Document:

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                                  EXHIBIT 4.1

                Form of Stockholder Protection Rights Agreement

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                                                                    EXHIBIT 4.1

                    STOCKHOLDER PROTECTION RIGHTS AGREEMENT

                                    BETWEEN

                          ACCREDO HEALTH, INCORPORATED

                                      AND

           AMERICAN STOCK TRANSFER AND TRUST COMPANY, AS RIGHTS AGENT

                                 APRIL 17, 2003
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                               TABLE OF CONTENTS

<TABLE>
<S>                                                                                                              <C>
ARTICLE I - CERTAIN DEFINITIONS...................................................................................1

ARTICLE II - THE RIGHTS...........................................................................................4

   2.1    Summary of Rights.......................................................................................4
   2.2    Issuance of Rights Certificates; Legend.................................................................4
   2.3    Exercise of Rights; Separation of Rights................................................................5
   2.4    Adjustments to Exercise Price; Number of Rights.........................................................6
   2.5    Date on Which Exercise is Effective.....................................................................7
   2.6    Execution, Authentication, Delivery and Dating of Rights Certificates...................................7
   2.7    Registration, Registration of Transfer and Exchange.....................................................7
   2.8    Mutilated, Destroyed, Lost and Stolen Rights Certificates...............................................8
   2.9    Persons Deemed Owners...................................................................................8
   2.10   Delivery and Cancellation of Certificates...............................................................8
   2.11   Agreement of Rights Holders.............................................................................9

ARTICLE III - ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS......................................9

   3.1    Flip-In.................................................................................................9
   3.2    Flip-Over..............................................................................................11

ARTICLE IV - THE RIGHTS AGENT....................................................................................11

   4.1    General................................................................................................11
   4.2    Merger or Consolidation or Change of Name of Rights Agent..............................................11
   4.3    Duties of Rights Agent.................................................................................12
   4.4    Change of Rights Agent.................................................................................13

ARTICLE V - MISCELLANEOUS........................................................................................14

   5.1    Termination............................................................................................14
   5.2    Expiration.............................................................................................14
   5.3    Issuance of New Rights Certificates....................................................................14
   5.4    Supplements and Amendments.............................................................................14
   5.5    Fractional Shares......................................................................................15
   5.6    Rights of Action.......................................................................................15
   5.7    Holder of Rights Not Deemed a Stockholder..............................................................15
   5.8    Notice of Proposed Actions.............................................................................15
   5.9    Notices................................................................................................15
   5.10   Suspension of Exercisability...........................................................................16
   5.11   Costs of Enforcement...................................................................................16
   5.12   Successors.............................................................................................16
   5.13   Benefits of this Agreement.............................................................................16
   5.14   Determination and Actions by the Board of Directors, etc...............................................16
   5.15   Descriptive Headings...................................................................................16
   5.16   Governing Law..........................................................................................16
   5.17   Counterparts...........................................................................................17
   5.18   Severability...........................................................................................17
</TABLE>

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                    STOCKHOLDER PROTECTION RIGHTS AGREEMENT

         THIS STOCKHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time to
time, this "Agreement") is made and entered into as of April ____, 2003, but
shall be effective as of April 17, 2003, between Accredo Health, Incorporated,
a Delaware corporation (the "Company"), and American Stock Transfer and Trust
Company, as rights agent (the "Rights Agent," which term shall include any
successor rights agent hereunder).

                                  WITNESSETH:

         WHEREAS, on April 17, 2003, the Board of Directors of the Company has
(a) authorized and declared a dividend of one right ("Right") in respect of
each share of Common Stock (as hereinafter defined) held of record as of the
Close of Business (as hereinafter defined) on April 28, 2003 (the "Record
Time") and (b) as provided in Section 2.4, authorized the issuance of one Right
in respect of each share of Common Stock issued after the Record Time and prior
to the Separation Time (as hereinafter defined);

         WHEREAS, subject to Sections 3.1, 5.1 and 5.10, each Right entitles
the holder thereof, after the Separation Time, to purchase securities of the
Company (or, in certain cases, of certain other entities) pursuant to the terms
and subject to the conditions set forth herein; and

         WHEREAS, the Company desires to appoint the Rights Agent to act on
behalf of the Company, and the Rights Agent is willing so to act, in connection
with the issuance, transfer, exchange and replacement of Rights Certificates
(as hereinafter defined), the exercise of Rights and other matters referred to
herein;

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

                                   ARTICLE I

                              CERTAIN DEFINITIONS

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

         "Acquiring Person" shall mean any Person who is a Beneficial Owner of
15% or more of the outstanding shares of Common Stock; provided, however, that
the term "Acquiring Person" shall not include any Person (i) who is the
Beneficial Owner of 15% or more of the outstanding shares of Common Stock on
the date of this Agreement or who shall become the Beneficial Owner of 15% or
more of the outstanding shares of Common Stock solely as a result of an
acquisition by the Company of shares of Common Stock, until such time hereafter
or thereafter as any such Person shall become the Beneficial Owner (other than
by means of a stock dividend or stock split) of any additional shares of Common
Stock, (ii) who is the Beneficial Owner of 15% or more of the outstanding
shares of Common Stock but who acquired Beneficial Ownership of shares of
Common Stock without any plan or intention to seek or affect control of the
Company, if such Person promptly enters into an irrevocable commitment promptly
to divest, and thereafter promptly divests (without exercising or retaining any
power, including voting power, with respect to such shares), sufficient shares
of Common Stock (or securities convertible into, exchangeable into or
exercisable for Common Stock) so that such Person ceases to be the Beneficial
Owner of 15% or more of the outstanding shares of Common Stock or (iii) who
Beneficially Owns shares of Common Stock consisting solely of one or more of
(A) shares of Common Stock Beneficially Owned pursuant to the grant or exercise
of an option granted to such Person by the Company in connection with an
agreement to merge with, or acquire, the Company entered into prior to a
Flip-In Date, (B) shares of Common Stock (or securities convertible into,
exchangeable into or exercisable for Common Stock) Beneficially Owned by such
Person or its Affiliates or Associates at the time of grant of such option or
(C) shares of Common Stock (or securities convertible into, exchangeable into
or exercisable for Common Stock) acquired by Affiliates or Associates of such
Person after the time of such grant which, in the aggregate, amount to less
than 1% of the outstanding shares of Common Stock. In addition, the Company,
any

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wholly owned Subsidiary of the Company and any employee stock ownership or
other employee benefit plan of the Company or a wholly owned Subsidiary of the
Company shall not be an Acquiring Person.

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

         A Person shall be deemed the "Beneficial Owner" of, and to have
"Beneficial Ownership" of, and to "Beneficially Own," any securities of which
such Person or any of such Person's Affiliates or Associates is or may be
deemed to be the beneficial owner pursuant to Rule 13d-3 and 13d-5 under the
Securities Exchange Act, as such Rules are in effect on the date of this
Agreement as well as any securities as to which such Person or any of such
Person's Affiliates or Associates has the right to become Beneficial Owner
(whether such right is exercisable immediately or only after the passage of
time or the occurrence of conditions) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange rights,
other rights (other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial Owner" of,
or to have "Beneficial Ownership" of, or to "Beneficially Own," any security
(i) solely because such security has been tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates or
Associates until such tendered security is accepted for payment or exchange or
(ii) solely because such Person or any of such Person's Affiliates or
Associates has or shares the power to vote or direct the voting of such
security pursuant to a revocable proxy given in response to a public proxy or
consent solicitation made to more than ten holders of shares of a class of
stock of the Company registered under Section 12 of the Securities Exchange Act
and pursuant to, and in accordance with, the applicable rules and regulations
under the Securities Exchange Act, except if such power (or the arrangements
relating thereto) is then reportable under Item 6 of Schedule 13D under the
Securities Exchange Act (or any similar provision of a comparable or successor
report). Notwithstanding the foregoing, no officer or director of the Company
shall be deemed to Beneficially Own any securities of any other Person by
virtue of any actions such officer or director takes in such capacity. For
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any time, including for purposes of determining the
percentage of the outstanding shares of Common Stock with respect to which a
Person is the Beneficial Owner, shall be made in accordance with the provisions
of Rule 13d-3(d)(1) under the Securities Exchange Act.

         "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in Atlanta, Georgia are generally authorized
or obligated by law or executive order to close.

         "Close of Business" on any given date shall mean 5:00 p.m. Atlanta,
Georgia time on such date (or, if such date is not a Business Day, 5:00 p.m.
Atlanta, Georgia time on the next succeeding Business Day).

         "Common Stock" shall mean the shares of Common Stock, par value $0.01
per share, of the Company.

         "Exchange Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 3.1(c).

         "Exercise Price" shall mean, as of any date, the price at which a
holder may purchase the securities issuable upon exercise of one whole Right.
Until adjustment thereof in accordance with the terms hereof, the Exercise
Price shall equal $100.00.

         "Expiration Time" shall mean the earliest of (i) the Exchange Time,
(ii) the Termination Time, (iii) April 28, 2013 and (iv) the time of a merger
of the Company into another corporation pursuant to an agreement entered into
prior to a Flip-In Date.

         "Flip-In Date" shall mean the tenth Business Day after any Stock
Acquisition Date or such earlier or later date as the Board of Directors of the
Company may from time to time fix by resolution adopted prior to the Flip-In
Date that would otherwise have occurred.

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         "Flip-Over Entity" for purposes of Section 3.2, shall mean (i) in the
case of a Flip-Over Transaction or Event described in clause (i) of the
definition thereof, the Person issuing any securities into which shares of
Common Stock are being converted or exchanged and, if no such securities are
being issued, any other party to such Flip-Over Transaction or Event and (ii)
in the case of a Flip-Over Transaction or Event referred to in clause (ii) of
the definition thereof, the Person receiving the greatest portion of the assets
or earning power being transferred in such Flip-Over Transaction or Event;
provided in all cases if such Person is a subsidiary of another Person, the
ultimate controlling Person that is not an individual shall be the Flip-Over
Entity.

         "Flip-Over Stock" shall mean the capital stock (or similar equity
interest) with the greatest voting power in respect of the election of
directors (or other Persons similarly responsible for direction of the business
and affairs) of the Flip-Over Entity.

         "Flip-Over Transaction or Event" shall mean a transaction or series of
transactions after a Flip-In Date in which, directly or indirectly, (i) the
Company shall consolidate or merge or participate in a share exchange with any
other Person if, at the time of the consolidation, merger or share exchange or
at the time the Company enters into any agreement with respect to any such
consolidation, merger or share exchange, the Acquiring Person Controls the
Board of Directors of the Company and either (A) any term of or arrangement
concerning the treatment of shares of capital stock in such consolidation,
merger or share exchange relating to the Acquiring Person is not identical to
the terms and arrangements relating to other holders of the Common Stock or (B)
the Person with whom the transaction or series of transactions occurs is the
Acquiring Person or an Affiliate or Associate of the Acquiring Person or (ii)
the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer) assets (A) aggregating more than
50% of the assets (measured by either book value or fair market value) or (B)
generating more than 50% of the operating income or cash flow, of the Company
and its Subsidiaries (taken as a whole) to any Person (other than the Company
or one or more of its wholly owned Subsidiaries) or to two or more such Persons
which are Affiliates or Associates or otherwise acting in concert, if, at the
time of the entry by the Company (or any such Subsidiary) into an agreement
with respect to such sale or transfer of assets, the Acquiring Person Controls
the Board of Directors of the Company. An Acquiring Person shall be deemed to
"Control" the Company's Board of Directors when, following a Flip-In Date, the
Persons who were directors of the Company before the Flip-In Date shall cease
to constitute a majority of the Company's Board of Directors.

         "Market Price" per share of any securities on any date shall mean the
average of the daily closing prices per share of such securities (determined as
described below) on each of the 20 consecutive Trading Days through and
including the Trading Day immediately preceding such date; provided, however,
that if an event of a type analogous to any of the events described in Section
2.4 shall have caused the closing prices used to determine the Market Price on
any Trading Days during such period of 20 Trading Days not to be fully
comparable with the closing price on such date, each such closing price so used
shall be appropriately adjusted in order to make it fully comparable with the
closing price on such date. The closing price per share of any securities on
any date shall be the last reported sale price, regular way, or, in case no
such sale takes place or is quoted on such date, the average of the closing bid
and asked prices, regular way, for each share of such securities, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange, Inc. or, if the securities are not listed or admitted to trading on
the New York Stock Exchange, Inc., as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the securities are listed or admitted to
trading or, if the securities are not listed or admitted to trading on any
national securities exchange, as reported by The Nasdaq Stock Market, Inc.'s
Nasdaq National Market or such other system then in use, or, if on any such
date the securities are not listed or admitted to trading on any national
securities exchange or quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the securities selected by the Board of Directors of the Company;
provided, however, that if on any such date the securities are not listed or
admitted to trading on a national securities exchange or traded in the
over-the-counter market, the closing price per share of such securities on such
date shall mean the fair value per share of securities on such date as
determined in good faith by the Board of Directors of the Company, after
consultation with a nationally recognized investment banking firm, and set
forth in a certificate delivered to the Rights Agent.

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         "Person" shall mean any individual, firm, partnership, association,
group (as such term is used in Rule 13d-5 under the Securities Exchange Act, as
such Rule is in effect on the date of this Agreement), corporation or other
entity.

         "Preferred Stock" shall mean the Series A Junior Participating
Preferred Stock, par value $1.00 per share, of the Company created by the
Certificate of Designation, Preferences and Rights in substantially the form
set forth in Exhibit B hereto, appropriately completed.

         "Separation Time" shall mean the Close of Business on the earlier of
(i) the tenth Business Day (or such later date as the Board of Directors of the
Company may from time to time fix by resolution adopted prior to the Separation
Time that would otherwise have occurred) after the date on which any Person
commences a tender or exchange offer which, if consummated, would result in
such Person's becoming an Acquiring Person and (ii) the Flip-In Date; provided,
that if the foregoing results in the Separation Time being prior to the Record
Time, the Separation Time shall be the Record Time and provided further, that
if any tender or exchange offer referred to in clause (i) of this paragraph is
canceled, terminated or otherwise withdrawn prior to the Separation Time
without the purchase of any shares of Common Stock pursuant thereto, such offer
shall be deemed, for purposes of this paragraph, never to have been made.

         "Stock Acquisition Date" shall mean the first date of public
announcement by the Company (by any means) that an Acquiring Person has become
such.

         "Subsidiary" of any specified Person shall mean any corporation or
other entity of which a majority of the voting power of the equity securities
or a majority of the equity interests is Beneficially Owned, directly or
indirectly, by such Person.

         "Termination Time" shall mean the time at which the right to exercise
the Rights shall terminate pursuant to Section 5.1 hereof.

         "Trading Day," when used with respect to any securities, shall mean a
day on which the New York Stock Exchange, Inc. is open for the transaction of
business or, if such securities are not listed or admitted to trading on the
New York Stock Exchange, Inc., a day on which the principal national securities
exchange on which such securities are listed or admitted to trading is open for
the transaction of business or, if such securities are not listed or admitted
to trading on any national securities exchange, a day on which The Nasdaq Stock
Market, Inc.'s Nasdaq National Market or such other system then in use is open
for the transaction of business or, if such securities are not listed or
admitted to trading on any national securities exchange or quoted on any such
system, a Business Day.

                                   ARTICLE II

                                   THE RIGHTS

         2.1      Summary of Rights. As soon as practicable after the Record
Time, the Company will mail a letter summarizing the terms of the Rights to
each holder of record of Common Stock as of the Record Time, at such holder's
address as shown by the records of the Company.

         2.2      Issuance of Rights Certificates; Legend. (a) Certificates for
the Common Stock issued after the Record Time but prior to the Separation Time
shall evidence, in addition to the Common Stock represented by such
certificate, one Right for each share of Common Stock represented thereby and
shall have impressed on, printed on, written on or otherwise affixed to them
the following legend:

         "Until the Separation Time (as defined in the Rights Agreement
         referred to below), this certificate also evidences and entitles the
         holder hereof to certain Rights as set forth in a Stockholder
         Protection Rights Agreement, effective as of April 17, 2003 (as such
         may be amended from time to time, the "Rights Agreement"), between
         Accredo Health, Incorporated (the "Company") and American Stock
         Transfer and Trust Company, as Rights Agent, the terms of which are
         hereby incorporated herein by reference and a copy of which is on file
         at the principal executive offices of

                                      -4-
<PAGE>
         the Company. Under certain circumstances, as set forth in the Rights
         Agreement, such Rights may be terminated, may become exercisable for
         securities or assets of the Company or of another entity, may be
         exchanged for shares of Common Stock or other securities or assets of
         the Company, may expire, may become void (if they are "Beneficially
         Owned" by an "Acquiring Person" or an Affiliate or Associate thereof,
         as such terms are defined in the Rights Agreement, or by any
         transferee of any of the foregoing) or may be evidenced by separate
         certificates and may no longer be evidenced by this certificate. The
         Company will mail or arrange for the mailing of a copy of the Rights
         Agreement to the holder of this certificate without charge promptly
         after the receipt of a written request therefor."

Certificates representing shares of Common Stock that are issued and
outstanding at the Record Time shall evidence, in addition to the Common Stock
represented by such certificate, one Right for each share of Common Stock
evidenced thereby notwithstanding the absence of the foregoing legend.

         (b)      Subject to Sections 2.4 and 5.3, one Right shall be issued in
respect of (i) each share of Common Stock outstanding as of the Record Time and
(ii) each additional share of Common Stock that becomes outstanding (whether by
original issuance or out of treasury, but other than in a transaction
contemplated by Section 2.4) after the Record Time but prior to the Separation
Time. To the extent provided in Section 5.3, Rights shall be issued by the
Company in respect of shares of Common Stock that are issued or sold by the
Company after the Separation Time.

         2.3      Exercise of Rights; Separation of Rights. (a) Subject to
                  Sections 3.1, 5.1 and 5.10 and subject to adjustment as
herein set forth, each Right will entitle the holder thereof, after the
Separation Time and prior to the Expiration Time, to purchase, for the Exercise
Price, one ten-thousandth (1/10,000th) of a share of Preferred Stock.

         (b)      Until the Separation Time, (i) no Right may be exercised and
(ii) each Right will be evidenced by the certificate that evidences the share
of Common Stock with which it is associated (together, in the case of
certificates issued prior to the Record Time, with the letter or notice mailed
to the record holder thereof pursuant to Section 2.1) and will be transferable
only together with, and will be transferred by a transfer (whether with or
without such letter or notice) of, such associated share of Common Stock, and
the surrender for transfer of any certificates representing outstanding Common
Stock will also constitute the surrender for transfer of the Rights associated
with the Common Stock represented by such certificate.

         (c)      Subject to this Section 2.3 and to Sections 3.1, 5.1 and
5.10, after the Separation Time and prior to the Expiration Time, the Rights
(i) may be exercised and (ii) may be transferred independently of shares of
Common Stock. Promptly following the Separation Time, the Rights Agent will
mail to each holder of record of Common Stock as of the Separation Time (other
than any Person whose Rights have become void pursuant to Section 3.1(b)), at
such holder's address as shown by the records of the Company (the Company
hereby agreeing to furnish copies of such records to the Rights Agent for this
purpose), (x) a certificate (a "Rights Certificate") in substantially the form
of Exhibit A hereto appropriately completed, representing the number of Rights
held by such holder at the Separation Time and having such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any national securities exchange or quotation system on which the
Rights may from time to time be listed or traded, or to conform to usage, and
(y) a disclosure statement describing the Rights.

         (d)      Subject to Sections 3.1, 5.1 and 5.10, Rights may be
exercised on any Business Day after the Separation Time and prior to the
Expiration Time by submitting to the Rights Agent the Rights Certificate
evidencing such Rights with an Election to Exercise (an "Election to Exercise")
substantially in the form attached to the Rights Certificate, duly completed,
accompanied by payment by certified or official bank check or money order
payable to the order of the Company, of a sum equal to the Exercise Price
multiplied by the number of Rights being exercised and a sum sufficient to
cover any transfer tax or charge that may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or the issuance or
delivery of certificates for shares or depositary receipts (or both) in a name
other than that of the holder of the Rights being exercised.

                                      -5-
<PAGE>
         (e)      Upon receipt of a Rights Certificate, with an Election to
Exercise accompanied by payment as set forth in Section 2.3(d), and subject to
Sections 3.1, 5.1 and 5.10, the Rights Agent promptly will (i)(A) requisition
from the Company's transfer agent(s) stock certificates evidencing such number
of shares or other securities to be purchased (the Company hereby irrevocably
authorizing its transfer agents to comply with all such requisitions) and (B)
if the Company elects pursuant to Section 5.5 not to issue certificates
representing fractional shares, requisition from the depositary selected by the
Company depositary receipts representing the fractional shares to be purchased
or requisition from the Company the amount of cash to be paid in lieu of
fractional shares in accordance with Section 5.5 and (ii) after receipt of such
certificates, depositary receipts and/or cash, deliver the same to or upon the
order of the registered holder of such Rights Certificate, registered (in the
case of certificates or depositary receipts) in such name or names as may be
designated by such holder. In the event that the Company elects pursuant to
Section 3.1(e) to issue other securities and/or assets of the Company upon
exercise of the Rights, the Company will make all arrangements necessary so
that such other securities and/or assets of the Company are available for
distribution by the Rights Agent, if and when appropriate.

         (f)      In case the holder of any Rights shall exercise less than all
the Rights evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised will be issued by the
Rights Agent to such holder or to such holder's duly authorized assigns.

         (g)      The Company covenants and agrees that it will (i) take all
such action as may be necessary to ensure that all shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Exercise Price), be duly and validly
authorized, executed, issued and delivered and fully paid and nonassessable;
(ii) take all such action as may be necessary to comply with any applicable
requirements of the Securities Act of 1933, as amended, or the Securities
Exchange Act, and the rules and regulations thereunder, and any other
applicable law, rule or regulation, in connection with the issuance of any
shares upon exercise of Rights; and (iii) pay when due and payable any and all
federal and state transfer taxes and charges that may be payable in respect of
the original issuance or delivery of the Rights Certificates or of any shares
issued upon the exercise of Rights, provided that the Company shall not be
required to pay any transfer tax or charge that may be payable in respect of
any transfer involved in the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for shares in a name other than that of
the holder of the Rights being transferred or exercised.

         2.4      Adjustments to Exercise Price; Number of Rights. (a) In the
event the Company shall at any time after the Record Time and prior to the
Separation Time (i) declare or pay a dividend on Common Stock payable in Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares of Common Stock, (x)
the Exercise Price in effect after such adjustment will be equal to the
Exercise Price in effect immediately prior to such adjustment divided by the
number of shares of Common Stock (the "Expansion Factor") that a holder of one
share of Common Stock immediately prior to such dividend, subdivision or
combination would hold thereafter as a result thereof (assuming for such
purpose that the Company would issue a fraction of a share of Common Stock, as
applicable, and without giving effect to any requirement that cash be paid in
lieu of the issuance of any fractional share interest) and (y) each Right held
prior to such adjustment will become that number of Rights equal to the
Expansion Factor, and the adjusted number of Rights will be deemed to be
distributed among the shares of Common Stock with respect to which the original
Rights were associated (if they remain outstanding) and the shares issued in
respect of such dividend, subdivision or combination, so that each such share
of Common Stock will have exactly one Right associated with it. Each adjustment
made pursuant to this paragraph shall be made as of the payment or effective
date for the applicable dividend, subdivision or combination.

         (b)      In the event the Company shall at any time after the Record
Time and prior to the Separation Time issue or distribute any securities or
assets in respect of, in lieu of or in exchange for Common Stock (other than
pursuant to a regular periodic cash dividend or a dividend paid solely in
Common Stock) whether by dividend, in a reclassification or recapitalization
(including any such transaction involving a merger, consolidation or share
exchange), or otherwise, the Company shall make such adjustments, if any, in
the Exercise Price, number of Rights and/or securities or other property
purchasable upon exercise of Rights as the Board of Directors of the Company,
in its sole discretion, may deem to be appropriate under the circumstances in
order to adequately protect the interests of the holders of Rights generally,
and the Company and the Rights Agent shall amend this Agreement as necessary to
provide for such adjustments.

                                      -6-
<PAGE>
         (c)      Each adjustment to the Exercise Price made pursuant to this
Section 2.4 shall be calculated to the nearest cent. Whenever an adjustment to
the Exercise Price is made pursuant to this Section 2.4, the Company shall (i)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment and (ii) promptly file
with the Rights Agent and with each transfer agent for the Common Stock a copy
of such certificate. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein and shall not be deemed to
have knowledge of any such adjustment unless and until it shall have received
such a certificate.

         Rights Certificates shall represent the right to purchase the
securities purchasable under the terms of this Agreement, including any
adjustment or change in the securities purchasable upon exercise of the Rights,
even though such certificates may continue to express the right to purchase the
securities purchasable at the time of issuance of the initial Rights
Certificates.

         2.5      Date on Which Exercise is Effective. Each person in whose
name any certificate for shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the shares
represented thereby on the date upon which the Rights Certificate evidencing
such Rights was duly surrendered and payment of the Exercise Price for such
Rights (and any applicable taxes and other governmental charges payable by the
exercising holder hereunder) was made; provided, however, that if the date of
such surrender and payment is a date upon which the stock transfer books of the
Company are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the stock transfer books of the Company are
open.

         2.6      Execution, Authentication, Delivery and Dating of Rights
Certificates. (a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer, President or one
of its Executive Vice Presidents or Senior Vice Presidents, under its corporate
seal reproduced thereon and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Rights Certificates
may be manual or facsimile.

         Rights Certificates bearing the manual or facsimile signatures of
individuals who were at the time of such signature the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the countersignature and
delivery of such Rights Certificates.

         Promptly after the Separation Time, the Company will notify the Rights
Agent of such Separation Time and will deliver Rights Certificates executed by
the Company to the Rights Agent for countersignature, and, subject to Section
3.1(b), an authorized signatory of the Rights Agent shall manually countersign
and deliver such Rights Certificates to the holders of the Rights pursuant to
Section 2.3(c). No Rights Certificate shall be valid for any purpose unless
manually countersigned by an authorized signatory of the Rights Agent.

         (b)      Each Rights Certificate shall be dated the date of
countersignature thereof.

         2.7      Registration, Registration of Transfer and Exchange. (a)
After the Separation Time, the Company will cause to be kept a register (the
"Rights Register") in which, subject to such reasonable regulations as it may
prescribe, the Company will provide for the registration and transfer of
Rights. The Rights Agent is hereby appointed "Rights Registrar" for the purpose
of maintaining the Rights Register for the Company and registering Rights and
transfers of Rights after the Separation Time as herein provided. In the event
that the Rights Agent shall cease to be the Rights Registrar, the Rights Agent
will have the right to examine the Rights Register at all reasonable times
after the Separation Time.

         After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights Certificate,
and subject to the provisions of this Section 2.7(a) and Sections 2.7(c) and
2.7(d), the Company will execute and the Rights Agent will countersign and
deliver, in the name of the holder or the designated transferee or transferees,
as required pursuant to the holder's instructions, one or more new Rights
Certificates evidencing the same aggregate number of Rights as did the Rights
Certificate so surrendered.

                                      -7-
<PAGE>
         (b)      Except as otherwise provided in Section 3.1(b), all Rights
issued upon any registration of transfer or exchange of Rights Certificates
shall be the valid obligations of the Company, and such Rights shall be
entitled to the same benefits under this Agreement as the Rights surrendered
upon such registration of transfer or exchange.

         (c)      Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company or the Rights Agent,
as the case may be, duly executed by the holder thereof or such holder's
attorney duly authorized in writing. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer
of any such surrendered Rights Certificates until the registered holder shall
have completed and signed the certificate contained in the form of assignment
on the reverse side of such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) thereof, or the Affiliates or Associates of such Beneficial
Owner (or former Beneficial Owner), as the Company shall reasonably request. As
a condition to the issuance of any new Rights Certificate under this Section
2.7, the Company may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto.

         (d)      The Company shall not be required to register the transfer or
exchange of any Rights after such Rights have become void under Section 3.1(b),
been exchanged under Section 3.1(c) or been terminated under Section 5.1.

         2.8      Mutilated, Destroyed, Lost and Stolen Rights Certificates.
(a) If any mutilated Rights Certificate is surrendered to the Rights Agent
prior to the Expiration Time, then, subject to Sections 3.1(b), 3.1(c) and 5.1,
the Company shall execute and the Rights Agent shall countersign and deliver in
exchange therefor a new Rights Certificate evidencing the same number of Rights
as did the Rights Certificate so surrendered.

         (b)      If there shall be delivered to the Company and the Rights
Agent prior to the Expiration Time (i) evidence to their satisfaction of the
destruction, loss or theft of any Rights Certificate and (ii) such security or
indemnity as may be required by them to save each of them and any of their
agents harmless, then, subject to Sections 3.1(b), 3.1(c) and 5.1 and in the
absence of notice to the Company or the Rights Agent that such Rights
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and upon its request the Rights Agent shall countersign and deliver, in
lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights
Certificate evidencing the same number of Rights as did the Rights Certificate
so destroyed, lost or stolen.

         (c)      As a condition to the issuance of any new Rights Certificate
under this Section 2.8, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Rights
Agent) connected therewith.

         (d)      Every new Rights Certificate issued pursuant to this Section
2.8 in lieu of any destroyed, lost or stolen Rights Certificate shall evidence
an original additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Rights Certificate shall be at any time
enforceable by anyone, and, subject to Section 3.1(b), shall be entitled to all
the benefits of this Agreement equally and proportionately with any and all
other Rights duly issued hereunder.

         2.9      Persons Deemed Owners. Prior to due presentment of a Rights
Certificate (or, prior to the Separation Time, the associated Common Stock
certificate) for registration of transfer, the Company, the Rights Agent and
any agent of the Company or the Rights Agent may deem and treat the person in
whose name such Rights Certificate (or, prior to the Separation Time, such
Common Stock certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.
As used in this Agreement, unless the context otherwise requires, the term
"holder" of any Rights shall mean the registered holder of such Rights (or,
prior to the Separation Time, the associated shares of Common Stock).

         2.10     Delivery and Cancellation of Certificates. All Rights
Certificates surrendered upon exercise or for registration of transfer or
exchange shall, if surrendered to any Person other than the Rights Agent, be
delivered to the Rights Agent and, in any case, shall be promptly canceled by
the Rights Agent. The Company may at any time

                                      -8-
<PAGE>
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Company may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly canceled by the Rights Agent. No Rights Certificates shall be
countersigned in lieu of or in exchange for any Rights Certificates canceled as
provided in this Section 2.10, except as expressly permitted by this Agreement.
The Rights Agent shall return all canceled Rights Certificates to the Company.

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

         (a)      prior to the Separation Time, each Right will be transferable
only together with, and will be transferred by a transfer of, the associated
share of Common Stock;

         (b)      after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;

         (c)      prior to due presentment of a Rights Certificate (or, prior
to the Separation Time, the associated Common Stock certificate) for
registration of transfer, the Company, the Rights Agent and any agent of the
Company or the Rights Agent may deem and treat the person in whose name the
Rights Certificate (or, prior to the Separation Time, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby for all purposes whatsoever, and neither the Company
nor the Rights Agent shall be affected by any notice to the contrary;

         (d)      Rights beneficially owned by certain Persons will, under the
circumstances set forth in Section 3.1(b), become void;

         (e)      this Agreement may be supplemented or amended from time to
time pursuant to Section 2.4(b) or 5.4; and

         (f)      notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of the Rights Agent's inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued by
a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Company must use its best efforts to have any such order, decree
or ruling lifted or otherwise overturned as soon as possible.

                                  ARTICLE III

                          ADJUSTMENTS TO THE RIGHTS IN
                       THE EVENT OF CERTAIN TRANSACTIONS

         3.1      Flip-In. (a) In the event that prior to the Expiration Time a
Flip-In Date shall occur, except as provided in this Section 3.1, each Right
shall constitute the right to purchase from the Company, upon exercise thereof
in accordance with the terms hereof (but subject to Section 5.10), that number
of shares of Common Stock having an aggregate Market Price on the Stock
Acquisition Date equal to twice the Exercise Price for an amount in cash equal
to the Exercise Price (such right to be appropriately adjusted in order to
protect the interests of the holders of Rights generally in the event that on
or after such Stock Acquisition Date an event of a type analogous to any of the
events described in Section 2.4(a) or (b) shall have occurred with respect to
the Common Stock).

         (b)      Notwithstanding the foregoing, any Rights that are or were
Beneficially Owned on or after the Stock Acquisition Date by an Acquiring
Person or an Affiliate or Associate thereof or by any transferee, direct or
indirect, of any of the foregoing shall become void and any holder of such
Rights (including transferees) shall thereafter have no right to exercise or
transfer such Rights under any provision of this Agreement. If any Rights
Certificate is presented for assignment or exercise and the Person presenting
the same will not complete the

                                      -9-
<PAGE>
certification set forth at the end of the form of assignment or notice of
election to exercise and provide such additional evidence of the identity of
the Beneficial Owner and its Affiliates and Associates (or former Beneficial
Owners and their Affiliates and Associates) as the Company shall reasonably
request, then the Company shall be entitled conclusively to deem the Beneficial
Owner thereof to be an Acquiring Person or an Affiliate or Associate thereof or
a transferee of any of the foregoing and accordingly will deem the Rights
evidenced thereby to be void and not transferable or exercisable.

         (c)      The Board of Directors of the Company may, at its option, at
any time after a Flip-In Date and prior to the time that an Acquiring Person
becomes the Beneficial Owner of more than 50% of the outstanding shares of
Common Stock, elect to exchange all (but not less than all) the
then-outstanding Rights (other than Rights that have become void pursuant to
the provisions of Section 3.1(b)) for shares of Common Stock at an exchange
ratio of one share of Common Stock per Right (appropriately adjusted in order
to protect the interests of holders of Rights generally in the event that after
the Separation Time an event of a type analogous to any of the events described
in Section 2.4(a) or (b) shall have occurred with respect to the Common Stock)
(such exchange ratio, as adjusted from time to time, being hereinafter referred
to as the "Exchange Ratio").

         Immediately upon the action of the Board of Directors of the Company
electing to exchange the Rights, without any further action and without any
notice, the right to exercise the Rights will terminate and each Right (other
than Rights that have become void pursuant to Section 3.1(b)) will thereafter
represent only the right to receive a number of shares of Common Stock equal to
the Exchange Ratio. Promptly after the action of the Board of Directors
electing to exchange the Rights, the Company shall give notice thereof
(specifying the steps to be taken to receive shares of Common Stock in exchange
for Rights) to the Rights Agent and the holders of the Rights (other than
Rights that have become void pursuant to Section 3.1(b)) outstanding
immediately prior thereto by mailing such notice in accordance with Section
5.9.

         Each Person in whose name any certificate for shares is issued upon
the exchange of Rights pursuant to this Section 3.1(c) or Section 3.1(e) shall
for all purposes be deemed to have become the holder of record of the shares
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of any applicable taxes and other governmental charges payable by the
holder was made; provided, however, that if the date of such surrender and
payment is a date upon which the stock transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares on, and such Certificate shall be dated, the next succeeding Business
Day on which the stock transfer books of the Company are open.

         (d)      Whenever the Company shall become obligated under Section
3.1(a) or (c) to issue shares of Common Stock upon exercise of or in exchange
for Rights, the Company, at its option, may substitute therefor shares of
Preferred Stock, at a ratio of one ten-thousandth (1/10,000th) of a share of
Preferred Stock for each share of Common Stock so issuable.

         (e)      In the event that there shall not be sufficient treasury
shares or authorized but unissued shares of Common Stock or Preferred Stock of
the Company to permit the exercise or exchange in full of the Rights in
accordance with Section 3.1(a) or (c), the Company shall either (i) call a
meeting of stockholders seeking approval to cause sufficient additional shares
to be authorized (provided that if such approval is not obtained the Company
will take the action specified in clause (ii) of this sentence) or (ii) take
such action as shall be necessary to ensure and provide, to the extent
permitted by applicable law and any agreements or instruments in effect on the
Stock Acquisition Date to which it is a party, that each Right shall thereafter
constitute the right to receive, (x) at the Company's option, either (A) in
return for the Exercise Price, cash, debt or equity securities or other assets
(or a combination thereof) having a fair value equal to twice the Exercise
Price, or (B) without payment of consideration (except as otherwise required by
applicable law), cash, debt or equity securities or other assets (or a
combination thereof) having a fair value equal to the Exercise Price, or (y) if
the Board of Directors of the Company elects to exchange the Rights in
accordance with Section 3.1(c), debt or equity securities or other assets (or a
combination thereof) having a fair value equal to the product of the Market
Price of a share of Common Stock on the Flip-In Date times the Exchange Ratio
in effect on the Flip-In Date, where in any case set forth in (x) or (y) above
the fair value of such debt or equity securities or other assets shall be as
determined in good faith by the Board of Directors of the Company, after
consultation with a nationally recognized investment banking firm.

                                     -10-
<PAGE>

         3.2      Flip-Over. (a) Prior to the Expiration Time, the Company
shall not enter into any agreement with respect to, consummate or permit to
occur any Flip-Over Transaction or Event unless and until it shall have entered
into a supplemental agreement with the Flip-Over Entity, for the benefit of the
holders of the Rights (other than holders of Rights that have become void
pursuant to Section 3.1(b)), providing that, upon consummation or occurrence of
the Flip-Over Transaction or Event (i) each Right (other than holders of Rights
that have become void pursuant to Section 3.1(b)) shall thereafter constitute
the right to purchase from the Flip-Over Entity, upon exercise thereof in
accordance with the terms hereof, that number of shares of Flip-Over Stock of
the Flip-Over Entity having an aggregate Market Price on the date of
consummation or occurrence of such Flip-Over Transaction or Event equal to
twice the Exercise Price for an amount in cash equal to the Exercise Price
(such right to be appropriately adjusted in order to protect the interests of
the holders of Rights generally (other than holders of Rights that have become
void pursuant to Section 3.1(b)) in the event that after such date of
consummation or occurrence an event of a type analogous to any of the events
described in Section 2.4(a) or (b) shall have occurred with respect to the
Flip-Over Stock) and (ii) the Flip-Over Entity shall thereafter be liable for,
and shall assume, by virtue of such Flip-Over Transaction or Event and such
supplemental agreement, all the obligations and duties of the Company pursuant
to this Agreement. The provisions of this Section 3.2 shall apply to successive
Flip-Over Transactions or Events.

         (b)      Prior to the Expiration Time, unless the Rights will be
terminated pursuant to Section 5.1 in connection therewith, the Company shall
not enter into any agreement with respect to, consummate or permit to occur any
Flip-Over Transaction or Event if at the time thereof there are any rights,
warrants or securities outstanding or any other arrangements, agreements or
instruments that would eliminate or otherwise diminish in any material respect
the benefits intended to be afforded by this Rights Agreement to the holders of
Rights upon consummation of such transaction.

                                   ARTICLE IV

                                THE RIGHTS AGENT

         4.1      General. (a) The Company hereby appoints the Rights Agent to
act as agent for the Company in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company
agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses and counsel fees and other disbursements incurred in
the administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent, its directors, officers, employees and agents for, and to hold
each of them harmless against, any loss, liability, or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent or such other indemnified party, for anything done or suffered or
omitted to be done by the Rights Agent in connection with the acceptance and
administration of this Agreement or the exercise or performance of its duties
hereunder, including the costs and expenses of defending against any claim of
liability. The indemnity provided in this Section 4.1(a) shall survive the
expiration of the Rights and the termination of this Agreement.

         (b)      The Rights Agent shall be fully protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement or the exercise or
performance of its duties hereunder in reliance upon any certificate for
securities purchasable upon exercise of Rights, Rights Certificate, certificate
for other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons.

         4.2      Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the stockholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, provided that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 4.4. In case at the time
such successor

                                     -11-
<PAGE>
Rights Agent succeeds to the agency created by this Agreement any of the Rights
Certificates have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates have not been countersigned, any successor Rights
Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates will have the full force provided in
the Rights Certificates and in this Agreement.

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

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

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

         (b)      Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person believed by the Rights Agent to
be the Chairman of the Board, the Chief Executive Officer, the President or any
Executive Vice President or Senior Vice President and by the Chief Financial
Officer, the Treasurer or any Assistant Treasurer or the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate will be full authorization to the Rights Agent for any action
taken, suffered or omitted in good faith by it under the provisions of this
Agreement in reliance upon such certificate.

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

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

         (e)      The Rights Agent will not be under any responsibility in
respect of the validity of any provision of this Agreement or the execution and
delivery hereof (except the due authorization, execution and delivery hereof by
the Rights Agent) or in respect of the validity or execution of any certificate
for securities purchasable upon exercise of Rights or Rights Certificate
(except its countersignature thereof); nor will it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 3.1(b)) or any adjustment required under any provision of this
Agreement or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights after receipt of
the certificate contemplated by Section 2.4 describing any such adjustment);
nor will it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any securities purchasable
upon exercise of Rights or any Rights or as to whether any securities
purchasable upon exercise of Rights will, when issued, be duly and validly
authorized, executed, issued and delivered and fully paid and nonassessable.

                                     -12-
<PAGE>
         (f)      The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.

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

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

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

         (j)      The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or
obligations shall be read into this Agreement against the Rights Agent.

         (k)      Anything in this Agreement to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits).

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

         4.4      Change of Rights Agent. The Rights Agent may resign and be
discharged from its duties under this Agreement upon 90 days notice (or such
lesser notice as is acceptable to the Company) in writing mailed to the Company
and to each transfer agent of Common Stock by registered or certified mail, and
to the holders of the Rights in accordance with Section 5.9. The Company may
remove the Rights Agent upon 30 days notice in writing, mailed to the Rights
Agent and to each transfer agent of the Common Stock by registered or certified
mail, and to the holders of the Rights in accordance with Section 5.9. If the
Rights Agent should resign or be removed or otherwise become incapable of
acting, the Company will appoint a successor to the Rights Agent. If the
Company fails to make such appointment within a period of 30 days after such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
any Rights (which holder shall, with such notice, submit such holder's Rights
Certificate for inspection by the Company), then

                                     -13-
<PAGE>
the holder of any Rights may apply to any court of competent jurisdiction for
the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of the
State of Georgia or any other State of the United States, in good standing,
which is authorized under such laws to exercise the powers of the Rights Agent
contemplated by this Agreement and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $100,000,000 or (b) an
Affiliate of a corporation described in the immediately preceding clause (a).
After appointment, the successor Rights Agent will be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company will file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock,
and mail a notice thereof in writing to the holders of the Rights. Failure to
give any notice provided for in this Section 4.4, however, or any defect
therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.

                                   ARTICLE V

                                 MISCELLANEOUS

         5.1      Termination. (a) The Board of Directors of the Company may,
at its option, at any time prior to the close of business on the Flip-In Date
elect to terminate the Rights without any payment to any holder thereof.

         (b)      Immediately upon the action of the Board of Directors of the
Company electing to terminate the Rights (or, if the resolution of the Board of
Directors electing to terminate the Rights states that the termination will not
be effective until the occurrence of a specified future time or event, upon the
occurrence of such future time or event), without any further action and
without any notice, the right to exercise the Rights will terminate and each
Right will thereafter be null and void.

         5.2      Expiration. The Rights and this Agreement shall expire at the
Expiration Time and no Person shall have any rights pursuant to this Agreement
or any Right after the Expiration Time, except, if the Rights are exchanged, as
provided in Section 3.1.

         5.3      Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the number or kind or class of shares of stock purchasable upon
exercise of Rights made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock by
the Company following the Separation Time and prior to the Expiration Time
pursuant to the terms of securities convertible or redeemable into shares of
Common Stock or to options, in each case issued or granted prior to, and
outstanding at, the Separation Time, the Company shall issue to the holders of
such shares of Common Stock, Rights Certificates representing the appropriate
number of Rights in connection with the issuance or sale of such shares of
Common Stock; provided, however, in each case, (i) no such Rights Certificate
shall be issued, if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or to the Person to whom such Rights
Certificates would be issued, (ii) no such Rights Certificates shall be issued
if, and to the extent that, appropriate adjustment shall have otherwise been
made in lieu of the issuance thereof, and (iii) the Company shall have no
obligation to distribute Rights Certificates to any Acquiring Person or
Affiliate or Associate of an Acquiring Person or any transferee of any of the
foregoing.

         5.4      Supplements and Amendments. The Company and the Rights Agent
may from time to time supplement or amend this Agreement without the approval
of any holders of Rights (i) prior to the Close of Business on the Flip-In
Date, in any respect and (ii) after the Close of Business on the Flip-In Date,
to make any changes that the Company may deem necessary or desirable and that
shall not materially adversely affect the interests of the holders of Rights
generally (other than an Acquiring Person or an Affiliate or an Associate of an
Acquiring Person)

                                     -14-
<PAGE>
or in order to cure any ambiguity or to correct or supplement any provision
contained herein that may be inconsistent with any other provisions herein or
otherwise defective. The Rights Agent will duly execute and deliver any
supplement or amendment hereto requested by the Company upon receipt of a
certificate from the Company that such supplement or amendment satisfies the
terms of the preceding sentence. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment that changes the rights
and duties of the Rights Agent under this Agreement shall be effective without
the consent of the Rights Agent.

         5.5      Fractional Shares. If the Company elects not to issue
certificates representing fractional shares upon exercise of Rights, the
Company shall, in lieu thereof, in the sole discretion of the Board of
Directors, either (a) evidence such fractional shares by depositary receipts
issued pursuant to an appropriate agreement between the Company and a
depositary selected by it, providing that each holder of a depositary receipt
shall have all of the rights, privileges and preferences to which such holder
would be entitled as a beneficial owner of such fractional share, or (b) sell
such shares on behalf of the holders of Rights and pay to the registered holder
of such Rights the appropriate fraction of price per share received upon such
sale.

         5.6      Rights of Action. Subject to the terms of this Agreement
(including Section 3.1(b)), rights of action in respect of this Agreement,
other than rights of action vested solely in the Rights Agent, are vested in
the respective holders of the Rights; and any holder of any Rights, without the
consent of the Rights Agent or of the holder of any other Rights, may, on such
holder's own behalf and for such holder's own benefit and the benefit of other
holders of Rights, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, such
holder's right to exercise such holder's Rights in the manner provided in such
holder's Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.

         5.7      Holder of Rights Not Deemed a Stockholder. No holder, as
such, of any Rights shall be entitled to vote, receive dividends or be deemed
for any purpose the holder of shares or any other securities which may at any
time be issuable on the exercise of such Rights, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 5.8), or to receive dividends or
subscription rights, or otherwise, until such Rights shall have been exercised
or exchanged in accordance with the provisions hereof.

         5.8      Notice of Proposed Actions. In case the Company shall propose
after the Separation Time and prior to the Expiration Time (i) to effect or
permit occurrence of any Flip-Over Transaction or Event or (ii) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Right, in accordance with Section
5.9, a notice of such proposed action, which shall specify the date on which
such Flip-Over Transaction or Event, liquidation, dissolution, or winding up is
to take place, and such notice shall be so given at least 20 Business Days
prior to the date of the taking of such proposed action.

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

                          Accredo Health, Incorporated
                          1640 Century Center Parkway
                                   Suite 101
                            Memphis, Tennessee 38134

                                     -15-
<PAGE>
         Any notice or demand authorized or required by this Agreement to be
given or made by the Company or by the holder of any Rights to or on the Rights
Agent shall be sufficiently given or made if delivered or sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing
with the Company) as follows:

         Notices or demands authorized or required by this Agreement to be
given or made by the Company or the Rights Agent to or on the holder of any
Rights shall be sufficiently given or made if delivered or sent by first-class
mail, postage prepaid, addressed to such holder at the address of such holder
as it appears upon the registry books of the Rights Agent or, prior to the
Separation Time, on the registry books of the transfer agent for the Common
Stock. Any notice that is mailed in the manner herein provided shall be deemed
given on the third Business Day after mailing, whether or not the holder
receives the notice. Failure to give a notice pursuant to the provisions of
this Agreement shall not affect the validity of any action taken hereunder.

         5.10     Suspension of Exercisability. To the extent that the Company
determines in good faith that some action will or need be taken pursuant to
Section 2.3(g) or Section 3.1 or otherwise to comply with federal or state
securities laws, the Company may suspend the exercisability of the Rights for
90 days and any additional period that may be reasonable in order to take such
action or comply with such laws. In the event of any such suspension, the
Company shall issue as promptly as practicable a public announcement stating
that the exercisability or exchangeability of the Rights has been temporarily
suspended. Notice thereof pursuant to Section 5.9 shall not be required.

         5.11     Costs of Enforcement. The Company agrees that if the Company
or any other Person the securities of which are purchasable upon exercise of
Rights fails to fulfill any of its obligations pursuant to this Agreement, then
the Company or such Person will reimburse the holder of any Rights for the
costs and expenses (including legal fees) incurred by such holder in actions to
enforce such holder's rights pursuant to any Rights or this Agreement.

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

         5.13     Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the holders of the Rights any legal or equitable right, remedy or claim under
this Agreement and this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the holders of the Rights.

         5.14     Determination and Actions by the Board of Directors, etc. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board of Directors of
the Company to any liability to the holders of the Rights.

         5.15     Descriptive Headings. Descriptive headings appear herein for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.

         5.16     Governing Law. THIS AGREEMENT AND EACH RIGHT ISSUED HEREUNDER
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF DELAWARE
AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF SUCH STATE APPLICABLE TO CONTRACTS TO BE MADE AND PERFORMED ENTIRELY
WITHIN SUCH STATE.

                                     -16-
<PAGE>
         5.17     Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.

         5.18     Severability. If any term or provision of this Agreement or
the application thereof to any circumstance shall, in any jurisdiction and to
any extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.

                     [SIGNATURES APPEAR ON FOLLOWING PAGE]

                                     -17-
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.

                                    ACCREDO HEALTH, INCORPORATED

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

                                   AMERICAN STOCK TRANSFER & TRUST COMPANY

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

                                      -1-
<PAGE>
                                                                      EXHIBIT A

                          (Form of Rights Certificate)

Certificate No. R-                                               _______ Rights

THE RIGHTS ARE SUBJECT TO TERMINATION OR MANDATORY EXCHANGE, AT THE OPTION OF
THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT(AS DEFINED BELOW).
RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR AFFILIATES OR ASSOCIATES
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR TRANSFEREES OF
ANY OF THE FOREGOING WILL BE VOID.

                               Rights Certificate

                          ACCREDO HEALTH, INCORPORATED

This certifies that _______________________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Stockholder Protection Rights Agreement, effective as of
April 17, 2003 (as amended from time to time, the "Rights Agreement"), between
Accredo Health, Incorporated, a Delaware corporation (the "Company"), and
American Stock Transfer and Trust Company as rights agent (the "Rights Agent,"
which term shall include any successor rights agent under the Rights
Agreement), to purchase from the Company at any time after the Separation Time
(as such term is defined in the Rights Agreement) and prior to the Close of
Business on April 28, 2003, one ten-thousandth (1/10,000) of a fully paid share
of Series A Junior Participating Preferred Stock, par value $1.00 per share
(the "Preferred Stock"), of the Company (subject to adjustment as provided in
the Rights Agreement) at the Exercise Price referred to below, upon
presentation and surrender of this Rights Certificate with the Form of Election
to Exercise duly executed at the principal office of the Rights Agent. The
Exercise Price shall initially be $100.00 per Right and shall be subject to
adjustment in certain events as provided in the Rights Agreement.

In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company or securities or assets of the
Company other than Preferred Stock, all as provided in the Rights Agreement.

This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available without cost upon written request. Capitalized terms used in this
Rights Certificate and not otherwise defined herein shall have the meanings
ascribed to such terms in the Rights Agreement.

This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
evidencing an aggregate number of Rights equal to the aggregate number of
Rights evidenced by the Rights Certificate or Rights Certificates surrendered.
If this Rights Certificate shall be exercised in part, the registered holder
shall be entitled to receive, upon surrender hereof, another Rights Certificate
or Rights Certificates for the number of whole Rights not exercised.

Subject to the provisions of the Rights Agreement, each Right evidenced by this
Certificate may be (a) terminated by the Company under certain circumstances,
at its option, or (b) exchanged by the Company under certain circumstances, at
its option, for one share of Common Stock or one ten-thousandth (1/10,000) of a
share of Preferred Stock) per Right (or, in certain cases, other securities or
assets of the Company), subject in each case to adjustment in certain events as
provided in the Rights Agreement.

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

<PAGE>
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Rights evidenced by this Rights Certificate shall have
been exercised or exchanged as provided in the Rights Agreement.

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

WITNESS the facsimile signature of the proper officers of the Company.

Date:

ATTEST:                             ACCREDO HEALTH, INCORPORATED

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

Countersigned:

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

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

                                      -2-
<PAGE>
                  [Form of Reverse Side of Rights Certificate]

                               FORM OF ASSIGNMENT

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

         FOR VALUE RECEIVED, _______________________________ hereby sells,
assigns and transfers unto ____________________________________________________
                             (Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ________________________
attorney-in-fact, to transfer the within Rights Certificate on the books of the
within-named company, with full power of substitution.

Dated:  ___________________, _____.

Signature Guaranteed:

                                    -------------------------------------------
                                    Signature
                                    (Signature must correspond to name as
                                    written upon the face of this Rights
                                    Certificate in every particular, without
                                    alteration or enlargement or any change
                                    whatsoever)

Signatures must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.

-------------------------------------------------------------------------------
                           (To be completed if true)

The undersigned hereby represents, for the benefit of the Company and all
holders of Rights and shares of Common Stock, that the Rights evidenced by this
Rights Certificate are not, and, to the knowledge of the undersigned, have
never been, Beneficially Owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).

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

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

                                     NOTICE

In the event the certification set forth above is not completed in connection
with a purported assignment, the Company will deem the Beneficial Owner of the
Rights evidenced by the enclosed Rights Certificate to be an Acquiring Person
or an Affiliate or Associate thereof (as defined in the Rights Agreement) or a
transferee of any of the foregoing and accordingly will deem the Rights
evidenced by such Rights Certificate to be void and not transferable or
exercisable.

<PAGE>
                  [To be attached to each Rights Certificate]
                          FORM OF ELECTION TO EXERCISE

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

TO:      ACCREDO HEALTH, INCORPORATED

The undersigned hereby irrevocably elects to exercise _________________ whole
Rights represented by the attached Rights Certificate to purchase the shares of
Series A Junior Participating Preferred Stock issuable upon the exercise of
such Rights and requests that certificates for such shares be issued in the
name of and delivered to:

                  Name:
                        ------------------------------------------
                  Address:
                          ----------------------------------------

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

                  Social Security or other Taxpayer ID No.:
                                                           -------

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

                  Name:
                        ------------------------------------------
                  Address:
                          ----------------------------------------

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

                  Social Security or other Taxpayer ID No.:
                                                           -------

Dated:  ___________________, _____.

Signature Guaranteed:

                                    -------------------------------------------
                                    Signature
                                    (Signature must correspond to name as
                                    written upon the face of this Rights
                                    Certificate in every particular, without
                                    alteration or enlargement or any change
                                    whatsoever)

Signatures must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.

-------------------------------------------------------------------------------
                           (to be completed if true)

The undersigned hereby represents, for the benefit of the Company and all
holders of Rights and shares of Common Stock, that the Rights evidenced by this
Rights Certificate are not, and, to the knowledge of the undersigned, have
never been, Beneficially Owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).

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

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

                                     NOTICE

In the event the certification set forth above is not completed in connection
with a purported assignment, the Company will deem the Beneficial Owner of the
Rights evidenced by the enclosed Rights Certificate to be an Acquiring Person
or an Affiliate or Associate thereof (as defined in the Rights Agreement) or a
transferee of any of

<PAGE>
the foregoing and accordingly will deem the Rights evidenced by such Rights
Certificate to be void and not transferable or exercisable.

                                      A-3
<PAGE>
                                                                      Exhibit B

                          CERTIFICATE OF DESIGNATION,
                           PREFERENCES AND RIGHTS OF
                 SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
                                       OF
                          ACCREDO HEALTH, INCORPORATED

                         Pursuant to Section 151 of the
                        Delaware General Corporation Law

         Accredo Health, Incorporated, a corporation organized under the laws
of the State of Delaware (the "Corporation"), hereby certifies that, pursuant
to the authority conferred upon the Board of Directors by the Certificate of
Incorporation, as amended, of the Corporation, the Board of Directors on April
17, 2003, adopted the following resolution creating a series of one hundred
thousand (100,000) shares of Preferred Stock designated as Series A Junior
Participating Preferred Stock:

         RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "Board") in accordance with the
provisions of its Certificate of Incorporation, as amended, a series of
Preferred Stock of the Corporation be and it hereby is created, and that the
designation and amount thereof and the voting rights or powers, preferences and
relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are as
follows:

         1.       Series A Junior Participating Preferred Stock. There is
hereby established a series of Preferred Stock, par value $1.00 per share, of
the Corporation, and the designation and certain terms, powers, preferences and
other rights of the shares of such series, and certain qualifications,
limitations and restrictions thereon, are hereby fixed as follows:

                  (i)      The distinctive serial designation of this series
shall be "Series A Junior Participating Preferred Stock" (hereinafter called
"this Series"). Each share of this Series shall be identical in all respects
with the other shares of this Series except as to the dates from and after
which dividends thereon shall be cumulative.

                  (ii)     The number of shares in this Series shall initially
be one hundred thousand (100,000), which number may from time to time be
increased or decreased (but not below the number then outstanding) by the Board
of Directors. Shares of this Series purchased by the Corporation shall be
canceled and shall revert to authorized but unissued shares of Preferred Stock
undesignated as to series. Shares of this Series may be issued in fractional
shares, which fractional shares shall entitle the holder, in proportion to such
holder's fractional share, to all rights of a holder of a whole share of this
Series.

                  (iii)    The holders of full or fractional shares of this
Series shall be entitled to receive, when and as declared by the Board of
Directors, but only out of funds legally available therefor, dividends, (A) on
each date that dividends or other distributions (other than dividends or
distributions payable in Common Stock of the Corporation) are payable on or in
respect of Common Stock comprising part of the Reference Package (as defined
below), in an amount per whole share of this Series equal to the aggregate
amount of dividends or other distributions (other than dividends or
distributions payable in Common Stock of the Corporation) that would be payable
on such date to a holder of the Reference Package and (B) on the last day of
March, June, September and December in each year, in an amount per whole share
of this Series equal to the excess (if any) of $1.00 over the aggregate
dividends paid per whole share of this Series during the three-month period
ending on such last day. Each such dividend shall be paid to the holders of
record of shares of this Series on the date, not exceeding 60 days preceding
such dividend or distribution payment date, fixed for that purpose by the Board
of Directors in advance of payment of each particular dividend or distribution.
Dividends on each full and each fractional share of this Series shall be
cumulative from the date such full or fractional share is originally issued;
provided that any such full or fractional share originally issued after a
dividend record date and on or prior to the dividend payment date to which such
record date relates shall not be entitled to receive the dividend payable on
such dividend payment date or any amount in respect of the period from such
original issuance to such dividend payment date.

<PAGE>
                  The term "Reference Package" shall initially mean 10,000
shares of Common Stock, par value $.01 per share ("Common Stock"), of the
Corporation. In the event the Corporation shall at any time (A) declare or pay
a dividend on any Common Stock payable in Common Stock, (B) subdivide any
Common Stock or (C) combine any Common Stock into a smaller number of shares,
then and in each such case the Reference Package after such event shall be the
Common Stock that a holder of the Reference Package immediately prior to such
event would hold thereafter as a result thereof.

                  Holders of shares of this Series shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein provided, on this Series.

                  So long as any shares of this Series are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock ranking
junior to this Series as to dividends and upon liquidation) shall be declared
or paid or set aside for payment or other distribution declared or made upon
the Common Stock or upon any other stock ranking junior to this Series as to
dividends or upon liquidation, nor shall any Common Stock nor any other stock
of the Corporation ranking junior to or on a parity with this Series as to
dividends or upon liquidation be redeemed, purchased or otherwise acquired for
any consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the Corporation ranking
junior to this Series as to dividends and upon liquidation), unless, in each
case, the full cumulative dividends (including the dividend to be due upon
payment of such dividend, distribution, redemption, purchase or other
acquisition) on all outstanding shares of this Series shall have been, or shall
contemporaneously be, paid.

                  (iv)     In the event of any merger, consolidation,
reclassification or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of this Series shall at the same
time be similarly exchanged or changed in an amount per whole share equal to
the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, that a holder of the Reference Package
would be entitled to receive as a result of such transaction.

                  (v) In the event of any liquidation, dissolution or winding
up of the affairs of the Corporation, whether voluntary or involuntary, the
holders of full and fractional shares of this Series shall be entitled, before
any distribution or payment is made on any date to the holders of the Common
Stock or any other stock of the Corporation ranking junior to this Series upon
liquidation, to be paid in full an amount per whole share of this Series equal
to the greater of (A) $1.00 or (B) the aggregate amount distributed or to be
distributed prior to such date in connection with such liquidation, dissolution
or winding up to a holder of the Reference Package (such greater amount being
hereinafter referred to as the "Liquidation Preference"), together with accrued
dividends to such distribution or payment date, whether or not earned or
declared. If such payment shall have been made in full to all holders of shares
of this Series, the holders of shares of this Series as such shall have no
right or claim to any of the remaining assets of the Corporation.

                  In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
shall be insufficient to pay in full all amounts to which such holders are
entitled pursuant to the first paragraph of this Section (v), no such
distribution shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the shares of this Series
upon such liquidation, dissolution or winding up unless proportionate
distributive amounts shall be paid on account of the shares of this Series,
ratably in proportion to the full distributable, amounts for which holders of
all such parity shares are respectively entitled upon such liquidation,
dissolution or winding up.

                  Upon the liquidation, dissolution or winding up of the
Corporation, the holders of shares of this Series then outstanding shall be
entitled to be paid out of assets of the Corporation available for distribution
to its stockholders all amounts to which such holders are entitled pursuant to
the first paragraph of this Section (v) before any payment shall be made to the
holders of Common Stock or any other stock of the Corporation ranking junior
upon liquidation to this Series.

                  For the purposes of this Section (v), the consolidation or
merger of, or binding share exchange by,

                                      A-2
<PAGE>
the Corporation with any other corporation shall not be deemed to constitute a
liquidation, dissolution or winding up of the corporation.

                  (vi)  The shares of this Series shall not be redeemable.

                  (vii) In addition to any other vote or consent of
stockholders required by law or by the Certificate of Incorporation of the
Corporation, each whole share of this Series shall, on any matter, vote as a
class with any other capital stock comprising part of the Reference Package and
voting on such matter and shall have the number of votes thereon that a holder
of the Reference Package would have.

         IN WITNESS WHEREOF, Accredo Health, Incorporated has caused this
Certificate of Designation to be executed as of April ___, 2003.

                                    ACCREDO HEALTH, INCORPORATED

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

                                      A-3<PAGE>

                                                                    Exhibit 4(a)

                           THE PROGRESSIVE CORPORATION

                               2003 INCENTIVE PLAN

SECTION 1.  ESTABLISHMENT; PURPOSE; DEFINITIONS.

          (a) The Progressive Corporation, an Ohio corporation (the "Company"),
hereby establishes an incentive compensation plan for key employees, to be known
as "The Progressive Corporation 2003 Incentive Plan" (the "Plan"), as set forth
in this document. The Plan permits the grant of Restricted Stock and Stock
Options to key employees of the Company and its Subsidiaries and Affiliates.

          (b) The purpose of the Plan is to enable the Company to attract,
retain and reward key employees of the Company and its Subsidiaries and
Affiliates and strengthen the mutuality of interests between such key employees
and the Company's shareholders by offering such key employees equity or
equity-based incentives.

          (c) For purposes of the Plan, the following terms shall have the
meanings set forth below:

          "Affiliate" means any entity (other than the Company and its
     Subsidiaries) that is designated by the Board as a participating employer
     under the Plan.

          "Award" means any award of Restricted Stock or Stock Options under the
     Plan.

          "Award Agreement" means an agreement setting forth the terms and
     conditions applicable to an Award granted to a Participant under the Plan.

          "Board" means the Board of Directors of the Company.

          "Book Value" means, as of any given date, on a per share basis (1) the
     shareholders' equity in the Company as of the end of the immediately
     preceding fiscal year as reflected in the Company's audited consolidated
     balance sheet as of such year-end date, subject to such adjustments as the
     Committee shall specify at or after grant, divided by (2) the number of
     outstanding shares of Stock as of such year-end date, subject to such
     adjustments as the Committee shall specify for events subsequent to such
     year-end date.

          "Change in Control" has the meaning assigned to it in Section 7(b).

          "Change in Control Price" has the meaning assigned to it in Section
     7(d).

          "Code" means the Internal Revenue Code of 1986, as amended from time
     to time, and any successor thereto.

          "Committee" means the Compensation Committee of the Board.

          "Company" means The Progressive Corporation, an Ohio corporation, or
     any successor corporation.

                                      -1-

<PAGE>

          "Disability" means a mental or physical condition which, in the
     opinion of the Committee, renders a Participant unable or incompetent to
     carry out the job responsibilities held by such Participant or the duties
     assigned to such Participant at the time such condition arose or was
     incurred, and which is expected to be permanent or for an indefinite
     duration.

          "Eligible Persons" has the meaning assigned to it in Section 4.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Expiration Date" means the date upon which an Award, or any portion
     thereof, is scheduled to expire or terminate if not exercised or vested
     prior thereto, as determined by the Committee.

          "Fair Market Value" means, as of any given date, the mean between the
     highest and lowest quoted selling price of the Stock on such date on the
     New York Stock Exchange or, if no such sale of the Stock occurs on the New
     York Stock Exchange on such date, then such mean price on the next
     preceding day on which the Stock was traded. If the Stock is no longer
     traded on the New York Stock Exchange, then the Fair Market Value of the
     Stock shall be determined by the Committee in good faith.

          "Family Member" means a Participant's child, stepchild, grandchild,
     parent, stepparent, grandparent, spouse, sibling, niece, nephew,
     mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law
     or sister-in-law, including adoptive relationships, a trust in which any of
     these persons (and/or the Participant) holds more than 50% of the
     beneficial interest, a foundation in which any of these persons (and/or the
     Participant) controls the management of assets and any other entity in
     which any of these persons (and/or the Participant) owns more than 50% of
     the voting interests.

          "Incentive Stock Option" means any Stock Option intended to be and
     designated as an "Incentive Stock Option", which satisfies the requirements
     of Section 422 of the Code or any successor section thereto.

          "Non-Employee Director" shall have the meaning set forth in Rule
     16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under
     the Exchange Act, or any successor definition adopted by the Commission.

          "Non-Qualified Stock Option" means any Stock Option that is not an
     Incentive Stock Option.

          "Option Exercise Price" means the price at which a share of Stock may
     be purchased by a Participant pursuant to the exercise of an Option, as
     determined by the Committee and set forth in the related Option Award
     Agreement.

          "Option Term" shall have the meaning assigned to it in Section
     6(b)(2).

          "Outside Director" shall have the meaning set forth in Section 162(m)
     of the Code and the regulations promulgated thereunder.

                                      -2-

<PAGE>

          "Participant" means an Eligible Person who holds an outstanding Award
     granted under the Plan.

          "Performance-Based Restricted Stock" means an Award of Restricted
     Stock, which will vest upon the achievement of Performance Goals
     established by or under the direction of the Committee and set forth in the
     related Award Agreement and which is intended to qualify for the exemption
     from the limitation on deductibility imposed by Section 162(m) of the Code.

          "Performance Goals" means the performance goals established by the
     Committee with respect to any Award, which shall be based on one or more of
     the following measures: earned premiums, operating income, net income,
     combined ratio, underwriting income and/or operating ratios (including loss
     ratio, loss adjustment expense ratio and/or expense ratio). Performance
     goals may be measured on a corporate, subsidiary or business unit basis, or
     any combination thereof. Performance goals may reflect absolute entity
     performance or a relative comparison of entity performance to the
     performance of a peer group of entities or other external measure.

          "Plan" means The Progressive Corporation 2003 Incentive Plan, as
     amended from time to time.

          "Potential Change in Control" has the meaning assigned to it in
     Section 7(c).

          "Restricted Stock" means an Award of shares of Stock that is made
     pursuant to Section 5 and is subject to restrictions.

          "Restriction Period" and "Minimum Restriction Period" shall have the
     meanings assigned to them in Section 5(b)(6).

          "Section 16 Participant" means a Participant under the Plan who is
     then subject to Section 16 of the Exchange Act.

          "Stock" means the Common Shares, $1.00 par value per share, of the
     Company.

          "Stock Option" or "Option" means any option to purchase shares of
     Stock that is granted pursuant to Section 6.

          "Subsidiary" means any corporation (other than the Company) in an
     unbroken chain of corporations beginning with the Company if each of the
     corporations (other than the last corporation in the unbroken chain) owns
     stock possessing 50% or more of the total combined voting power of all
     classes of stock in one of the other corporations in such chain.

          "Time-based Restricted Stock" means an Award of Restricted Stock that
     will vest upon the lapse of a time period determined by or under the
     direction of the Committee and specified in the related Award Agreement.

SECTION 2.  ADMINISTRATION.

          The Plan shall be administered by the Committee. The Committee shall
consist of not less than three directors of the Company, all of whom shall be
Non-Employee Directors and Outside Directors. Committee members shall be
appointed by the Board and shall serve on the Committee at the

                                      -3-

<PAGE>

pleasure of the Board. The functions of the Committee specified in the Plan
shall be exercised by the Board if and to the extent that no Committee exists
which has the authority to so administer the Plan.

          The Committee shall have full power to interpret and administer the
Plan and full authority to select the individuals to whom Awards will be granted
and to determine the type and amount of Awards to be granted to each
Participant, the consideration, if any, to be paid for such Awards, the timing
of such Awards, the terms and conditions of Awards granted under the Plan and
the terms and conditions of the related Award Agreements which will be entered
into with Participants. As to the selection of and grant of Awards to
Participants who are not Section 16 Participants, the Committee may delegate its
responsibilities to members of the Company's management consistent with
applicable law.

          The Committee shall have the authority to adopt, alter, change and
repeal such rules, regulations, guidelines and practices governing the Plan,
from time to time, as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award issued under the Plan (and any Award
Agreement relating thereto); to direct employees of the Company or other
advisors to prepare such materials or perform such analyses as the Committee
deems necessary or appropriate; and otherwise to supervise the administration of
the Plan.

          Any interpretation and administration of the Plan by the Committee,
and all actions and determinations of the Committee, shall be final, binding and
conclusive on the Company, its shareholders, Subsidiaries, Affiliates, all
Participants in the Plan, their respective legal representatives, successors and
assigns and all persons claiming under or through any of them. No member of the
Board or of the Committee shall incur any liability for any action taken or
omitted, or any determination made, in good faith in connection with the Plan.

SECTION 3.  STOCK SUBJECT TO THE PLAN.

          (a) Aggregate Stock Subject to the Plan. Subject to adjustment as
     provided in Section 3(c) below, the total number of shares of Stock
     reserved and available for Awards under the Plan is 5,000,000. Any Stock
     issued hereunder may consist, in whole or in part, of authorized and
     unissued shares or treasury shares.

          (b) Forfeiture or Termination of Awards or Stock. If any Stock subject
     to any Award granted hereunder is forfeited or an Award otherwise
     terminates or expires without the issuance of Stock, the Stock that is
     subject to such Award shall again be available for distribution in
     connection with future Awards under the Plan as set forth in Section 3(a),
     unless the Participant who had been awarded such forfeited Stock or the
     expired or terminated Award has theretofor received dividends or other
     benefits of ownership with respect to such Stock. For purposes hereof, a
     Participant shall not be deemed to have received a benefit of ownership
     with respect to such Stock by the exercise of voting rights or the
     accumulation of dividends which are not realized due to the forfeiture of
     such Stock or the expiration or termination of the related Award without
     issuance of such Stock.

          (c) Adjustment. In the event of any merger, reorganization,
     consolidation, recapitalization, share dividend, share split, reverse share
     split, combination of shares or other change in the corporate or capital
     structure of the Company affecting the Stock, such substitution or
     adjustment shall be made in the aggregate number of shares of Stock
     reserved for issuance under the Plan, in the maximum number of shares that
     may be subject to Awards granted to any Participant during any calendar
     year or other period, in the number and Option Exercise Price of

                                      -4-

<PAGE>

     shares subject to outstanding Options granted under the Plan and in the
     number of shares subject to Restricted Stock Awards granted under the Plan
     as may be approved by the Committee, in its sole discretion, to prevent
     dilution or enlargement of rights; provided that the number of shares
     subject to any Award shall always be a whole number. Any fractional shares
     shall be eliminated.

          (d) Annual Award Limitation. No Participant may be granted Awards
     under the Plan with respect to an aggregate of more than 200,000 shares of
     Stock (subject to adjustment as provided in Section 3(c) hereof) during any
     calendar year.

SECTION 4.  ELIGIBILITY.

          Officers and other key employees of the Company and its Subsidiaries
and Affiliates (but excluding members of the Committee and any other person who
serves only as a director) who are responsible for or contribute to the
management, growth or profitability of the business of the Company or its
Subsidiaries or Affiliates ("Eligible Persons") are eligible to be granted
Awards under the Plan.

SECTION 5.  RESTRICTED STOCK.

          (a) Grant. Subject to the terms and conditions of the Plan, Restricted
     Stock may be awarded to Eligible Persons at any time and from time to time
     as shall be determined by the Committee. The Committee shall determine the
     individuals to whom, and the time or times at which, grants of Restricted
     Stock will be made; the number of shares of Restricted Stock to be awarded
     to each Participant; the price (if any) to be paid by the Participant
     (subject to Section 5(b)); whether the Awards will consist of
     Performance-Based Restricted Stock or Time-Based Restricted Stock or a
     combination thereof; the date or dates or conditions upon which Restricted
     Stock Awards will vest, whether through lapse of time or the achievement of
     specified Performance Goals; the Performance Goal or Goals, if any, that
     must be satisfied as a condition to the vesting of any Restricted Stock
     Award; the period or periods within which such Restricted Stock Awards may
     be subject to forfeiture; and the other terms and conditions of such Awards
     in addition to those set forth in Section 5(b).

          The Committee may condition the grant or vesting of Restricted Stock
     upon the lapse of time or the attainment of specified Performance Goals or
     such other factors as the Committee may determine in its sole discretion.

          (b) Terms and Conditions. Restricted Stock awarded under the Plan
     shall be subject to the following terms and conditions and shall contain
     such additional terms and conditions, not inconsistent with the provisions
     of the Plan, as the Committee shall deem desirable. A Participant who
     receives a Restricted Stock Award shall not have any rights with respect to
     such Award, unless and until such Participant has executed an Award
     Agreement evidencing the Award in the form approved from time to time by
     the Committee and has delivered a fully executed copy thereof to the
     Company, and has otherwise complied with the applicable terms and
     conditions of such Award.

          (1) The purchase price for shares of Restricted Stock shall be
          determined by the Committee at the time of grant and may be equal to
          their par value or zero.

                                      -5-

<PAGE>

          (2) Awards of Restricted Stock must be accepted by executing the
          related Restricted Stock Award Agreement, delivering an executed copy
          of such Restricted Stock Award Agreement to the Company and paying
          whatever price (if any) is required under Section 5(b)(1).

          (3) Subject to Section 5(b)(5), each Participant receiving a
          Restricted Stock Award shall be issued a stock certificate in respect
          of such shares of Restricted Stock. Such certificate shall be
          registered in the name of such Participant, and shall bear an
          appropriate legend referring to the terms, conditions and restrictions
          applicable to such Award.

          (4) Subject to Section 5(b)(5), the stock certificates evidencing such
          shares of Restricted Stock shall be delivered to and held in custody
          by the Company, or its designee, until the restrictions thereon shall
          have lapsed or any conditions to the vesting of such Award have been
          satisfied. As a condition of any Restricted Stock Award, the
          Participant shall deliver to the Company a stock power, endorsed in
          blank, relating to the Stock covered by such Award.

          (5) In the discretion of the Company, any shares of Restricted Stock
          awarded to any Participant may be issued and held in book entry form.
          In such event, no stock certificates evidencing such shares will be
          issued and the applicable restrictions will be noted in the records of
          the Company's transfer agent and in the book entry system.

          (6) A Participant may be granted an Award of Time-Based Restricted
          Stock or Performance-Based Restricted Stock, or a combination thereof.
          Time-Based Restricted Stock Awards will vest and all restrictions
          thereon will terminate upon the lapse of a period of time specified by
          the Committee, provided all other conditions to vesting have been met.
          Performance-Based Restricted Stock Awards will vest and all
          restrictions thereon will terminate upon the certification by the
          Committee of the achievement of the specified Performance Goals,
          provided all other conditions to vesting have been met.

          (7) Subject to the provisions of this Plan and the related Restricted
          Stock Award Agreement, during the period set by the Committee
          commencing with the date of a Restricted Stock Award (the "Restriction
          Period"), the Participant who has received such Award shall not be
          permitted to sell, transfer, pledge, assign or otherwise encumber the
          shares of Restricted Stock which are subject to such Award. The
          Restriction Period shall not be less than six months and one day in
          duration ("Minimum Restriction Period") and may be a function of time
          or the achievement of Performance Goals, or both, as determined by the
          Committee at the time of grant. Subject to these limitations and the
          Minimum Restriction Period requirement, the Committee, in its sole
          discretion, may provide for the lapse of such restrictions in
          installments and may accelerate or waive such restrictions, in whole
          or in part, based on service, performance or such other factors and
          criteria as the Committee may determine, in its sole discretion;
          provided that any such action does not affect any Award held by any
          Participant who is subject to Section 162(m) of the Code.

          (8) Except as provided in this Section 5(b)(8), Section 5(b)(7) or
          Section 5(b)(9), the Participant shall have, with respect to the
          shares of Restricted Stock awarded, all of the rights of a shareholder
          of the Company, including the right to vote the Stock and the right to
          receive any dividends. The Committee, in its sole discretion, as
          determined at the time

                                      -6-

<PAGE>

          of award, may permit or require the payment of cash dividends to be
          deferred and, if the Committee so determines, reinvested, subject to
          Section 10(f), in additional Restricted Stock to the extent shares are
          available under Section 3, or otherwise reinvested. Stock dividends
          issued with respect to Restricted Stock shall be treated as additional
          shares of Restricted Stock that are subject to the same restrictions
          and other terms and conditions that apply to the shares with respect
          to which such dividends are issued.

          (9) No Restricted Stock shall be transferable by any Participant other
          than by will or by the laws of descent and distribution, except that,
          if determined by the Committee at the time of grant and so provided in
          the applicable Award Agreement, a Participant may transfer Restricted
          Stock during his or her lifetime to one or more of his or her Family
          Members, provided that no consideration is paid for the transfer and
          that the transfer would not result in the loss of any exemption under
          Rule 16b-3 of the Exchange Act with respect to any Restricted Stock.
          The transferee of Restricted Stock will be subject to all
          restrictions, terms and conditions applicable to the Restricted Stock
          prior to its transfer, except that the Restricted Stock will not be
          further transferable by the transferee other than by will or by the
          laws of descent and distribution.

          (10) If a Participant's employment by the Company or any Subsidiary or
          Affiliate terminates by reason of death, any Restricted Stock held by
          such Participant at the time of death shall thereafter vest or any
          restrictions lapse, to the extent such Restricted Stock would have
          become vested or no longer subject to restriction within one year from
          the time of death had the Participant continued to fulfill all of the
          conditions of the Restricted Stock Award during such period; provided
          that, if the vesting of such Award is conditioned on or subject to the
          achievement of specified Performance Goals, such Performance Goals are
          achieved prior to the earlier of the expiration of such one year
          period or the Expiration Date of the Award, subject in all cases to
          the Minimum Restriction Period requirement. The balance of the
          Restricted Stock shall be forfeited.

          (11) If a Participant's employment by the Company or any Subsidiary or
          Affiliate terminates by reason of Disability, any Restricted Stock
          then held by such Participant shall thereafter vest or any restriction
          lapse, to the extent such Restricted Stock would have become vested or
          no longer subject to restrictions within one year from the time of
          such termination had the Participant continued to fulfill all of the
          conditions of the Restricted Stock Award during such period; provided
          that, if the vesting of such Award is conditioned on or subject to the
          achievement of specified Performance Goals, such Performance Goals are
          achieved prior to the earlier of the expiration of such one year
          period or the Expiration Date of the Award, subject in all cases to
          the Minimum Restriction Period requirement. The balance of the
          Restricted Stock shall be forfeited.

          (12) Unless otherwise determined by the Committee at or after the time
          of granting any Restricted Stock Award, and except as provided in
          Section 5(b)(13) hereof, if a Participant's employment by the Company
          or any Subsidiary or Affiliate terminates for any reason other than
          death or Disability, all Restricted Stock held by such Participant
          which is unvested or subject to restriction at the time of such
          termination shall thereupon be forfeited.

          (13) If a Participant's employment with the Company (or any of its
          Subsidiaries or Affiliates) terminates due to a Qualified Retirement
          (as defined below), the following provisions shall apply (subject in
          all cases to Section 5(b)(13)(C) hereof):

                                      -7-

<PAGE>

          (A)  if and to the extent that any Award Installment (as defined
               below) is vested as of the Qualified Retirement Date (as defined
               below), all shares of Restricted Stock held by the Participant in
               connection with such Award Installment shall be free of
               applicable restrictions and delivered to the Participant (subject
               to Section 5(b)(5));

          (B)  (i) with respect to all Time-Based Restricted Stock Awards held
               by the Participant on his or her Qualified Retirement Date, if
               and to the extent that any Award Installment is not vested as of
               such Qualified Retirement Date, such Award Installment (a) shall
               remain in effect with respect to fifty percent (50%) of the
               shares of Stock covered thereby and, as to such shares, shall
               immediately vest on the Participant's Qualified Retirement Date,
               and shall thereafter be free of applicable restrictions and
               delivered to the Participant (subject to Section 5(b)(5)); and
               (b) shall terminate, effective as of the Qualified Retirement
               Date, with respect to the remaining fifty percent (50%) of the
               shares covered by such Award Installment.

               (ii) with respect to all Performance-Based Restricted Stock
               Awards held by the Participant on his or her Qualified Retirement
               Date, if and to the extent that any Award Installment is not
               vested as of the Qualified Retirement Date, such Award
               Installment (a) shall remain in effect with respect to fifty
               percent (50%) of the shares of Stock covered thereby and, as to
               such shares, shall vest upon the achievement of the related
               Performance Goals (unless such Performance Goals are not achieved
               prior to the Expiration Date applicable to such Award
               Installment, in which event the Award Installment will terminate,
               and all shares of Restricted Stock covered by such Award
               Installment will be forfeited, as of such Expiration Date), and
               (b) shall terminate, effective as of the Qualified Retirement
               Date, with respect to the remaining fifty percent (50%) of the
               shares covered by such Award Installment; provided that, with
               respect to any member of the Company's Senior Management Group
               (as defined below) who has given the Company at least one (1)
               full year's prior written notice of his or her retirement, upon
               any Qualified Retirement of such individual, no portion of any
               Performance-Based Restricted Stock Awards held by such
               Participant on his or her Qualified Retirement Date will
               terminate on such date, but such Awards will remain in effect and
               one hundred percent (100%) of the shares subject to each such
               Award held by such Participant on his or her Qualified Retirement
               Date shall vest as of the date on which the applicable
               Performance Goals have been achieved (unless such Performance
               Goals are not achieved prior to the Expiration Date applicable to
               such Award, in which event the Award will terminate, and all
               shares of Restricted Stock covered by such Award will be
               forfeited, as of such Expiration Date).

          (C)  if the Committee determines that the Participant is or has
               engaged in any Disqualifying Activity (as defined below), then
               (1) to the extent that any Restricted Stock Award held by such
               Participant has vested as of the

                                      -8-

<PAGE>

               Disqualification Date (as defined below), the Participant shall
               have the right to receive all shares of Restricted Stock which
               are vested as of such date (subject to Section 5(b)(5)) and (2)
               to the extent that any Restricted Stock Award held by such
               Participant has not vested as of the Disqualification Date, the
               Award shall terminate, and all related shares shall be forfeited,
               as of such date. Any determination by the Committee, which may
               act upon the recommendation of the Chief Executive Officer or
               other senior officer of the Company, that the Participant is or
               has engaged in any Disqualifying Activity, and as to the
               Disqualification Date, shall be final and conclusive.

          (D)  For purposes of Section 5(b)13, the following terms are defined
               as follows:

               (i) QUALIFIED RETIREMENT - any termination of a Participant's
               employment with the Company or its Subsidiaries or Affiliates for
               any reason (other than death, Disability or an involuntary
               termination for Cause) if, at or immediately prior to the date of
               such termination, the Participant satisfies both of the following
               conditions:

                    (a)  the Participant is 55 year of age or older; and

                    (b)  the sum of the Participant's age and completed years of
                         service as an employee of the Company or its
                         Subsidiaries or Affiliates (disregarding fractions in
                         both cases) shall total 70 or more.

               (ii) QUALIFIED RETIREMENT DATE - the date as of which the
               Participant's employment with the Company or its Subsidiaries or
               Affiliates shall terminate pursuant to a Qualified Retirement.

               (iii) DISQUALIFYING ACTIVITY - means any of the following acts or
               activities:

                    (a) directly or indirectly serving as a principal,
                    shareholder, partner, director, officer, employee or agent
                    of, or as a consultant, advisor or in any other capacity to,
                    any business or entity which competes with the Company or
                    its Subsidiaries or Affiliates in any business or activity
                    then conducted by the Company or any of its Subsidiaries or
                    Affiliates to an extent deemed material by the Committee; or

                    (b) any disclosure by the Participant, or any use by the
                    Participant for his or her own benefit or for the benefit of
                    any other person or entity (other than the Company or its
                    Subsidiaries or Affiliates), of any confidential information
                    or trade secret of the Company or any of its Subsidiaries or
                    Affiliates without the consent of the Company; or

                                      -9-

<PAGE>

                    (c) any material violation of any of the provisions of the
                    Company's Code of Business Conduct and Ethics ("Code of
                    Conduct") or any agreement between the Participant and the
                    Company;

                    (d) making any other disclosure or taking any other action
                    which is determined by the Committee to be materially
                    detrimental to the business, prospects or reputation of the
                    Company or any of its Subsidiaries or Affiliates; or

                    (e) the Participant fails, in any material respect, to
                    perform his or her assigned responsibilities as an employee
                    of the Company or any of its Subsidiaries or Affiliates, as
                    determined by the Committee, in its sole judgment, after
                    consulting with the Chief Executive Officer.

          The ownership of less than 2% of the outstanding voting securities of
          a publicly traded corporation which competes with the Company or any
          of its Subsidiaries or Affiliates shall not constitute a Disqualifying
          Activity.

               (iv) CAUSE - means a felony conviction of a Participant or the
               failure of a Participant to contest prosecution for a felony, or
               a Participant's willful misconduct or dishonesty, any of which,
               in the judgment of the Committee, is harmful to the business or
               reputation of the Company or any Subsidiary or Affiliate; or any
               material violation of the Code of Conduct or any agreement
               between the Participant and the Company.

               (v) DISQUALIFICATION DATE - the earliest date as of which the
               Participant engaged in any Disqualifying Activity, as determined
               by the Committee.

               (vi) AWARD INSTALLMENT - if the Restricted Stock Award consists
               of multiple Awards, each with a separate Vesting Date and/or
               separate Expiration Date, any one of such Awards or, if the
               Restricted Stock Award consists of a single Award, with a single
               Vesting Date and a single Expiration Date, then the entire Award.

               (vii) VESTING DATE - the date on which any restrictions on a
               Restricted Stock Award terminate and such Award vests, whether by
               reason of lapse of time, the achievement of specified Performance
               Goals or both.

               (viii) SENIOR MANAGEMENT GROUP - means the Chief Executive
               Officer and other members of the executive management team, (i.e.
               the Chief Executive Officer's Direct Reporting Group) determined,
               with respect to any Participant, on the date of his or her
               retirement from the Company.

                                      -10-

<PAGE>

          (14) Any Participant who is then eligible to participate in The
          Progressive Corporation Executive Deferred Compensation Plan or any
          other deferral plan hereafter adopted or maintained by the Company (a
          "Deferral Plan") may elect to defer all or any portion of any
          Restricted Stock Awards granted to him or her under this Plan, subject
          to and in accordance with the terms of the applicable Deferral Plan.

SECTION 6.        STOCK OPTIONS.

          (a) Grant. Subject to the terms and conditions of the Plan, Stock
     Options may be granted to Eligible Persons at any time and from time to
     time, as shall be determined by the Committee. The Committee shall
     determine the individuals to whom, and the time or times at which, grants
     of Stock Options will be made; the number of shares purchasable under each
     Stock Option; and the other terms and conditions of the Stock Options in
     addition to those set forth in Sections 6(b) and 6(c). Any Stock Option
     granted under the Plan shall be in such form as the Committee may from time
     to time approve.

          Stock Options granted under the Plan may be either of two types, which
     shall be indicated on their face: (i) Incentive Stock Options or (ii)
     Non-Qualified Stock Options. Subject to Section 6(c) hereof, the Committee
     shall have the authority to grant to any Participant Incentive Stock
     Options, Non-Qualified Stock Options or a combination thereof.

          (b) Terms and Conditions. Options granted under the Plan shall be
     evidenced by Option Award Agreements, shall be subject to the following
     terms and conditions and shall contain such additional terms and
     conditions, not inconsistent with the terms of the Plan, as the Committee
     shall deem desirable:

          (1) Option Exercise Price. The Option Exercise Price per share of
          Stock purchasable under a Non-Qualified Stock Option shall be
          determined by the Committee at the time of grant and shall not be less
          than 100% of the Fair Market Value of the Stock on the date of grant.
          The Option Exercise Price per share of Stock purchasable under an
          Incentive Stock Option shall be determined by the Committee at the
          time of grant and shall be not less than 100% of the Fair Market Value
          of the Stock at the date of grant (or 110% of the Fair Market Value of
          the Stock at the date of grant in the case of a Participant who at the
          date of grant owns shares possessing more than ten percent of the
          total combined voting power of all classes of stock of the Company or
          its parent or subsidiary corporations (as determined under Section
          424(d), (e) and (f) of the Code)(a "10% Participant")).

          (2) Option Term. The term of each Stock Option ("Option Term") shall
          be determined by the Committee at the time of grant and may not exceed
          ten years from the date the Option is granted (or, with respect to
          Incentive Stock Options, five years in the case of a 10% Participant).

          (3) Exercise. Stock Options shall be exercisable at such time or times
          and subject to such terms and conditions (which may include, without
          limitation, the achievement of one or more Performance Goals) as shall
          be determined by the Committee at or after grant; provided, however,
          that, except as provided in Section 7, unless otherwise determined by
          the Committee at or after grant, no Stock Option shall be exercisable
          prior

                                      -11-

<PAGE>

          to six months and one day following the date of grant. If any Stock
          Option is exercisable only in installments or only after a specified
          vesting date, the Committee may accelerate or waive, in whole or in
          part, such installment exercise provisions or vesting date, at any
          time at or after grant based on such factors as the Committee shall
          determine, in its sole discretion.

          (4) Method of Exercise. Subject to whatever installment exercise
          provisions apply with respect to such Stock Option, and the six month
          and one day holding period set forth in Section 6(b)(3) and any other
          conditions to vesting, Stock Options may be exercised in whole or in
          part, at any time during the Option Term, by giving to the Company
          written notice of exercise specifying the number of shares of Stock to
          be purchased.

               Such notice shall be accompanied by payment in full of the Option
          Exercise Price of the shares of Stock for which the Option is
          exercised, in cash or by check or such other instrument as the
          Committee may accept. Subject to the following sentence, unless
          otherwise determined by the Committee, in its sole discretion, at or
          after grant, payment, in full or in part, of the Option Exercise Price
          of (i) Incentive Stock Options may be made in the form of unrestricted
          Stock then owned by the Participant and (ii) Non-Qualified Stock
          Options may be made in the form of unrestricted Stock then owned by
          the Participant or Stock that is part of the Non-Qualified Stock
          Option being exercised. Notwithstanding the foregoing, any election by
          a Section 16 Participant to satisfy such payment obligation, in whole
          or in part, with unrestricted Stock then owned by such Participant or
          Stock that is part of the Non-Qualified Stock Option being exercised
          shall be subject to prior approval by the Committee, in its sole
          discretion. The value of each such share surrendered or withheld shall
          be equal to the Fair Market Value of the Stock on the date the Option
          is exercised.

               No Stock shall be issued pursuant to an exercise of an Option
          until full payment has been made therefor. A Participant shall not
          have rights to dividends or any other rights of a shareholder with
          respect to any Stock subject to an Option unless and until the
          Participant has given written notice of exercise, has paid in full for
          such shares, has given, if requested, the representation described in
          Section 10(a) and such shares have been issued to the Participant.

          (5) Non-Transferability of Options. Except as provided in the
          following sentence, no Stock Option shall be transferable by the
          Participant other than by will or by the laws of descent and
          distribution, and all Stock Options shall be exercisable, during the
          Participant's lifetime, only by the Participant or, subject to
          Sections 6(b)(3) and 6(c), by the Participant's authorized legal
          representative if the Participant is unable to exercise an Option as a
          result of the Participant's Disability. Notwithstanding the foregoing,
          if determined by the Committee at the time of grant and so provided in
          the applicable Award Agreement, a Participant may transfer a
          Non-Qualified Stock Option during his or her lifetime to one or more
          of his or her Family Members, provided that no consideration is paid
          for the transfer and that the transfer would not result in the loss of
          any exemption under Rule 16b-3 of the Exchange Act with respect to any
          Stock Option. The transferee of a Stock Option will be subject to all
          restrictions, terms and conditions applicable to the Stock Option
          prior to its transfer, except that the Stock Option will not be
          further transferable by the transferee other than by will or by the
          laws of descent and distribution.

                                      -12-

<PAGE>

          (6) Termination by Death. Subject to Section 6(c), if any
          Participant's employment by the Company or any Subsidiary or Affiliate
          terminates by reason of death, any Stock Option held by such
          Participant may thereafter be exercised, to the extent such Option was
          exercisable at the time of death or would have become exercisable
          within one year from the time of death had the Participant continued
          to fulfill all conditions of the Option during such period (or on such
          accelerated basis as the Committee may determine at or after grant),
          by the estate of the Participant (acting through its fiduciary) for a
          period of one year (or such other period as the Committee may specify
          at or after grant) from the date of such death; provided that, if the
          vesting of such Option is conditioned on or subject to the achievement
          of specified Performance Goals, such Performance Goals are achieved
          prior to the earlier of the expiration of such one year period or the
          Expiration Date of such Option. The balance of the Stock Option shall
          be forfeited.

          (7) Termination by Reason of Disability. Subject to Sections 6(b)(3)
          and 6(c), if a Participant's employment by the Company or any
          Subsidiary or Affiliate terminates by reason of Disability, any Stock
          Option held by such Participant may thereafter be exercised, to the
          extent such Option was exercisable at the time of termination or would
          have become exercisable within one year from the time of termination
          had the Participant continued to fulfill all conditions of the Option
          during such period (or on such accelerated basis as the Committee may
          determine at or after grant), by the Participant or by the
          Participant's duly authorized legal representative if the Participant
          is unable to exercise the Option as a result of the Participant's
          Disability, for a period of one year (or such other period as the
          Committee may specify at or after grant) from the date of such
          termination of employment; provided that, if the vesting of such
          Option is conditioned on or subject to the achievement of specified
          Performance Goals, such Performance Goals are achieved prior to the
          earlier of the expiration of such one year period or the Expiration
          Date of such Option; and provided, further, that if the Participant
          dies within such one-year period (or such other period as the
          Committee shall specify at or after grant), any unexercised Stock
          Option held by such Participant shall thereafter be exercisable by the
          estate of the Participant (acting through its fiduciary) to the same
          extent to which it was exercisable at the time of death for a period
          of one year from the date of such termination of employment. The
          balance of the Stock Option shall be forfeited.

          (8) Other Termination. Unless otherwise determined by the Committee at
          or after the time of granting any Stock Option, if a Participant's
          employment by the Company or any Subsidiary or Affiliate terminates
          for any reason other than death or Disability, all Stock Options held
          by such Participant shall thereupon immediately terminate, except that
          if the Participant is involuntarily terminated by the Company or any
          Subsidiary or Affiliate without Cause, any such Stock Option may be
          exercised, to the extent otherwise exercisable at the time of such
          termination, at any time during the lesser of two months from the date
          of such termination or the balance of such Stock Option's term. For
          purposes of this Section, "Cause" has the meaning set forth in Section
          5(b)(13)(D)(iv).

     (c) Incentive Stock Options. Notwithstanding Section 4, only employees of
     the Company or a Subsidiary shall be eligible to receive Incentive Stock
     Options. Notwithstanding Sections 6(b)(6) and (7), an Incentive Stock
     Option shall be exercisable by (i) a Participant's authorized legal
     representative (if the Participant is unable to exercise the Incentive
     Stock Option as a result of the Participant's Disability) only if, and to
     the extent, permitted by Section 422 of the Code and Section 16 of the
     Exchange Act and the rules and regulations promulgated thereunder and (ii)
     by

                                      -13-

<PAGE>

     the Participant's estate, in the case of death, or authorized legal
     representative, in the case of Disability, no later than 10 years from the
     date the Incentive Stock Option was granted (or 5 years in the case of a
     10% Participant) (in addition to any other restrictions or limitations
     which may apply). Anything in the Plan to the contrary notwithstanding, no
     term or provision of the Plan relating to Incentive Stock Options shall be
     interpreted, amended or altered, nor shall any discretion or authority
     granted under the Plan be exercised, so as to disqualify the Plan under
     Section 422 of the Code, or, without the consent of the Participant(s)
     affected, to disqualify any Incentive Stock Option under such Section 422
     or any successor Section thereto.

     (d) Buyout Provisions. The Committee may at any time buy out, for a payment
     in cash, Stock or Restricted Stock, any Option previously granted, based on
     such terms and conditions as the Committee shall establish and agree upon
     with the Participant, provided that no such transaction involving a Section
     16 Participant shall be structured or effected in a manner that would
     violate, or result in any liability on the part of the Participant under,
     Section 16 of the Exchange Act or the rules and regulations promulgated
     thereunder.

SECTION 7.  CHANGE IN CONTROL PROVISION.

          (a) Impact of Event. In the event of and upon: (1) a "Change in
     Control" as defined in Section 7(b) or (2) a "Potential Change in Control"
     as defined in Section 7(c), the following acceleration and valuation
     provisions shall apply:

               (1) Any Stock Options awarded under the Plan not previously
          exercisable and vested shall become fully exercisable and vested;

               (2) All restrictions, limitations and Performance Goals, if any,
          applicable to any Restricted Stock or Stock Options shall terminate
          and such Stock or Stock Options shall be deemed fully vested; and

               (3) The value of all outstanding Awards, in each case to the
          extent vested, shall, unless otherwise determined by the Committee in
          its sole discretion at or after grant but prior to any Change in
          Control or Potential Change in Control, be cashed out on the basis of
          the "Change in Control Price", as defined in Section 7(d), as of the
          date such Change in Control or such Potential Change in Control is
          determined to have occurred.

          (b) Definition of Change in Control. For purposes of Section 7(a), a
     "Change in Control" means the happening of any of the following:

               (1) When any "person" as defined in Section 3(a)(9) of the
          Exchange Act and as used in Sections 13(d) and 14(d) thereof,
          including a "group" as defined in Section 13(d) of the Exchange Act,
          but excluding the Company and any Subsidiary and any employee benefit
          plan sponsored or maintained by the Company or any Subsidiary
          (including any trustee of such plan acting as trustee), directly or
          indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3
          under the Exchange Act, as amended from time to time), of securities
          of the Company representing 20 percent or more of the combined voting
          power of the Company's then outstanding securities; provided, however,
          that the terms "person" and "group" shall not include any "Excluded
          Director", and the term "Excluded Director" means any director who, on
          the effective date of the Plan, is

                                      -14-

<PAGE>

          the beneficial owner of or has the right to acquire an amount of Stock
          equal to or greater than five percent of the number of shares of Stock
          outstanding on such effective date; and further provided that, unless
          otherwise determined by the Board or any committee thereof, the terms
          "person" and "group" shall not include any entity or group of entities
          which has acquired Stock of the Company in the ordinary course of
          business for investment purposes only and not with the purpose or
          effect of changing or influencing the control of the Company, or in
          connection with or as a participant in any transaction having such
          purpose or effect, ("Investment Intent"), as demonstrated by the
          filing by such entity or group of a statement on Schedule 13G
          (including amendments thereto) pursuant to Regulation 13D under the
          Exchange Act, as long as such entity or group continues to hold such
          Stock with an Investment Intent;

               (2) When, during any period of 24 consecutive months during the
          existence of the Plan, the individuals who, at the beginning of such
          period, constitute the Board (the "Incumbent Directors") cease for any
          reason other than death to constitute at least a majority thereof;
          provided, however, that a director who was not a director at the
          beginning of such 24-month period shall be deemed to have satisfied
          such 24-month requirement (and be an Incumbent Director) if such
          director was elected by, or on the recommendation of or with the
          approval of, at least two-thirds of the directors who then qualified
          as Incumbent Directors either actually (because they were directors at
          the beginning of such 24-month period) or by prior operation of this
          Section 7(b)(2); or

               (3) The occurrence of a transaction requiring shareholder
          approval for the acquisition of the Company, or any portion of the
          outstanding equity securities or voting power of the Company, by an
          entity other than the Company or a Subsidiary through purchase of
          Stock or assets, by merger or otherwise;

     provided, however, a change in control shall not be deemed to be a Change
     in Control for purposes of the Plan if the Board approves such change prior
     to either (i) the commencement of any of the events described in Section
     7(b)(l), (2), or (3) or 7(c)(l) or (ii) the commencement by any person
     other than the Company of a tender offer for Stock.

          (c) Definition of Potential Change in Control. For purposes of Section
     7(a), a "Potential Change in Control" means the happening of any one of the
     following:

          (1) The approval by shareholders of an agreement by the Company, the
          consummation of which would result in a Change in Control of the
          Company as defined in Section 7(b); or

          (2) The acquisition of beneficial ownership, directly or indirectly,
          by any entity, person or group (other than the Company or a Subsidiary
          or any Company employee benefit plan (including any trustee of such
          plan acting as such trustee)) of securities of the Company
          representing five percent or more of the combined voting power of the
          Company's outstanding securities and the adoption by the Board of a
          resolution to the effect that a Potential Change in Control of the
          Company has occurred for purposes of this Plan.

          (d) Change in Control Price. For purposes of this Section 7, "Change
     in Control Price" means the highest price per share paid in any transaction
     reported on the New York Stock Exchange Composite Index, or paid or offered
     in any bona fide transaction related to a Change in

                                      -15-

<PAGE>

     Control or Potential Change in Control of the Company, at any time during
     the 60-day period immediately preceding the occurrence of the Change in
     Control (or, where applicable, the occurrence of the Potential Change in
     Control event), in each case as determined by the Committee.

SECTION 8.  AMENDMENTS AND TERMINATION.

          The Board may at any time, in its sole discretion, amend, supplement,
alter or discontinue the Plan, but no such amendment, alteration or
discontinuation shall be made which would impair the rights of a Participant
under an Award theretofore granted, without the Participant's consent. The
Company shall submit to the shareholders of the Company for their approval any
amendments to the Plan which are required to be approved by shareholder by law
or the rules and regulations of any governmental authority or any stock exchange
upon which the Stock is then traded.

          Subject to changes in law or other legal requirements that would
permit otherwise, the Plan may not be amended without the approval of the
shareholders, to (a) increase the total number of shares of Stock that may be
issued under the Plan or to any Participant during any calendar year (except for
adjustments pursuant to Section 3(c)), (b) permit the granting of Stock Options
with Option Exercise Prices lower than those specified in Section 6(b)(1), (c)
modify the Plan's eligibility requirements, or (d) change the Performance Goals
specified in Section 1(c). Further, no Performance-Based Award may be amended if
such amendment would adversely affect the Award's qualification as qualified
performance-based compensation under Section 162(m) of the Code.

          The Committee may at any time, in its sole discretion, amend the terms
of any outstanding Award, but no such amendment shall be made which would impair
the rights of a Participant under an Award theretofore granted, without the
Participant's consent; nor, in the case of any Award of a Stock Option, shall
any such amendment reduce the Option Exercise Price relating to such Stock
Option or, in any other case, reduce the purchase price (if any) of the Stock
which is subject to an outstanding Award; nor shall any such amendment be made
which would make the applicable exemptions provided by Rule 16b-3 under the
Exchange Act unavailable to any Section 16 Participant holding an Award without
the Participant's consent.

          Subject to the above provisions, the Board shall have all necessary
authority to amend the Plan to take into account changes in applicable
securities and tax laws and accounting rules, as well as other developments.

SECTION 9.  UNFUNDED STATUS OF PLAN.

          The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.

SECTION 10.  GENERAL PROVISIONS.

          (a) The Committee may require each Participant acquiring Stock
     pursuant to an Award under the Plan to represent to and agree with the
     Company in writing that the Participant is acquiring the Stock

                                      -16-

<PAGE>

     without a view to distribution thereof. Any certificates for such shares
     may include any legend which the Committee deems appropriate to reflect any
     restrictions on transfer.

               All shares of Stock or other securities issued under the Plan
     shall be subject to such stop-transfer orders and other restrictions as the
     Committee may deem advisable under the rules, regulations and other
     requirements of the Securities and Exchange Commission, any stock exchange
     upon which the Stock is then listed, and any applicable federal or state
     securities laws, and the Committee may cause a legend or legends to be
     placed on any certificates for such shares to make appropriate reference to
     such restrictions or to cause such restrictions to be noted in the records
     of the Company's stock transfer agent and any applicable book entry system.

          (b) Nothing contained in this Plan shall prevent the Board from
     adopting other or additional compensation arrangements, subject to
     shareholder approval if such approval is required; and such arrangements
     may be either generally applicable or applicable only in specific cases.

          (c) Neither the adoption of the Plan, nor its operation, nor any
     document describing, implementing or referring to the Plan, or any part
     thereof, shall confer upon any Participant under the Plan any right to
     continue in the employ, or as a director, of the Company or any Subsidiary
     or Affiliate, or shall in any way affect the right and power of the Company
     or any Subsidiary or Affiliate to terminate the employment, or service as a
     director, or change the job title, duties, authority, position or
     compensation of any Participant in the Plan at any time with or without
     assigning a reason therefor, to the same extent as the Company or any
     Subsidiary or Affiliate might have done if the Plan had not been adopted.

          (d) For purposes of this Plan, a transfer of a Participant between the
     Company and any of its Subsidiaries or Affiliates, or between such
     Subsidiaries or Affiliates, shall not be deemed a termination of employment
     or adversely affect or enlarge the rights of any Participant under this
     Plan or with respect to any Award.

          (e) No later than the date as of which an amount first becomes
     includable in the gross income of the Participant for federal income tax
     purposes with respect to any Award under the Plan, the Participant shall
     pay to the Company, or make arrangements satisfactory to the Committee
     regarding the payment of, any federal, state or local taxes or other items
     of any kind required by law to be withheld with respect to such amount.
     Subject to the following sentence, unless otherwise determined by the
     Committee, withholding obligations may be settled with Stock, including
     unrestricted Stock previously owned by the Participant or Stock that is
     part of the Award that gives rise to the withholding requirement.
     Notwithstanding the foregoing, any election by a Section 16 Participant to
     settle such tax withholding obligation with Stock that is previously owned
     by the Participant or part of such Award shall be subject to prior approval
     by the Committee, in its sole discretion. The obligations of the Company
     under the Plan shall be conditional on such payment or arrangements and the
     Company and its Subsidiaries and Affiliates to the extent permitted by law
     shall have the right to deduct any such taxes from any payment of any kind
     otherwise due to the Participant.

          (f) The actual or deemed reinvestment of dividends in additional Stock
     or Restricted Stock at the time of any dividend payment shall only be
     permissible if sufficient shares of Stock are available under Section 3 for
     such reinvestment (taking into account the then outstanding and previously
     granted Restricted Stock and Stock Options).

                                      -17-

<PAGE>

          (g) The Plan, all Awards made and all actions taken thereunder and any
     agreements relating thereto, shall be governed by and construed in
     accordance with the laws of the State of Ohio.

          (h) In the event any Award is transferred or assigned pursuant to a
     court order, such transfer or assignment shall be without liability to the
     Company and the Company shall have the right to offset against such Award
     any expenses (including attorneys' fees) incurred by the Company in
     connection with such transfer or assignment.

          (i) All Award Agreements entered into with Participants pursuant to
     the Plan shall be subject to the Plan. A Participant who receives an Award
     under the Plan shall not have any rights with the respect to such Award,
     unless and until such Participant has executed an Award Agreement
     evidencing the Award, in the form approved by the Committee; has delivered
     a fully-executed copy of such Award Agreement to the Company; and has
     otherwise complied with the applicable terms and conditions of such Award.

          (j) The provisions of Awards need not be the same with respect to each
     Participant.

SECTION 11.  SHAREHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.

          The Plan was adopted by the Board on January 31, 2003 and is subject
to approval by the holders of the Company's outstanding Stock, in accordance
with applicable law. The Plan will become effective on the date of such
approval.

SECTION 12.  TERM OF PLAN.

          No Award shall be granted pursuant to the Plan on or after January 31,
2013, but Awards granted prior to such date may extend beyond that date.

                                      -18-

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