Document:

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                                RIGHTS AGREEMENT

                           DATED AS OF JUNE 23, 2003,

                                 BY AND BETWEEN

                           LAIDLAW INTERNATIONAL, INC.

                                       AND

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
                                 AS RIGHTS AGENT

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<TABLE>
<S>                                                                                                                  <C>
1.       Certain Definitions....................................................................................      1

2.       Appointment of Rights Agent............................................................................      5

3.       Issue of Right Certificates............................................................................      5

4.       Form of Right Certificates.............................................................................      7

5.       Countersignature and Registration......................................................................      7

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

7.       Exercise of Rights; Purchase Price; Expiration Date of Rights..........................................      8

8.       Cancellation and Destruction of Right Certificates.....................................................      9

9.       Company Covenants Concerning Securities and Rights.....................................................     10

10.      Record Date............................................................................................     11

11.      Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights........................     11

12.      Certificate of Adjusted Purchase Price or Number of Securities.........................................     19

13.      Consolidation, Merger or Sale or Transfer of Assets or Earning Power...................................     20

14.      Fractional Rights and Fractional Securities............................................................     22

15.      Rights of Action.......................................................................................     24

16.      Agreement of Rights Holders............................................................................     24

17.      Right Certificate Holder Not Deemed a Stockholder......................................................     25

18.      Concerning the Rights Agent............................................................................     25

19.      Merger or Consolidation or Change of Name of Rights Agent..............................................     25

20.      Duties of Rights Agent.................................................................................     26

21.      Change of Rights Agent.................................................................................     27

22.      Issuance of New Right Certificates.....................................................................     28

23.      Redemption.............................................................................................     29

24.      Exchange...............................................................................................     29

25.      Notice of Certain Events...............................................................................     30

26.      Notices................................................................................................     31

27.      Supplements and Amendments.............................................................................     32

28.      Successors; Certain Covenants..........................................................................     32

29.      Benefits of This Agreement.............................................................................     32

30.      Governing Law..........................................................................................     32

31.      Severability...........................................................................................     33
</TABLE>

                                      (i)

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<TABLE>
<S>                                                                                                                 <C>
32.      Descriptive Headings, Etc..............................................................................     33

33.      Determinations and Actions by the Board................................................................     33

34.      Counterparts...........................................................................................     33

Exhibit A......................................................................................................     A-1

Exhibit B......................................................................................................     B-1
</TABLE>

                                      (ii)

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                                RIGHTS AGREEMENT

         This RIGHTS AGREEMENT, dated as of June 23, 2003 (this "Agreement"), is
made and entered into by and between Laidlaw International, Inc., a Delaware
corporation (the "Company"), and Wells Fargo Bank Minnesota, National
Association, as Rights Agent (the "Rights Agent").

                                    RECITALS

         WHEREAS, pursuant to the confirmation order entered by the United
States Bankruptcy Court for the Western District of New York in Jointly
Administered Case Nos. 01-14099K through 01-14104K on February 27, 2003, the
Company has effected a distribution of one right (a "Right") for each share of
Common Stock, par value $0.01 per share, of the Company (a "Common Share")
outstanding as of the Close of Business (as hereinafter defined) on the day that
is ten days after the Effective Date (as defined in the Bankruptcy Plan) (the
"Record Date"), each Right initially representing the right to purchase one
one-hundredth of a Preferred Share (as hereinafter defined), on the terms and
subject to the conditions herein set forth, and the Company has further
authorized and directed the issuance of one Right (subject to adjustment as
provided herein) with respect to each Common Share issued or delivered by the
Company (whether originally issued or delivered from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date (as
hereinafter defined) and the Expiration Date (as hereinafter defined) or as
provided in Section 22.

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

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

         (a)      "Acquiring Person" means any Person (other than the Company or
                  any Related Person) who or which, together with all Affiliates
                  and Associates of such Person, is the Beneficial Owner of 15%
                  or more of the then-outstanding Common Shares; provided,
                  however, that a Person will not be deemed to have become an
                  Acquiring Person solely as a result of a reduction in the
                  number of Common Shares outstanding unless and until such time
                  as (i) such Person or any Affiliate or Associate of such
                  Person thereafter becomes the Beneficial Owner of additional
                  Common Shares representing 1% or more of the then-outstanding
                  Common Shares, other than as a result of a stock dividend,
                  stock split or similar transaction effected by the Company in
                  which all holders of Common Shares are treated equally, or
                  (ii) any other Person who is the Beneficial Owner of Common
                  Shares representing 1% or more of the then-outstanding Common
                  Shares thereafter becomes an Affiliate or Associate of such
                  Person; provided, further, however, that a Person (other than
                  the Company or any Related Person) that or which, together
                  with all Affiliates and Associates of such Person, solely as a
                  result of distributions made pursuant to the Bankruptcy Plan
                  on account of Allowed Claims in Classes 4, 5A, 5B and 6 (as
                  defined in the Bankruptcy Plan) held as of the Distribution
                  Record Date (as defined in the Bankruptcy Plan),

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                  becomes the Beneficial Owner of 15% or more of the
                  then-outstanding Common Shares shall not be deemed to have
                  become an Acquiring Person unless and until such time as (A)
                  such Person or any Affiliate or Associate of such Person
                  thereafter becomes the Beneficial Owner of additional Common
                  Shares representing 1% or more of the then-outstanding Common
                  Shares other than as a result of a stock dividend, stock split
                  or similar transaction effected by the Company in which all
                  holders of Common Shares are treated equally or (B) any other
                  Person who is the Beneficial Owner of Common Shares
                  representing 1% or more of the then-outstanding Common Shares
                  thereafter becomes an Affiliate or Associate of such Person.
                  Notwithstanding the foregoing, if the Board of the Company
                  determines in good faith that a Person who would otherwise be
                  an "Acquiring Person" as defined pursuant to the foregoing
                  provisions of this Section 1(a), has become such
                  inadvertently, and such Person divests as promptly as
                  practicable a sufficient number of Common Shares so that such
                  Person would no longer be an "Acquiring Person" as defined
                  pursuant to the foregoing provisions of this Section 1(a),
                  then such Person shall not be deemed to be an "Acquiring
                  Person" for any purposes of this Agreement.

         (b)      "Affiliate" and "Associate" will have the respective meanings
                  ascribed to such terms in Rule 12b-2 of the General Rules and
                  Regulations under the Exchange Act, as in effect on the date
                  of this Agreement, provided, however, that a Person will not
                  be deemed to be the Affiliate or Associate of another Person
                  solely because either or both Persons are or were Directors of
                  the Company.

         (c)      "Bankruptcy Plan" means the Third Amended Joint Plan of
                  Reorganization, dated January 23, 2003, as filed in the United
                  States Bankruptcy Court for the Western District of New York,
                  in Jointly Administered Case Nos. 01-14099K through 01-14104K.

         (d)      A Person will be deemed the "Beneficial Owner" of, and to
                  "Beneficially Own," any securities:

                  (i)      the beneficial ownership of which such Person or any
                           of such Person's Affiliates or Associates, directly
                           or indirectly, has the right to acquire (whether such
                           right is exercisable immediately or only after the
                           passage of time) pursuant to any agreement,
                           arrangement or understanding (whether or not in
                           writing), or upon the exercise of conversion rights,
                           exchange rights, warrants, options or other rights
                           (in each case, other than upon exercise or exchange
                           of the Rights); provided, however, that a Person will
                           not be deemed the Beneficial Owner of, or to
                           Beneficially Own, securities tendered pursuant to a
                           tender or exchange offer made by or on behalf of such
                           Person or any of such Person's Affiliates or
                           Associates until such tendered securities are
                           accepted for purchase or exchange; or

                  (ii)     that such Person or any of such Person's Affiliates
                           or Associates, directly or indirectly, has or shares
                           the right to vote or dispose of, including

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                           pursuant to any agreement, arrangement or
                           understanding (whether or not in writing); or

                  (iii)    of which any other Person is the Beneficial Owner, if
                           such Person or any of such Person's Affiliates or
                           Associates has any agreement, arrangement or
                           understanding (whether or not in writing) with such
                           other Person (or any of such other Person's
                           Affiliates or Associates) with respect to acquiring,
                           holding, voting or disposing of any securities of the
                           Company;

provided, however, that a Person will not be deemed the Beneficial Owner of, or
to Beneficially Own, any security (A) if such Person has the right to vote such
security pursuant to an agreement, arrangement or understanding (whether or not
in writing) that (1) arises solely from a revocable proxy given to such Person
in response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report), (B) if such beneficial ownership arises solely
as a result of such Person's status as a "clearing agency," as defined in
Section 3(a)(23) of the Exchange Act, or (C) if such beneficial ownership arises
solely as a result of such Person's status as a disbursing agent for the holders
of claims pursuant to the Bankruptcy Plan; provided, further, however, that
nothing in this paragraph (d) will cause a Person engaged in business as an
underwriter of securities to be the Beneficial Owner of, or to Beneficially Own,
any securities acquired through such Person's participation in good faith in an
underwriting syndicate until the expiration of 40 calendar days after the date
of such acquisition, or such later date as the Directors of the Company may
determine in any specific case.

         (e)      "Business Day" means any day other than a Saturday, Sunday or
                  a day on which banking institutions in the State of New York
                  (or such other state in which the principal office of the
                  Rights Agent is located) are authorized or obligated by law or
                  executive order to close.

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

         (g)      "Common Shares" when used with reference to the Company means
                  the shares of Common Stock, par value $0.01 per share, of the
                  Company; provided, however, that, if the Company is the
                  continuing or surviving corporation in a transaction described
                  in Section 13(a)(ii), "Common Shares" when used with reference
                  to the Company means shares of the capital stock or units of
                  the equity interests with the greatest aggregate voting power
                  of the Company. "Common Shares" when used with reference to
                  any corporation or other legal entity other than the Company,
                  including an Issuer, means shares of the capital stock or
                  units of the equity interests with the greatest aggregate
                  voting power of such Person (and, in the case of a Person not
                  organized in corporate form, which equity interests shall
                  represent the right to participate in profits, losses,
                  deductions and credits of such Person).

         (h)      "Company" means Laidlaw International, Inc., a Delaware
                  corporation.

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         (i)      "Distribution Date" means the earlier of: (i) the Close of
                  Business on the tenth calendar day following the Share
                  Acquisition Date, or (ii) the Close of Business on the tenth
                  Business Day (or, unless the Distribution Date shall have
                  previously occurred, such later date as may be specified by
                  the Board of Directors of the Company) after the commencement
                  of a tender or exchange offer by any Person (other than the
                  Company or any Related Person), if upon the consummation
                  thereof such Person would constitute an Acquiring Person
                  hereunder.

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

         (k)      "Exchange Ratio" has the meaning set forth in Section 24.

         (l)      "Exercise Value" has the meaning set forth in Section
                  11(a)(iii).

         (m)      "Expiration Date" means the earliest of (i) the Close of
                  Business on the Final Expiration Date, (ii) the time at which
                  the Rights are redeemed as provided in Section 23, and (iii)
                  the time at which all exercisable Rights are exchanged as
                  provided in Section 24.

         (n)      "Final Expiration Date" means the tenth anniversary of the
                  Record Date.

         (o)      "Flip-in Event" means any event described in clauses (A), (B)
                  or (C) of Section 11(a)(ii).

         (p)      "Flip-over Event" means any event described in clauses (i),
                  (ii) or (iii) of Section 13(a).

         (q)      "Issuer" has the meaning set forth in Section 13(b).

         (r)      "Nasdaq" means The NASDAQ Stock Market.

         (s)      "Person" means any individual, firm, corporation or other
                  legal entity, and includes any successor (by merger or
                  otherwise) of such entity.

         (t)      "Preferred Shares" means shares of Series A Junior
                  Participating Preferred Stock, par value $0.01 per share, of
                  the Company having the rights and preferences set forth in the
                  Certificate of Incorporation of the Company.

         (u)      "Purchase Price" means initially $75.00 per one one-hundredth
                  of a Preferred Share, subject to adjustment from time to time
                  as provided in this Agreement.

         (v)      "Record Date" has the meaning set forth in the Recitals to
                  this Agreement.

         (w)      "Redemption Price" means $0.01 per Right, subject to
                  adjustment by resolution of the Board of Directors of the
                  Company to reflect any stock split, stock dividend or similar
                  transaction occurring after the Record Date.

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         (x)      "Related Person" means (i) any Subsidiary of the Company or
                  (ii) any employee benefit or stock ownership plan of the
                  Company or of any Subsidiary of the Company or any entity
                  holding Common Shares for or pursuant to the terms of any such
                  plan.

         (y)      "Right" has the meaning set forth in the Recitals to this
                  Agreement.

         (z)      "Right Certificates" means certificates evidencing the Rights,
                  in substantially the form attached as Exhibit A.

         (aa)     "Rights Agent" means Wells Fargo Bank Minnesota, National
                  Association, unless and until a successor Rights Agent has
                  become such pursuant to the terms of this Agreement,
                  whereupon, "Rights Agent" will mean such successor Rights
                  Agent.

         (bb)     "Securities Act" means the Securities Act of 1933, as amended.

         (cc)     "Share Acquisition Date" means the first date of public
                  announcement by the Company (by press release, filing made
                  with the Securities and Exchange Commission or otherwise) that
                  an Acquiring Person has become such.

         (dd)     "Subsidiary" when used with reference to any Person means any
                  corporation or other legal entity of which a majority of the
                  voting power of the voting equity securities or equity
                  interests is owned, directly or indirectly, by such Person;
                  provided, however, that for purposes of Section 13(b),
                  "Subsidiary" when used with reference to any Person means any
                  corporation or other legal entity of which at least 20% of the
                  voting power of the voting equity securities or equity
                  interests is owned, directly or indirectly, by such Person.

         (ee)     "Trading Day" means any day on which the principal national
                  securities exchange on which the Common Shares are listed or
                  admitted to trading is open for the transaction of business
                  or, if the Common Shares are not listed or admitted to trading
                  on any national securities exchange, a Business Day.

         (ff)     "Triggering Event" means any Flip-in Event or Flip-over Event.

2.                Appointment of Rights Agent. The Company hereby appoints the
         Rights Agent to act as agent for the Company and the holders of the
         Rights (who, in accordance with Section 3, will also be, prior to the
         Distribution Date, the holders of the Common Shares) in accordance with
         the terms and conditions hereof, and the Rights Agent hereby accepts
         such appointment and hereby certifies that it complies with the
         requirements of the New York Stock Exchange governing transfer agents
         and registrars. The Company may from time to time act as Co-Rights
         Agent or appoint such Co-Rights Agents as it may deem necessary or
         desirable. Any actions that may be taken by the Rights Agent pursuant
         to the terms of this Agreement may be taken by any such Co-Rights
         Agent. To the extent that any Co-Rights Agent takes any action pursuant
         to this Agreement, such Co-Rights Agent will be entitled to all of the
         rights and protections of, and subject to all of the applicable duties
         and obligations imposed upon, the Rights Agent pursuant to the terms of
         this Agreement.

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3.                Issue of Right Certificates. (a) Until the Distribution Date,
         (i) the Rights will be evidenced by the certificates representing
         Common Shares registered in the names of the record holders thereof
         (which certificates representing Common Shares will also be deemed to
         be Right Certificates), (ii) the Rights will be transferable only in
         connection with the transfer of the underlying Common Shares, and (iii)
         the surrender for transfer of any certificates evidencing Common Shares
         in respect of which Rights have been issued will also constitute the
         transfer of the Rights associated with the Common Shares evidenced by
         such certificates. On or as promptly as practicable after the Record
         Date, the Company will send by first class, postage prepaid mail, to
         each record holder of Common Shares as of the Close of Business on the
         Record Date, at the address of such holder shown on the records of the
         Company as of such date, a copy of a Summary of Rights to Purchase
         Preferred Stock in substantially the form attached as Exhibit B.

         (b)      Rights will be issued by the Company in respect of all Common
                  Shares (other than Common Shares issued upon the exercise or
                  exchange of any Right) issued or delivered by the Company
                  (whether originally issued or delivered from the Company's
                  treasury) after the Record Date but prior to the earlier of
                  the Distribution Date and the Expiration Date. Certificates
                  evidencing such Common Shares will have stamped on, impressed
                  on, printed on, written on, or otherwise affixed to them the
                  following legend or such similar legend as the Company may
                  deem appropriate and as is not inconsistent with the
                  provisions of this Agreement, or as may be required to comply
                  with any applicable law or with any rule or regulation made
                  pursuant thereto or with any rule or regulation of any stock
                  exchange or transaction reporting system on which the Common
                  Shares may from time to time be listed or quoted, or to
                  conform to usage:

         This Certificate also evidences and entitles the holder hereof to
         certain Rights as set forth in a Rights Agreement between Laidlaw
         International, Inc. and Wells Fargo Bank Minnesota, National
         Association (the "Rights Agreement"), the terms of which are hereby
         incorporated herein by reference and a copy of which is on file at the
         principal executive offices of Laidlaw International, Inc. The Rights
         are not exercisable prior to the occurrence of certain events specified
         in the Rights Agreement. Under certain circumstances, as set forth in
         the Rights Agreement, such Rights may be redeemed, may be exchanged,
         may expire, may be amended, or may be evidenced by separate
         certificates and no longer be evidenced by this Certificate. Laidlaw
         International, Inc. will mail to the holder of this Certificate a copy
         of the Rights Agreement, as in effect on the date of mailing, without
         charge promptly after receipt of a written request therefor. Under
         certain circumstances as set forth in the Rights Agreement, Rights that
         are or were beneficially owned by an Acquiring Person or any Affiliate
         or Associate of an Acquiring Person (as such terms are defined in the
         Rights Agreement) may become null and void.

         (c)      Any Right Certificate issued pursuant to this Section 3 that
                  represents Rights beneficially owned by an Acquiring Person or
                  any Associate or Affiliate thereof and any Right Certificate
                  issued at any time upon the transfer of any Rights to an
                  Acquiring Person or any Associate or Affiliate thereof or to
                  any nominee of such Acquiring Person, Associate or Affiliate
                  and any Right Certificate issued pursuant

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                  to Section 6 or 11 hereof upon transfer, exchange, replacement
                  or adjustment of any other Right Certificate referred to in
                  this sentence, shall be subject to and contain the following
                  legend or such similar legend as the Company may deem
                  appropriate and as is not inconsistent with the provisions of
                  this Agreement, or as may be required to comply with any
                  applicable law or with any rule or regulation made pursuant
                  thereto or with any rule or regulation of any stock exchange
                  on which the Rights may from time to time be listed, or to
                  conform to usage:

         The Rights represented by this Right Certificate are or were
         beneficially owned by a Person who was an Acquiring Person or an
         Affiliate or an Associate of an Acquiring Person (as such terms are
         defined in the Rights Agreement). This Right Certificate and the Rights
         represented hereby may become null and void in the circumstances
         specified in Section 11(a)(ii) of the Rights Agreement.

         (d)      As promptly as practicable after the Distribution Date, the
                  Company will prepare and execute, the Rights Agent will
                  countersign and the Company will send or cause to be sent (and
                  the Rights Agent will, if requested, send), by first class,
                  insured, postage prepaid mail, to each record holder of Common
                  Shares as of the Close of Business on the Distribution Date,
                  at the address of such holder shown on the records of the
                  Company, a Right Certificate evidencing one Right for each
                  Common Share so held, subject to adjustment as provided
                  herein. As of and after the Distribution Date, the Rights will
                  be evidenced solely by such Right Certificates.

         (e)      In the event that the Company purchases or otherwise acquires
                  any Common Shares after the Record Date but prior to the
                  Distribution Date, any Rights associated with such Common
                  Shares will be deemed canceled and retired so that the Company
                  will not be entitled to exercise any Rights associated with
                  the Common Shares so purchased or acquired.

4.                Form of Right Certificates. The Right Certificates (and the
         form of election to purchase and the form of assignment to be printed
         on the reverse thereof) will, when, as and if issued, be substantially
         in the form attached as Exhibit A with such changes and marks of
         identification or designation, and such legends, summaries or
         endorsements printed thereon, as the Company may deem appropriate and
         as are not inconsistent with the provisions of this Agreement, or as
         may be required to comply with any applicable law or with any rule or
         regulation made pursuant thereto or with any rule or regulation of any
         stock exchange or transaction reporting system on which the Rights may
         from time to time be listed or quoted, or to conform to usage. Subject
         to the provisions of Sections 11 and 22, the Right Certificates,
         whenever issued, on their face will entitle the holders thereof to
         purchase such number of one one-hundredths of a Preferred Share as are
         set forth therein at the Purchase Price set forth therein, but the
         Purchase Price, the number and kind of securities issuable upon
         exercise of each Right and the number of Rights outstanding will be
         subject to adjustment as provided herein.

5.                Countersignature and Registration. (a) The Right Certificates
         will be executed on behalf of the Company by its Chairman of the Board,
         its President or any Vice President,

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         either manually or by facsimile signature. The Right Certificates will
         be countersigned manually by the Rights Agent and will not be valid for
         any purpose unless so countersigned. In case any officer of the Company
         who signed any of the Right Certificates ceases to be such officer of
         the Company before countersignature by the Rights Agent and issuance
         and delivery by the Company, such Right Certificates, nevertheless, may
         be countersigned by the Rights Agent, and issued and delivered by the
         Company with the same force and effect as though the Person who signed
         such Right Certificates had not ceased to be such officer of the
         Company; and any Right Certificate may be signed on behalf of the
         Company by any Person who, at the actual date of the execution of such
         Right Certificate, is a proper officer of the Company to sign such
         Right Certificate, although at the date of the execution of this Rights
         Agreement any such Person was not such officer.

         (b)      Following the Distribution Date, the Rights Agent will keep or
                  cause to be kept, at the principal office of the Rights Agent
                  designated for such purpose and at such other offices as may
                  be required to comply with any applicable law or with any rule
                  or regulation made pursuant thereto or with any rule or
                  regulation of any stock exchange or any transaction reporting
                  system on which the Rights may from time to time be listed or
                  quoted, books for registration and transfer of the Right
                  Certificates issued hereunder. Such books will show the names
                  and addresses of the respective holders of the Right
                  Certificates, the number of Rights evidenced on its face by
                  each of the Right Certificates and the date of each of the
                  Right Certificates.

6.                 Transfer, Split Up, Combination and Exchange of Right
         Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
         (a) Subject to the provisions of Sections 7(d) and 14, at any time
         after the Close of Business on the Distribution Date and prior to the
         Expiration Date, any Right Certificate or Right Certificates
         representing exercisable Rights may be transferred, split up, combined
         or exchanged for another Right Certificate or Right Certificates,
         entitling the registered holder to purchase a like number of one
         one-hundredths of a Preferred Share (or other securities, as the case
         may be) as the Right Certificate or Right Certificates surrendered then
         entitled such holder (or former holder in the case of a transfer) to
         purchase. Any registered holder desiring to transfer, split up, combine
         or exchange any such Right Certificate or Rights Certificates must make
         such request in a writing delivered to the Rights Agent and must
         surrender the Right Certificate or Right Certificates to be
         transferred, split up, combined or exchanged at the principal office of
         the Rights Agent designated for such purpose. Thereupon or as promptly
         as practicable thereafter, subject to the provisions of Sections 7(d)
         and 14, the Company will prepare, execute and deliver to the Rights
         Agent, and the Rights Agent will countersign and deliver, a Right
         Certificate or Right Certificates, as the case may be, as so requested.
         The Company may require payment of a sum sufficient to cover any tax or
         governmental charge that may be imposed in connection with any
         transfer, split up, combination or exchange of Right Certificates.

         (b)      Upon receipt by the Company and the Rights Agent of evidence
                  reasonably satisfactory to them of the loss, theft,
                  destruction or mutilation of a Right Certificate and, in case
                  of loss, theft or destruction, of indemnity or security

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                  reasonably satisfactory to them, and, if requested by the
                  Company, reimbursement to the Company and the Rights Agent of
                  all reasonable expenses incidental thereto, and upon surrender
                  to the Rights Agent and cancellation of the Right Certificate
                  if mutilated, the Company will prepare, execute and deliver a
                  new Right Certificate of like tenor to the Rights Agent and
                  the Rights Agent will countersign and deliver such new Right
                  Certificate to the registered holder in lieu of the Right
                  Certificate so lost, stolen, destroyed or mutilated.

7.                Exercise of Rights; Purchase Price; Expiration Date of Rights.
         (a) The registered holder of any Right Certificate may exercise the
         Rights evidenced thereby (except as otherwise provided herein) in whole
         or in part at any time after the Distribution Date and prior to the
         Expiration Date, upon surrender of the Right Certificate, with the form
         of election to purchase on the reverse side thereof duly executed, to
         the Rights Agent at the office or offices of the Rights Agent
         designated for such purpose, together with payment in cash, in lawful
         money of the United States of America by certified check or bank draft
         payable to the order of the Company, equal to the sum of (i) the
         exercise price for the total number of securities as to which such
         surrendered Rights are exercised and (ii) an amount equal to any
         applicable transfer tax required to be paid by the holder of such Right
         Certificate in accordance with the provisions of Section 9(d).

         (b)      Upon receipt of a Right Certificate representing exercisable
                  Rights with the form of election to purchase duly executed,
                  accompanied by payment as described above, the Rights Agent
                  will promptly (i) requisition from any transfer agent of the
                  Preferred Shares (or make available, if the Rights Agent is
                  the transfer agent) certificates representing the number of
                  one one-hundredths of a Preferred Share to be purchased (and
                  the Company hereby irrevocably authorizes and directs its
                  transfer agent to comply with all such requests), or, if the
                  Company elects to deposit Preferred Shares issuable upon
                  exercise of the Rights hereunder with a depositary agent,
                  requisition from the depositary agent depositary receipts
                  representing such number of one one-hundredths of a Preferred
                  Share as are to be purchased (and the Company hereby
                  irrevocably authorizes and directs such depositary agent to
                  comply with all such requests), (ii) after receipt of such
                  certificates (or depositary receipts, as the case may be),
                  cause the same to be delivered to or upon the order of the
                  registered holder of such Right Certificate, registered in
                  such name or names as may be designated by such holder, (iii)
                  when appropriate, requisition from the Company or any transfer
                  agent therefor (or make available, if the Rights Agent is the
                  transfer agent) certificates representing the number of
                  equivalent common shares to be issued in lieu of the issuance
                  of Common Shares in accordance with the provisions of Section
                  11(a)(iii), (iv) when appropriate, after receipt of such
                  certificates, cause the same to be delivered to or upon the
                  order of the registered holder of such Right Certificate,
                  registered in such name or names as may be designated by such
                  holder, (v) when appropriate, requisition from the Company the
                  amount of cash to be paid in lieu of the issuance of
                  fractional shares in accordance with the provisions of Section
                  14 or in lieu of the issuance of Common Shares in accordance
                  with the provisions of Section 11(a)(iii), (vi) when
                  appropriate, after receipt, deliver such cash to or upon the
                  order of the registered holder of such Right Certificate, and
                  (vii) when

                                       9

<PAGE>

                  appropriate, deliver any due bill or other instrument provided
                  to the Rights Agent by the Company for delivery to the
                  registered holder of such Right Certificate as provided by
                  Section 11(l).

         (c)      In case the registered holder of any Right Certificate
                  exercises less than all the Rights evidenced thereby, the
                  Company will prepare, execute and deliver a new Right
                  Certificate evidencing Rights equivalent to the Rights
                  remaining unexercised and the Rights Agent will countersign
                  and deliver such new Right Certificate to the registered
                  holder of such Right Certificate or to his duly authorized
                  assigns, subject to the provisions of Section 14.

         (d)      Notwithstanding anything in this Agreement to the contrary,
                  neither the Rights Agent nor the Company will be obligated to
                  undertake any action with respect to any purported transfer,
                  split up, combination or exchange of any Right Certificate
                  pursuant to Section 6 or exercise of a Right Certificate as
                  set forth in this Section 7 unless the registered holder of
                  such Right Certificate has (i) completed and signed the
                  certificate following the form of assignment or the form of
                  election to purchase, as applicable, set forth on the reverse
                  side of the Right Certificate surrendered for such transfer,
                  split up, combination, exchange or exercise and (ii) provided
                  such additional evidence of the identity of the Beneficial
                  Owner (or former Beneficial Owner) or Affiliates or Associates
                  thereof as the Company may reasonably request.

8.                Cancellation and Destruction of Right Certificates. All Right
         Certificates surrendered for the purpose of exercise, transfer, split
         up, combination or exchange will, if surrendered to the Company or to
         any of its stock transfer agents, be delivered to the Rights Agent for
         cancellation or in canceled form, or, if surrendered to the Rights
         Agent, will be canceled by it, and no Right Certificates will be issued
         in lieu thereof except as expressly permitted by the provisions of this
         Agreement. The Company will deliver to the Rights Agent for
         cancellation and retirement, and the Rights Agent will so cancel and
         retire, any other Right Certificate purchased or acquired by the
         Company otherwise than upon the exercise thereof. The Rights Agent will
         deliver all canceled Right Certificates to the Company, or will, at the
         written request of the Company, destroy such canceled Right
         Certificates, and in such case will deliver a certificate of
         destruction thereof to the Company.

9.                Company Covenants Concerning Securities and Rights. The
         Company covenants and agrees that:

         (a)      It will cause to be reserved and kept available out of its
                  authorized and unissued Preferred Shares or any Preferred
                  Shares held in its treasury, a number of Preferred Shares that
                  will be sufficient to permit the exercise in full of all
                  outstanding Rights in accordance with Section 7.

         (b)      So long as the Preferred Shares (and, following the occurrence
                  of a Triggering Event, Common Shares and/or other securities)
                  issuable upon the exercise of the Rights may be listed on a
                  national securities exchange, or quoted on Nasdaq, it

                                       10

<PAGE>

                  will use its reasonable best efforts to cause, from and after
                  such time as the Rights become exercisable, all securities
                  reserved for issuance upon the exercise of Rights to be listed
                  on such exchange, or quoted on Nasdaq, upon official notice of
                  issuance upon such exercise.

         (c)      It will take all such action as may be necessary to ensure
                  that all Preferred Shares (and, following the occurrence of a
                  Triggering Event, Common Shares and/or other securities)
                  delivered upon exercise of Rights, at the time of delivery of
                  the certificates for such securities, will be (subject to
                  payment of the Purchase Price) duly authorized, validly
                  issued, fully paid and nonassessable securities.

         (d)      It will pay when due and payable any and all federal and state
                  transfer taxes and charges that may be payable in respect of
                  the issuance or delivery of the Right Certificates and of any
                  certificates representing securities issued upon the exercise
                  of Rights; provided, however, that the Company will not be
                  required to pay any transfer tax or charge that may be payable
                  in respect of any transfer or delivery of Right Certificates
                  to a Person other than, or the issuance or delivery of
                  certificates or depositary receipts representing securities
                  issued upon the exercise of Rights in a name other than that
                  of, the registered holder of the Right Certificate evidencing
                  Rights surrendered for exercise, or to issue or deliver any
                  certificates or depositary receipts representing securities
                  issued upon the exercise of any Rights until any such tax or
                  charge has been paid (any such tax or charge being payable by
                  the holder of such Right Certificate at the time of surrender)
                  or until it has been established to the Company's reasonable
                  satisfaction that no such tax is due.

         (e)      It will use its best efforts (i) to file on an appropriate
                  form, as soon as practicable following the later of the Share
                  Acquisition Date and the Distribution Date, a registration
                  statement under the Securities Act with respect to the
                  securities issuable upon exercise of the Rights, (ii) to cause
                  such registration statement to become effective as soon as
                  practicable after such filing, and (iii) to cause such
                  registration statement to remain effective (with a prospectus
                  at all times meeting the requirements of the Securities Act)
                  until the earlier of (A) the date as of which the Rights are
                  no longer exercisable for such securities and (B) the
                  Expiration Date. The Company will also take such action as may
                  be appropriate under, or to ensure compliance with, the
                  securities or "blue sky" laws of the various states in
                  connection with the exercisability of the Rights. The Company
                  may temporarily suspend, for a period of time not to exceed
                  120 days after the date set forth in clause (i) of the first
                  sentence of this Section 9(e), the exercisability of the
                  Rights in order to prepare and file such registration
                  statement and to permit it to become effective. Upon any such
                  suspension, the Company will issue a public announcement
                  stating that the exercisability of the Rights has been
                  temporarily suspended, as well as a public announcement at
                  such time as the suspension is no longer in effect. In
                  addition, if the Company determines that a registration
                  statement should be filed under the Securities Act or any
                  state securities laws following the Distribution Date, the
                  Company may temporarily suspend the exercisability of the
                  Rights in each relevant jurisdiction until such time as a
                  registration statement has been declared effective and, upon
                  any such suspension,

                                       11

<PAGE>

                  the Company will issue a public announcement stating that the
                  exercisability of the Rights has been temporarily suspended,
                  as well as a public announcement at such time as the
                  suspension is no longer in effect. Notwithstanding anything in
                  this Agreement to the contrary, the Rights will not be
                  exercisable in any jurisdiction if the requisite registration
                  or qualification in such jurisdiction has not been effected or
                  the exercise of the Rights is not permitted under applicable
                  law.

         (f)      Notwithstanding anything in this Agreement to the contrary,
                  after the later of the Share Acquisition Date and the
                  Distribution Date, it will not take (or permit any Subsidiary
                  to take) any action if at the time such action is taken it is
                  reasonably foreseeable that such action will eliminate or
                  otherwise diminish the benefits intended to be afforded by the
                  Rights.

         (g)      In the event that the Company is obligated to issue other
                  securities of the Company and/or pay cash pursuant to Section
                  11, 13, 14 or 24 it will make all arrangements necessary so
                  that such other securities and/or cash are available for
                  distribution by the Rights Agent, if and when appropriate.

10.               Record Date. Each Person in whose name any certificate
         representing Preferred Shares (or Common Shares and/or other
         securities, as the case may be) is issued upon the exercise of Rights
         will for all purposes be deemed to have become the holder of record of
         the Preferred Shares (or Common Shares and/or other securities, as the
         case may be) represented thereby on, and such certificate will be
         dated, the date upon which the Right Certificate evidencing such Rights
         was duly surrendered and payment of the Purchase Price (and all
         applicable transfer taxes) was made; provided, however, that if the
         date of such surrender and payment is a date upon which the transfer
         books of the Company for the Preferred Shares (or Common Shares and/or
         other securities, as the case may be) are closed, such Person will be
         deemed to have become the record holder of such securities on, and such
         certificate will be dated, the next succeeding Business Day on which
         the transfer books of the Company for the Preferred Shares (or Common
         Shares and/or other securities, as the case may be) are open. Prior to
         the exercise of the Rights evidenced thereby, the holder of a Right
         Certificate will not be entitled to any rights of a holder of any
         security for which the Rights are or may become exercisable, including,
         without limitation, the right to vote, to receive dividends or other
         distributions, or to exercise any preemptive rights, and will not be
         entitled to receive any notice of any proceedings of the Company,
         except as provided herein.

11.               Adjustment of Purchase Price, Number and Kind of Securities or
         Number of Rights. The Purchase Price, the number and kind of securities
         issuable upon exercise of each Right and the number of Rights
         outstanding are subject to adjustment from time to time as provided in
         this Section 11.

         (a)      (i)      In the event that the Company at any time after the
         Record Date (A) declares a dividend on the Preferred Shares payable in
         Preferred Shares, (B) subdivides the outstanding Preferred Shares, (C)
         combines the outstanding Preferred Shares into a smaller number of
         Preferred Shares, or (D) issues any shares of its capital stock in a
         reclassification of the Preferred Shares (including any such
         reclassification in connection

                                       12

<PAGE>

         with a consolidation or merger in which the Company is the continuing
         or surviving corporation), except as otherwise provided in this Section
         11(a), the Purchase Price in effect at the time of the record date for
         such dividend or of the effective date of such subdivision, combination
         or reclassification and/or the number and/or kind of shares of capital
         stock issuable on such date upon exercise of a Right, will be
         proportionately adjusted so that the holder of any Right exercised
         after such time is entitled to receive upon payment of the Purchase
         Price then in effect the aggregate number and kind of shares of capital
         stock that, if such Right had been exercised immediately prior to such
         date and at a time when the transfer books of the Company for the
         Preferred Shares were open, the holder of such Right would have owned
         upon such exercise (and, in the case of a reclassification, would have
         retained after giving effect to such reclassification) and would have
         been entitled to receive by virtue of such dividend, subdivision,
         combination or reclassification; provided, however, that in no event
         shall the consideration to be paid upon the exercise of one Right be
         less than the aggregate par value of the shares of capital stock
         issuable upon exercise of one Right. If an event occurs that would
         require an adjustment under both this Section 11(a)(i) and Section
         11(a)(ii) or Section 13, the adjustment provided for in this Section
         11(a)(i) will be in addition to, and will be made prior to, any
         adjustment required pursuant to Section 11(a)(ii) or Section 13.

                  (ii)     Subject to the provisions of Section 24, if:

                           (A) any Person becomes an Acquiring Person; or

                           (B) any Acquiring Person or any Affiliate or
                  Associate of any Acquiring Person, directly or indirectly, (1)
                  merges into the Company or otherwise combines with the Company
                  and the Company is the continuing or surviving corporation of
                  such merger or combination (other than in a transaction
                  subject to Section 13), (2) merges or otherwise combines with
                  any Subsidiary of the Company, (3) in one or more transactions
                  (otherwise than in connection with the exercise, exchange or
                  conversion of securities exercisable or exchangeable for or
                  convertible into shares of any class of capital stock of the
                  Company or any of its Subsidiaries) transfers cash, securities
                  or any other property to the Company or any of its
                  Subsidiaries in exchange (in whole or in part) for shares of
                  any class of capital stock of the Company or any of its
                  Subsidiaries or for securities exercisable or exchangeable for
                  or convertible into shares of any class of capital stock of
                  the Company or any of its Subsidiaries, or otherwise obtains
                  from the Company or any of its Subsidiaries, with or without
                  consideration, any additional shares of any class of capital
                  stock of the Company or any of its Subsidiaries or securities
                  exercisable or exchangeable for or convertible into shares of
                  any class of capital stock of the Company or any of its
                  Subsidiaries (otherwise than as part of a pro rata
                  distribution to all holders of shares of any class of capital
                  stock of the Company, or any of its Subsidiaries), (4) sells,
                  purchases, leases, exchanges, mortgages, pledges, transfers or
                  otherwise disposes (in one or more transactions) to, from,
                  with or of, as the case may be, the Company or any of its
                  Subsidiaries (otherwise than in a transaction subject to
                  Section 13), any property, including securities, on terms and
                  conditions less favorable to the Company than the Company
                  would be able to obtain in an arm's-length transaction with an
                  unaffiliated third party, (5)

                                       13

<PAGE>

                  receives any compensation from the Company or any of its
                  Subsidiaries other than compensation as a director or a
                  regular full-time employee, in either case at rates consistent
                  with the Company's (or its Subsidiaries') past practices, or
                  (6) receives the benefit, directly or indirectly (except
                  proportionately as a stockholder), of any loans, advances,
                  guarantees, pledges or other financial assistance or any tax
                  credits or other tax advantage provided by the Company or any
                  of its Subsidiaries; or

                           (C) during such time as there is an Acquiring Person,
                  there is any reclassification of securities of the Company
                  (including any reverse stock split), or any recapitalization
                  of the Company, or any merger or consolidation of the Company
                  with any of its Subsidiaries, or any other transaction or
                  series of transactions involving the Company or any of its
                  Subsidiaries (whether or not with or into or otherwise
                  involving an Acquiring Person), other than a transaction
                  subject to Section 13, that has the effect, directly or
                  indirectly, of increasing by more than 1% the proportionate
                  share of the outstanding shares of any class of equity
                  securities of the Company or any of its Subsidiaries, or of
                  securities exercisable or exchangeable for or convertible into
                  equity securities of the Company or any of its Subsidiaries,
                  of which an Acquiring Person, or any Affiliate or Associate of
                  any Acquiring Person, is the Beneficial Owner;

         then, and in each such case, from and after the latest of the
         Distribution Date, the Share Acquisition Date and the date of the
         occurrence of such Flip-in Event, proper provision will be made so that
         each holder of a Right, except as provided below, will thereafter have
         the right to receive, upon exercise thereof in accordance with the
         terms of this Agreement at an exercise price per Right equal to the
         product of the then-current Purchase Price multiplied by the number of
         one one-hundredths of a Preferred Share for which a Right was
         exercisable immediately prior to the date of the occurrence of such
         Flip-in Event (or, if any other Flip-in Event shall have previously
         occurred, the product of the then-current Purchase Price multiplied by
         the number of one one-hundredths of a Preferred Share for which a Right
         was exercisable immediately prior to the date of the first occurrence
         of a Flip-in Event), in lieu of Preferred Shares, such number of Common
         Shares as equals the result obtained by (x) multiplying the
         then-current Purchase Price by the number of one one-hundredths of a
         Preferred Share for which a Right was exercisable immediately prior to
         the date of the occurrence of such Flip-in Event (or, if any other
         Flip-in Event shall have previously occurred, multiplying the
         then-current Purchase Price by the number of one one-hundredths of a
         Preferred Share for which a Right was exercisable immediately prior to
         the date of the first occurrence of a Flip-in Event), and dividing that
         product by (y) 50% of the current per share market price of the Common
         Shares (determined pursuant to Section 11(d)) on the date of the
         occurrence of such Flip-in Event. Notwithstanding anything in this
         Agreement to the contrary, from and after the first occurrence of a
         Flip-in Event, any Rights that are Beneficially Owned by (A) any
         Acquiring Person (or any Affiliate or Associate of any Acquiring
         Person), (B) a transferee of any Acquiring Person (or any such
         Affiliate or Associate) who becomes a transferee after the occurrence
         of a Flip-in Event, or (C) a transferee of

                                       14

<PAGE>

         any Acquiring Person (or any such Affiliate or Associate) who became a
         transferee prior to or concurrently with the occurrence of a Flip-in
         Event pursuant to either (1) a transfer from an Acquiring Person to
         holders of its equity securities or to any Person with whom it has any
         continuing agreement, arrangement or understanding regarding the
         transferred Rights or (2) a transfer that the Directors of the Company
         have determined is part of a plan, arrangement or understanding that
         has the purpose or effect of avoiding the provisions of this Section
         11(a)(ii), and subsequent transferees of any of such Persons, will be
         void without any further action and any holder of such Rights will
         thereafter have no rights whatsoever with respect to such Rights under
         any provision of this Agreement. The Company will use all reasonable
         efforts to ensure that the provisions of this Section 11(a)(ii) are
         complied with, but will have no liability to any holder of Right
         Certificates or any other Person as a result of its failure to make any
         determinations with respect to an Acquiring Person or its Affiliates,
         Associates or transferees hereunder. Upon the occurrence of a Flip-in
         Event, no Right Certificate that represents Rights that are or have
         become void pursuant to the provisions of this Section 11(a)(ii) will
         thereafter be issued pursuant to Section 3 or Section 6, and any Right
         Certificate delivered to the Rights Agent that represents Rights that
         are or have become void pursuant to the provisions of this Section
         11(a)(ii) will be canceled. Upon the occurrence of a Flip-over Event,
         any Rights that shall not have been previously exercised pursuant to
         this Section 11(a)(ii) shall thereafter be exercisable (to the extent
         they have not become void pursuant to this Section 11(a)(ii)) only
         pursuant to Section 13 and not pursuant to this Section 11(a)(ii).

                  (iii)    Upon the occurrence of a Flip-in Event, if there are
                           not sufficient Common Shares authorized but unissued
                           or issued but not outstanding to permit the issuance
                           of all the Common Shares issuable in accordance with
                           Section 11(a)(ii) upon the exercise of a Right, the
                           Board of Directors of the Company will use its best
                           efforts promptly to authorize and, subject to the
                           provisions of Section 9(e), make available for
                           issuance additional Common Shares or other equity
                           securities of the Company having equivalent voting
                           rights and an equivalent value (as determined in good
                           faith by the Board of Directors of the Company) to
                           the Common Shares (for purposes of this Section
                           11(a)(iii), "equivalent common shares"). In the event
                           that equivalent common shares are so authorized, upon
                           the exercise of a Right in accordance with the
                           provisions of Section 7, the registered holder will
                           be entitled to receive (A) Common Shares, to the
                           extent any are available, and (B) a number of
                           equivalent common shares, which the Board of
                           Directors of the Company has determined in good faith
                           to have a value equivalent to the excess of (x) the
                           aggregate current per share market value on the date
                           of the occurrence of the most recent Flip-in Event of
                           all the Common Shares issuable in accordance with
                           Section 11(a)(ii) upon the exercise of a Right (the
                           "Exercise Value") over (y) the aggregate current per
                           share market value on the date of the occurrence of
                           the most recent Flip-in Event of any Common Shares
                           available for issuance upon the exercise of such
                           Right; provided, however,

                                       15

<PAGE>

                           that if at any time after 30 calendar days after the
                           latest of the Share Acquisition Date, the
                           Distribution Date and the date of the occurrence of
                           the most recent Flip-in Event, there are not
                           sufficient Common Shares and/or equivalent common
                           shares available for issuance upon the exercise of a
                           Right, then the Company will be obligated to deliver,
                           upon the surrender of such Right and without
                           requiring payment of the Purchase Price, Common
                           Shares (to the extent available), equivalent common
                           shares (to the extent available) and then cash (to
                           the extent permitted by applicable law and any
                           agreements or instruments to which the Company is a
                           party in effect immediately prior to the Share
                           Acquisition Date), which securities and cash have an
                           aggregate value equal to the excess of (1) the
                           Exercise Value over (2) the product of the
                           then-current Purchase Price multiplied by the number
                           of one one-hundredths of a Preferred Share for which
                           a Right was exercisable immediately prior to the date
                           of the occurrence of the most recent Flip-in Event
                           (or, if any other Flip-in Event shall have previously
                           occurred, the product of the then-current Purchase
                           Price multiplied by the number of one one-hundredths
                           of a Preferred Share for which a Right would have
                           been exercisable immediately prior to the date of the
                           occurrence of such Flip-in Event if no other Flip-in
                           Event had previously occurred). To the extent that
                           any legal or contractual restrictions prevent the
                           Company from paying the full amount of cash payable
                           in accordance with the foregoing sentence, the
                           Company will pay to holders of the Rights as to which
                           such payments are being made all amounts that are not
                           then restricted on a pro rata basis and will continue
                           to make payments on a pro rata basis as promptly as
                           funds become available until the full amount due to
                           each such Rights holder has been paid.

         (b)      In the event that the Company fixes a record date for the
                  issuance of rights, options or warrants to all holders of
                  Preferred Shares entitling them (for a period expiring within
                  45 calendar days after such record date) to subscribe for or
                  purchase Preferred Shares (or securities having equivalent
                  rights, privileges and preferences as the Preferred Shares
                  (for purposes of this Section 11(b), "equivalent preferred
                  shares")) or securities convertible into Preferred Shares or
                  equivalent preferred shares at a price per Preferred Share or
                  equivalent preferred share (or having a conversion price per
                  share, if a security convertible into Preferred Shares or
                  equivalent preferred shares) less than the current per share
                  market price of the Preferred Shares (determined pursuant to
                  Section 11(d)) on such record date, the Purchase Price to be
                  in effect after such record date will be determined by
                  multiplying the Purchase Price in effect immediately prior to
                  such record date by a fraction, the numerator of which is the
                  number of Preferred Shares outstanding on such record date
                  plus the number of Preferred Shares that the aggregate
                  offering price of the total number of Preferred Shares and/or
                  equivalent preferred shares so to be offered (and/or the
                  aggregate initial conversion price of the convertible
                  securities so to be offered) would purchase at such current
                  per share market price and the denominator of which is the
                  number of Preferred Shares outstanding on such record date
                  plus the number of additional Preferred Shares and/or
                  equivalent preferred shares to be offered for subscription

                                       16

<PAGE>

                  or purchase (or into which the convertible securities so to be
                  offered are initially convertible); provided, however, that in
                  no event shall the consideration to be paid upon the exercise
                  of one Right be less than the aggregate par value of the
                  shares of capital stock issuable upon exercise of one Right.
                  In case such subscription price may be paid in a consideration
                  part or all of which is in a form other than cash, the value
                  of such consideration will be as determined in good faith by
                  the Board of Directors of the Company, whose determination
                  will be described in a statement filed with the Rights Agent.
                  Preferred Shares owned by or held for the account of the
                  Company will not be deemed outstanding for the purpose of any
                  such computation. Such adjustment will be made successively
                  whenever such a record date is fixed, and in the event that
                  such rights, options or warrants are not so issued, the
                  Purchase Price will be adjusted to be the Purchase Price that
                  would then be in effect if such record date had not been
                  fixed.

         (c)      In the event that the Company fixes a record date for the
                  making of a distribution to all holders of Preferred Shares
                  (including any such distribution made in connection with a
                  consolidation or merger in which the Company is the continuing
                  or surviving corporation) of evidences of indebtedness, cash
                  (other than a regular periodic cash dividend), assets, stock
                  (other than a dividend payable in Preferred Shares) or
                  subscription rights, options or warrants (excluding those
                  referred to in Section 11(b)), the Purchase Price to be in
                  effect after such record date will be determined by
                  multiplying the Purchase Price in effect immediately prior to
                  such record date by a fraction, the numerator of which is the
                  current per share market price of the Preferred Shares (as
                  determined pursuant to Section 11(d)) on such record date or,
                  if earlier, the date on which Preferred Shares begin to trade
                  on an ex-dividend or when issued basis for such distribution,
                  less the fair market value (as determined in good faith by the
                  Board of Directors of the Company, whose determination will be
                  described in a statement filed with the Rights Agent) of the
                  portion of the evidences of indebtedness, cash, assets or
                  stock so to be distributed or of such subscription rights,
                  options or warrants applicable to one Preferred Share, and the
                  denominator of which is such current per share market price of
                  the Preferred Shares; provided, however, that in no event
                  shall the consideration to be paid upon the exercise of one
                  Right be less than the aggregate par value of the shares of
                  capital stock issuable upon exercise of one Right. Such
                  adjustments will be made successively whenever such a record
                  date is fixed; and in the event that such distribution is not
                  so made, the Purchase Price will again be adjusted to be the
                  Purchase Price that would then be in effect if such record
                  date had not been fixed.

         (d)      (i)      For the purpose of any computation hereunder, the
         "current per share market price" of Common Shares on any date will be
         deemed to be the average of the daily closing prices per share of such
         Common Shares for the 30 consecutive Trading Days immediately prior to
         such date; provided, however, that in the event that the current per
         share market price of the Common Shares is determined during a period
         following the announcement by the issuer of such Common Shares of (A) a
         dividend or distribution on such Common Shares payable in such Common
         Shares or securities convertible into such Common Shares (other than
         the Rights) or (B) any subdivision, combination or

                                       17

<PAGE>

         reclassification of such Common Shares, and prior to the expiration of
         30 Trading Days after the ex-dividend date for such dividend or
         distribution, or the record date for such subdivision, combination or
         reclassification, then, and in each such case, the current per share
         market price will be appropriately adjusted to take into account
         ex-dividend trading or to reflect the current per share market price
         per Common Share equivalent. The closing price for each day will be the
         last sale price, regular way, or, in case no such sale takes place on
         such day, the average of the closing bid and asked prices, regular way,
         in either case as reported in the principal consolidated transaction
         reporting system with respect to securities listed or admitted to
         trading on the New York Stock Exchange or, if the Common Shares are not
         listed or admitted to trading on the New York Stock Exchange, as
         reported in the principal consolidated transaction reporting system
         with respect to securities listed on the principal national securities
         exchange on which the Common Shares are listed or admitted to trading
         or, if the Common Shares are not listed or admitted to trading on any
         national securities exchange, the last quoted price or, if not so
         quoted, the average of the high bid and low asked prices in the
         over-the-counter market, as reported by Nasdaq or such other system
         then in use, or, if on any such date the Common Shares are not quoted
         by any such organization, the average of the closing bid and asked
         prices as furnished by a professional market maker making a market in
         the Common Shares selected by the Board of Directors of the Company. If
         the Common Shares are not publicly held or not so listed or traded, or
         are not the subject of available bid and asked quotes, "current per
         share market price" will mean the fair value per share as determined in
         good faith by the Board of Directors of the Company, whose
         determination will be described in a statement filed with the Rights
         Agent.

                  (ii)     For the purpose of any computation hereunder, the
                           "current per share market price" of the Preferred
                           Shares will be determined in the same manner as set
                           forth above for Common Shares in Section 11(d)(i),
                           other than the last sentence thereof. If the current
                           per share market price of the Preferred Shares cannot
                           be determined in the manner provided above, the
                           "current per share market price" of the Preferred
                           Shares will be conclusively deemed to be an amount
                           equal to the current per share market price of the
                           Common Shares multiplied by one hundred (as such
                           number may be appropriately adjusted to reflect
                           events such as stock splits, stock dividends,
                           recapitalizations or similar transactions relating to
                           the Common Shares occurring after the date of this
                           Agreement). If neither the Common Shares nor the
                           Preferred Shares are publicly held or so listed or
                           traded, or the subject of available bid and asked
                           quotes, "current per share market price" of the
                           Preferred Shares will mean the fair value per share
                           as determined in good faith by the Board of Directors
                           of the Company, whose determination will be described
                           in a statement filed with the Rights Agent. For all
                           purposes of this Agreement, the current per share
                           market price of one one-hundredth of a Preferred
                           Share will be equal to the current per share market
                           price of one Preferred Share divided by one hundred.

         (e)      Except as set forth below, no adjustment in the Purchase Price
                  will be required unless such adjustment would require an
                  increase or decrease of at least 1% in

                                       18

<PAGE>

                  such price; provided, however, that any adjustments that by
                  reason of this Section 11(e) are not required to be made will
                  be carried forward and taken into account in any subsequent
                  adjustment. All calculations under this Section 11 will be
                  made to the nearest cent or to the nearest one one-millionth
                  of a Preferred Share or one ten-thousandth of a Common Share
                  or other security, as the case may be. Notwithstanding the
                  first sentence of this Section 11(e), any adjustment required
                  by this Section 11 will be made no later than the earlier of
                  (i) three years from the date of the transaction that requires
                  such adjustment and (ii) the Expiration Date.

         (f)      If as a result of an adjustment made pursuant to Section
                  11(a), the holder of any Right thereafter exercised becomes
                  entitled to receive any securities of the Company other than
                  Preferred Shares, thereafter the number and/or kind of such
                  other securities so receivable upon exercise of any Right
                  (and/or the Purchase Price in respect thereof) will be subject
                  to adjustment from time to time in a manner and on terms as
                  nearly equivalent as practicable to the provisions with
                  respect to the Preferred Shares (and the Purchase Price in
                  respect thereof) contained in this Section 11, and the
                  provisions of Sections 7, 9, 10, 13 and 14 with respect to the
                  Preferred Shares (and the Purchase Price in respect thereof)
                  will apply on like terms to any such other securities (and the
                  Purchase Price in respect thereof).

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

         (h)      Unless the Company has exercised its election as provided in
                  Section 11(i), upon each adjustment of the Purchase Price
                  pursuant to Section 11(b) or Section 11(c), each Right
                  outstanding immediately prior to the making of such adjustment
                  will thereafter evidence the right to purchase, at the
                  adjusted Purchase Price, that number of one one-hundredths of
                  a Preferred Share (calculated to the nearest one one-millionth
                  of a Preferred Share) obtained by (i) multiplying (x) the
                  number of one one-hundredths of a Preferred Share issuable
                  upon exercise of a Right immediately prior to such adjustment
                  of the Purchase Price by (y) the Purchase Price in effect
                  immediately prior to such adjustment of the Purchase Price and
                  (ii) dividing the product so obtained by the Purchase Price in
                  effect immediately after such adjustment of the Purchase
                  Price.

         (i)      The Company may elect, on or after the date of any adjustment
                  of the Purchase Price, to adjust the number of Rights in
                  substitution for any adjustment in the number of one
                  one-hundredths of a Preferred Share issuable upon the exercise
                  of a Right. Each of the Rights outstanding after such
                  adjustment of the number of Rights will be exercisable for the
                  number of one one-hundredths of a Preferred Share for which a
                  Right was exercisable immediately prior to such adjustment.
                  Each Right held of record prior to such adjustment of the
                  number of Rights will become that number of Rights (calculated
                  to the nearest one ten-thousandth)

                                       19

<PAGE>

                  obtained by dividing the Purchase Price in effect immediately
                  prior to adjustment of the Purchase Price by the Purchase
                  Price in effect immediately after adjustment of the Purchase
                  Price. The Company will make a public announcement of its
                  election to adjust the number of Rights, indicating the record
                  date for the adjustment, and, if known at the time, the amount
                  of the adjustment to be made. Such record date may be the date
                  on which the Purchase Price is adjusted or any day thereafter,
                  but, if the Right Certificates have been issued, will be at
                  least 10 calendar days later than the date of the public
                  announcement. If Right Certificates have been issued, upon
                  each adjustment of the number of Rights pursuant to this
                  Section 11(i), the Company will, as promptly as practicable,
                  cause to be distributed to holders of record of Right
                  Certificates on such record date Right Certificates
                  evidencing, subject to the provisions of Section 14, the
                  additional Rights to which such holders are entitled as a
                  result of such adjustment, or, at the option of the Company,
                  will cause to be distributed to such holders of record in
                  substitution and replacement for the Right Certificates held
                  by such holders prior to the date of adjustment, and upon
                  surrender thereof if required by the Company, new Right
                  Certificates evidencing all the Rights to which such holders
                  are entitled after such adjustment. Right Certificates so to
                  be distributed will be issued, executed, and countersigned in
                  the manner provided for herein (and may bear, at the option of
                  the Company, the adjusted Purchase Price) and will be
                  registered in the names of the holders of record of Right
                  Certificates on the record date specified in the public
                  announcement.

         (j)      Without respect to any adjustment or change in the Purchase
                  Price and/or the number and/or kind of securities issuable
                  upon the exercise of the Rights, the Right Certificates
                  theretofore and thereafter issued may continue to express the
                  Purchase Price and the number and kind of securities that were
                  expressed in the initial Right Certificate issued hereunder.

         (k)      Before taking any action that would cause an adjustment
                  reducing the Purchase Price below one one-hundredth of the
                  then par value, if any, of the Preferred Shares or below the
                  then par value, if any, of any other securities of the Company
                  issuable upon exercise of the Rights, the Company will take
                  any corporate action that may, in the opinion of its counsel,
                  be necessary in order that the Company may validly and legally
                  issue fully paid and nonassessable Preferred Shares or such
                  other securities, as the case may be, at such adjusted
                  Purchase Price.

         (l)      In any case in which this Section 11 otherwise requires that
                  an adjustment in the Purchase Price be made effective as of a
                  record date for a specified event, the Company may elect to
                  defer until the occurrence of such event the issuance to the
                  holder of any Right exercised after such record date the
                  number of Preferred Shares or other securities of the Company,
                  if any, issuable upon such exercise over and above the number
                  of Preferred Shares or other securities of the Company, if
                  any, issuable upon such exercise on the basis of the Purchase
                  Price in effect prior to such adjustment; provided, however,
                  that the Company delivers to such holder a due bill or other
                  appropriate instrument evidencing such holder's

                                       20

<PAGE>

                  right to receive such additional Preferred Shares or other
                  securities upon the occurrence of the event requiring such
                  adjustment.

         (m)      Notwithstanding anything in this Agreement to the contrary,
                  the Company will be entitled to make such reductions in the
                  Purchase Price, in addition to those adjustments expressly
                  required by this Section 11, as and to the extent that in its
                  good faith judgment the Board of Directors of the Company
                  determines to be advisable in order that any (i) consolidation
                  or subdivision of the Preferred Shares, (ii) issuance wholly
                  for cash of Preferred Shares at less than the current per
                  share market price therefor, (iii) issuance wholly for cash of
                  Preferred Shares or securities that by their terms are
                  convertible into or exchangeable for Preferred Shares, (iv)
                  stock dividends, or (v) issuance of rights, options or
                  warrants referred to in this Section 11, hereafter made by the
                  Company to holders of its Preferred Shares is not taxable to
                  such stockholders.

         (n)      Notwithstanding anything in this Agreement to the contrary, in
                  the event that the Company at any time after the Record Date
                  prior to the Distribution Date (i) pays a dividend on the
                  outstanding Common Shares payable in Common Shares, (ii)
                  subdivides the outstanding Common Shares, (iii) combines the
                  outstanding Common Shares into a smaller number of shares, or
                  (iv) issues any shares of its capital stock in a
                  reclassification of the outstanding Common Shares (including
                  any such reclassification in connection with a consolidation
                  or merger in which the Company is the continuing or surviving
                  corporation), the number of Rights associated with each Common
                  Share then outstanding, or issued or delivered thereafter but
                  prior to the Distribution Date, will be proportionately
                  adjusted so that the number of Rights thereafter associated
                  with each Common Share following any such event equals the
                  result obtained by multiplying the number of Rights associated
                  with each Common Share immediately prior to such event by a
                  fraction the numerator of which is the total number of Common
                  Shares outstanding immediately prior to the occurrence of the
                  event and the denominator of which is the total number of
                  Common Shares outstanding immediately following the occurrence
                  of such event. The adjustments provided for in this Section
                  11(n) will be made successively whenever such a dividend is
                  paid or such a subdivision, combination or reclassification is
                  effected.

12.               Certificate of Adjusted Purchase Price or Number of
         Securities. Whenever an adjustment is made as provided in Section 11 or
         Section 13, the Company will promptly (a) prepare a certificate setting
         forth such adjustment and a brief statement of the facts accounting for
         such adjustment, (b) file with the Rights Agent and with each transfer
         agent for the Preferred Shares and the Common Shares a copy of such
         certificate, and (c) if such adjustment is made after the Distribution
         Date, mail a brief summary of such adjustment to each holder of a Right
         Certificate in accordance with Section 26.

13.               Consolidation, Merger or Sale or Transfer of Assets or Earning
         Power. (a) In the event that:

                                       21

<PAGE>

                  (i)      at any time after a Person has become an Acquiring
                           Person, the Company consolidates with, or merges with
                           or into, any other Person and the Company is not the
                           continuing or surviving corporation of such
                           consolidation or merger; or

                  (ii)     at any time after a Person has become an Acquiring
                           Person, any Person consolidates with the Company, or
                           merges with or into the Company, and the Company is
                           the continuing or surviving corporation of such
                           merger or consolidation and, in connection with such
                           merger or consolidation, all or part of the Common
                           Shares is changed into or exchanged for stock or
                           other securities of any other Person or cash or any
                           other property; or

                  (iii)    at any time after a Person has become an Acquiring
                           Person, the Company, directly or indirectly, sells or
                           otherwise transfers (or one or more of its
                           Subsidiaries sells or otherwise transfers), in one or
                           more transactions, assets or earning power (including
                           without limitation securities creating any obligation
                           on the part of the Company and/or any of its
                           Subsidiaries) representing in the aggregate more than
                           50% of the assets or earning power of the Company and
                           its Subsidiaries (taken as a whole) to any Person or
                           Persons other than the Company or one or more of its
                           wholly owned Subsidiaries;

then, and in each such case, proper provision will be made so that from and
after the latest of the Share Acquisition Date, the Distribution Date and the
date of the occurrence of such Flip-over Event (A) each holder of a Right,
except as provided in Section 11(a), thereafter has the right to receive, upon
the exercise thereof in accordance with the terms of this Agreement at an
exercise price per Right equal to the product of the then-current Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share for which a
Right was exercisable immediately prior to the Share Acquisition Date, such
number of duly authorized, validly issued, fully paid, nonassessable and freely
tradeable Common Shares of the Issuer, free and clear of any liens, encumbrances
and other adverse claims and not subject to any rights of call or first refusal,
as equals the result obtained by (x) multiplying the then-current Purchase Price
by the number of one one-hundredths of a Preferred Share for which a Right is
exercisable immediately prior to the Share Acquisition Date and dividing that
product by (y) 50% of the current per share market price of the Common Shares of
the Issuer (determined pursuant to Section 11(d)), on the date of the occurrence
of such Flip-over Event; (B) the Issuer will thereafter be liable for, and will
assume, by virtue of the occurrence of such Flip-over Event, all the obligations
and duties of the Company pursuant to this Agreement; (C) the term "Company"
will thereafter be deemed to refer to the Issuer; and (D) the Issuer will take
such steps (including without limitation the reservation of a sufficient number
of its Common Shares to permit the exercise of all outstanding Rights) in
connection with such consummation as may be necessary to assure that the
provisions hereof are thereafter applicable, as nearly as reasonably may be
possible, in relation to its Common Shares thereafter deliverable upon the
exercise of the Rights.

         (b)      For purposes of this Section 13, "Issuer" means (i) in the
                  case of any Flip-over Event described in Sections 13(a)(i) or
                  (ii) above, the Person that is the continuing, surviving,
                  resulting or acquiring Person (including the Company as

                                       22

<PAGE>

                  the continuing or surviving corporation of a transaction
                  described in Section 13(a)(ii) above), and (ii) in the case of
                  any Flip-over Event described in Section 13(a)(iii) above, the
                  Person that is the party receiving the greatest portion of the
                  assets or earning power (including without limitation
                  securities creating any obligation on the part of the Company
                  and/or any of its Subsidiaries) transferred pursuant to such
                  transaction or transactions; provided, however, that, in any
                  such case, (A) if (1) no class of equity security of such
                  Person is, at the time of such merger, consolidation or
                  transaction and has been continuously over the preceding
                  12-month period, registered pursuant to Section 12 of the
                  Exchange Act, and (2) such Person is a Subsidiary, directly or
                  indirectly, of another Person, a class of equity security of
                  which is and has been so registered, the term "Issuer" means
                  such other Person; and (B) in case such Person is a
                  Subsidiary, directly or indirectly, of more than one Person, a
                  class of equity security of two or more of which are and have
                  been so registered, the term "Issuer" means whichever of such
                  Persons is the issuer of the equity security having the
                  greatest aggregate market value. Notwithstanding the
                  foregoing, if the Issuer in any of the Flip-over Events listed
                  above is not a corporation or other legal entity having
                  outstanding equity securities, then, and in each such case,
                  (x) if the Issuer is directly or indirectly wholly owned by a
                  corporation or other legal entity having outstanding equity
                  securities, then all references to Common Shares of the Issuer
                  will be deemed to be references to the Common Shares of the
                  corporation or other legal entity having outstanding equity
                  securities that ultimately controls the Issuer, and (y) if
                  there is no such corporation or other legal entity having
                  outstanding equity securities, (I) proper provision will be
                  made so that the Issuer creates or otherwise makes available
                  for purposes of the exercise of the Rights in accordance with
                  the terms of this Agreement, a kind or kinds of security or
                  securities having a fair market value at least equal to the
                  economic value of the Common Shares that each holder of a
                  Right would have been entitled to receive if the Issuer had
                  been a corporation or other legal entity having outstanding
                  equity securities; and (II) all other provisions of this
                  Agreement will apply to the issuer of such securities as if
                  such securities were Common Shares.

         (c)      The Company will not consummate any Flip-over Event if, (i) at
                  the time of or immediately after such Flip-over Event, there
                  are or would be any rights, warrants, instruments or
                  securities outstanding or any agreements or arrangements in
                  effect that would eliminate or substantially diminish the
                  benefits intended to be afforded by the Rights, (ii) prior to,
                  simultaneously with or immediately after such Flip-over Event,
                  the stockholders of the Person who constitutes, or would
                  constitute, the Issuer for purposes of Section 13(a) shall
                  have received a distribution of Rights previously owned by
                  such Person or any of its Affiliates or Associates, or (iii)
                  the form or nature of the organization of the Issuer would
                  preclude or limit the exercisability of the Rights. In
                  addition, the Company will not consummate any Flip-over Event
                  unless the Issuer has a sufficient number of authorized Common
                  Shares (or other securities as contemplated in Section 13(b)
                  above) that have not been issued or reserved for issuance to
                  permit the exercise in full of the Rights in accordance with
                  this Section 13 and unless prior to such consummation the
                  Company and the Issuer have executed and delivered to the

                                       23

<PAGE>

                  Rights Agent a supplemental agreement providing for the terms
                  set forth in subsections (a) and (b) of this Section 13 and
                  further providing that as promptly as practicable after the
                  consummation of any Flip-over Event, the Issuer will:

                           (A) prepare and file a registration statement under
                  the Securities Act with respect to the Rights and the
                  securities issuable upon exercise of the Rights on an
                  appropriate form, and use its best efforts to cause such
                  registration statement to (1) become effective as soon as
                  practicable after such filing and (2) remain effective (with a
                  prospectus at all times meeting the requirements of the
                  Securities Act) until the Expiration Date;

                           (B) take all such action as may be appropriate under,
                  or to ensure compliance with, the securities or "blue sky"
                  laws of the various states in connection with the
                  exercisability of the Rights; and

                           (C) deliver to holders of the Rights historical
                  financial statements for the Issuer and each of its Affiliates
                  that comply in all respects with the requirements for
                  registration on Form 10 under the Exchange Act.

         (d)      The provisions of this Section 13 will similarly apply to
                  successive mergers or consolidations or sales or other
                  transfers. In the event that a Flip-over Event occurs at any
                  time after the occurrence of a Flip-in Event, except for
                  Rights that have become void pursuant to Section 11(a)(ii),
                  Rights that shall not have been previously exercised will
                  cease to be exercisable in the manner provided in Section
                  11(a)(ii) and will thereafter be exercisable in the manner
                  provided in Section 13(a).

14.               Fractional Rights and Fractional Securities. (a) The Company
         will not be required to issue fractions of Rights or to distribute
         Right Certificates that evidence fractional Rights. In lieu of such
         fractional Rights, the Company will pay as promptly as practicable to
         the registered holders of the Right Certificates with regard to which
         such fractional Rights otherwise would be issuable, an amount in cash
         equal to the same fraction of the current market value of one Right.
         For the purposes of this Section 14(a), the current market value of one
         Right is the closing price of the Rights for the Trading Day
         immediately prior to the date on which such fractional Rights otherwise
         would have been issuable. The closing price for any day is the last
         sale price, regular way, or, in case no such sale takes place on such
         day, the average of the closing bid and asked prices, regular way, in
         either case as reported in the principal consolidated transaction
         reporting system with respect to securities listed or admitted to
         trading on the New York Stock Exchange or, if the Rights are not listed
         or admitted to trading on the New York Stock Exchange, as reported in
         the principal consolidated transaction reporting system with respect to
         securities listed on the principal national securities exchange on
         which the Rights are listed or admitted to trading or, if the Rights
         are not listed or admitted to trading on any national securities
         exchange, the last quoted price or, if not so quoted, the average of
         the high bid and low asked prices in the over-the-counter market, as
         reported by Nasdaq or such other system then in use, or, if on any such
         date the Rights are not quoted by any such organization, the average of
         the closing bid and asked prices as

                                       24

<PAGE>

         furnished by a professional market maker making a market in the Rights
         selected by the Board of Directors of the Company. If the Rights are
         not publicly held or are not so listed or traded, or are not the
         subject of available bid and asked quotes, the current market value of
         one Right will mean the fair value thereof as determined in good faith
         by the Board of Directors of the Company, whose determination will be
         described in a statement filed with the Rights Agent.

         (b)      The Company will not be required to issue fractions of
                  Preferred Shares (other than fractions that are integral
                  multiples of one one-hundredth of a Preferred Share) upon
                  exercise of the Rights or to distribute certificates that
                  evidence fractional Preferred Shares (other than fractions
                  that are integral multiples of one one-hundredth of a
                  Preferred Share). Fractions of Preferred Shares in integral
                  multiples of one one-hundredth of a Preferred Share may, at
                  the election of the Company, be evidenced by depositary
                  receipts pursuant to an appropriate agreement between the
                  Company and a depositary selected by it, provided that such
                  agreement provides that the holders of such depositary
                  receipts have all the rights, privileges and preferences to
                  which they are entitled as beneficial owners of the Preferred
                  Shares represented by such depositary receipts. In lieu of
                  fractional Preferred Shares that are not integral multiples of
                  one one-hundredth of a Preferred Share, the Company may pay to
                  any Person to whom or which such fractional Preferred Shares
                  would otherwise be issuable an amount in cash equal to the
                  same fraction of the current market value of one Preferred
                  Share. For purposes of this Section 14(b), the current market
                  value of one Preferred Share is the closing price of the
                  Preferred Shares (as determined in the same manner as set
                  forth for Common Shares in the second sentence of Section
                  11(d)(i)) for the Trading Day immediately prior to the date of
                  such exercise; provided, however, that if the closing price of
                  the Preferred Shares cannot be so determined, the closing
                  price of the Preferred Shares for such Trading Day will be
                  conclusively deemed to be an amount equal to the closing price
                  of the Common Shares (determined pursuant to the second
                  sentence of Section 11(d)(i)) for such Trading Day multiplied
                  by one hundred (as such number may be appropriately adjusted
                  to reflect events such as stock splits, stock dividends,
                  recapitalizations or similar transactions relating to the
                  Common Shares occurring after the date of this Agreement);
                  provided, further, however, that if neither the Common Shares
                  nor the Preferred Shares are publicly held or listed or
                  admitted to trading on any national securities exchange, or
                  the subject of available bid and asked quotes, the current
                  market value of one Preferred Share will mean the fair value
                  thereof as determined in good faith by the Board of Directors
                  of the Company, whose determination will be described in a
                  statement filed with the Rights Agent.

         (c)      Following the occurrence of a Triggering Event, the Company
                  will not be required to issue fractions of Common Shares or
                  other securities issuable upon exercise or exchange of the
                  Rights or to distribute certificates that evidence any such
                  fractional securities. In lieu of issuing any such fractional
                  securities, the Company may pay to any Person to whom or which
                  such fractional securities would otherwise be issuable an
                  amount in cash equal to the same fraction of the current
                  market value of one such security. For purposes of this
                  Section 14(c), the

                                       25

<PAGE>

                  current market value of one Common Share or other security
                  issuable upon the exercise or exchange of Rights is the
                  closing price thereof (as determined in the same manner as set
                  forth for Common Shares in the second sentence of Section
                  11(d)(i)) for the Trading Day immediately prior to the date of
                  such exercise or exchange; provided, however, that if neither
                  the Common Shares nor any such other securities are publicly
                  held or listed or admitted to trading on any national
                  securities exchange, or the subject of available bid and asked
                  quotes, the current market value of one Common Share or such
                  other security will mean the fair value thereof as determined
                  in good faith by the Board of Directors of the Company, whose
                  determination will mean the fair value thereof as will be
                  described in a statement filed with the Rights Agent.

15.               Rights of Action. All rights of action in respect of this
         Agreement, excepting the rights of action given to the Rights Agent
         under Section 18, are vested in the respective registered holders of
         the Right Certificates (and, prior to the Distribution Date, the
         registered holders of the Common Shares); and any registered holder of
         any Right Certificate (or, prior to the Distribution Date, of the
         Common Shares), without the consent of the Rights Agent or of the
         holder of any other Right Certificate (or, prior to the Distribution
         Date, of the holder of any Common Shares), may in his own behalf and
         for his own benefit enforce, and may institute and maintain any suit,
         action or proceeding against the Company to enforce, or otherwise act
         in respect of, his right to exercise the Rights evidenced by such Right
         Certificate in the manner provided in such Right 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 this Agreement, and injunctive
         relief against actual or threatened violations of the obligations of
         any Person subject to this Agreement.

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

         (a)      Prior to the Distribution Date, the Rights will be evidenced
                  by the certificates representing Common Shares registered in
                  the names of the record holders thereof (which certificates
                  representing Common Shares will also be deemed to be Rights
                  Certificates) and are transferable only in connection with the
                  transfer of the Common Shares;

         (b)      After the Distribution Date, the Right Certificates are
                  transferable only on the registry books of the Rights Agent if
                  surrendered at the principal office of the Rights Agent
                  designated for such purpose, duly endorsed or accompanied by a
                  proper instrument of transfer;

         (c)      The Company and the Rights Agent may deem and treat the Person
                  in whose name the Right Certificate (or, prior to the
                  Distribution Date, the associated Common Share certificate) is
                  registered as the absolute owner thereof and of the

                                       26

<PAGE>

                  Rights evidenced thereby (notwithstanding any notations of
                  ownership or writing on the Right Certificate or the
                  associated Common Share certificate made by anyone other than
                  the Company or the Rights Agent) for all purposes whatsoever,
                  and neither the Company nor the Rights Agent will be affected
                  by any notice to the contrary;

         (d)      Such holder expressly waives any right to receive any
                  fractional Rights and any fractional securities upon exercise
                  or exchange of a Right, except as otherwise provided in
                  Section 14.

         (e)      Notwithstanding anything in this Agreement to the contrary,
                  neither the Company nor the Rights Agent will have any
                  liability to any holder of a Right or other Person as a result
                  of its 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, that the
                  Company will use its best efforts to have any such order,
                  decree or ruling lifted or otherwise overturned as soon as
                  possible.

17.               Right Certificate Holder Not Deemed a Stockholder. No holder,
         as such, of any Right Certificate will be entitled to vote, receive
         dividends, or be deemed for any purpose the holder of Preferred Shares
         or any other securities of the Company that may at any time be issuable
         upon the exercise of the Rights represented thereby, nor will anything
         contained herein or in any Right Certificate be construed to confer
         upon the holder of any Right Certificate, as such, any of the rights of
         a stockholder of the Company or any right to vote for the election of
         Directors or upon any matter submitted to stockholders at any meeting
         thereof, or to give or withhold consent to any corporate action, or to
         receive notice of meetings or other actions affecting stockholders
         (except as provided in Section 25), or to receive dividends or
         subscription rights, or otherwise, until the Right or Rights evidenced
         by such Right Certificate shall have been exercised in accordance with
         the provisions of this Agreement or exchanged pursuant to the
         provisions of Section 24.

18.               Concerning the Rights Agent. (a) The Company will 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 will also
         indemnify the Rights Agent for, and hold it harmless against, any loss,
         liability, suit, action, proceeding or expense, incurred without
         negligence, bad faith, or willful misconduct on the part of the Rights
         Agent, for anything done or omitted to be done by the Rights Agent in
         connection with the acceptance and administration of this Agreement,
         including the costs and expenses of defending against any claim of
         liability arising therefrom, directly or indirectly.

                                       27

<PAGE>

         (b)      The Rights Agent will be protected and will incur no liability
                  for or in respect of any action taken, suffered, or omitted by
                  it in connection with its administration of this Agreement in
                  reliance upon any Right Certificate or certificate evidencing
                  Preferred Shares or Common Shares or 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.

19.               Merger or Consolidation or Change of Name of Rights Agent. (a)
         Any corporation into which the Rights Agent or any successor Rights
         Agent may be merged or with which it may be consolidated, or any
         corporation resulting from any merger or consolidation to which the
         Rights Agent or any successor Rights Agent is a party, or any
         corporation succeeding to the corporate trust 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 corporation would be eligible for appointment as a
         successor Rights Agent under the provisions of Section 21. If at the
         time such successor Rights Agent succeeds to the agency created by this
         Agreement any of the Right Certificates shall have been countersigned
         but not delivered, any such successor Rights Agent may adopt the
         countersignature of the predecessor Rights Agent and deliver such Right
         Certificates so countersigned; and if at that time any of the Right
         Certificates shall not have been countersigned, any successor Rights
         Agent may countersign such Right 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 Right Certificates will have the full force
         provided in the Right Certificates and in this Agreement.

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

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

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

         (b)      Whenever in the performance of its duties under this Agreement
                  the Rights Agent deems it necessary or desirable that any fact
                  or matter be proved or established by

                                       28

<PAGE>

                  the Company prior to taking or suffering any action hereunder,
                  such fact or matter (unless other evidence in respect thereof
                  be herein specifically prescribed) may be deemed to be
                  conclusively proved and established by a certificate signed by
                  any one of the Chairman of the Board, the President, any Vice
                  President, the Secretary or the Treasurer of the Company and
                  delivered to the Rights Agent, and such certificate will be
                  full authorization to the Rights Agent for any action taken or
                  suffered in good faith by it under the provisions of this
                  Agreement in reliance upon such certificate.

         (c)      The Rights Agent 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 Right 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 this Agreement or the execution and
                  delivery hereof (except the due execution and delivery hereof
                  by the Rights Agent) or in respect of the validity or
                  execution of any Right Certificate (except its
                  countersignature thereof); nor will it be responsible for any
                  breach by the Company of any covenant contained in this
                  Agreement or in any Right Certificate; nor will it be
                  responsible for any adjustment required under the provisions
                  of Sections 11 or 13 (including any adjustment that results in
                  Rights becoming void) 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 evidenced by
                  Right Certificates after actual notice of 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 shares of stock or other securities to be
                  issued pursuant to this Agreement or any Right Certificate or
                  as to whether any shares of stock or other securities will,
                  when issued, be duly authorized, validly issued, fully paid
                  and nonassessable.

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

         (g)      The Rights Agent is hereby authorized and directed to accept
                  instructions with respect to the performance of its duties
                  hereunder from any one of the Chairman of the Board, the
                  President, any Vice President, the Secretary or the Treasurer
                  of the Company, and to apply to such officers for advice or
                  instructions in connection with its duties, and it will not be
                  liable for any action taken or suffered to be taken by it in
                  good faith in accordance with instructions of any such
                  officer.

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<PAGE>

         (h)      The Rights Agent and any stockholder, director, officer or
                  employee of the Rights Agent may buy, sell or deal in any of
                  the Rights or other securities of the Company or become
                  pecuniarily interested in any transaction in which the Company
                  may be interested, or contract with or lend money to the
                  Company or otherwise act as fully and freely as though it were
                  not Rights Agent under this Agreement. Nothing herein will
                  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 reasonable care
                  was exercised in the selection and continued employment
                  thereof. The Rights Agent will not be under any duty or
                  responsibility to ensure compliance with any applicable
                  federal or state securities laws in connection with the
                  issuance, transfer or exchange of Right Certificates.

         (j)      If, with respect to any Right Certificate surrendered to the
                  Rights Agent for exercise, transfer, split up, combination or
                  exchange, either (i) the certificate attached to the form of
                  assignment or form of election to purchase, as the case may
                  be, has either not been completed or indicates an affirmative
                  response to clause 1 or 2 thereof, or (ii) any other actual or
                  suspected irregularity exists, the Rights Agent will not take
                  any further action with respect to such requested exercise,
                  transfer, split up, combination or exchange without first
                  consulting with the Company, and will thereafter take further
                  action with respect thereto only in accordance with the
                  Company's written instructions.

21.               Change of Rights Agent. The Rights Agent or any successor
         Rights Agent may resign and be discharged from its duties under this
         Agreement upon 30 calendar days' notice in writing mailed to the
         Company and to each transfer agent of the Preferred Shares or the
         Common Shares by registered or certified mail, and to the holders of
         the Right Certificates by first class mail. The Company may remove the
         Rights Agent or any successor Rights Agent upon 30 calendar days'
         notice in writing, mailed to the Rights Agent or successor Rights
         Agent, as the case may be, and to each transfer agent of the Preferred
         Shares and the Common Shares by registered or certified mail, and to
         the holders of the Right Certificates by first class mail. If the
         Rights Agent resigns or is removed or otherwise becomes 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
         calendar days after giving notice of such removal or after it has been
         notified in writing of such resignation or incapacity by the resigning
         or incapacitated Rights Agent or by the holder of a Right Certificate
         (who will, with such notice, submit his Right Certificate for
         inspection by the Company), then the registered holder of any Right
         Certificate may apply to any court of competent jurisdiction for the
         appointment of a new Rights Agent. Any successor Rights Agent, whether
         appointed by the Company or by such a court, will be a corporation or
         other legal entity organized and doing business under the laws of the
         United States or of the State of New York (or of any other state of

                                       30

<PAGE>

         the United States so long as such corporation is authorized to do
         business as a banking institution in the State of New York), in good
         standing, having a principal office in the State of New York, that is
         authorized under such laws to exercise corporate trust or stock
         transfer powers and is subject to supervision or examination by federal
         or state authority and which has at the time of its appointment as
         Rights Agent a combined capital and surplus of at least $50 million.
         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 will 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 Preferred
         Shares or the Common Shares, and mail a notice thereof in writing to
         the registered holders of the Right Certificates. Failure to give any
         notice provided for in this Section 21, however, or any defect therein,
         will 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.

22.               Issuance of New Right Certificates. Notwithstanding any of the
         provisions of this Agreement or of the Rights to the contrary, the
         Company may, at its option, issue new Right Certificates evidencing
         Rights in such form as may be approved by its Board of Directors to
         reflect any adjustment or change in the Purchase Price per share and
         the number or kind of securities issuable upon exercise of the Rights
         made in accordance with the provisions of this Agreement. In addition,
         in connection with the issuance or sale by the Company of Common Shares
         following the Distribution Date and prior to the Expiration Date, the
         Company (a) will, with respect to Common Shares so issued or sold
         pursuant to the exercise, exchange or conversion of securities (other
         than Rights) issued prior to the Distribution Date that are exercisable
         or exchangeable for, or convertible into Common Shares, and (b) may, in
         any other case, if deemed necessary, appropriate or desirable by the
         Board of Directors of the Company, issue Right Certificates
         representing an equivalent number of Rights as would have been issued
         in respect of such Common Shares if they had been issued or sold prior
         to the Distribution Date, as appropriately adjusted as provided herein
         as if they had been so issued or sold; provided, however, that (i) no
         such Right Certificate will be issued if, and to the extent that, in
         its good faith judgment the Board of Directors of the Company
         determines that the issuance of such Right Certificate could have a
         material adverse tax consequence to the Company or to the Person to
         whom or which such Right Certificate otherwise would be issued and (ii)
         no such Right Certificate will be issued if, and to the extent that,
         appropriate adjustment otherwise has been made in lieu of the issuance
         thereof.

23.               Redemption. (a) Prior to the Expiration Date, the Board of
         Directors of the Company may, at its option, redeem all but not less
         than all of the then-outstanding Rights at the Redemption Price at any
         time prior to the Close of Business on the later of (i) the
         Distribution Date and (ii) Share Acquisition Date. Any such redemption
         will be effective immediately upon the action of the Board of Directors
         of the Company ordering the same, unless such action of the Board of
         Directors of the Company expressly provides that such redemption will
         be effective at a subsequent time or upon the

                                       31

<PAGE>

         occurrence or nonoccurrence of one or more specified events (in which
         case such redemption will be effective in accordance with the
         provisions of such action of the Board of Directors of the Company).

         (b)      Immediately upon the effectiveness of the redemption of the
                  Rights as provided in Section 23(a), and without any further
                  action and without any notice, the right to exercise the
                  Rights will terminate and the only right thereafter of the
                  holders of Rights will be to receive the Redemption Price,
                  without interest thereon. Promptly after the effectiveness of
                  the redemption of the Rights as provided in Section 23(a), the
                  Company will publicly announce such redemption and, within 10
                  calendar days thereafter, will give notice of such redemption
                  to the holders of the then-outstanding Rights by mailing such
                  notice to all such holders at their last addresses as they
                  appear upon the registry books of the Company; provided,
                  however, that the failure to give, or any defect in, any such
                  notice will not affect the validity of the redemption of the
                  Rights. Any notice that is mailed in the manner herein
                  provided will be deemed given, whether or not the holder
                  receives the notice. The notice of redemption mailed to the
                  holders of Rights will state the method by which the payment
                  of the Redemption Price will be made. The Company may, at its
                  option, pay the Redemption Price in cash, Common Shares (based
                  upon the current per share market price of the Common Shares
                  (determined pursuant to Section 11(d)) at the time of
                  redemption), or any other form of consideration deemed
                  appropriate by the Board of Directors of the Company (based
                  upon the fair market value of such other consideration,
                  determined by the Board of Directors of the Company in good
                  faith) or any combination thereof. The Company may, at its
                  option, combine the payment of the Redemption Price with any
                  other payment being made concurrently to holders of Common
                  Shares and, to the extent that any such other payment is
                  discretionary, may reduce the amount thereof on account of the
                  concurrent payment of the Redemption Price. If legal or
                  contractual restrictions prevent the Company from paying the
                  Redemption Price (in the form of consideration deemed
                  appropriate by the Board of Directors) at the time of
                  redemption, the Company will pay the Redemption Price, without
                  interest, promptly after such time as the Company ceases to be
                  so prevented from paying the Redemption Price.

24.               Exchange. (a) The Board of Directors of the Company may, at
         its option, at any time after the later of the Share Acquisition Date
         and the Distribution Date, exchange all or part of the then-outstanding
         and exercisable Rights (which will not include Rights that have become
         void pursuant to the provisions of Section 11(a)(ii)) for Common Shares
         at an exchange ratio of one Common Share per Right, appropriately
         adjusted to reflect any stock split, stock dividend or similar
         transaction occurring after the Record Date (such exchange ratio being
         hereinafter referred to as the "Exchange Ratio"). Any such exchange
         will be effective immediately upon the action of the Board of Directors
         of the Company ordering the same, unless such action of the Board of
         Directors of the Company expressly provides that such exchange will be
         effective at a subsequent time or upon the occurrence or nonoccurrence
         of one or more specified events (in which case such exchange will be
         effective in accordance with the provisions of such action of the

                                       32

<PAGE>

         Board of Directors of the Company). Notwithstanding the foregoing, the
         Board of Directors of the Company will not be empowered to effect such
         exchange at any time after any Person (other than the Company or any
         Related Person), who or which, together with all Affiliates and
         Associates of such Person, becomes the Beneficial Owner of 50% or more
         of the then-outstanding Common Shares.

         (b)      Immediately upon the effectiveness of the exchange of any
                  Rights as provided in Section 24(a), and without any further
                  action and without any notice, the right to exercise such
                  Rights will terminate and the only right with respect to such
                  Rights thereafter of the holder of such Rights will be to
                  receive that number of Common Shares equal to the number of
                  such Rights held by such holder multiplied by the Exchange
                  Ratio. Promptly after the effectiveness of the exchange of any
                  Rights as provided in Section 24(a), the Company will publicly
                  announce such exchange and, within 10 calendar days
                  thereafter, will give notice of such exchange to all of the
                  holders of such Rights at their last addresses as they appear
                  upon the registry books of the Rights Agent; provided,
                  however, that the failure to give, or any defect in, such
                  notice will not affect the validity of such exchange. Any
                  notice that is mailed in the manner herein provided will be
                  deemed given, whether or not the holder receives the notice.
                  Each such notice of exchange will state the method by which
                  the exchange of the Common Shares for Rights will be effected
                  and, in the event of any partial exchange, the number of
                  Rights that will be exchanged. Any partial exchange will be
                  effected pro rata based on the number of Rights (other than
                  Rights that have become void pursuant to the provisions of
                  Section 11(a)(ii)) held by each holder of Rights.

         (c)      In any exchange pursuant to this Section 24, the Company, at
                  its option, may substitute for any Common Share exchangeable
                  for a Right (i) equivalent common shares (as such term is used
                  in Section 11(a)(iii)), (ii) cash, (iii) debt securities of
                  the Company, (iv) other assets, or (v) any combination of the
                  foregoing, in any event having an aggregate value, as
                  determined in good faith by the Board of Directors of the
                  Company (whose determination will be described in a statement
                  filed with the Rights Agent), equal to the current market
                  value of one Common Share (determined pursuant to Section
                  11(d)) on the Trading Day immediately preceding the date of
                  the effectiveness of the exchange pursuant to this Section 24.

25.               Notice of Certain Events. (a) If, after the Distribution Date,
         the Company proposes (i) to pay any dividend payable in stock of any
         class to the holders of Preferred Shares or to make any other
         distribution to the holders of Preferred Shares (other than a regular
         periodic cash dividend), (ii) to offer to the holders of Preferred
         Shares rights, options or warrants to subscribe for or to purchase any
         additional Preferred Shares or shares of stock of any class or any
         other securities, rights or options, (iii) to effect any
         reclassification of its Preferred Shares (other than a reclassification
         involving only the subdivision of outstanding Preferred Shares), (iv)
         to effect any consolidation or merger into or with, or to effect any
         sale or other transfer (or to permit one or more of its Subsidiaries to
         effect any sale or other transfer), in one or more transactions, of
         assets or earning power (including, without limitation, securities
         creating any obligation on the

                                       33

<PAGE>

         part of the Company and/or any of its Subsidiaries) representing more
         than 50% of the assets and earning power of the Company and its
         Subsidiaries, taken as a whole, to any other Person or Persons other
         than the Company or one or more of its wholly owned Subsidiaries, (v)
         to effect the liquidation, dissolution or winding up of the Company, or
         (vi) to declare or pay any dividend on the Common Shares payable in
         Common Shares or to effect a subdivision, combination or
         reclassification of the Common Shares then, in each such case, the
         Company will give to each holder of a Right Certificate, to the extent
         feasible and in accordance with Section 26, a notice of such proposed
         action, which specifies the record date for the purposes of such stock
         dividend, distribution or offering of rights, options or warrants, or
         the date on which such reclassification, consolidation, merger, sale,
         transfer, liquidation, dissolution or winding up is to take place and
         the date of participation therein by the holders of the Common Shares
         and/or Preferred Shares, if any such date is to be fixed, and such
         notice will be so given, in the case of any action covered by clause
         (i) or (ii) above, at least 10 calendar days prior to the record date
         for determining holders of the Preferred Shares for purposes of such
         action, and, in the case of any such other action, at least 10 calendar
         days prior to the date of the taking of such proposed action or the
         date of participation therein by the holders of the Common Shares
         and/or Preferred Shares, whichever is the earlier.

         (b)      In case any Triggering Event occurs, then, in any such case,
                  the Company will as soon as practicable thereafter give to the
                  Rights Agent and each holder of a Right Certificate, in
                  accordance with Section 26, a notice of the occurrence of such
                  event, which specifies the event and the consequences of the
                  event to holders of Rights.

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

                           Laidlaw International, Inc.
                           55 Shuman Blvd., Suite 400
                           Naperville, Illinois 60563
                           Attention: General Counsel

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

                           Wells Fargo Bank Minnesota, National Association
                           Corporate Trust
                           Sixth and Marquette
                           MAC N9303-120
                           Minneapolis, MN 55479
                           Attention: Laidlaw Administrator

                                       34

<PAGE>

         (c)      Notices or demands authorized by this Agreement to be given or
                  made by the Company or the Rights Agent to the holder of any
                  Right Certificate (or, if prior the Distribution Date, to the
                  holder of any certificate evidencing Common Shares) will be
                  sufficiently given or made if sent by first class mail,
                  postage prepaid, addressed to such holder at the address of
                  such holder as shown on the registry books of the Company.

27.               Supplements and Amendments. Prior to the time at which the
         Rights cease to be redeemable pursuant to Section 23, and subject to
         the last sentence of this Section 27, the Company may in its sole and
         absolute discretion, and the Rights Agent will if the Company so
         directs, supplement or amend any provision of this Agreement in any
         respect without the approval of any holders of Rights or Common Shares.
         From and after the time at which the Rights cease to be redeemable
         pursuant to Section 23, and subject to the last sentence of this
         Section 27, the Company may, and the Rights Agent will if the Company
         so directs, supplement or amend this Agreement without the approval of
         any holders of Rights or Common Shares in order (i) to cure any
         ambiguity, (ii) to correct or supplement any provision contained herein
         that may be defective or inconsistent with any other provisions herein,
         (iii) to shorten or lengthen any time period hereunder, or (iv) to
         supplement or amend the provisions hereunder in any manner that the
         Company may deem desirable; provided that no such supplement or
         amendment shall adversely affect the interests of the holders of Rights
         as such (other than an Acquiring Person or an Affiliate or Associate of
         an Acquiring Person), and no such supplement or amendment shall cause
         the Rights again to become redeemable or cause this Agreement again to
         become supplementable or amendable otherwise than in accordance with
         the provisions of this sentence. Without limiting the generality or
         effect of the foregoing, this Agreement may be supplemented or amended
         to provide for such voting powers for the Rights and such procedures
         for the exercise thereof, if any, as the Board of Directors of the
         Company may determine to be appropriate. Upon the delivery of a
         certificate from an officer of the Company that states that the
         proposed supplement or amendment is in compliance with the terms of
         this Section 27, the Rights Agent will execute such supplement or
         amendment; provided, however, that the failure or refusal of the Rights
         Agent to execute such supplement or amendment will not affect the
         validity of any supplement or amendment adopted by the Board of
         Directors of the Company, any of which will be effective in accordance
         with the terms thereof. Notwithstanding anything in this Agreement to
         the contrary, no supplement or amendment may be made that decreases the
         stated Redemption Price to an amount less than $.01 per Right.

28.               Successors; Certain Covenants. All the covenants and
         provisions of this Agreement by or for the benefit of the Company or
         the Rights Agent will be binding on and inure to the benefit of their
         respective successors and assigns hereunder.

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

                                       35

<PAGE>

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

31.               Severability. If any term, provision, covenant or restriction
         of this Agreement is held by a court of competent jurisdiction or other
         authority to be invalid, void or unenforceable, the remainder of the
         terms, provisions, covenants and restrictions of this Agreement will
         remain in full force and effect and will in no way be affected,
         impaired or invalidated; provided, however, that nothing contained in
         this Section 31 will affect the ability of the Company under the
         provisions of Section 27 to supplement or amend this Agreement to
         replace such invalid, void or unenforceable term, provision, covenant
         or restriction with a legal, valid and enforceable term, provision,
         covenant or restriction.

32.               Descriptive Headings, Etc. Descriptive headings of the several
         Sections of this Agreement are inserted for convenience only and will
         not control or affect the meaning or construction of any of the
         provisions hereof. Unless otherwise expressly provided, references
         herein to Articles, Sections and Exhibits are to Articles, Sections and
         Exhibits of or to this Agreement.

33.               Determinations and Actions by the Board. For all purposes of
         this Agreement, any calculation of the number of Common Shares
         outstanding at any particular time, including for purposes of
         determining the particular percentage of such outstanding Common Shares
         of which any Person is the Beneficial Owner, will be made in accordance
         with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
         Regulations under the Exchange Act. The Board of Directors of the
         Company will have the exclusive power and authority to administer this
         Agreement and to exercise all rights and powers specifically granted to
         the Board of Directors of the Company 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
         (including any determination as to whether particular Rights shall have
         become void). All such actions, calculations, interpretations and
         determinations (including, for purposes of clause (y) below, any
         omission with respect to any of the foregoing) that are done or made by
         the Board of Directors of the Company in good faith will (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 any Person, including
         without limitation the Rights Agent and the holders of the Rights.

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

                                       36

<PAGE>

                            [SIGNATURES ON NEXT PAGE]

                                       37

<PAGE>

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

                                       LAIDLAW INTERNATIONAL, INC.

                                       By:  ___________________________________
                                            Ivan R. Cairns
                                            Senior Vice President and General
                                              Counsel

                                       WELLS FARGO BANK MINNESOTA,
                                       NATIONAL ASSOCIATION

                                       By:  ___________________________________
                                            Jane Y. Schweiger
                                            Vice President

                                       38

<PAGE>

                                                                       EXHIBIT A

                            FORM OF RIGHT CERTIFICATE

Certificate No. R-____________                                 __________ Rights

NOT EXERCISABLE AFTER JULY 3, 2013 (SUBJECT TO POSSIBLE EXTENSION AT THE OPTION
OF THE BOARD OF DIRECTORS OF THE COMPANY) OR EARLIER IF REDEEMED, EXCHANGED OR
AMENDED. THE RIGHTS ARE SUBJECT TO REDEMPTION, EXCHANGE AND AMENDMENT AT THE
OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE OR WERE
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR A
TRANSFEREE THEREOF MAY BECOME NULL AND VOID.

                                Right Certificate

                           LAIDLAW INTERNATIONAL, INC.

         This certifies that _______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions, and conditions of the
Rights Agreement, dated as of June 23, 2003 (the "Rights Agreement"), between
Laidlaw International, Inc., a Delaware corporation (the "Company"), and Wells
Fargo Bank Minnesota, National Association (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M. (Eastern time) on the
Expiration Date (as such term is defined in the Rights Agreement) at the
principal office or offices of the Rights Agent designated for such purpose, one
one-hundredth of a fully paid nonassessable share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Shares"), of the Company, at a purchase price of $75.00 per one one-hundredth of
a Preferred Share (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase and related
Certificate duly executed. If this Right Certificate is exercised in part, the
holder will be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
The number of Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share that may be purchased upon exercise thereof)
set forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of the date of the Rights Agreement, based on the Preferred
Shares as constituted at such date.

         As provided in the Rights Agreement, the Purchase Price and/or the
number and/or kind of securities issuable upon the exercise of the Rights
evidenced by this Right Certificate are subject to adjustment upon the
occurrence of certain events.

                                       A-1

<PAGE>

         This Right 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 of the Rights Agent,
the Company and the holders of the Right Certificates, which limitations of
rights include the temporary suspension of the exercisability of the Rights
under the circumstances specified in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and can
be obtained from the Company without charge upon written request therefor. Terms
used herein with initial capital letters and not defined herein are used herein
with the meanings ascribed thereto in the Rights Agreement.

         Pursuant to the Rights Agreement, from and after the occurrence of a
Flip-in Event, any Rights that are Beneficially Owned by (i) any Acquiring
Person (or any Affiliate or Associate of any Acquiring Person), (ii) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
becomes a transferee after the occurrence of a Flip-in Event, or (iii) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the Flip-in Event pursuant to
either (a) a transfer from an Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (b) a transfer
that the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding that has the purpose or effect of avoiding certain
provisions of the Rights Agreement, and subsequent transferees of any of such
Persons, will be void without any further action and any holder of such Rights
will thereafter have no rights whatsoever with respect to such Rights under any
provision of the Rights Agreement. From and after the occurrence of a Flip-in
Event, no Right Certificate will be issued that represents Rights that are or
have become void pursuant to the provisions of the Rights Agreement, and any
Right Certificate delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the provisions of the Rights Agreement will be
canceled.

         This Right Certificate, with or without other Right Certificates, may
be transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the holder to purchase a like number of one
one-hundredths of a Preferred Share (or other securities, as the case may be) as
the Right Certificate or Right Certificates surrendered entitled such holder (or
former holder in the case of a transfer) to purchase, upon presentation and
surrender hereof at the principal office of the Rights Agent designated for such
purpose, with the Form of Assignment (if appropriate) and the related
Certificate duly executed.

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right or may be exchanged in whole or in part. The Rights
Agreement may be supplemented and amended by the Company, as provided therein.

         The Company is not required to issue fractions of Preferred Shares
(other than fractions that are integral multiples of one one-hundredth of a
Preferred Share, which may, at the option of the Company, be evidenced by
depositary receipts) or other securities issuable upon the exercise of any Right
or Rights evidenced hereby. In lieu of issuing such fractional Preferred Shares
or other securities, the Company may make a cash payment, as provided in the
Rights Agreement.

                                       A-2

<PAGE>

         No holder of this Right Certificate, as such, will be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company that may at any time be
issuable upon the exercise of the Right or Rights represented hereby, nor will
anything contained herein or in the Rights Agreement be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate have been exercised in accordance with the
provisions of the Rights Agreement.

         This Right Certificate will not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.

         WITNESS the facsimile signature of the proper officers of the Company.
Dated as of ________, ____.

ATTEST:                                      LAIDLAW INTERNATIONAL, INC.

_________________________________            By:  _____________________________
                                                  Name:
                                                  Title:

Countersigned:

WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION

By:  ____________________________
     Authorized Signature

                                       A-3

<PAGE>

                    Form of Reverse Side of Right Certificate

                               FORM OF ASSIGNMENT

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

FOR VALUE RECEIVED, _______________ hereby sells, assigns and transfers unto

________________________________________________________________________________
                  (Please print name and address of transferee)

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

Dated: ____________, ____

                                             ___________________________________
                                             Signature

Signature Guaranteed:

                                       A-4

<PAGE>

                                   CERTIFICATE

         The undersigned hereby certifies by checking the appropriate boxes
that:

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

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

Dated: _____________, ____

                                             ___________________________________
                                             Signature

                                       A-5

<PAGE>

                          FORM OF ELECTION TO PURCHASE

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

To Laidlaw International, Inc.:

         The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the one one-hundredths of a
Preferred Share or other securities issuable upon the exercise of such Rights
and requests that certificates for such securities be issued in the name of and
delivered to:

Please insert social security
or other identifying number: ___________________________________________________

________________________________________________________________________________
                         (Please print name and address)

________________________________________________________________________________

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

Please insert social security
or other identifying number: ___________________________________________________

________________________________________________________________________________
                         (Please print name and address)

________________________________________________________________________________

Dated: _____________, ____

                                             ___________________________________
                                             Signature

Signature Guaranteed:

                                       A-6

<PAGE>

                                   CERTIFICATE

         The undersigned hereby certifies by checking the appropriate boxes
that:

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

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

Dated: _____________, ____

                                             ___________________________________
                                             Signature

                                     NOTICE

         SIGNATURES ON THE FOREGOING FORM OF ASSIGNMENT AND FORM OF ELECTION TO
PURCHASE AND IN THE RELATED CERTIFICATES MUST CORRESPOND TO THE NAME AS WRITTEN
UPON THE FACE OF THIS RIGHT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.

         SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE PROGRAM) PURSUANT TO RULE 17Ad-15
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

                                       A-7

<PAGE>

                                                                       EXHIBIT B

                  SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK

         Pursuant to the confirmation order entered by the United States
Bankruptcy Court for the Western District of New York in Jointly Administered
Case Nos. 01-14099K through 01-14104K approving the Third Amended Joint Plan of
Reorganization, dated January 23, 2003, the Board of Directors of Laidlaw
International, Inc. adopted a rights plan and will effect a distribution of one
preferred share purchase right for each outstanding share of Laidlaw
International, Inc.'s Common Stock, par value $0.01 per share. The distribution
is payable on the day that is ten days after the effective date of the Third
Amended Joint Plan of Reorganization. The terms of the rights and the rights
plan are set forth in a Rights Agreement, dated as of June 23, 2003, by and
between Laidlaw International, Inc. and Wells Fargo Bank Minnesota, National
Association, as rights agent.

         Our Board adopted the rights plan to protect our stockholders from
coercive takeover practices or takeover bids that are inconsistent with their
best interests. In general terms, the rights plan imposes a significant penalty
upon any person or group that acquires 15% or more of our outstanding common
stock (or, in the case of a person or group that acquired 15% or more of our
outstanding common stock solely as a result of distributions made pursuant to
the bankruptcy plan on account of certain allowed unsecured claims, an
additional 1% or more of our outstanding common stock) without the prior
approval of our Board. A person or group that acquires a percentage of our
common stock in excess of the applicable threshold is called an "acquiring
person." Any rights held by an acquiring person are void and may not be
exercised.

         This summary of rights provides a general description of the rights
plan. Because it is only a summary, this description should be read together
with the entire rights plan, which we incorporate in this summary by reference.
Upon written request, we will provide a copy of the rights plan free of charge
to any stockholder.

THE RIGHTS. We will effect a distribution of one right per each outstanding
share of our common stock on July 3, 2003. If the rights become exercisable,
each right would allow its holder to purchase from us one one-hundredth of a
share of our Series A Junior Participating Preferred Stock for a purchase price
of $75.00. Each fractional share of preferred stock would give the stockholder
approximately the same dividend, voting and liquidation rights as does one share
of our common stock. Prior to exercise, however, a right does not give its
holder any dividend, voting or liquidation rights.

EXERCISABILITY. The rights will not be exercisable until the earlier of:

-        10 days after a public announcement by Laidlaw International, Inc. that
         a person or group has become an acquiring person; and

-        10 business days (or a later date determined by our Board) after a
         person or group begins a tender or exchange offer that, if completed,
         would result in that person or group becoming an acquiring person.

                                       B-1

<PAGE>

We refer to the date that the rights become exercisable as the "distribution
date." Until the distribution date, our common stock certificates will also
evidence the rights and will contain a notation to that effect. Any transfer of
shares of common stock prior to the distribution date will constitute a transfer
of the associated rights. After the distribution date, the rights will separate
from the common stock and be evidenced by rights certificates, which we will
mail to all holders of rights that have not become void.

         FLIP-IN EVENT. After the distribution date, if a person or group
already is or becomes an acquiring person, all holders of rights, except the
acquiring person, may exercise their rights upon payment of the purchase price
to purchase shares of our common stock (or other securities or assets as
determined by the Board) with a market value of two times the purchase price.

         FLIP-OVER EVENT. After the distribution date, if a flip-in event has
already occurred and Laidlaw International, Inc. is acquired in a merger or
similar transaction, all holders of rights except the acquiring person may
exercise their rights upon payment of the purchase price, to purchase shares of
the acquiring corporation with a market value of two times the purchase price of
the rights.

         Rights may be exercised to purchase our preferred shares only after the
distribution date occurs and prior to the occurrence of a flip-in event as
described above. A distribution date resulting from the commencement of a tender
offer or exchange offer described in the second bullet point above could precede
the occurrence of a flip-in event, in which case the rights could be exercised
to purchase our preferred shares. A distribution date resulting from any
occurrence described in the first bullet point above would necessarily follow
the occurrence of a flip-in event, in which case the rights could be exercised
to purchase shares of common stock or other securities as described above.

EXPIRATION. The rights will expire on July 3, 2013.

REDEMPTION. Our Board may redeem all (but not less than all) of the rights for a
redemption price of $0.01 per right at any time before the later of the
distribution date and the date of the first public announcement or disclosure by
Laidlaw International, Inc. that a person or group has become an acquiring
person. Once the rights are redeemed, the right to exercise rights will
terminate, and the only right of the holders of rights will be to receive the
redemption price. The redemption price will be adjusted if we declare a stock
split or issue a stock dividend on our common stock.

EXCHANGE. After the later of the distribution date and the date of the first
public announcement by Laidlaw International, Inc. that a person or group has
become an acquiring person, but before an acquiring person owns 50% or more of
our outstanding common stock, our Board may exchange each right (other than
rights that have become void) for one share of common stock or an equivalent
security.

ANTI-DILUTION PROVISIONS. Our Board may adjust the purchase price of the
preferred shares, the number of preferred shares issuable and the number of
outstanding rights to prevent dilution that may occur as a result of certain
events, including among others, a stock dividend, a stock split or

                                       B-2

<PAGE>

a reclassification of the preferred shares or our common stock. No adjustments
to the purchase price of less than 1% will be made.

AMENDMENTS. Before the time rights cease to be redeemable, our Board may amend
or supplement the rights plan without the consent of the holders of the rights,
except that no amendment may decrease the redemption price below $0.01 per
right. At any time thereafter, our Board may amend or supplement the rights plan
only to cure an ambiguity, to alter time period provisions, to correct
inconsistent provisions or to make any additional changes to the rights plan,
but only to the extent that those changes do not impair or adversely affect any
rights holder and do not result in the rights again becoming redeemable.

                                       B-3<PAGE>
                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT
                    (Amended and Restated as of July 1, 2003)

      This EMPLOYMENT AGREEMENT (the "AGREEMENT") is effective as of July 1,
2003 by and between MERITAGE CORPORATION, a Maryland corporation (the "COMPANY")
and ______________, an individual ("EXECUTIVE").

                                    RECITALS

      WHEREAS, Executive is currently the Co-Chief Executive Officer and
Co-Chairman of the Company;

      WHEREAS, the Company desires to continue to obtain the services of
Executive, and Executive desires to provide services to the Company, in
accordance with the terms, conditions and provisions of this Agreement;

      NOW THEREFORE, in consideration of the covenants and mutual agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in reliance upon the
representations, covenants and mutual agreements contained herein, the Company
and Executive agree as follows:

      1. EMPLOYMENT. Subject to the terms and conditions of this Agreement, the
Company agrees to employ Executive as Co-Chairman and Co-Chief Executive Officer
of the Company, and Executive agrees to diligently perform the duties associated
with such positions. Executive will report directly to the Board of Directors.
Executive will devote substantially all of his business time, attention and
energies to the business of the Company and will comply with the charters,
policies and guidelines established by the Company from time to time applicable
to its directors and senior management executives.

      2. TERM. Executive will be employed under this Agreement until December
31, 2005, unless Executive's employment is terminated earlier pursuant to
Section 7. The Agreement will renew for an additional period of one year (the
"Renewal Term(s)"), unless on or before February 15, 2005 (or February 15 of any
Renewal Term), either Executive or the Company notifies the other in writing
that it wishes to terminate employment under this Agreement at the end of the
term then in effect.

      3. DIRECTOR STATUS. For so long as Executive is Co-Chief Executive
Officer, the Company shall use commercially reasonable efforts, subject to
applicable law and regulation of the New York Stock Exchange ("NYSE"), to cause
Executive to be nominated for election as a director and to be recommended to
the stockholders for election as a director. Upon any termination of employment
as Co-Chief Executive Officer, Executive will be deemed to have resigned from
the Board of Directors, unless (a) the Executive is not terminated for Cause (as
defined below) and owns 5% or more of the Company's common stock outstanding, or
(b) within 30 days thereof a majority of the independent directors of the Board
(as defined by rules of the NYSE) vote to enable Executive to continue on the
Board through the balance of his term.

<PAGE>

      4. SALARY. The Company will pay Executive a base salary (the "BASE
SALARY") at the annual rate of $850,000 per year commencing July 1, 2003. Such
salary will increase to $925,000 commencing January 1, 2005. The Base Salary
will increase ten percent on January 1 of each Renewal Term. The Base Salary
will be payable in accordance with the payroll practices of the Company in
effect from time to time. The Base Salary may be raised, but not lowered,
without Executive's consent.

      5. INCENTIVE COMPENSATION.

      A. Bonus. Executive will be entitled to incentive compensation based on
the achievement of certain performance targets pursuant to the plan specified in
Exhibit A hereto (the "BONUS"). The Bonus will be due and payable in accordance
with Exhibit A.

      B. Options. During the term of this Agreement, commencing in 2004, the
Company annually shall grant the Executive options to acquire 40,000 shares (or
equivalent consideration at the discretion of the Board of Directors). The
options will have an exercise price equal to the fair market value on the date
of grant as defined under the relevant plan or, if the options are incentive
stock options, at the fair market value or 110% of the fair market value, as may
be required by law. Subject to the provisions hereof and Executive's Change of
Control Agreement, the options will be on the same terms and conditions as other
standard option grants.

      6. EXECUTIVE BENEFITS. During the term of this Agreement, Executive will
be entitled to reimbursement of reasonable and customary business expenses. The
Company will provide to Executive such fringe benefits and other Executive
benefits as are regularly provided by the Company to its senior management
(e.g., health and long-term disability insurance, paid vacation, etc.);
provided, however, that nothing herein shall preclude the Company from amending
or terminating any employee or general executive benefit plans or programs. In
addition, the Company shall provide the Executive with the benefits set forth on
Exhibit B, which benefits may not be terminated or reduced during the term
hereof.

      7. TERMINATION.

      A. Voluntary Resignation by Executive or Termination Without Cause.

      If Executive voluntarily terminates his employment with the Company for
any reason after December 31, 2003 (or before such date, if with Good Reason),
or the Company terminates Executive without Cause, then (i) the Company will be
obligated to pay Executive's Base Salary through the Date of Termination; (ii)
no Bonus shall be payable for the fiscal year in which the termination occurs
(except as provided below); (iii) the Company shall pay Executive $10 million
(the Consulting, Severance and Non-Competition Payment"), in monthly
installments of $416,666.67 in cash or by check, over the next two years (the
"Consulting Period")(subject to Executive's compliance with this Agreement,
including Sections 8 and 9 as provided therein); (iv) the Company shall
reimburse Executive for COBRA premiums for the period that the Company is
required to offer COBRA coverage as a matter of law; (v) in connection with any
termination without Cause by the Company, any options granted after the date
hereof shall vest in full; and (vi) at the option of the Company, the Executive
shall render consulting services to the Company as may be requested from time to
time by the Chairman of the Board, not to exceed 20 hours per month. If

                                      - 2 -
<PAGE>

the Company terminates employment under this Agreement without Cause during the
last three months of the Company's fiscal year, Executive will be paid a pro
rata bonus based upon the Company's performance for the fiscal year, payable at
the time set forth in Exhibit A.

      B. Termination upon Death or Disability. If Executive's employment is
terminated as a result of Executive's death or Disability, then the Company will
be obligated to pay (i) Executive's then current Base Salary through the Date of
Termination, (ii) a pro rated amount of Executive's Bonus for the year, payable
at the time set forth in Exhibit A, and (iii) Executive's COBRA premiums for the
period that the Company is required to offer COBRA coverage as a matter of law.
In addition, upon such a termination, the Executive's options granted shall
accelerate and become vested without further action and, to the extent permitted
under the plan's governing documents, Executive shall have a period of one year
from the Date of Termination to exercise such options. If Executive dies or
becomes disabled during any period that the Company is obliged to make payments
under Section 7(A), the Company shall make a lump sum payment to Executive (or
his estate) of any unpaid amount within thirty (30) days of such death or
disability.

      C. Voluntary Termination (Without Good Reason) before December 31, 2003 or
Termination for Cause by the Company.

            (1) If the Executive resigns without Good Reason before December 31,
      2003, or if the Company discharges Executive for Cause, then the Company
      will be obligated to pay Executive's Base Salary through the Date of
      Termination. No bonus shall be payable.

            (2) Upon voluntary termination (without Good Reason) by Executive
      before December 31, 2003, or a termination for Cause by the Company, the
      provisions of Section 8 (Restrictive Covenant) shall automatically become
      applicable for the two-year period set forth therein, without any further
      payment due Executive. Executive acknowledges and agrees that the
      compensation herein is adequate consideration for such covenants.

      D. Definitions. For purposes of this Agreement:

            (1) "CAUSE" and "GOOD REASON" shall have the meanings ascribed to
      them in the Amended and Restated Change of Control Agreement (the "Change
      of Control Agreement"), effective as of July 1, 2003,

            (2) "DATE OF TERMINATION" shall mean (i) if this Agreement is
      terminated as a result of Executive's death, the date of Executive's
      death, (ii) if this Agreement is terminated by Executive, the date on
      which he notifies the Company in writing, (iii) if this Agreement is
      terminated by the Company for Disability, the date a notice of termination
      is given, (iv) if this Agreement is terminated by the Company for Cause,
      the date a notice of termination is given to Executive by the Company, or
      (v) if this Agreement is terminated by the Company without Cause, the date
      notice of termination is given to Executive by the Company, and

            (3) "DISABILITY" shall mean a disability that results in Executive
      being medically unable to fulfill his duties under this Agreement for six
      consecutive months.

                                      - 3 -
<PAGE>

      E. Procedures for Notices of Termination. The procedures set forth in
Section 10 (a), (b) and (d) of the Change of Control Agreement shall apply under
this Agreement in connection with a notice of termination as to the kind of
termination events described in those subsections.

      8. RESTRICTIVE COVENANT. In consideration of Executive's employment, but
subject to Section 7, Executive agrees to the following:

      A. During the Restriction Period (as defined below), Executive will not,
directly or indirectly, either as an executive, partner, owner, lender,
director, adviser or consultant or in any other capacity or through any entity:

            (1) engage in any production homebuilding or home sales or within
      100 miles of any Company project, provided, that, for purposes of this
      Section 8(a)(1), Executive (a) may own stock in the Company and less than
      1% of any other publicly traded homebuilder, and (b) may engage in custom
      homebuilding (up to 5 homes annually for third parties and 2 for family
      members), land banking or lot or land development; provided, however, that
      Executive may not directly or indirectly engage in the sale of finished
      lots within the restricted areas described above, unless at least 10
      business days prior to any offer to a third party, the lots are offered to
      the Company, and if the Company (or its nominee) determines to purchase
      the property, the applicable selling party negotiates a sale in good
      faith. If no such sale is then consummated, then the applicable selling
      party may pursue a sale with a third party. If the terms of such
      third-party sale are materially different than the offer made to the
      Company, the Company (or its nominee) will have the right of first refusal
      to purchase the lots within three business days of notice of the proposed
      sale to such a third party. This notice must contain the specific terms
      and conditions thereof and the proposed buyer. If the Company (or a
      nominee) does not respond to the right of first offer within 10 days or
      the right of first refusal within three days, the Company will be deemed
      to have waived the applicable right. The Company or nominee can substitute
      cash for any non-cash consideration (at the fair market value thereof).
      This right will arise again if the third party offer is materially
      modified or amended.

            (2) hire any person who is, or within the six month period preceding
      the date of such activity was, an employee of or consultant to the Company
      (other than as a result of a general solicitation for employment); or

            (3) solicit any customer or supplier of the Company (including lot
      developers and land bankers) for a production homebuilding business or
      otherwise attempt to induce any such customer or supplier to discontinue
      or materially modify its relationship with the Company. During the
      Restriction Period, Executive may utilize the services of Company
      suppliers for business operations permitted under Section 8a(1), i.e.,
      custom homebuilding, land banking and land or lot development, so long as
      these activities do not disrupt or adversely affect the Company's
      relationships with such suppliers.

      B. The provisions of this Section 8 shall begin as of the date hereof,
will survive the termination of this agreement under Section 7 and will expire
two years from the Date of Termination, provided that, to the extent required,
the notices under Section 7 are given and the payments made as provided therein
(the "RESTRICTION PERIOD").

                                      - 4 -
<PAGE>

      C. Executive represents to the Company that he is willing and able to
engage in businesses that are not competing businesses hereunder and that
enforcement of the restrictions set forth in this Section 8 would not be unduly
burdensome to Executive. Executive hereby agrees that the period of time
provided for in this Section 8 and other provisions and restrictions set forth
herein are reasonable and necessary to protect the Company and its successors
and assigns in the use and employment of the goodwill of the business conducted
by Executive. Executive agrees that, if Executive in any non-immaterial respect
violates the terms of this Section 8(A) or Section 9, the Company shall not be
obliged to pay any remaining Consulting, Severance, and Non-Competition
Payments, provided that the Company must first provide Executive with written
notice of such violation and the opportunity to provide within thirty (30) days
any information showing that he has not in any non-immaterial respect breached
such Agreement. During any notice period or any dispute regarding the violation
of the terms of this Section 8 or Section 9, the Company will place such
payments in an interest bearing escrow account at Bank of America, Phoenix, or
its successor. Executive further agrees that damages cannot compensate the
Company in the event of a violation of this Section 8 and that, if such
violation should occur, injunctive relief shall be essential for the protection
of the Company and its successors and assigns. Accordingly, Executive hereby
covenants and agrees that, in the event any of the provisions of this Section 8
shall be violated or breached, the Company shall be entitled to obtain
injunctive relief against the party or parties violating such covenants without
bond but upon due notice, in addition to such further or other relief as may be
available at equity or law. An injunction by the Company shall not be considered
an election of remedies or a waiver of any right to assert any other remedies
which the Company has at law or in equity. No waiver of any breach or violation
hereof shall be implied from forbearance or failure by the Company to take
action thereof. The prevailing party in any litigation, arbitration or similar
dispute resolution proceeding to enforce this provision will recover any and all
reasonable costs and expenses, including attorneys' fees.

      D. Executive agrees that the period of time in which this Section 8 is in
effect shall be extended for a period equal to the duration of any breach of
this Section 8 by Executive.

      E. For purposes of Sections 8 and 9, the term "COMPANY" includes Meritage
Corporation and its subsidiaries and affiliates. For purposes hereunder, an
affiliate shall be deemed to be any corporation or other business entity in
which the Company or its subsidiaries owns a controlling interest.

      9. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.

      A. It is understood that in the course of Executive's employment with
Company, Executive will become acquainted with Company Confidential Information
(as defined below). Executive recognizes that Company Confidential Information
has been developed or acquired at great expense, is proprietary to the Company,
and is and shall remain the exclusive property of the Company. Accordingly,
Executive agrees that he will not, disclose to others, copy, make any use of, or
remove from Company's premises any Company Confidential Information, except as
Executive's duties may specifically require, without the express written consent
of the Company, during Executive's employment with the Company and thereafter
until such time as Company Confidential Information becomes generally known, or
readily ascertainable by proper means by persons unrelated to the Company.

                                      - 5 -
<PAGE>

      B. Upon any termination of employment, Executive shall promptly deliver to
the Company the originals and all copies of any and all materials, documents,
notes, manuals, or lists containing or embodying Company Confidential
Information, or relating directly or indirectly to the business of the Company,
in the possession or control of Executive.

      C. Executive hereby agrees that the period of time provided for in this
Section 9 and other provisions and restrictions set forth herein are reasonable
and necessary to protect the Company and its successors and assigns in the use
and employment of the goodwill of the business conducted by Executive. Executive
further agrees that damages cannot compensate the Company in the event of a
violation of this Section 9 and that, if such violation should occur, injunctive
relief shall be essential for the protection of the Company and its successors
and assigns. Accordingly, Executive hereby covenants and agrees that, in the
event any of the provisions of this Section 9 shall be violated or breached, the
Company shall be entitled to obtain injunctive relief against the party or
parties violating such covenants, without bond but upon due notice, in addition
to such further or other relief as may be available at equity or law. Obtainment
of such an injunction by the Company shall not be considered an election of
remedies or a waiver of any right to assert any other remedies which the Company
has at law or in equity. No waiver of any breach or violation hereof shall be
implied from forbearance or failure by the Company to take action thereof. The
prevailing party in any litigation, arbitration or similar dispute resolution
proceeding to enforce this provision will recover any and all reasonable costs
and expenses, including attorneys' fees.

      D. "COMPANY CONFIDENTIAL INFORMATION" shall mean confidential, proprietary
information or trade secrets of Company and its subsidiaries and affiliates
including without limitation the following: (1) customer lists and customer
information as compiled by Company; (2) Company's internal practices and
procedures; (3) Company's financial condition and financial results of
operation; (4) supply of materials information, including sources and costs,
designs, information on land and lot inventories, and current and prospective
projects; (5) strategic planning, manufacturing, engineering, purchasing,
finance, marketing, promotion, distribution, and selling activities; (6) all
other information which Executive has a reasonable basis to consider
confidential or which is treated by Company as confidential; and (7) all
information having independent economic value to Company that is not generally
known to, and not readily ascertainable by proper means by, persons who can
obtain economic value from its disclosure or use. Notwithstanding the foregoing
provisions, the following shall not be considered "Company Confidential
Information": (i) the general skills of the Executive as an experienced real
estate and homebuilding entrepreneur and senior management level employee; (ii)
information generally known by senior management executives within the
homebuilding and/or land development industry; (iii) persons, entities, contacts
or relationships of Executive that are also generally known in the industry; and
(iv) information which becomes available on a non-confidential basis from a
source other than Executive which source is not prohibited from disclosing such
confidential information by legal, contractual or other obligation.

      10. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any applicable law, then such provision
will be deemed to be modified to the extent necessary to render it legal, valid
and enforceable, and if no such modification will make the provision legal,
valid and enforceable, then this Agreement will be construed as if not
containing the

                                      - 6 -
<PAGE>

provision held to be invalid, and the rights and obligations of the parties will
be construed and enforced accordingly.

      11. ASSIGNMENT BY COMPANY. Nothing in this Agreement shall preclude the
Company from consolidating or merging into or with, or transferring all or
substantially all of its assets to, another corporation or entity that assumes
this Agreement and all obligations and undertakings hereunder. Upon such
consolidation, merger or transfer of assets and assumption, the term "Company"
as used herein shall mean such other corporation or entity, as appropriate, and
this Agreement shall continue in full force and effect.

      12. ENTIRE AGREEMENT. This Agreement, the Change of Control Agreement with
Executive, and any agreements concerning stock options or other benefits, embody
the complete agreement of the parties hereto with respect to the subject matter
hereof and supersede any prior written, or prior or contemporaneous oral,
understandings or agreements between the parties that may have related in any
way to the subject matter hereof. This Agreement may be amended only in writing
executed by the Company and Executive. Notwithstanding the foregoing, nothing in
this Agreement is intended to affect any previous agreements pertaining to the
grant of options to the Executive, including without limitation, provisions in
Executive's prior Change of Control Agreement, providing for acceleration upon a
change-in-control.

      13. GOVERNING LAW. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement, shall be governed by and
construed in accordance with the internal laws, and not the law of conflicts, of
the State of ___________.

      14. NOTICE. Any notice required or permitted under this Agreement must be
in writing and will be deemed to have been given when delivered personally or by
overnight courier service or three days after being sent by mail, postage
prepaid, at the address indicated below or to such changed address as such
person may subsequently give such notice of:

            if to Parent or Company:      Meritage Corporation
                                          8501 E. Princess Drive, Suite 290
                                          Scottsdale, Arizona 85255
                                          Attention: Chief Financial Officer

            with a copy to:               Snell & Wilmer L.L.P.
                                          One Arizona Center
                                          400 E. Van Buren Street
                                          Phoenix, Arizona 85004-0001
                                          Phone: (602) 382-6252
                                          Fax:  (602) 382-6070
                                          Attn:  Steven D. Pidgeon, Esq.

            if to Executive:
                                          ---------------------------------

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

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

                                          Phone:
                                                 --------------------------
                                          Fax:
                                               ----------------------------

                                      - 7 -
<PAGE>

            with a copy to:
                                          ---------------------------------

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

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

                                          Phone:
                                                 --------------------------
                                          Fax:
                                               ----------------------------

      15. ARBITRATION. Any dispute, controversy, or claim, whether contractual
or non-contractual, between the parties hereto arising directly or indirectly
out of or connected with this Agreement, relating to the breach or alleged
breach of any representation, warranty, agreement, or covenant under this
Agreement, unless mutually settled by the parties hereto, shall be resolved by
binding arbitration in accordance with the Employment Arbitration Rules of the
American Arbitration Association (the "AAA"). Any arbitration shall be conducted
by arbitrators approved by the AAA and mutually acceptable to Company and
Executive. All such disputes, controversies, or claims shall be conducted by a
single arbitrator, unless the dispute involves more than $50,000 in the
aggregate in which case the arbitration shall be conducted by a panel of three
arbitrators. If the parties hereto are unable to agree on the arbitrator(s),
then the AAA shall select the arbitrator(s). The resolution of the dispute by
the arbitrator(s) shall be final, binding, nonappealable, and fully enforceable
by a court of competent jurisdiction under the Federal Arbitration Act. The
arbitrator(s) shall award damages to the prevailing party. The arbitration award
shall be in writing and shall include a statement of the reasons for the award.
The arbitration shall be held in _____________________________. The
arbitrator(s) shall award reasonable attorneys' fees and costs to the prevailing
party.

      16. WITHHOLDING; RELEASE; NO DUPLICATION OF BENEFITS. All of Executive's
compensation under this Agreement will be subject to deduction and withholding
authorized or required by applicable law. The Company's obligation to make any
post-termination payments hereunder (other than salary payments and expense
reimbursements through a date of termination), shall be subject to receipt by
the Company from Executive of a mutually agreeable release, and compliance by
Executive with the covenants set forth in Sections 8 and 9 hereof. If there is
any conflict between the provisions of the Change of Control Agreement and this
Agreement, such conflict shall be resolved so as to provide the greater benefit
to Executive. However, in order to avoid duplication of any monetary benefits,
any payments or benefits due under Executive's Change of Control Agreement, will
be reduced by any payments or benefits provided hereunder. Any payment required
under the Change of Control Agreement to be paid in a lump sum, as set forth in
the Change of Control Agreement, shall be so paid, and the remainder, if any,
due under this Agreement will be paid in equal monthly installments over the
Consulting Period, except that in no event shall the payment of the Consulting,
Non-Competition and Severance payment be accelerated.

      17. SUCCESSORS AND ASSIGNS. This Agreement is solely for the benefit of
the parties and their respective successors, assigns, heirs and legatees.
Nothing herein shall be construed to provide any right to any other entity or
individual.

      18. RELATED PARTY TRANSACTIONS. Executive may not engage in any related
party transactions with the Company unless approved in the specific instance by
the Audit Committee of the Board of Directors of Meritage Corporation.

                                      - 8 -
<PAGE>

      IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.

                                    MERITAGE CORPORATION, a Maryland
                                    corporation

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

                                    EXECUTIVE:  ______________________

                                      - 9 -
<PAGE>

                                    EXHIBIT A

                         INCENTIVE COMPENSATION SCHEDULE

                             CEO BONUS COMPENSATION

BASE SALARY      $500,000 (effective July 1, 2002); $850,000 (effective
                 July 1, 2003); $925,000 (effective January 1, 2005)

PART I - BONUS

2003         -      For 2003, as provided in the plan previously approved.

2004/05      -      For 2004 and 2005 and any Renewal Term, Executive shall be
                    entitled to a bonus equal to 1.65% of the EBITDA if
                    Company's ROA and ROE are each in the top 1/2 of public
                    homebuilders having revenues of $500 million or more per
                    year, based upon revenues for the preceding year.

PART II - PAYMENT

The bonus shall be paid within a reasonable time after year-end, but, in any
event, no later than 10 days after ROE and ROA information on public
homebuilders becomes available. Co-CEOs do not have to wait until the Form 10-K
is filed with the SEC.

<PAGE>

                                    EXHIBIT B

                               SPECIFIED BENEFITS

1.    Payments (including a tax gross up) annually for Executive to purchase
      life insurance in the amount of $5,000,000.

2.    Payments (including a tax gross up) annually for Executive to purchase
      disability insurance providing for monthly payments of an estimated
      $20,000 per month.

3.    Executive Supplemental Savings Plan enabling deferred compensation in
      excess of 401(k) limitations.

4.    Supplemental Retirement Benefits Program to provide the Executive
      retirement payments equal to 60% of his final five years average base
      salary beginning at age 65 and continuing through death.

5.    Use of Company's plane for up to 1/2 of a 1/16 fractional ownership (but
      not to exceed 28.75 hours) for personal use for Executive and his family
      upon payment by Executive of the equivalent of lowest available coach fare
      for each person traveling.

6.    Use of Company car (same as current policy.)

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