Board of Directors, and (iii) Common Stock
                          issued pursuant to the exercise of any stock option,
                          warrant or other right to purchase Common Stock
                          outstanding on the date of this Warrant.

                  (vi)    "Warrants" shall mean the warrants to purchase shares
                          of Common Stock issued by the Company pursuant to the
                          Securities Purchase Agreement (as defined below).

SECTION 7.  MISCELLANEOUS.

     7.1. ENTIRE AGREEMENT. This Warrant was issued pursuant to the terms and
conditions of a certain Securities Purchase Agreement, of even date herewith, by
and between the Company and the Warrantholder (the "Securities Purchase
Agreement"). This Warrant, the Registration Rights Agreement and the Securities
Purchase Agreement constitute the entire agreement between the Company and the
Warrantholder with respect to this Warrant and the Warrant Shares.

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     7.2. BINDING EFFECTS; BENEFITS. This Warrant shall inure to the benefit of
and shall be binding upon the Company, the Warrantholder, and each of their
respective heirs, legal representatives, successors and assigns. Nothing in this
Warrant, expressed or implied, is intended to or shall confer on any person
entity other than the Company, the Warrantholder, and each of their respective
heirs, legal representatives, successors or assigns, any rights, remedies,
obligations or liabilities under or by reason of this Warrant.

     7.3 TRANSFER RESTRICTIONS; ASSIGNMENT. Except as otherwise provided herein,
this Warrant may not be transferred, in whole or in part, without the prior
written consent of the Company, which may be given or withheld in the Company's
sole discretion.

     7.4. AMENDMENTS. This Warrant may not be modified or amended except by a
written instrument signed by the Company and the Warrantholder.

     7.3. SECTION AND OTHER HEADINGS. The section and other headings contained
in this Warrant are for reference purposes only and shall not be deemed to be a
part of this Warrant or to affect the meaning or interpretation of this Warrant.

     7.4. FURTHER ASSURANCES. Each of the Company and the Warrantholder shall do
and perform all such further acts and things and execute and deliver all such
other certificates, instruments and/or documents as any party hereto may
reasonably request in connection with the performance of the provisions of this
Warrant.

     7.5. NOTICES. All demands, requests, notices, and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally, sent by
confirmed facsimile or sent by United States certified or registered first class
mail, postage prepaid, to the parties hereto at the following addresses or at
such other address as any party hereto shall hereafter specify by notice to the
other party hereto:

          (a) if to the Company, addressed to:

              Rako Capital Corporation
              Two North College Avenue
              Fayetteville, AR 72701
              Attention:  Lisa Trammell
              Telephone No.:  (479) 684-2700
              Facsimile No.:  (479) 684-2799

          (b) If to the Warrantholder or any other holder, addressed to the
              address of such person appearing on the books of the Company.

Except as otherwise provided herein, all such demands, requests, notices and
other communications shall be deemed to have been received on the date of
personal delivery thereof, the sending of confirmed facsimile thereof or on the
third Business Day after the mailing thereof.

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     7.6. SEPARABILITY. Any term or provision of this Warrant which is invalid
or unenforceable in any jurisdiction shall be ineffective in such jurisdiction
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable any other term or provision of this Warrant or affecting the
validity or enforceability of any of the terms or provisions of this Warrant in
any other jurisdiction.

     7.7. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the Fair Market Value of a share of Common Stock as of the date of
such exercise.

     7.8. GOVERNING LAW; CONSENT TO JURISDICTION. This Warrant shall be governed
by, and construed in accordance with, the laws of the State of New York (without
giving effect to any choice or conflict of law provisions). Each of the parties
hereby irrevocably and unconditionally submits to the jurisdiction of the courts
of the State of New York and of the federal courts sitting in the State of New
York in all actions or proceedings arising out of or relating to this Warrant.
Each of the parties agrees that all actions or proceedings arising out of or
relating to this Warrant must be litigated exclusively in any state or federal
court in the City of New York, and accordingly, each party irrevocably waives
any objection which it may now or hereafter have to the laying of the venue of
any such litigation in any such court. Each of the parties hereby irrevocably
and unconditionally waives its right to a jury trial in any action arising out
of or relating to this Warrant.

     7.9. EQUITABLE RELIEF. The Company recognizes that, in the event the
Company fails to perform, observe or discharge any of its obligations or
liabilities under this Warrant, any remedy of law may prove to be inadequate
relief to the Warrantholder or any other holder, and therefore, the Company
agrees that the Warrantholder or any other holder, if it so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages, in addition to any other remedies that
may be available to it at law or in equity.

     7.10. EXPENSES AND ATTORNEYS' FEES. If, at any time or times, whether prior
or subsequent to the date hereof, the Warrantholder employs counsel for advice
or other representation or incurs reasonable legal and/or other costs and
expenses in connection with:

          (a)     the amendment, waiver or modification of any provision of this
                  Warrant;

          (b)     any litigation, contest, dispute, suite, proceeding or action
                  (whether instituted by the Warrantholder, the Company or any
                  other person) in any way relating to this Warrant, unless a
                  court of competent jurisdiction finds in favor of the Company
                  as the prevailing party, and awards court costs and attorneys'
                  fees to the Company as such prevailing party; or

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          (c)     any attempt to enforce any rights of the Warrantholder against
                  the Company or any other person that may be obligated to the
                  Warrantholder by virtue of this Warrant in accordance with the
                  terms of this Warrant;

then, in any such event, the reasonable attorneys' fees arising from such
services and all reasonable expenses, costs, charges, and fees of counsel or of
the Warrantholder in any way or respect arising in connection with or relating
to any of the events or actions described in this subsection shall be payable on
demand by the Company, to the Warrantholder.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the Company and the Warrantholder have caused this
Warrant to be signed by their duly authorized officers as of the 8th day of
April, 2003.

                                       RAKO CAPITAL CORPORATION

                                       By: /s/ Gary Fuchs
                                          -------------------------------------
                                          Gary Fuchs, Chief Executive Officer

                                       WARRANTHOLDER
                                       Stanford Venture Capital Holdings, Inc.

                                       By: /s/ James M. Davis
                                          -------------------------------------
                                          James M. Davis, President

                                       12
<PAGE>

                            RAKO CAPITAL CORPORATION

                              WARRANT EXERCISE FORM

                     (To be executed upon exercise Warrant)

     The undersigned, the record holder of this Warrant, hereby irrevocably
elects to exercise the right, represented by this Warrant, to purchase _________
of the Warrant Shares and herewith pays the Exercise Price in accordance with
the terms of this Warrant by (check applicable boxes):

     [ ] tendering payment for such Warrant Shares to the order of RAKO CAPITAL
CORPORATION in the amount of $______________.

     [ ] surrendering the undersigned's purchase rights with respect to ______
Warrant Shares, having an aggregate Fair Market Value as of the date of this
exercise of $________________, which equals or exceeds the aggregate Exercise
Price of the Warrant Shares being purchased, as permitted by subsection 2.6 of
the Warrant. (The Company shall refund to the Warrantholder in cash any such
excess value, not to exceed 99.9% of the Fair Market Value of one share of
Common Stock).

     The undersigned requests that a certificate for the Warrant Shares being
purchased be registered in the name of ________________ and that such
certificate be delivered to _____________.

     Date                            Signature
         -------------------------            ---------------------------------

<PAGE>

                               FORM OF ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers all
of the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth below, to:

         Name of Assignee           Address          No. of Shares
         ---------------------------------------------------------

and hereby irrevocable constitutes and appoints ________________ as agent and
attorney-in-fact to transfer said Warrant on the books of Rako Capital
Corporation, with full power of substitution in the premises.

Dated
      --------------------------------

In the presence of

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

                                       Name:
                                            ------------------------------------

                                       Signature:
                                                 -------------------------------
                                       Title of Signing Offer or Agent (if any):

                                       Address:
                                               --------------------------------

                                       Note:  The above signature should
                                       correspond with the name on the face of
                                       the within Warrant.<PAGE>

                                                                     EXHIBIT 4.6

                               DONLAR CORPORATION

                           CERTIFICATE OF DESIGNATION
                       SENIOR CONVERTIBLE PREFERRED STOCK

         Section 1.        Authorized Shares. Nineteen Million Nine Hundred Five
Thousand Five Hundred (19,905,500) shares of Senior Convertible Preferred are
authorized.

         Section 2.        Dividends. In the event that the Corporation declares
or pays any dividends upon the Common Stock (whether payable in cash, securities
or other property) other than dividends payable solely in shares of Common
Stock, the Corporation shall also declare and pay to the holders of the Senior
Convertible Preferred at the same time that it declares and pays such dividends
to the holders of the Common Stock, the dividends which would have been declared
and paid with respect to the Common Stock issuable upon conversion of the Senior
Convertible Preferred had all of the outstanding Senior Convertible Preferred
been converted immediately prior to the record date for such dividend, or if no
record date is fixed, the date as of which the record holders of Common Stock
entitled to such dividends are to be determined; however, no dividend shall be
declared or paid until all amounts owing under the Loan Agreement have been
repaid or converted in full.

         Section 3.        Liquidation. Upon any liquidation, dissolution or
winding up of the Corporation (whether voluntary or involuntary), each holder of
Senior Convertible Preferred shall be entitled to be paid, before any
distribution or payment is made upon any Junior Securities, an amount in cash
equal to the greater of: (i) the aggregate Liquidation Value of all shares of
Senior Convertible Preferred held by such holder and (ii) the amount such holder
would be entitled to receive had all the Senior Convertible Preferred held by
such holder been converted into Common Stock, and the holders of Senior
Convertible Preferred shall not be entitled to any further payment. If upon any
such liquidation, dissolution or winding up of the Corporation the Corporation's
assets to be distributed among the holders of the Senior Convertible Preferred
are insufficient to permit payment to such holders of the aggregate amount which
they are entitled to be paid under this Section 2, then the entire assets
available to be distributed to the Corporation's shareholders shall be
distributed pro rata among such holders based upon the aggregate Liquidation
Value of the Senior Convertible Preferred held by each such holder. Not less
than sixty (60) days prior to the payment date stated therein, the Corporation
shall mail written notice of any such liquidation, dissolution or winding up to
each record holder of Senior Convertible Preferred, setting forth in reasonable
detail the amount of proceeds to be paid with respect to each share of Senior
Convertible Preferred and each share of Common Stock in connection with such
liquidation, dissolution or winding up.

         Upon the election of the holders of a majority of the outstanding
shares of Senior Convertible Preferred delivered to the Corporation within forty
(45) days after receipt of the Corporation's notice to the holders of Senior
Convertible Preferred under this Section 2, any consolidation or merger of the
Corporation (except for the merger of the Corporation pursuant to the Loan
Agreement) with or into another entity or entities (whether or not the
Corporation is the surviving entity) or any sale or transfer by the Corporation
of all or substantially all of its assets

                                       1

<PAGE>

(determined either for the Corporation alone or with its Subsidiaries on a
consolidated basis) or any sale, transfer or issuance or series of sales,
transfers and/or issuances of shares of the Corporation's capital stock by the
Corporation or the holders thereof as a result of which the holders of the
Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Corporation's Board of
Directors immediately prior to such sale or issuance cease to own the
Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Corporation's Board of
Directors, shall be deemed to be a liquidation, dissolution and winding up of
the Corporation for purposes of this Section 2, and the holders of the Senior
Convertible Preferred shall be entitled to receive payment from the Corporation
of the amounts payable with respect to the Senior Convertible Preferred upon a
liquidation, dissolution or winding up of the Corporation under this Section 2
in cancellation of their shares of Senior Convertible Preferred upon the
consummation of any such transaction. Each holder of Senior Convertible
Preferred shall have the right to elect the benefits of either this Section 2 or
Section 6E hereof in connection with any such merger, consolidation or sale of
assets.

         Section 4.        Priority of Senior Convertible Preferred on Dividends
and Redemptions. So long as any Senior Convertible Preferred remains
outstanding, without the prior written consent of the holders of 75% of the
outstanding shares of Senior Convertible Preferred, the Corporation shall not,
nor shall it permit any Subsidiary to, directly or indirectly redeem, purchase
or otherwise acquire, any Junior Securities or any capital stock or other equity
securities (including, without limitation, warrants, options and other rights to
acquire such capital stock or other equity securities) of any Subsidiary
pursuant to the terms of the Certificate of Incorporation or directly or
indirectly redeem, purchase or make any payments with respect to any stock
appreciation rights, phantom stock plans or similar rights or plans, nor shall
the Corporation directly or indirectly pay or declare any dividend or make any
distribution upon any Junior Securities pursuant to the terms of the Certificate
of Incorporation except for dividends payable in shares of Common Stock issued
upon the outstanding shares of Common Stock.

         Section 5.        Redemptions. The Corporation shall not, nor shall it
permit any Subsidiary to, redeem or otherwise acquire any shares of Senior
Convertible Preferred, except pursuant to a purchase offer made pro rata to all
holders of Senior Convertible Preferred on the basis of the number of shares of
Senior Convertible Preferred owned by each such holder.

         Section 6.        Voting and Consent Rights.

                  5A.      Voting Rights. The holders of the Senior Convertible
Preferred shall be entitled to notice of all shareholders meetings in accordance
with the Corporation's bylaws, and the holders of the Senior Convertible
Preferred shall be entitled to vote on all matters submitted to the shareholders
for a vote together with the holders of the Common Stock voting together as a
single class with each share of Common Stock entitled to one vote per share and
each share of Senior Convertible Preferred entitled to one vote for each share
of Common Stock issuable upon conversion of the Senior Convertible Preferred as
of the record date for such vote or, if no record date is specified, as of the
date of such vote.

                                       2
<PAGE>

                  5B.      Consent Rights. In addition to and not in derogation
of any voting rights expressly provided hereunder or under applicable laws, for
so long as Willis Stein & Partners, L.P., Star Polymers, L.L.C. or their
respective transferees continue to hold at least an aggregate of 4,500,000
shares of Senior Convertible Preferred (as adjusted for stock splits, stock
dividends and recapitalizations), the Corporation shall not, without the prior
written consent of the holders of at least 75% of the outstanding Senior
Convertible Preferred:

                  (i)      make any amendment to the Certificate of
Incorporation, the Certificate of Designation or the Corporation's bylaws, or
file any resolution of the Board of Directors with the Illinois Secretary of
State containing any provisions, which would increase the number of authorized
shares of the Senior Convertible Preferred Stock or adversely affect or
otherwise impair the rights or the relative preferences and priorities of the
holders of the Senior Convertible Preferred;

                  (ii)     authorize, issue or enter into any agreement
providing for the issuance (contingent or otherwise) of any capital stock or
other equity securities (or any securities convertible into or exchangeable for
any capital stock or other equity securities) which are senior to the Senior
Convertible Preferred with respect to the payment of dividends, redemptions or
distributions upon liquidation or otherwise;

                  (iii)    except as provided in the Loan Agreement, merge or
consolidate with any Person or permit any Subsidiary to merge or consolidate
with any Person (other than a wholly-owned Subsidiary);

                  (iv)     sell, lease or otherwise dispose of, or permit any
Subsidiary to sell, lease or otherwise dispose of, more than 50% of the
consolidated assets of the Corporation and its Subsidiaries (computed on the
basis of book value, determined in accordance with generally accepted accounting
principles consistently applied, or fair market value, determined by the
Corporation's Board of Directors in its reasonable good faith judgment) in any
transaction or series of related transactions (other than sales of inventory in
the ordinary course of business) or sell or permanently dispose of 25% or more
of its or any Subsidiary's Intellectual Property Rights (based on the fair
market value of such Intellectual Property, determined by the Corporation's
Board of Directors in its reasonable good faith judgment), provided, however,
that any such sale or disposition of any of its or any Subsidiary's Intellectual
Property Rights shall only be made to an independent third party at fair market
value and, until such time as all indebtedness owed the Lender (as defined in
the Loan Agreement) has been repaid or converted in full, that the Corporation
uses the proceeds of such sale to repay any amounts outstanding under the Loan
Agreement; or

                  (v)      liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without limitation, any
reorganization into a limited liability company, a partnership or any other
non-corporate entity which is treated as a partnership for federal income tax
purposes).

         Section 7.        Conversion. The holders of Senior Convertible
Preferred shall

                                       3

<PAGE>

have no right to convert into Common Stock until the Term A Loan and the Term C
Loan made under the Loan Agreement (as such terms are defined in the Loan
Agreement) shall have been repaid or converted in full. After such repayment or
conversion, a holder of Senior Convertible Preferred may convert all or any
portion of the outstanding principal amount of their Senior Convertible
Preferred pursuant to this Section 6.

                  7A.      Conversion Procedure.

                  (i)      Once Term Loans A and C under the Loan Agreement are
converted or repaid in full, a holder of Senior Convertible Preferred may
convert all or any portion of the outstanding principal amount of such holder's
Senior Convertible Preferred into a number of shares of Conversion Stock
(excluding any fractional share) determined by dividing the aggregate
Liquidation Value ($1.00 per share) of the number of shares of Senior
Convertible Preferred designated by such holder of Senior Convertible Preferred
in a written notice of intention to convert as the amount to be converted, by
the applicable Conversion Price. Written notice of an intention to convert may
condition the consummation of such conversion upon the consummation of a
transaction affecting the Corporation, such as a Public Offering, Change in
Ownership or Fundamental Change, in which case conversion shall not be deemed to
be effective until such transaction has been consummated.

                  (ii)     Each such conversion of a Senior Convertible
Preferred shall be deemed to have been effected as of the close of business on
the date on which the Senior Convertible Preferred has been surrendered at the
principal office of the Corporation. At such time as such conversion has been
effected, the rights of the holder of Senior Convertible Preferred as such
holder to the extent of the conversion shall cease, and the Person or Persons in
whose name or names any certificate or certificates for shares of Conversion
Stock are to be issued upon such conversion shall be deemed to have become the
holder or holders of record of the shares of Conversion Stock represented
thereby.

                  (iii)    As soon as possible after a conversion has been
effected (but in any event within five (5) business days), the Corporation shall
deliver to the converting holder of Senior Convertible Preferred:

                  (a)      a certificate or certificates representing the number
         of shares of Conversion Stock (excluding any fractional share) issuable
         by reason of such conversion in such name or names and such
         denomination or denominations as the converting holder has specified;

                  (b)      payment in an amount equal to the sum of all
         dividends declared but unpaid with respect to the Senior Convertible
         Preferred that has been converted, plus the amount payable under
         subparagraph (d) below;

                  (c)      a new certificate representing any portion of the
         Senior Convertible Preferred surrendered to the Corporation in
         connection with such conversion but which was not converted; and

                                       4

<PAGE>

                  (d)      with respect to any fractional share of Conversion
         Stock which would, except for the provisions hereof, be deliverable
         upon conversion of the Senior Convertible Preferred, an amount equal to
         the Market Price of such fractional share as of the date of such
         conversion.

                  (iv)     The issuance of certificates for shares of Conversion
Stock upon conversion of Senior Convertible Preferred shall be made without
charge to the holder hereof for any domestic documentary, stamp, transfer,
excise or similarly related transactional tax relating to the issuance of
securities in respect thereof or other cost incurred by the Corporation in
connection with such conversion and the related issuance of shares of Conversion
Stock. Upon conversion of any Senior Convertible Preferred, the Corporation
shall take all such actions as are necessary in order to ensure that the
Conversion Stock issuable with respect to such conversion shall be validly
issued, fully paid and nonassessable.

                  (v)      The Corporation shall not close its books against the
transfer of Senior Convertible Preferred or Conversion Stock issued or issuable
upon conversion of Senior Convertible Preferred in any manner which interferes
with the timely conversion of Senior Convertible Preferred. The Corporation
shall assist and cooperate with any Holder of Senior Convertible Preferred
required to make any governmental filings or obtain any governmental approval
prior to or in connection with the conversion of a Senior Convertible Preferred
(including, without limitation, making any filings required to be made by the
Corporation).

                  (vi)     The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock, solely
for the purpose of issuance upon the conversion of the Senior Convertible
Preferred, such number of shares of Conversion Stock issuable upon the
conversion of all outstanding Senior Convertible Preferred. All shares of
Conversion Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Corporation shall take all such actions as may be necessary to assure that
all such shares of Conversion Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Conversion Stock may be listed (except
for official notice of issuance which shall be immediately delivered by the
Corporation upon each such issuance).

                  7B.      Conversion Price. The initial Conversion Price for
Senior Convertible Preferred shall be $0.68. If and whenever on or after the
original date of issuance of Senior Convertible Preferred the Corporation issues
or sells, or in accordance with Section 6C is deemed to have issued or sold, any
shares of Common Stock for a consideration per share less than the Conversion
Price in effect immediately prior to such time, the Conversion Price shall be
reduced to the Conversion Price determined by dividing (A) an amount equal to
the sum of (x) the product derived by multiplying the Conversion Price
immediately prior to such issue or sale by the number of shares of Common Stock
deemed outstanding immediately prior to such issue or sale, plus (y) the
consideration, if any, received by the Corporation upon such issue on sale, by
(B) the number of shares of Common Stock deemed outstanding immediately after
such issue or

                                       5

<PAGE>

sale.

                  7C.      Effect on Conversion Price of Certain Events. For
purposes of determining the adjusted Conversion Price under Section 6B, the
following shall be applicable:

                  (i)      Issuance of Rights or Option. If the Corporation in
any manner grants any rights or options to subscribe for or to purchase Common
Stock or any stock or other securities convertible into or exchangeable for
Common Stock (such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called "Convertible
Securities") and the price per share for which Common Stock is issuable upon the
exercise of such Options or upon conversion or exchange of such Convertible
Securities is less than the Conversion Price in effect immediately prior to the
time of the granting of such Options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Corporation for such price per share. For purposes
of this paragraph, the "price per share for which Common Stock is issuable upon
exercise of such Options or upon conversion or exchange of such Convertible
Securities" is determined by dividing (A) the total amount, if any, received or
receivable by the Corporation as consideration for the granting of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus in the case of such
Options which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the issuance
or sale of such Convertible Securities and the conversion or exchange thereof,
by (B) the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options. No adjustment
of the Conversion Price shall be made upon the actual issuance of such Common
Stock or of such Convertible Securities upon the exercise of such Options or
upon the actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities. Notwithstanding the foregoing, there shall be no
adjustment pursuant to this Section 6C(i) with respect to Options issued (a) to
employees, directors and consultants of the Corporation pursuant to employee
benefit plans for an aggregate of 5 million shares of Common Stock (as such
number of shares is equitably adjusted for subsequent stock splits, stock
combinations, stock dividends and recapitalizations) or (b) pursuant to the Loan
Agreement or Restructuring Agreement as defined on Exhibit A attached hereto.

                  (ii)     Issuance of Convertible Securities. If the
Corporation in any manner issues or sells any Convertible Securities and the
price per share for which Common Stock is issuable upon such conversion or
exchange is less than the Conversion Price in effect immediately prior to the
time of such issue or sale, then the maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities shall be
deemed to be outstanding and to have been issued and sold by the Corporation for
such price per share. For the purposes of this paragraph, the "price per share
for which Common Stock is issuable upon such conversion or exchange" is
determined by dividing (A) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such

                                       6

<PAGE>

Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No
adjustment of the Conversion Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities, and if
any such issue or sale of such Convertible Securities is made upon exercise of
any Options for which adjustments of the Conversion Price had been or are to be
made pursuant to other provisions of this Section 6C(i), no further adjustment
of the Conversion Price shall be made by reason of such issue or sale.
Notwithstanding the foregoing, there shall be no adjustment pursuant to this
Section 6C(ii) with respect to Convertible Securities issued pursuant to the
Loan Agreement or the Restructuring Agreement as defined on Exhibit A attached
hereto.

                  (iii)    Change in Option Price or Conversion Rate. If the
purchase price provided for in any Option, the additional consideration (if any)
payable upon the issue, conversion or exchange of any Convertible Security, or
the rate at which any Convertible Security is convertible into or exchangeable
for Common Stock changes at any time, the Conversion Price in effect at the time
of such change shall be readjusted to the Conversion Price which would have been
in effect at such time had such Option or Convertible Security originally
provided for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold; provided that if such adjustment of the Conversion Price would result in
an increase in the Conversion Price then in effect, such adjustment shall not be
effective until thirty (30) days after written notice thereof has been given to
all holders of Senior Convertible Preferred.

                  (iv)     Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or the termination of
any right to convert or exchange any Convertible Securities without the exercise
of such Option or right, the Conversion Price then in effect hereunder shall be
adjusted to the Conversion Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued; provided that if such expiration or termination would result in an
increase in the Conversion Price then in effect, such increase shall not be
effective until thirty (30) days after written notice thereof has been given to
all holders of Senior Convertible Preferred.

                  (v)      Calculation of Consideration Received. If any Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefore shall be
deemed to be the net amount received by the Corporation therefore. In case any
Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other than cash
received by the Corporation shall be the fair value of such consideration,
except where such consideration consists of securities, in which case the amount
of consideration received by the Corporation shall be the Market Price thereof
as of the date of receipt. In case any Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection
with any merger in which the Corporation is the surviving corporation, the
amount of consideration therefore shall be deemed to be the fair value of such
portion of the net assets and

                                       7

<PAGE>

business of the non-surviving corporation as is attributable to such Common
Stock, Options or Convertible Securities, as the case may be. The fair value of
any consideration other than cash and securities shall be determined jointly by
the Corporation and the holders of two thirds of the outstanding Senior
Convertible Preferred. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an independent
appraiser experienced in valuing such types of consideration jointly selected by
the Corporation and the holders of two thirds of the outstanding Senior
Convertible Preferred. The determination of such appraiser shall be final and
binding upon the parties, and the fees and expenses of such appraiser shall be
borne by the Corporation.

                  (vi)     Integrated Transactions. In case any Option is issued
in connection with the issue or sale of other securities of the Corporation,
together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the Options
shall be deemed to have been issued for a consideration of $0.01.

                  (vii)    Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of the Corporation or any Subsidiary, and the disposition of any
shares so owned or held shall be considered an issue or sale of Common Stock.

                  (viii)   Record Date. If the Corporation takes a record of the
holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase Common Stock, Options
or Convertible Securities, then such record date shall be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.

                  7D.      Subdivision or Combination of Common Stock. If the
Corporation at any time subdivides (by any stock split, stock dividend or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced, and if the Corporation at any
time combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.

                  7E.      Reorganization, Reclassification, Consolidation,
Merger or Sale. If any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Corporation's
assets to another Person or other transaction, except for the merger of the
Corporation with Donlar Biosyntrex Corporation contemplated by the Restructuring
Agreements (collectively, any "Organic Change"), is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock, then, prior to the consummation of such Organic
Change, lawful, adequate and appropriate provisions (in form and substance
satisfactory to each holder of Senior Convertible Preferred) shall be made

                                       8

<PAGE>

whereby each of the holders of Senior Convertible Preferred shall thereafter
have the right to acquire and receive in lieu of or addition to (as the case may
be) shares of Conversion Stock immediately theretofore acquirable and receivable
upon the conversion of such holder's Senior Convertible Preferred, such shares
of stock, securities or assets as may be issued or payable with respect to or in
exchange for the number of shares of Conversion Stock immediately theretofore
acquirable and receivable upon conversion of such holder's Senior Convertible
Preferred had such Organic Change not taken place. In any such case, appropriate
provisions (in form and substance reasonably satisfactory to each holder of the
Senior Convertible Preferred) shall be made with respect to such holder's rights
and interests to insure that the provisions of this Section 6 shall thereafter
be applicable in relation to any shares of stock, securities or assets
thereafter deliverable upon the conversion of the Senior Convertible Preferred
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Corporation, an
immediate adjustment of the Conversion Price to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale and a corresponding
immediate adjustment in the number of shares of Conversion Stock acquirable and
receivable upon conversion of the Senior Convertible Preferred, if the value so
reflected is less than the Conversion Price in effect immediately prior to such
consolidation, merger or sale.) The Corporation shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Corporation) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form reasonably satisfactory to the each holder of Senior Convertible
Preferred), the obligation to deliver to each such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to acquire.

                  7F.      Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 6 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Corporation's board of directors shall make an appropriate adjustment
in the Conversion Price so as to protect the rights of the holders of Senior
Convertible Preferred; provided that no such adjustment shall increase the
Conversion Price as otherwise determined pursuant to this Section 6 or decrease
the number of shares of Conversion Stock issuable upon conversion of the Senior
Convertible Preferred then outstanding.

                  7G.      Notices.

                  (i)      Immediately upon any adjustment of the Conversion
Price, the Corporation shall send written notice thereof to the holders of
Senior Convertible Preferred, setting forth in reasonable detail and certifying
the calculation of such adjustment.

                  (ii)     The Corporation shall send written notice to the
holders of Senior Convertible Preferred at least twenty (20) days prior to the
date on which the Corporation closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock, (B) with respect
to any pro rata subscription offer to holders of Common Stock or (C) for
determining rights to vote with respect to any Organic Change, dissolution or
liquidation.

                                       9

<PAGE>

                  (iii)    The Corporation shall also give at least twenty (20)
days prior written notice of the date on which any Organic Change, dissolution
or liquidation shall take place.

         Section 8.        Information Rights.

                  8A.      Financial Statements and Other Information. The
Corporation shall deliver to each holder of at least 1,800,000 shares of Senior
Convertible Preferred:

                  (i)      as soon as available but in any event within
forty-five (45) days after the end of each monthly accounting period in each
year, unaudited consolidated statements of income and cash flows of the
Corporation and its Subsidiaries for such monthly period and for the period from
the beginning of the year to the end of such month, and unaudited consolidated
balance sheets of the Corporation and its Subsidiaries as of the end of such
monthly period, setting forth in each case comparisons to the Corporation's
annual budget and to the corresponding period in the preceding year, and all
such statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied and shall be certified by the
Corporation's chief financial officer;

                  (ii)     accompanying the financial statements referred to in
subparagraph (i) an Officer's Certificate stating that there is no Event of
Noncompliance in existence and that neither the Corporation nor any of its
Subsidiaries is in default under any of its material agreements or, if any Event
of Noncompliance or any such default exists, specifying the nature and period of
existence thereof and what actions the Corporation and its Subsidiaries have
taken and propose to take with respect thereto;

                  (iii)    within ninety (90) days after the end of each year,
consolidated statements of income and cash flows of the Corporation and its
Subsidiaries for such year, and consolidated balance sheets of the Corporation
and its Subsidiaries as of the end of such year, setting forth in each case
comparisons to the Corporation's annual budget and to the preceding year, all
prepared in accordance with generally accepted accounting principles,
consistently applied, and accompanied by (a) an opinion of the Corporation's
regular independent accounting firm of recognized national or regional standing,
(b) a certificate from such accounting firm, addressed to the Corporation's
Board of Directors, stating that in the course of its examination nothing came
to its attention that caused it to believe that there was an Event of
Noncompliance in existence or that there was any material default by the
Corporation or any Subsidiary in the fulfillment of or compliance with any of
the terms, covenants, provisions or conditions of any material agreement to
which the Corporation or any such Subsidiary is a party or, if such accountants
have reason to believe that any Event of Noncompliance any other such default by
the Corporation or any such Subsidiary exists, a certificate specifying the
nature and period of existence thereof, and (c) a copy of such firm's annual
management letter to the Board of Directors;

                  (iv)     promptly upon receipt thereof, any additional
reports, management

                                       10

<PAGE>

letters or other detailed information concerning significant aspects of the
Corporation's operations or financial affairs given to the Corporation by its
independent accountants (and not otherwise contained in other materials provided
hereunder);

                  (v)      at least thirty (30) days but not more than ninety
(90) days prior to the beginning of each fiscal year, an annual budget prepared
on a monthly basis for the Corporation and its Subsidiaries for such fiscal year
(displaying anticipated statements of income and cash flows and balance sheets),
and promptly upon preparation thereof any other significant budgets prepared by
the Corporation and any revisions of such annual or other budgets, and within
forty-five (45) days after any monthly period in which there is a material
adverse deviation from the annual budget, an Officer's Certificate explaining
the deviation and what actions the Corporation has taken and proposes to take
with respect thereto;

                  (vi)     promptly (but in any event within five (5) business
days) after the discovery or receipt of notice of any Event of Noncompliance,
any default under any material agreement to which it or any of its Subsidiaries
is a party, any condition or event which is reasonably likely to result in any
material liability under any federal, state or local statute or regulation
relating to public health and safety, worker health and safety or pollution or
protection of the environment, or any other material adverse change, event or
circumstance affecting the Corporation or any Subsidiary (including, without
limitation, the filing of any material litigation against the Corporation or any
Subsidiary or the existence of any dispute with any Person which involves a
reasonable likelihood of such litigation being commenced), an Officer's
Certificate specifying the nature and period of existence thereof and what
actions the Corporation and its Subsidiaries have taken and propose to take with
respect thereto;

                  (vii)    within ten (10) days after transmission thereof,
copies of all financial statements, proxy statements, reports and any other
general written communications which the Corporation sends to its shareholders
and copies of all registration statements and all regular, special or periodic
reports which it files, or any of its officers or directors file with respect to
the Corporation, with the Securities and Exchange Commission or with any
securities exchange on which any of its securities are then listed, and copies
of all press releases and other statements made available generally by the
Corporation to the public concerning material developments in the Corporation's
and its Subsidiaries' businesses; and

                  (viii)   with reasonable promptness, such other information
and financial data concerning the Corporation and its Subsidiaries as any Person
entitled to receive information under this paragraph 7A may reasonably request.

                  8B.      Inspection of Property. The Corporation shall permit
any representatives designated by any holder of 1,800,000 shares of Senior
Convertible Preferred, upon reasonable notice and during normal business hours,
to (i) visit and inspect any of the properties of the Corporation and its
Subsidiaries, (ii) examine the corporate and financial records of the
Corporation and its Subsidiaries and make copies thereof or extracts therefrom
and (iii) discuss the affairs, finances and accounts of any such corporations
with the directors, officers, key employees and independent accountants of the
Corporation and its Subsidiaries.

                                       11

<PAGE>

                  8C.      Attendance at Board Meetings. The Corporation shall
give each holder of at least 1,800,000 shares of Senior Convertible Preferred
written notice of each meeting of its Board of Directors and each committee
thereof at the same time and in the same manner as notice is given to the
directors (which notice shall be promptly confirmed in writing to each such
Person), and the Corporation shall permit a representative of each such Person
to attend as an observer all meetings of its Board of Directors and all
committees thereof. Each representative shall be entitled to receive all written
materials and other information (including, without limitation, copies of
meeting minutes) given to directors in connection with such meetings at the same
time such materials and information are given to the directors. If the
Corporation proposes to take any action by written consent in lieu of a meeting
of its Board of Directors or of any committee thereof, the Corporation shall
give written notice thereof to each such Person prior to the effective date of
such consent describing in reasonable detail the nature and substance of such
action.

         Section 9.        Purchase Rights. If at any time the Corporation
grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the "Purchase Rights"), then each holder
of Senior Convertible Preferred shall be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
holder could have acquired if such holder had held the number of shares of
Conversion Stock acquirable upon conversion of such holder's Senior Convertible
Preferred immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or if no such record is taken, the
date as of which the record holders of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights.

         Section 10.       Event of Noncompliance

                  10A.     Definition. An Event of Noncompliance shall have
occurred if:

                  (i)      the Corporation breaches or otherwise fails to
perform or observe any covenant or agreement set forth herein;

                  (ii)     the Corporation breaches the representation and
warranty set forth in paragraph (viii) in the letter agreement by and between
the Corporation, Willis Stein Partners, L.P. and Star Polymers, L.L.C. dated
March 18, 2002; or

                  (iii)    the Corporation or any material Subsidiary makes an
assignment for the benefit of creditors or admits in writing its inability to
pay its debts generally as they become due (provided however that an Event of
Noncompliance shall be deemed not to occur if the Lender, as defined in the Loan
Agreement, exercises or enforces any of its rights under the Loan Agreement or
any ancillary agreements thereto, including, but not limited to the
Subordination Agreements); or an order, judgment or decree is entered
adjudicating the Corporation or any material Subsidiary bankrupt or insolvent;
or any order for relief with respect to the Corporation or any material
Subsidiary is entered under the Federal Bankruptcy Code; or

                                       12

<PAGE>

the Corporation or any material Subsidiary petitions or applies to any tribunal
for the appointment of a custodian, trustee, receiver or liquidator of the
Corporation or any material Subsidiary or of any substantial part of the assets
of the Corporation or any material Subsidiary or any material Subsidiary, or
commences any proceeding (other than a proceeding for the voluntary liquidation
and dissolution of a Subsidiary) relating to the Corporation or any material
Subsidiary under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction; or any
such petition or application is filed, or any such proceeding is commenced,
against the Corporation or any material Subsidiary and either (a) the
Corporation or any material Subsidiary by any act indicates its approval
thereof, consent thereto or acquiescence therein or (b) such petition,
application or proceeding is not dismissed within sixty (60) days.

                  10B.     Consequences of Events of Noncompliance.

                  (i)      If an Event of Noncompliance of the type described in
subparagraph 9A(i) and (ii) shall exist for thirty (30) consecutive days, and
after notice from the holders of at least an aggregate of 4,500,000 shares of
the Senior Convertible Preferred (as adjusted for stock splits, stock dividends
and recapitalizations) outstanding of such Event of Noncompliance, the
Corporation shall fail to cure such Event of Noncompliance within thirty (30)
days after receipt of such notice (a "Triggering Event"), the Conversion Price
of the Senior Convertible Preferred shall be reduced immediately by 10% of the
Conversion Price in effect immediately prior to such adjustment (the "First
Adjustment"). If a Triggering Event (other than a Triggering Event giving rise
to the First Adjustment) shall occur after the First Adjustment, the Conversion
Price shall be reduced immediately by 10% of what the Conversion Price would
have been immediately prior to such adjustment if the First Adjustment had not
been made (the "Second Adjustment"). If a Triggering Event (other than a
Triggering Event giving rise to the First or Second Adjustment) shall occur
after the Second Adjustment, the Conversion Price shall be reduced immediately
by 10% of what the Conversion Price would have been immediately prior to such
adjustment if the First and Second Adjustments had not been made. In no event
shall any Conversion Price adjustment be rescinded, and in no event shall there
be more than three Conversion Price adjustments pursuant to this subparagraph.

                                       13

<PAGE>

                  For example, assume that the Conversion Price of the Senior
                  Convertible Preferred is $.68. If a Triggering Event occurs,
                  the Conversion Price would be reduced immediately by 10% of
                  $.68, or $.068, for a new Conversion Price of $.612. If a
                  second Triggering Event occurs, the existing Conversion Price
                  would be reduced by 10% of what the Conversion Price would
                  have been if there had been no previous adjustment pursuant to
                  this paragraph (i.e., $.68), or $.068, for a new Conversion
                  Price of $.544. Then assume that there is a two for one stock
                  split, in which case the Conversion Price would be decreased
                  hereunder from $.544 to $.272, and assume that a third
                  Triggering Event occurs, the Conversion Price would be reduced
                  by 10% of what the Conversion Price would have been
                  immediately prior to such adjustment if there had been no
                  previous adjustments pursuant to this paragraph (i.e. $.34),
                  or $.034, for a new Conversion Price of $.238.

                  (ii)     If an Event of Noncompliance of the type described in
subparagraph 9A(iii) has occurred and if all amounts owing to the Lender (as
defined in the Loan Agreement) has been repaid or converted in full, all of the
Senior Convertible Preferred then outstanding shall be subject to immediate
redemption by the Corporation (without any action on the part of the holders of
the Senior Convertible Preferred) at a price per Share equal to the Liquidation
Value thereof. Provided that all indebtedness to the Lender (as defined in the
Loan Agreement) has been repaid or converted in full, the Corporation shall
immediately redeem all Senior Convertible Preferred upon the occurrence of such
Event of Noncompliance.

                  (iii)    If any Event of Noncompliance exists, each holder of
Senior Convertible Preferred shall also have any other rights which such holder
is entitled to under any contract or agreement and any other rights which such
holder may have pursuant to applicable law.

         Section 11.       Registration of Transfer. The Corporation shall keep
at its principal office a register for the registration of Senior Convertible
Preferred. Upon the surrender of any certificate representing Senior Convertible
Preferred at such place, the Corporation shall, at the request of the record
holder of such certificate, execute and deliver (at the Corporation's expense) a
new certificate or certificates in exchange therefor representing in the
aggregate the number of shares of Senior Convertible Preferred represented by
the surrendered certificate. Each such new certificate shall be registered in
such name and shall represent such number of shares of Senior Convertible
Preferred as is requested by the holder of the surrendered certificate and shall
be substantially identical in form to the surrendered certificate.

         Section 12.       Replacement. Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the registered holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing shares of Senior Convertible Preferred, and in the
case of any such loss, theft or destruction, upon receipt of

                                       14

<PAGE>

indemnity reasonably satisfactory to the Corporation (provided that if the
holder is a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Corporation shall (at its expense) execute
and deliver in lieu of such certificate a new certificate of like kind
representing the number of shares of Senior Convertible Preferred by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.

         Section 13.       Non-Contravention with Loan Agreement. Nothing in
this Certificate of Designation Senior Convertible Preferred Stock shall have
the effect of contravening. derogating or superceding any rights of the Lender
(as defined in the Loan Agreement) pursuant to the Loan Agreement for as long as
such Loan Agreement is in effect.

         Section 14.       Definitions.

                  "Change in Ownership" means any sale, transfer or issuance or
series of sales, transfers and/or issuances of Common Stock by the Corporation
or any holders thereof which results in any Person or group of Persons (as the
term "group" is used under the Securities Exchange Act of 1934), other than
Tennessee Farmers Life Insurance Company and the holders of Common Stock and
Senior Convertible Preferred as of the date of the closing under the Merger
Agreement, owning more than 50% of the Common Stock outstanding at the time of
such sale, transfer or issuance or series of sales, transfers and/or issuances.

                  "Common Stock" means, collectively, the Corporation's Common
Stock and any capital stock of any class of the Corporation hereafter authorized
which is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any liquidation, dissolution or winding up of
the Corporation.

                  "Conversion Price" means the conversion price determined in
accordance with Section 6B hereof.

                  "Conversion Stock" means shares of the Corporation's Common
Stock, no par value per share; provided that if there is a change such that the
securities issuable upon conversion of the Senior Convertible Preferred are
issued by an entity other than the Corporation or there is a change in the type
or class of securities so issuable, then the term "Conversion Stock" shall mean
one share of the security issuable upon conversion of the Senior Convertible
Preferred if such security is issuable in shares, or shall mean the smallest
unit in which such security is issuable if such security is not issuable in
shares.

                  "Convertible Securities" means any stock or securities
directly or indirectly convertible into or exchangeable for Common Stock.

                  "Corporation" means Donlar Corporation, a corporation
organized under the laws of the State of Illinois.

                                       15

<PAGE>

                  "Fundamental Change" means (a) any sale or transfer or more
than 50% of the assets of the Corporation and its Subsidiaries on a consolidated
basis (measured either by book value in accordance with generally accepted
accounting principles consistently applied or by fair market value determined in
the reasonable good faith judgment of the Corporation's Board of Directors) in
any transaction or series of transactions (other than sales in the ordinary
course of business) and (b) any merger or consolidation to which the Corporation
is a party, except for a merger in which the Corporation is the surviving
corporation, the terms of the Senior Convertible Preferred are not changed and
the Senior Convertible Preferred is not exchanged for cash, securities or other
property, and after giving effect to such merger, the holders of the
Corporation's outstanding capital stock possessing a majority of the voting
power (under ordinary circumstances) to elect a majority of the Corporation's
Board of Directors immediately prior to the merger shall continue to own the
Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Corporation's Board of
Directors.

                  "Intellectual Property Rights" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, data, data bases and documentation thereof, (vi) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information),
(vii) other intellectual property rights and (viii) copies and tangible
embodiments thereof (in whatever form or medium), other than intellectual
property rights not having a material value.

                  "Junior Securities" means any capital stock or other equity
securities of the Corporation, except for the Senior Convertible Preferred.

                  "Liquidation Value" of any share of Senior Convertible
Preferred as of any particular date shall be equal to $1.

                  "Loan Agreement" means the Bridge and Consolidated Term Loan
Agreement as amended from time to time, dated as of March 18, 2002, among the
Corporation and Donlar Biosyntrex Corporation, and Tennessee Farmers Life
Insurance Company, including all exhibits and ancillary documents thereto.

                  "Market Price" of any security means the average of the
closing prices of such security's sales on all securities exchanges on which
such security may at the time be listed, or, if there has been no sales on any
such exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day such security

                                       16

<PAGE>

is not so listed, the average of the representative bid and asked prices quoted
in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
security is not quoted in the NASDAQ System, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of twenty-one
(21) days consisting of the day as of which "Market Price" is being determined
and the twenty (20) consecutive business days prior to such day. If at any time
such security is not listed on any securities exchange or quoted in the NASDAQ
System or the over-the-counter market, the "Market Price" shall be the fair
value thereof determined jointly by the Corporation and the holders of a
majority of the Senior Convertible Preferred. If such parties are unable to
reach agreement within a reasonable period of time, such fair value shall be
determined by an independent appraiser experienced in valuing securities jointly
selected by the Corporation and the holders of a majority of the Senior
Convertible Preferred. The determination of such appraiser shall be final and
binding upon the parties, and the Corporation shall pay the fees and expenses of
such appraiser.

                  "Merger Agreement" means the Agreement and Plan of Merger by
and among the Corporation and Donlar Biosyntrex, setting forth the terms and
conditions by which Donlar Biosyntrex shall be merged with and into the
Corporation.

                  "Options" means any rights, warrants or options to subscribe
for or purchase Common Stock or Convertible Securities.

                  "Organic Change" means an Organic Change as defined in Section
6E.

                  "Person" means an individual, a partnership, a corporation, a
limited liability Corporation, a limited liability, an association, a joint
stock Corporation, a trust, a joint venture, an unincorporated organization and
a governmental entity or any department, agency or political subdivision
thereof.

                  "Restructuring Agreement" means the Agreement to Merge, dated
as of March 18, 2002, by and among the Corporation, Donlar Biosyntrex and
certain investors, as such agreement may from time to time be amended in
accordance with its terms.

                  "Senior Convertible Preferred" means the Senior Convertible
Preferred Stock.

                  "Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that person or a combination thereof.
For purposes hereof,

                                       17

<PAGE>

a Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control the managing general partner of such limited liability
company, partnership, association or other business entity.

         Section 15.       Amendment and Waiver. No amendment, modification or
waiver shall be binding or effective with respect to any provision of Sections 1
to 15 hereof without the prior written consent of the holders of at least 75% of
the Senior Convertible Preferred outstanding at the time such action is taken
provided that no change in the terms hereof may be accomplished by merger or
consolidation of the Corporation with another corporation or entity unless the
Corporation has obtained the prior written consent of the holders of at least
75% of the Senior Convertible Preferred then outstanding.

         Section 16.       Notices. Except as otherwise expressly provided
hereunder, all notices referred to herein shall be in writing and shall be
delivered by registered or certified mail, return receipt requested and postage
prepaid, or by reputable overnight courier service, charges prepaid, and shall
be deemed to have been given when so mailed or sent (i) to the Corporation, at
its principal executive offices and (ii) to any holder of Senior Convertible
Preferred, at such holder's address as it appears in the stock records of the
Corporation (unless otherwise indicated by any such holder).

                                       18

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