Document:

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                                                                     EXHIBIT 4.2

                               QLOGIC CORPORATION
                                STOCK AWARDS PLAN
                   (As Amended; Current as of August 26, 2003)

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                               TABLE OF CONTENTS

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1.   PURPOSE.................................................   1

2.   DEFINITIONS.............................................   1

     2.1  Award..............................................   1
     2.2  Board..............................................   1
     2.3  Code...............................................   1
     2.4  Company............................................   1
     2.5  Common Stock.......................................   1
     2.6  Deferred Stock Award...............................   1
     2.7  Disabled or Disability.............................   1
     2.8  Fair Market Value..................................   1
     2.9  Incentive Stock Option.............................   2
     2.10 Nonqualified Stock Option..........................   2
     2.11 Optionee...........................................   2
     2.12 Other Stock-Based Award............................   2
     2.13 Performance Unit Award.............................   2
     2.14 Plan...............................................   2
     2.15 Plan Administrator.................................   2
     2.16 Restricted Stock Award.............................   2
     2.17 Stock Appreciation Right...........................   2
     2.18 Stock Option.......................................   2
     2.19 Unrestricted Stock Award...........................   2

3.   AWARDS UNDER THE PLAN...................................   2

4.   ADMINISTRATION..........................................   2

     4.1  Administration by Board............................   2
     4.2  Administration by Compensation Committee...........   3

5.   ELIGIBILITY.............................................   3

6.   SHARES SUBJECT TO THE PLAN..............................   3

     6.1  Available Shares...................................   3
     6.2  Limitation on Number of Shares Subject to Awards...   4
     6.3  Capital Structure Adjustments......................   4

7.   TERMS AND CONDITIONS OF STOCK OPTIONS...................   4

     7.1  Number of Shares Subject to Stock Option...........   4
     7.2  Stock Option Price.................................   4
     7.3  Notice and Payment.................................   5
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                                TABLE OF CONTENTS
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     7.4  Term of Stock Option...............................   5
     7.5  Exercise of Stock Option...........................   6
     7.6  No Transfer of Stock Option........................   6
     7.7  Limit on Incentive Stock Options...................   6
     7.8  No Fractional Shares...............................   6
     7.9  Exercisability in the Event of Death...............   6
     7.10 Modification, Extension, and Renewal of
          Stock Options......................................   6
     7.11 1994 Distribution..................................   7
     7.12 Other Provisions...................................   8

8.   STOCK APPRECIATION RIGHTS...............................   9

     8.1  General............................................   9
     8.2  Grant and Exercise.................................   9
     8.3  Terms and Conditions of Stock Appreciation
          Rights.............................................   9
     8.4  Rules Relating to Exercise.........................  10

9.   RESTRICTED STOCK........................................  10

     9.1  General............................................  10
     9.2  Award Agreement and Certificates...................  10
     9.3  Rights as a Stockholder............................  11
     9.4  Restrictions.......................................  11
     9.5  Section 83(b) Election.............................  12

10.  UNRESTRICTED STOCK......................................  12

11.  DEFERRED STOCK AWARDS...................................  12

     11.1 General............................................  12
     11.2 Award Agreement....................................  12
     11.3 Elective Deferral..................................  12
     11.4 Termination........................................  12
     11.5 Payments in Respect of Deferred Stock..............  12

12.  PERFORMANCE UNIT AWARDS.................................  13

     12.1 General............................................  13
     12.2 Award Agreement....................................  13
     12.3 Termination........................................  13
     12.4 Acceleration; Waiver...............................  13
     12.5 Exercise...........................................  13
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                                TABLE OF CONTENTS
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13.  OTHER STOCK-BASED AWARDS................................  14

     13.1 General............................................  14
     13.2 Purchase Price; Form of Payment....................  14
     13.3 Forfeiture of Awards; Repurchase of Stock;
          Acceleration of Waiver of Restrictions.............  14
     13.4 Award Agreements...................................  14
     13.5 Deemed Dividend Payments; Deferrals................  14

14.  SUPPLEMENTAL GRANTS.....................................  15

     14.1 Loans..............................................  15
     14.2 Cash Payments......................................  15

15.  TERMINATION OR AMENDMENT OF THE PLAN....................  15

16.  INDEMNIFICATION.........................................  15

17.  WITHHOLDING.............................................  16

     17.1 Irrevocable Election...............................  16
     17.2 Approval by Plan Administrator.....................  16
     17.3 Timing of Election.................................  16
     17.4 Window Period......................................  16
     17.5 Timing of Delivery.................................  16
     17.6 Terms in Agreement.................................  17

18.  UNFUNDED STATUS OF PLAN.................................  17

19.  GENERAL PROVISIONS......................................  17

     19.1 Restrictions on Issuance of Shares.................  17
     19.2 Rights as a Stockholder or Employee................  17
     19.3 Governing Law......................................  18

20.  EFFECTIVE DATE OF PLAN..................................  18

21.  TERM OF PLAN............................................  18
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                               QLOGIC CORPORATION
                                STOCK AWARDS PLAN
                   (As Amended; Current as of August 26, 2003)

     1.   Purpose. The purpose of this QLogic Corporation Stock Awards Plan is
to further the growth and development of QLogic Corporation by providing an
incentive to officers and other key employees who are in a position to
contribute materially to the prosperity of the Company to participate in the
long-term growth of the Company by receiving the opportunity to acquire shares
of the Company's common stock and to provide for additional compensation based
on appreciation in the Company's shares. The Plan provides a means to increase
such persons' interests in the Company's welfare, to encourage them to continue
their services to the Company or its subsidiaries, and to attract individuals of
outstanding ability to enter the employment of the Company or its subsidiaries.

     2.   Definitions. The following definitions are applicable to the Plan:

          2.1 Award. Except where referring to a particular category of grant
under the Plan, "Award" or "Awards" shall include Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards,
Unrestricted Stock Awards, Deferred Stock Awards, Performance Unit Awards and
Other Stock-Based Awards.

          2.2  Board.  The Board of Directors of the Company.

          2.3 Code. The Internal Revenue Code of 1986, as amended from time to
time.

          2.4 Company. QLogic Corporation, a Delaware corporation.

          2.5 Common Stock. The shares of the common stock of the Company.

          2.6 Deferred Stock Award. An Award made pursuant to Section 11 below
of the right to receive Common Stock at the end of a specified deferral period.

          2.7 Disabled or Disability. For the purposes of Section 7.4, a
disability of the type defined in Section 22(e)(3) of the Code. The
determination of whether an individual is Disabled or has a Disability shall be
determined under procedures established by the Plan Administrator.

          2.8 Fair Market Value. For purposes of the Plan, the Sfair market
value" of any share of Common Stock of the Company at any date shall be (a) if
the Common Stock is listed on an established stock exchange or exchanges, the
last reported sale price per share on the last trading day immediately preceding
such date on the principal exchange on which it is traded, or if no sale was
made on such day on such principal exchange, at the closing reported bid price
on such day on such exchange, or (b) if the Common Stock is not then listed on
an exchange, the last reported sale price per share on the last trading day
immediately preceding such date reported by NASDAQ, or if sales are not reported
by NASDAQ or no sale was made on such date, the average of the closing bid and
asked prices per share for the Common Stock in the over-the-counter market as
quoted on NASDAQ

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on the day prior to such date, or (c) if the Common Stock is not then listed on
an exchange or quoted on NASDAQ, an amount determined in good faith by the Plan
Administrator.

          2.9 Incentive Stock Option. Any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.

          2.10 Nonqualified Stock Option. Any Stock Option that is not an
Incentive Stock Option.

          2.11 Optionee. The recipient of a Stock Option Award.

          2.12 Other Stock-Based Award. An Award made pursuant to Section 13
below of the right to receive debt or other securities convertible into or
exchangeable for Common Stock.

          2.13 Performance Unit Award. An Award made pursuant to Section 12
below of the right to receive cash or Common Stock upon the attainment of
specified performance goals.

          2.14 Plan. The QLogic Corporation Stock Awards Plan, as amended from
time to time.

          2.15 Plan Administrator. The Board or the Compensation Committee
designated pursuant to Section 4 to administer, construe and interpret the terms
of the Plan.

          2.16 Restricted Stock Award. An Award of shares of Common Stock that
are subject to restrictions pursuant to Section 9.

          2.17 Stock Appreciation Right. An Award made pursuant to Section 8
below.

          2.18 Stock Option. Any option to purchase shares of Common Stock
granted pursuant to Section 7.

          2.19 Unrestricted Stock Award. An Award made pursuant to Section 10
below.

     3.   Awards Under the Plan. Two types of Stock Options (referred to herein
as "Stock Options" without distinction between such two types) may be granted
under the Plan: Stock Options intended to qualify as Incentive Stock Options and
Nonqualified Stock Options. The Plan also permits the Award of Stock
Appreciation Rights that provide additional compensation based on appreciation
in the Company's Common Stock, Restricted Stock Awards, Unrestricted Stock
Awards, Deferred Stock Awards, Performance Unit Awards and Other Stock-Based
Awards.

     4.   Administration.

          4.1 Administration by Board. Subject to Section 4.2, the Plan
Administrator shall be the Board of Directors of the Company (the "Board")
during such periods of time as all members of the Board are "disinterested
persons" as defined in Rule 16b-3(c)(2)(i) promulgated by the Securities and
Exchange Commission (a "disinterested person"). Subject to the provisions of the
Plan, the Plan Administrator shall have authority to construe and interpret the
Plan, to promulgate, amend, and rescind rules and regulations relating to its
administration, from time to time to select from among the eligible employees
(as determined pursuant to Section 5) of the Company and its

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subsidiaries those employees to whom Awards will be granted, to determine the
timing and manner of the grant of the Awards, to determine the exercise price,
the number of shares covered by and all of the terms of the Awards, to determine
the duration and purpose of leaves of absence which may be granted to Award
holders without constituting termination of their employment for purposes of the
Plan, and to make all of the determinations necessary or advisable for
administration of the Plan. The interpretation and construction by the Plan
Administrator of any provision of the Plan, or of any agreement issued and
executed under the Plan, shall be final and binding upon all parties. No member
of the Board shall be liable for any action or determination undertaken or made
in good faith with respect to the Plan or any agreement executed pursuant to the
Plan.

          4.2 Administration by Compensation Committee. The Board may, in its
sole discretion, delegate any or all of its duties as Plan Administrator, and at
any time the Board includes any person who is not a disinterested person, the
Board shall delegate all of its duties as Plan Administrator during such period
of time, to a committee (the "Compensation Committee") of not fewer than two (2)
members of the Board, all of the members of which Compensation Committee shall
be persons who, in the opinion of counsel to the Company, are disinterested
persons, to be appointed by and serve at the pleasure of the Board. From time to
time, the Board may increase or decrease (to not less than two members) the size
of the Compensation Committee, and add additional members to, or remove members
from, the Compensation Committee. The Compensation Committee shall act pursuant
to a majority vote, or the written consent of a majority of its members, and
minutes shall be kept of all of its meetings and copies thereof shall be
provided to the Board. Subject to the provisions of the Plan and the directions
of the Board, the Compensation Committee may establish and follow such rules and
regulations for the conduct of its business as it may deem advisable. No member
of the Compensation Committee shall be liable for any action or determination
undertaken or made in good faith with respect to the Plan or any agreement
executed pursuant to the Plan.

     5.   Eligibility. Any employee (including any officer who is an employee)
of the Company or any of its subsidiaries shall be eligible to receive an Award
under the Plan; provided, however, that no person who owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or any of its parent or subsidiary corporations shall be eligible to
receive an Incentive Stock Option under the Plan unless at the time such Stock
Option is granted the Stock Option price (determined in the manner provided in
Section 7.2) is at least 110% of the Fair Market Value of the shares subject to
the Stock Option and such Stock Option by its terms is not exercisable after the
expiration of five years from the date such Stock Option is granted. An employee
may receive more than one Award under the Plan.

     6.   Shares Subject to the Plan.

          6.1 Available Shares. The shares available for grant of Awards under
the Plan shall be shares of the Company's authorized but unissued, or
reacquired, Common Stock. The aggregate number of shares which may be issued
pursuant to exercise of Awards granted under the Plan shall not exceed
26,800,000(1) shares of Common Stock (after giving effect to stock splits
effected on or before February 8, 2000 and as subject to further adjustment as
provided in Section 6.2). In the event that the grant of any Award under the
Plan for any reason expires, is terminated or surrendered without being
exercised in full or is exercised or surrendered without the

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(1) As amended on August 27, 2002.

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distribution of shares, the shares of Common Stock allocable to the unexercised
portion of the Award shall again be available for grant and distribution under
the Plan as if no Award had been granted with respect to such shares.

          6.2 Limitation on Number of Shares Subject to Awards. In no event
shall any participant in the Plan be granted Awards in any one calendar year
pursuant to which the aggregate number of shares of Common Stock that may be
acquired thereunder exceeds 750,000(2) shares.

          6.3 Capital Structure Adjustments. Except as otherwise provided
herein, appropriate and proportionate capital structure adjustments shall be
made in the number and class of shares subject to the Plan, to the Award rights
granted under the Plan, and the exercise price of such Award rights, in the
event of a stock dividend (but only on Common Stock), stock split, reverse stock
split, recapitalization, reorganization, merger, consolidation, separation, or
like change in the corporate or capital structure of the Company. In the event
of a liquidation of the Company, or a merger, reorganization, or consolidation
of the Company with any other corporation in which the Company is not the
surviving corporation or the Company becomes a wholly owned subsidiary of
another corporation, any unexercised Award rights theretofore granted under the
Plan shall be deemed cancelled unless the surviving corporation in any such
merger, reorganization, or consolidation elects to assume the Award rights under
the Plan or to use substitute Award rights in place thereof; provided, however,
that, notwithstanding the foregoing, if such Award rights would otherwise be
cancelled in accordance with the foregoing, the Award recipient shall have the
right, exercisable during a ten-day period ending on the fifth day prior to such
liquidation, merger, or consolidation, to exercise the Award rights without
regard to any restrictions on exercisability. To the extent that the foregoing
adjustments relate to stock or securities of the Company, such adjustments shall
be made by the Plan Administrator, the determination of which in that respect
shall be final, binding, and conclusive, provided that each Incentive Stock
Option granted pursuant to the Plan shall not be adjusted in a manner that
causes it to fail to continue to qualify as an incentive stock option within the
meaning of Section 422 of the Code.

     7.   Terms and Conditions of Stock Options. Stock Options granted under the
Plan shall be evidenced by agreements (which need not be identical) in such form
and containing such provisions which are consistent with the Plan as the Plan
Administrator shall from time to time approve. Such agreements may incorporate
all or any of the terms hereof by reference and shall comply with and be subject
to the following terms and conditions:

          7.1 Number of Shares Subject to Stock Option. Each Stock Option
agreement shall specify the number of shares subject to the Stock Option.

          7.2 Stock Option Price. The purchase price for the shares subject to
any Stock Option shall be such amount as is determined by the Plan
Administrator, but not less than par value per share. Anything to the contrary
notwithstanding, the purchase price for the shares subject to any Incentive
Stock Option shall not be less than 100% of the Fair Market Value of the shares
of Common Stock of the Company on the date the Stock Option is granted. In the
case of an Incentive Stock Option granted to an employee who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any of its parent or subsidiary

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(2) As amended on August 26, 2003.

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corporations, the Stock Option price shall not be less than 110% of the Fair
Market Value of the shares of Common Stock of the Company on the date the Stock
Option is granted.

          7.3  Notice and Payment. Any exercisable portion of a Stock Option may
be exercised only by:

               (a) delivery of a written notice to the Company, prior to the
time when such Stock Option becomes unexercisable under Section 7.4, stating the
number of shares being purchased and complying with all applicable rules
established by the Plan Administrator;

               (b) payment in full of the exercise price of such Option by, as
applicable, (i) cash or check for an amount equal to the aggregate Stock Option
exercise price for the number of shares being purchased, (ii) in the discretion
of the Plan Administrator, upon such terms as the Plan Administrator shall
approve, a copy of instructions to a broker directing such broker to sell the
Common Stock for which such Option is exercised, and to remit to the Company the
aggregate exercise price of such Options (a "cashless exercise"), or (iii) in
the discretion of the Plan Administrator, upon such terms as the Plan
Administrator shall approve, the Optionee may pay all or a portion of the
purchase price for the number of shares being purchased by tendering shares of
the Company's Common Stock owned by the Optionee, duly endorsed for transfer to
the Company, with a Fair Market Value on the date of delivery equal to the
aggregate purchase price of the shares with respect to which such Stock Option
or portion is thereby exercised (a "stock-for-stock exercise");

               (c) payment of the amount of tax required to be withheld (if any)
by the Company or any parent or subsidiary corporation as a result of the
exercise of a Stock Option. At the discretion of the Plan Administrator, upon
such terms as the Plan Administrator shall approve, the Optionee may pay all or
a portion of the tax withholding by (i) cash or check payable to the Company,
(ii) cashless exercise, (iii) stock-for-stock exercise, or (iv) a combination of
(1), (2) and (3); and

               (d) delivery of a written notice to the Company requesting that
the Company direct the transfer agent to issue to the Optionee (or to his
designee) a certificate for the number of shares of Common Stock for which the
Option was exercised or, in the case of a cashless exercise, for any shares that
were not sold in the cashless exercise.

     Notwithstanding the foregoing, the Company may extend and maintain, or
arrange for the extension and maintenance of, credit to any Optionee to finance
the Optionee's purchase of shares pursuant to exercise of any Stock Option, on
such terms as may be approved by the Plan Administrator, subject to applicable
regulations of the Federal Reserve Board and any other laws or regulations in
effect at the time such credit is extended. The Plan Administrator may, at any
time and in its discretion, authorize a cash payment, determined in accordance
with Section 8.3(f), which shall not exceed the amount required to pay in full
the federal, state and local tax consequences of an exercise of any Stock Option
granted under the Plan.

          7.4  Term of Stock Option. No Stock Option shall be exercisable after
the expiration of the earliest of (a) ten years after the date the Stock Option
is granted, (b) three months after the date the Optionee's employment with the
Company and its subsidiaries terminates if such termination is for any reason
other than Disability or death, or (c) one year after the date the Optionee's
employment with the Company and its subsidiaries terminates if such termination
is a

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result of death or Disability; provided, however, that the Stock Option
agreement for any Stock Option may provide for shorter periods in each of the
foregoing instances. In the case of an Incentive Stock Option granted to an
employee who owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any of its parent or subsidiary
corporations, the term set forth in (a), above, shall not be more than five
years after the date the Stock Option is granted.

          7.5  Exercise of Stock Option. No Stock Option shall be exercisable
during the lifetime of an Optionee by any person other than the Optionee.
Subject to the foregoing, the Plan Administrator shall have the power to set the
time or times within which each Stock Option shall be exercisable and to
accelerate the time or times of exercise. Unless otherwise provided by the Plan
Administrator, each Stock Option granted under the Plan shall become exercisable
on a cumulative basis as to 25% of the total number of shares covered thereby at
any time after one year from the date the Stock Option is granted and an
additional 6_% of such total number of shares at any time after the end of each
consecutive calendar quarter thereafter until the Stock Option has become
exercisable as to all of such total number of shares. To the extent that an
Optionee has the right to exercise a Stock Option and purchase shares pursuant
thereto, the Stock Option may be exercised from time to time as provided in
Section 7.3.

          7.6  No Transfer of Stock Option. No Stock Option shall be
transferable by an Optionee otherwise than by will or the laws of descent and
distribution.

          7.7  Limit on Incentive Stock Options. The aggregate fair market value
(determined at the time the Option is granted) of the stock with respect to
which Incentive Stock Options granted under this Plan are exercisable for the
first time by an Optionee during any calendar year shall not exceed $100,000. To
the extent that the aggregate Fair Market Value (determined at the time the
Stock Option is granted) of the stock with respect to which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar
year (under all Incentive Stock Option plans of the Company and any parent or
subsidiary corporations) exceeds $100,000, such Stock Options shall be treated
as Nonqualified Stock Options. The determination of which Stock Options shall be
treated as Nonqualified Stock Options shall be made by taking Stock Options into
account in the order in which they were granted.

          7.8  No Fractional Shares. In no event shall the Company be required
to issue fractional shares upon the exercise of a Stock Option.

          7.9  Exercisability in the Event of Death. In the event of the death
of the Optionee, any Stock Option or unexercised portion thereof granted to the
Optionee, to the extent exercisable by him or her on the date of death, may be
exercised by the Optionee's personal representatives, heirs, or legatees subject
to the provisions of Section 7.4 hereof.

          7.10 Modification, Extension, and Renewal of Stock Options. Subject to
the terms and conditions and within the limitations of the Plan, the Plan
Administrator may modify, extend, or renew outstanding Stock Options granted
under the Plan, accept the surrender of outstanding Stock Options (to the extent
not theretofore exercised) and authorize the granting of new Stock Options in
substitution therefor (to the extent not theretofore exercised). The Plan
Administrator may modify any outstanding Stock Options so as to specify a lower
exercise price or accept the surrender of outstanding Stock Options and
authorize the grant of new Stock Options in

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substitution therefor specifying a lower price. The Plan Administrator shall
not, however, without the consent of the Optionee, modify any outstanding
Incentive Stock Option in any manner which would cause the Stock Option not to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
Code. Notwithstanding the foregoing, no modification of a Stock Option shall,
without the consent of the Optionee, alter or impair any rights of the Optionee
under the Stock Option.

          7.11 1994 Distribution. The following provisions shall apply to the
options issued under this Plan in connection with the conversion and adjustment
of options which are outstanding under the Emulex Corporation Employee Stock
Option Plan (the "Emulex Plan") on the "Distribution Date" specified in the
Distribution Agreement (the "Distribution Agreement") providing for the
distribution of all of the outstanding common stock of the Company (the
"Distribution") to the stockholders of Emulex Corporation, a Delaware
corporation ("Emulex"), on the Distribution Date and a reverse stock split of
the outstanding shares of common stock of the Company in connection with the
Distribution pursuant to which each two outstanding shares of common stock of
the Company on the Distribution Date will be combined to become one share of
common stock of the Company (the "Reverse Stock Split"), with all fractional
shares being acquired by the Company for cash:

               (a) Adjustment of Options for Reverse Stock Split. Upon the
effectiveness of the Reverse Stock Split, each option then outstanding under the
Emulex Plan shall be automatically adjusted pursuant to the terms of the Emulex
Plan so that the total number of shares of common stock of Emulex purchasable
under such option and the number of shares of such common stock purchasable as
of any given point in time shall be halved and the purchase price per share of
such common stock shall be doubled.

               (b) Conversion of Options Upon the Distribution. Upon the
Distribution, except as otherwise provided in a written instrument with respect
to a specified option outstanding under the Plan on the date of the
Distribution, each option then outstanding under the Emulex Plan (an
"Outstanding Option") shall be automatically converted into two separately
exercisable options (collectively, the "New Options"), one to purchase common
stock of the Company (a "Company Option") and the other to purchase common stock
of Emulex (a "New Emulex Option"). Each Company Option will be deemed granted
under the Plan and each New Emulex Option will be deemed granted under the
Emulex Plan. Each New Option shall be exercisable for a number of shares equal
to the number of shares subject to purchase under the unexercised portion of the
related Outstanding Option (as adjusted as a result of the Reverse Stock Split
as provided herein).

               (c) Option Terms and Conditions. Except as otherwise provided in
this Section 7.11, each New Option shall contain and continue to be subject to
the same terms and conditions of the related Outstanding Option, including,
without limitation, provisions relating to the term and expiration of the
option; exercisability of the option; payment for shares purchased upon exercise
of the option; adjustments in the shares and exercise price under the option,
cancellation of the option, and/or acceleration of exercisability of the option
in the event of any stock dividend, stock split, reverse stock split, merger,
consolidation, liquidation, recapitalization or reorganization of the Company or
Emulex, as the case may be; or acceleration of exercisability of the option as a
result of a change in control of the Company or Emulex, as the case may be. For
purposes of determining expiration of the term and vesting of the right to
exercise a Company Option received in connection with the conversion of an
Outstanding Option held by a person who is employed by

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Emulex immediately after the Distribution (an "Emulex Employee"), such Emulex
Employee's employment with Emulex following the Distribution shall be treated
the same as if such Emulex Employee had continued to be employed by the Company
or one of its subsidiaries; and termination of such Emulex Employee's employment
with Emulex and its subsidiaries after the Distribution shall be treated as
termination of such Emulex Employee's employment with the Company and its
subsidiaries, irrespective of whether such Emulex Employee may become employed
by the Company or one of its subsidiaries following termination of his or her
employment with Emulex and its subsidiaries. For purposes of determining
expiration of the term and vesting of the right to exercise a New Emulex Option
received in connection with the conversion of an Outstanding Option held by a
person who is employed by the Company or one of its subsidiaries immediately
after the Distribution (a "Company Employee"), such Company Employee's
employment with the Company (or any of its subsidiaries) following the
Distribution shall be treated the same as if such Company Employee were employed
by Emulex or one of its subsidiaries; and termination of such Company Employee's
employment with the Company and its subsidiaries after the Distribution shall be
treated as termination of his or her employment with Emulex and its
subsidiaries, irrespective of whether such Company Employee may become employed
by Emulex or one of its subsidiaries following termination of his or her
employment with the Company and its subsidiaries.

               (d) Option Price. Upon the Distribution, the purchase price per
share of stock purchasable under each New Option shall be adjusted to give
effect to the Distribution by allocating the purchase price per share of the
stock purchasable under the related Outstanding Option between the Company
Option and the New Emulex Option proportionately such that the purchase price
per share under the Company Option shall be equal to the product of the purchase
price per share under the related Outstanding Option (adjusted as a result of
the Reverse Stock Split as provided herein) multiplied by a fraction, the
numerator of which is the fair market value of a share of common stock of the
Company and the denominator of which is the sum of the fair market value of a
share of common stock of the Company plus the fair market value of a share of
common stock of Emulex; and the purchase price per share under the Emulex Option
shall be equal to the product of the purchase price per share under the related
Outstanding Option (adjusted as a result of the Reverse Stock Split as provided
herein) multiplied by a fraction, the numerator of which is the fair market
value of a share of common stock of Emulex and the denominator of which is the
sum of the fair market value of a share of common stock of Emulex plus the fair
market value of a share of common stock of the Company.

               (e) Fair Market Value. For purposes of this Section 7.11, the
fair market value of a share of common stock of the Company and a share of
common stock of Emulex shall be the average of the closing sales prices per
share of common stock of the Company and common stock of Emulex, respectively,
as quoted on the NASDAQ National Market System as reported in the Wall Street
Journal for each of the 20 trading days beginning on the day following the
Distribution Date, and if there is no closing sale price reported on the NASDAQ
National Market System for either common stock of the Company or common stock of
Emulex for one or more days during such period, the determination shall be made
utilizing the earliest 20 days following the day following the Distribution Date
on which closing sales prices are reported for such stock.

          7.12 Other Provisions. Each Stock Option may contain such other terms,
provisions, and conditions not inconsistent with the Plan as may be determined
by the Plan Administrator.

                                       8
<PAGE>

     8.   Stock Appreciation Rights.

          8.1  General. A Stock Appreciation Right is a grant entitling the
recipient to receive an amount in cash or shares of the Common Stock of the
Company or a combination thereof having a value equal to (or if the Plan
Administrator shall so determine at time of grant, less than) the excess of the
Fair Market Value of a share on the date of exercise over the Fair Market Value
of a share on the date of grant (or over the Stock Option exercise price, if the
Stock Appreciation Rights are granted in tandem with a Stock Option) multiplied
by the number of shares with respect to which the Stock Appreciation Rights
shall have been exercised, with the Plan Administrator having the sole
discretion to determine the form of payment. In any event, cash shall be paid in
lieu of fractional shares.

          8.2  Grant and Exercise. Stock Appreciation Rights may be granted in
tandem with the grant of any Stock Option or independent of any Stock Option
granted under the Plan. In the case of a tandem grant with a Nonqualified Stock
Option, such Stock Appreciation Rights may be granted either at or after the
grant of such Nonqualified Stock Option. In the case of a tandem grant with an
Incentive Stock Option, Stock Appreciation Rights may be granted only at the
time of the grant of such Incentive Stock Option. Stock Appreciation Rights or
any applicable portion thereof granted in tandem with a given Stock Option shall
terminate and no longer be exercisable upon the termination or exercise of the
related Stock Option, except that, unless otherwise provided by the Plan
Administrator at the time of grant, a right granted with respect to less than
the full number of shares covered by a related tandem Stock Option shall be
reduced only if and to the extent that the number of shares covered by the
exercise or termination of the related tandem Stock Option exceeds the number of
shares not covered by the Stock Appreciation Rights.

          8.3  Terms and Conditions of Stock Appreciation Rights. Stock
Appreciation Rights shall be subject to the following terms and conditions and
to such other terms and conditions not inconsistent with the Plan as the Plan
Administrator may from time to time determine:

               (a) No Stock Appreciation Rights shall be exercisable in whole or
in part during the first six months of the grant term.

               (b) Stock Appreciation Rights granted in tandem with a Stock
Option shall be exercisable by the Optionee (or such other person entitled under
the Plan to exercise the Stock Option contained in the tandem grant) only at
such time or times, and to the extent, that the related tandem Stock Option is
exercisable and only when the Fair Market Value of the stock subject to the
tandem Stock Option exceeds the exercise price of such Stock Option. Upon the
exercise of Stock Appreciation Rights, the applicable portion of any related
tandem Stock Option shall be surrendered. Stock Appreciation Rights granted
independent of any Stock Option shall be exercisable by the holder in such
manner and within such period or periods as shall be determined by the Plan
Administrator pursuant to the terms of the Stock Appreciation Rights agreement
evidencing the grant.

               (c) Stock Appreciation Rights granted in tandem with a Stock
Option shall be transferable only with such Stock Option. Stock Appreciation
Rights shall not be transferable otherwise than by will or the laws of descent
and distribution. All Stock Appreciation Rights shall be exercisable during the
holder's lifetime only by the holder or the holder's legal representative or
guardian.

                                       9
<PAGE>

               (d) The Plan Administrator may, at any time and in its
discretion, authorize a cash payment in respect of a grant or exercise under the
Plan which shall not exceed the amount required to pay in full the federal,
state and local tax consequences of an exercise of any Award granted under this
Plan. The Plan Administrator shall have sole and complete authority to decide
whether to make such cash payments in any case, to make provision for such
payments either simultaneously with or after any grant, and to determine the
amount of any such payment.

          8.4  Rules Relating to Exercise. In the case of a holder subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended from time to
time, no Stock Appreciation Rights shall be exercised except in compliance with
any applicable requirements of Rule 16b-3(e) promulgated by the Securities and
Exchange Commission or any successor rule. The Plan Administrator may impose
such conditions on the exercise of Stock Appreciation Rights (including, without
limitation, to limit the time of exercise to specified window periods following
the release of quarterly and annual statements of sales and earnings or to fixed
dates that are outside the control of the Stock Appreciation Rights holder) as
may be required to satisfy the requirements of Rule 16b-3 or any successor rule.

     9.   Restricted Stock.

          9.1  General. A Restricted Stock Award is an Award entitling the
recipient to acquire shares of Common Stock, subject to such conditions,
including the right of the Company during a specified period or periods to
repurchase such shares at their original price or to require forfeiture of such
shares (if no cash consideration was paid) upon the participant's termination of
employment, as the Plan Administrator may determine at the time of grant. The
Plan Administrator may award shares of Restricted Stock (i) at no cost to the
recipient (or for a purchase price not in excess of the par value of the shares)
or (ii) for a purchase price determined by the Plan Administrator on the date of
grant. Shares of Restricted Stock may be granted or sold in respect of past
services or other valid consideration.

          9.2  Award Agreement and Certificates. A participant who is granted a
Restricted Stock Award shall have no rights with respect to such Award unless
the participant shall have accepted the Award within sixty days (or such shorter
period as the Plan Administrator may specify) following the Award date by
executing and delivering to the Company a Restricted Stock Award agreement in
such form as the Plan Administrator shall determine and by making payment to the
Company by certified or bank check or instrument acceptable to the Plan
Administrator any cash consideration required to be paid in connection with such
Restricted Stock Award. Each participant receiving a Restricted Stock Award
shall be issued a certificate in respect of such shares of Restricted Stock.
Such certificate shall be registered in the name of the participant and
deposited with the Company or its designee, and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such Award,
substantially in the following form:

          "This certificate and the shares of stock represented hereby are
          subject to the terms and conditions (including forfeiture and
          restrictions against transfer) contained in the QLogic Corporation
          Stock Awards Plan and an agreement entered into between the registered
          owner and QLogic Corporation. Release from such terms and conditions
          shall be obtained only in accordance with the

                                       10
<PAGE>

          provisions of the Plan and the agreement, copies of which are on file
          in the office of the Secretary of QLogic Corporation."

The Plan Administrator may require that, as a condition of any Restricted Stock
Award, the participant shall have delivered to the Company a stock power,
endorsed in blank, relating to the Stock covered by such Award.

          9.3  Rights as a Stockholder. Upon complying with Section 9.2 above, a
participant shall have all the rights of a stockholder with respect to the
Restricted Stock including voting and dividend rights, subject to
nontransferability restrictions, Company repurchase or forfeiture rights and any
other condition described in this Section 9 or contained in the Restricted Stock
Award agreement. The Restricted Stock Award agreement may require or permit the
immediate payment, waiver, deferral, or investment of dividends paid on the
Restricted Stock.

          9.4  Restrictions. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged, or otherwise encumbered or disposed of except as
specifically provided herein and in the Restricted Stock Award agreement. Unless
the Plan Administrator in its discretion provides otherwise, all shares of
Restricted Stock shall be subject to the restrictions against transfer and to
the Company's right to repurchase or require forfeiture set forth in this
Section 9.4 for a period of six months from the date of grant.

               The Plan Administrator shall specify the date or dates (which may
depend upon or be related to the attainment of performance goals or such other
factors or criteria as the Plan Administrator shall determine) on which the
nontransferability of the Restricted Stock and the obligation to forfeit or
resell such shares to the Company shall lapse. The Plan Administrator may
provide for the lapse of such restrictions in installments and at any time may
accelerate such date or dates and otherwise waive or, subject to Section 15
below, amend any terms and conditions of the Award.

               Except as otherwise may be provided in the Award agreement or
determined by the Plan Administrator at any time after the date of grant, in the
event of termination of employment of a participant with the Company and its
subsidiaries for any reason (including death), the participant or the
participant's legal representative shall resell to the Company, at the cash
consideration paid therefor, all Restricted Stock, and the Company shall
purchase such shares at that price, or if no cash consideration was paid, all
shares of Restricted Stock awarded to the participant shall automatically be
forfeited to the Company.

               Any shares of Stock or other securities of the Company or any
other entity which are issued as a distribution on, or in exchange for,
Restricted Stock or into which Restricted Stock is converted as a result of a
recapitalization, stock dividend, distribution of securities, stock split or
combination of shares or a merger, consolidation or sale of substantially all of
the assets of the Company shall be subject to the restrictions set forth in the
Restricted Stock Award agreement, which shall inure to the benefit of any
surviving or successor corporation which is the issuer of such securities. Upon
the lapse of the restrictions applicable to a participant's Restricted Stock,
certificates for shares of Stock free of any restrictive legend shall be
delivered to the participant or his legal representative or guardian.

                                       11
<PAGE>

          9.5  Section 83(b) Election. Any Restricted Stock Award agreement may
provide that the participant may not elect to be taxed with respect to such
Award in accordance with Section 83(b) of the Code.

     10.  Unrestricted Stock. The Plan Administrator may, in its sole
discretion, grant (or sell at a purchase price determined by the Plan
Administrator at the time of sale) to any participant shares of Common Stock
free of restrictions under the Plan ("Unrestricted Stock"). Shares of
Unrestricted Stock may be granted or sold as described in the preceding sentence
in respect of past services or other valid consideration. Any purchase of
Unrestricted Stock by a recipient must take place within sixty days after the
time of grant of the right to purchase such shares. Notwithstanding the
foregoing, any shares of Unrestricted Stock granted to a participant subject to
Section 16(b) of the Act may not be sold or otherwise disposed of for value for
a period of six months from the date of grant.

     11.  Deferred Stock Awards.

          11.1 General. A Deferred Stock Award is an Award entitling the
recipient to acquire shares of Common Stock without payment in one or more
installments at a future date or dates, all as determined by the Plan
Administrator. The Plan Administrator may also condition such acquisition on the
attainment of specified performance goals or such other factors or criteria as
the Plan Administrator shall determine. Unless the Plan Administrator in its
discretion provides otherwise, the deferral with respect to any Deferred Stock
Award shall be no less than six months from the date of grant.

          11.2 Award Agreement. A participant who is granted a Deferred Stock
Award shall have no rights with respect to such Award unless within sixty days
of the grant of such Award (or such shorter period as the Plan Administrator may
specify) the participant shall have accepted the Award by executing and
delivering to the Company a Deferred Stock Award agreement.

          11.3 Elective Deferral. A participant may elect to further defer
receipt of the Common Stock payable under a Deferred Stock Award (or an
installment of the Award) for a specified period or until a specified event,
subject in each case to the Plan Administrator's approval and under such terms
as determined by the Plan Administrator. Subject to any exceptions adopted by
the Plan Administrator, such election must generally be made at least 12 months
prior to completion of the deferral period for the Award (or for such
installment of the Award).

          11.4 Termination. Except as may otherwise be provided in the Deferred
Stock Award agreement, a participant's rights in all Deferred Stock Awards shall
automatically terminate upon the participant's termination of employment with
the Company and its Subsidiaries for any reason (including death). At any time
prior to the participant's termination of employment, the Plan Administrator may
in its discretion accelerate, waive, or, subject to Section 15 below, amend any
or all of the restrictions or conditions imposed under any Deferred Stock Award.

          11.5 Payments in Respect of Deferred Stock. Without limiting the right
of the Plan Administrator to specify different terms, the Deferred Stock Award
agreement may either make no provisions for, or may require or permit the
immediate payment, deferral, or investment of amounts equal to, or less than,
any cash dividends which would have been payable on the Deferred Stock had such
Stock been outstanding, all as determined by the Plan Administrator in its sole
discretion.

                                       12
<PAGE>

     12.  Performance Unit Awards.

          12.1 General. A Performance Unit Award is an Award entitling the
recipient to acquire cash or shares of Common Stock, or a combination of cash
and Common Stock, upon the attainment of specified performance goals. The Plan
Administrator in its sole discretion shall determine whether and to whom
Performance Unit Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be measured, and all
other limitations and conditions applicable to the Performance Unit Award.
Notwithstanding the foregoing, no Performance Unit Award shall be exercisable in
whole or in part during the first six months following the date of grant.
Performance goals may vary from participant to participant and between groups of
participants and shall be based upon such Company, business unit or individual
performance factors or criteria as the Plan Administrator may deem appropriate.
Performance periods may overlap and participants may participate simultaneously
with respect to Performance Unit Awards that are subject to different
performance periods and different performance goals. The Plan Administrator may
adjust the performance goals and periods applicable to a Performance Unit Award
to take into account changes in law and accounting and tax rules, and to make
such adjustments as the Plan Administrator deems necessary or appropriate to
reflect the inclusion or exclusion of the impact of extraordinary or unusual
items, events or circumstances in order to avoid windfalls or hardships.
Performance Units may be awarded independent of or in connection with the grant
of any other Award under the Plan.

          12.2 Award Agreement. A participant shall have no rights with respect
to a Performance Unit Award unless within sixty days of the grant of such Award
(or such shorter period as the Plan Administrator may specify) the participant
shall have accepted the Award by executing and delivering to the Company a
Performance Unit Award agreement.

          12.3 Termination. Except as may otherwise be provided by the Plan
Administrator at any time prior to the termination of employment, a
participant's rights and all Performance Unit Awards shall automatically
terminate upon the participant's termination of employment by the Company and
its Subsidiaries for any reason (including death).

          12.4 Acceleration; Waiver. At any time prior to the participant's
termination of employment with the Company and its Subsidiaries, the Plan
Administrator may in its sole discretion accelerate, waive, or, subject to
Section 15 below, amend any or all of the goals, restrictions or conditions
imposed under any Performance Unit Award.

          12.5 Exercise. The Plan Administrator in its sole discretion shall
establish procedures to be followed in exercising any Performance Unit Award,
which procedure shall be set forth in the Performance Unit Award agreement. The
Plan Administrator may at any time provide that payment under a Performance Unit
Award shall be made, upon satisfaction of the applicable performance goals,
without any exercise by the participant. Except as otherwise specified by the
Plan Administrator, (i) a Performance Unit granted in tandem with a Stock Option
is exercisable, and (ii) the exercise of a Performance Unit granted in tandem
with any Award shall reduce the number of shares of Common Stock subject to the
related Award on such basis as is specified in the Performance Unit Award
agreement.

                                       13
<PAGE>

     13.  Other Stock-Based Awards.

          13.1 General. The Plan Administrator may grant other Awards under
which Common Stock is or may in the future be acquired ("Other Stock-Based
Awards"). Such Awards may include, without limitation, debt securities
convertible into or exchangeable for shares of Common Stock upon such
conditions, including attainment of performance goals, as the Plan Administrator
shall determine. No Other Stock-Based Award shall be exercisable in whole or in
part during the first six months following the date of grant or, if shares of
Common Stock are awarded to a participant on the date of grant, such Stock shall
be subject to restrictions against transfer for a period of no less than six
months from the date of grant. Subject to the purchase price limitations in
Section 13.2 below, such convertible or exchangeable securities may have such
terms and conditions as the Plan Administrator may determine at the time of
grant. However, no convertible or exchangeable debt shall be issued unless the
Plan Administrator shall have provided (by the Company's right of repurchase,
right to require conversion or exchange, or other means deemed appropriate by
the Plan Administrator) a means of avoiding any right of the holders of such
debt to prevent a Company transaction by reason of covenants in such debt.

          13.2 Purchase Price; Form of Payment. The Plan Administrator may
determine the consideration, if any, payable upon the issuance or exercise of an
Other Stock-Based Award. However, no shares of Common Stock (whether acquired by
purchase, conversion, or exchange or otherwise) shall be issued unless (i)
issued at no cost to the recipient (or for a purchase price not in excess of the
par value of the shares), or (ii) sold, exchanged, or converted by the Company,
and the Company shall have received payment for such Stock or securities so
sold, exchanged, or converted equal to at least 50% of Fair Market Value of the
Stock on the grant or effective date, or the exchange or conversion date, under
the Award, as specified by the Plan Administrator. The Plan Administrator may
permit payment by certified check or bank check or other instrument acceptable
to the Plan Administrator or by surrender of other shares of Common Stock
(excluding shares then subject to restrictions under the Plan).

          13.3 Forfeiture of Awards; Repurchase of Stock; Acceleration of Waiver
of Restrictions. The Plan Administrator may determine the conditions under which
an other Stock-Based Award shall be forfeited or, in the case of an Award
involving a payment by the recipient, the conditions under which the Company may
or must repurchase such Award or related Stock. At any time the Plan
Administrator may in its sole discretion accelerate, waive, or, subject to
Section 15 below, amend any or all of the limitations or conditions imposed
under any Other Stock-Based Award.

          13.4 Award Agreements. A participant shall have no rights with respect
to any Other Stock-Based Award unless within sixty days after the grant of such
Award (or such shorter period as the Plan Administrator may specify) the
participant shall have accepted the Award by executing and delivering to the
Company an Other Stock-Based Award agreement.

          13.5 Deemed Dividend Payments; Deferrals. Without limiting the right
of the Plan Administrator to specify different terms, an Other Stock-Based Award
agreement may require or permit the immediate payment, waiver, deferral, or
investment of dividends or deemed dividends payable or deemed payable on Stock
subject to the Award.

                                       14
<PAGE>

     14.  Supplemental Grants.

          14.1 Loans. The Company may extend and maintain, or arrange for the
extension and maintenance of, credit to any Award recipient to finance the
participant's purchase of shares pursuant to the exercise of any Award, on such
terms as may be approved by the Plan Administrator, subject to applicable
regulations of the Federal Reserve Board and any other laws or regulations in
effect at the time such credit is extended, either on or after the date of grant
of such Award. Such loans may be either in connection with the grant or exercise
of any Award, or in connection with the payment of any federal, state and local
income taxes in respect of income recognized under an Award. The Plan
Administrator shall have full authority to decide whether to make a loan
hereunder and to determine the amount, term, and provisions of any such loan,
including the interest rate (which may be zero) charged in respect of any such
loan, whether the loan is to be secured or unsecured, the terms on which the
loan is to be repaid and the conditions, if any, under which it may be forgiven.
However, no loan hereunder shall provide or reimburse to the borrower the amount
used by him for the payment of the par value of any shares of Stock issued, have
a term (including extensions) exceeding ten years in duration, or be an amount
exceeding the total exercise or purchase price paid by the borrower under an
Award or for related Stock under the Plan plus an amount equal to the cash
payment permitted in Section 14.2 below.

          14.2 Cash Payments. The Plan Administrator may, at any time and in its
discretion, authorize a cash payment, in respect of the grant or exercise of an
Award under the Plan or the lapse or waiver of restrictions under an Award,
which shall not exceed the amount which would be required in order to pay in
full the federal, state and local income taxes due as a result of income
recognized by the recipient as a consequence of (i) the receipt of an Award or
the exercise of rights thereunder and (ii) the receipt of such cash payment. The
Plan Administrator shall have complete authority to decide whether to make such
cash payments in any case, to make provisions for such payments either
simultaneously with or after the grant of the associated Award, and to determine
the amount of any such payment.

     15.  Termination or Amendment of the Plan. The Board may at any time
terminate or amend the Plan; provided that, without approval of the stockholders
of the Company, there shall be, except by operation of the provisions of Section
6.2, no increase in the total number of shares covered by the Plan, no change in
the class of persons eligible to receive Awards granted under the Plan or other
material modification of the requirements as to eligibility for participation in
the Plan, no material increase in the benefits accruing to participants under
the Plan, no reduction in the exercise price of Awards granted under the Plan,
and no extension of the latest date upon which Awards may be exercised; and
provided further that, without the consent of the Award recipient, no amendment
may adversely affect any then outstanding Awards or any unexercised portion
thereof.

     16.  Indemnification. In addition to such other rights of indemnification
as they may have as members of the Board or the Compensation Committee, the
members of the Plan Administrator shall be indemnified by the Company against
reasonable expense, including attorney's fees, actually and necessarily incurred
in connection with the defense of any action, suit, or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any grant thereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
action, suit, or proceeding, except in relation to matters as to which it shall
be

                                       15
<PAGE>

adjudged in such action, suit, or proceeding that such member is liable for
negligence or misconduct in the performance of his duties, provided that within
60 days after institution of any such action, suit, or proceeding, the member
shall in writing offer the Company the opportunity, at its own expense, to
handle and defend the same.

     17.  Withholding. Whenever the Company proposes or is required to issue or
transfer shares under the Plan, the Company shall have the right to require the
recipient to remit to the Company an amount sufficient to satisfy any federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares of Common Stock. If a participant
surrenders shares acquired pursuant to the exercise of an Incentive Stock Option
in payment of the exercise price of an Award and such surrender constitutes a
disqualifying disposition for purposes of obtaining Incentive Stock Option
treatment under the Code, the Company shall have the right to require the
Optionee to remit to the Company an amount sufficient to satisfy any federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares. Whenever under the Plan payments
are to be made in cash, such payments shall be net of an amount sufficient to
satisfy any federal, state and local withholding tax requirements. A recipient
may elect with respect to any Award which is paid in whole or in part in shares
of Common Stock, to surrender previously acquired shares of Common Stock or
authorize the Company to withhold shares (valued at Fair Market Value on the
date of surrender or withholding of the shares) in satisfaction of all such
withholding requirements (the "Share Surrender Withholding Election") in
accordance with the following:

          17.1 Irrevocable Election. Any Share Surrender Withholding Election
shall be made by written notice to the Company and thereafter shall be
irrevocable by the recipient.

          17.2 Approval by Plan Administrator. If a recipient is subject to
Section 16 of the Securities Exchange Act of 1934, as amended, or any successor
law, any Share Surrender Withholding Election shall be subject to the consent or
disapproval of the Plan Administrator in accordance with rules established from
time to time by the Plan Administrator.

          17.3 Timing of Election. Any Share Surrender Withholding Election must
be made prior to the date on which the recipient recognizes taxable income with
respect to the receipt of such shares (the "Tax Date").

          17.4 Window Period. If a recipient is subject to Section 16 of the
Securities Exchange Act of 1934, as amended, or any successor law, such person
must make any Share Surrender Withholding Election:

               (a) more than six months after the date of grant with respect to
which such election is made (except whenever such election is made by a Disabled
recipient or the estate or personal representative of a deceased recipient); and

               (b) either at least six months prior to the Tax Date or during
the period of ten business days beginning on the third business day following
the release for publication of the Company's summary statement of sales and
earnings for a quarter or fiscal year.

          17.5 Timing of Delivery. When the Tax Date falls after the exercise of
an Award and the recipient makes a Share Surrender Withholding Election, the
full number of shares subject to

                                       16
<PAGE>

the Award being exercised will be issued, but the recipient will be
unconditionally obligated to deliver to the Company on the Tax Date the number
of shares having a value on the Tax Date equal to the recipient's federal, state
and local withholding tax requirements.

          17.6 Terms in Agreement. For purposes of this Section 17, the Plan
Administrator shall have the discretion to provide (by general rule or a
provision in the specific Award agreement) that, at the election of the
recipient, "federal, state and local withholding tax requirements" shall be
deemed to be any amount designated by the recipient which does not exceed his
estimated federal, state and local tax obligations associated with the
transaction, including FICA taxes to the extent applicable.

     18.  Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a participant by the Company, nothing set forth herein
shall give any such participant any rights that are greater than those of a
general unsecured creditor of the Company. In its sole discretion, the Plan
Administrator may authorize the creation of trusts or other arrangements to meet
the obligations created under the Plan to deliver shares or cash with respect to
the exercise of Awards hereunder, provided, however, that the existence of such
trusts or other arrangements is consistent with the unfunded status of the Plan.

     19.  General Provisions.

          19.1 Restrictions on Issuance of Shares. The issuance of Awards and
shares of Common Stock shall be subject to compliance with all of the applicable
requirements of law with respect to the issuance and sale of securities,
including, without limitation, any required qualification under the California
Corporate Securities Law of 1968, as amended. If a participant acquires shares
of Common Stock pursuant to the exercise of an Award, the Plan Administrator, in
its sole discretion, may require as a condition of issuance of shares covered by
his or her Award, to represent that the shares to be acquired pursuant to
exercise of the Award will be acquired for investment and without a view to
distribution thereof; and in such case, the Company may place a legend on the
certificate evidencing the shares reflecting the fact that they were acquired
for investment and cannot be sold or transferred unless registered under the
Securities Act of 1933, as amended, or unless counsel for the Company is
satisfied that the circumstances of the proposed transfer do not require such
registration. The Company may place a legend on the certificates evidencing the
shares reflecting the fact that they are subject to restrictions on transfer
under the terms of this Section 20.1. In addition, any participant may be
required to execute a buy- sell or right of first refusal agreement in favor of
the Company or its designee with respect to all or any of the shares so
acquired. In such event, the terms of such agreement shall apply to such shares.

          19.2 Rights as a Stockholder or Employee. A participant or transferee
of an Award shall have no right as a stockholder of the Company with respect to
any shares covered by any grant under this Plan until the date of the issuance
of a share certificate for such shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether cash, securities, or other
property) or distributions or other rights for which the record date is prior to
the date such share certificate is issued, except as provided in Section 6.2.
Nothing in the Plan or in any Award agreement shall confer upon any participant
any right to continue in the employ of the Company or any of its subsidiaries or
interfere in any way with any right of the Company or any subsidiary to
terminate the participant's employment at any time.

                                       17
<PAGE>

          19.3 Governing Law. This Plan shall be governed by, and construed in
accordance with, the laws of the state of California.

     20.  Effective Date of Plan. The Plan shall be adopted and become effective
on the date of execution specified below subject, however, to the approval of
the Plan by the stockholders of the Company within twelve months of the
Effective Date. Unless stockholder approval is obtained within twelve months of
the Effective Date, this Plan and any Awards hereunder shall become void.

     21.  Term of Plan. Unless sooner terminated by the Board in its sole
discretion, the Plan will expire and no Awards may be made hereunder on and
after July 31, 2006(1).

---------

(1) As amended August 26, 2003.

                                       18<PAGE>
                                                                    EXHIBIT 4.5

                                RIGHTS AGREEMENT

                                    between

                                 SYMBION, INC.

                                      and

                                 SUNTRUST BANK

                                as Rights Agent

                          Dated as of February 6, 2004

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                         Page

<S>                                                                                                      <C>
Section 1.  CERTAIN DEFINITIONS.............................................................................1

Section 2.  APPOINTMENT OF RIGHTS AGENT.....................................................................7

Section 3.  ISSUE OF RIGHTS CERTIFICATES....................................................................7

Section 4.  FORM OF RIGHTS CERTIFICATES.....................................................................9

Section 5.  EXECUTION, AUTHENTICATION AND DELIVERY.........................................................10

Section 6.  REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE............................................11

Section 7.  MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES......................................11

Section 8.  EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS..................................12

Section 9.  CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES............................................14

Section 10. RESERVATION AND AVAILABILITY OF SHARES.........................................................14

Section 11. RECORD DATE....................................................................................15

Section 12. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND TYPE OF SHARES OR NUMBER OF RIGHTS....................15

Section 13. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.....................................21

Section 14. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER...........................22

Section 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES........................................................23

Section 16. RIGHTS OF ACTION...............................................................................24

Section 17. AGREEMENT OF RIGHTS HOLDERS....................................................................25

Section 18. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.............................................25

Section 19. CONCERNING THE RIGHTS AGENT....................................................................25
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                        <C>
Section 20. DUTIES OF RIGHTS AGENT.........................................................................26

Section 21. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT......................................27

Section 22. CHANGE OF RIGHTS AGENT.........................................................................28

Section 23. ISSUANCE OF NEW RIGHTS CERTIFICATES............................................................29

Section 24. REDEMPTION.....................................................................................29

Section 25. MANDATORY REDEMPTION AND EXCHANGE..............................................................30

Section 26. NOTICE OF CERTAIN EVENTS.......................................................................31

Section 27. SECURITIES LAWS REGISTRATIONS..................................................................32

Section 28. NOTICES........................................................................................32

Section 29. SUPPLEMENTS AND AMENDMENTS.....................................................................33

Section 30. SUCCESSORS.....................................................................................34

Section 31. BENEFITS OF THIS AGREEMENT.....................................................................34

Section 32. SEVERABILITY...................................................................................34

Section 33. GOVERNING LAW..................................................................................34

Section 34. COUNTERPARTS...................................................................................34

Section 35. DESCRIPTIVE HEADINGS...........................................................................34

Section 36. BOARD OF DIRECTORS.............................................................................34
</TABLE>

EXHIBITS

EXHIBIT A - Form of Certificate of Designation of Series A Junior
            Participating Preferred Stock of Symbion, Inc.

EXHIBIT B - Form of Rights Certificate

EXHIBIT C - Summary of Rights to Purchase Preferred Shares

<PAGE>
                                RIGHTS AGREEMENT

         This Rights Agreement (this "Agreement"), dated as of February 6, 2004
is between Symbion, Inc., a Delaware corporation (the "Company"), and SunTrust
Bank, as Rights Agent.

         WHEREAS, the Board of Directors, having determined its actions to be
in the best interests of the Company, has authorized the creation of Rights,
has authorized and directed the issuance to the holders of record of Common
Shares of the Company outstanding as of the Close of Business on February 11,
2004 (the "Record Date"), of one Right with respect to each Common Share of the
Company outstanding on the Record Date, and has further authorized and directed
the issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earlier of the Distribution Date,
the Redemption Date and the Final Expiration Date; and

         WHEREAS, the Board of Directors has authorized and directed that the
terms and conditions under which the Rights are to be distributed, including
without limitation those affecting the exercise thereof, the securities or
other property to be acquired thereby and the purchase price to be paid
therefor, shall be set forth in a written agreement between the Company and a
rights agent.

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

         Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings indicated:

         (a)      "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Voting Shares then outstanding, but
shall not include the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any trustee
of or fiduciary with respect to any such plan when acting in such capacity.
Notwithstanding the foregoing:

                  (y)      no Person shall become an "Acquiring Person" solely
         as the result of an acquisition of Voting Shares by the Company which,
         by reducing the number of shares outstanding, increases the
         proportionate percentage of shares beneficially owned by such Person
         to the amount of Voting Shares necessary for such person to become an
         Acquiring Person; PROVIDED, HOWEVER, that, if a Person shall become
         the Beneficial Owner of the amount of Voting Shares necessary for such
         person to become an Acquiring Person by reason of share purchases by
         the Company and shall, after such share purchases by the Company and
         at a time when such Person is the Beneficial Owner of the amount of
         Voting Shares necessary for such person to become an Acquiring Person,
         become the Beneficial Owner of any additional Voting Shares, then such
         Person shall be deemed to be an "Acquiring Person"; and

<PAGE>
                  (z)      if the Board of Directors determines in good faith
         that a Person who would otherwise be an "Acquiring Person," as defined
         pursuant to the foregoing provisions of this Section 1(a), has become
         such inadvertently (including, without limitation, because (i) such
         Person was unaware that he or it was the Beneficial Owner of a
         percentage of Voting Shares that would otherwise cause such person to
         be an "Acquiring Person" or (ii) such Person was aware of the extent
         to which he or it is the Beneficial Owner of Voting Shares but had no
         actual knowledge of the consequences of being such a Beneficial Owner
         under this Agreement) and without any intention of changing or
         influencing control of the Company, and such Person divests as
         promptly as practicable, but in any event within the time period
         directed by the Board of Directors, 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 or to have become an
         "Acquiring Person" for any purposes of this Agreement during any
         period of time (1) prior to the time the members of the Board of
         Directors shall have become aware that such Person had become an
         "Acquiring Person" (but for the provisions of this subsection (z)),
         (2) during which the members of the Board of Directors are making the
         determination called for under this subsection (z), and (3) during
         which such Person is divesting himself or itself of a sufficient
         number of Voting Shares so that such Person would no longer be an
         "Acquiring Person".

                  Nothing in this Section 1(a) shall affect the effect or
         application of Section 8(e).

         (b)      "Agreement" shall mean this Rights Agreement as the same may
be hereafter amended from time to time.

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

         (d)      A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "own beneficially" any securities which (without duplication):

                  (1)      such Person or any of such Person's Affiliates or
         Associates has the right to acquire (whether such right is exercisable
         immediately or only after the passage of time, compliance with
         regulatory requirements, the fulfillment of a condition or otherwise)
         pursuant to any oral or written agreement, arrangement or
         understanding (other than customary agreements with and between
         underwriters and selling group members (A) with respect to a bona fide
         public offering of securities or (B) in connection with a placement of
         securities pursuant to Rule 144A under the Securities Act), or upon
         the exercise of conversion rights, exchange rights, rights (other than
         these Rights), warrants or options, or otherwise; or the right to vote
         pursuant to any agreement, arrangement or understanding; PROVIDED,
         HOWEVER, that a Person shall not be deemed the Beneficial Owner of, or
         to beneficially own, (i) 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) securities

                                       2
<PAGE>
         issuable upon exercise of Rights at any time prior to any Person
         becoming an Acquiring Person;

                  (2)      such Person or any of such Person's Affiliates or
         Associates, directly or indirectly, has the right to vote or dispose
         of or has "beneficial ownership" of (as determined pursuant to Rule
         13d-3 of the Exchange Act) or has a "pecuniary interest" or an
         "indirect pecuniary interest" in (as determined pursuant to Rule
         16a-1(a)(2) of the Exchange Act), in either case including pursuant to
         any agreement, arrangement or understanding, whether or not in
         writing; PROVIDED, HOWEVER, that a Person shall not be deemed the
         Beneficial Owner of, or to "beneficially own," any security under this
         subparagraph (2) as a result of an agreement, arrangement or
         understanding to vote such security (A) which arises solely from a
         revocable proxy or consent given to such Person in response to a
         public proxy or consent solicitation made pursuant to, and in
         accordance with, the applicable rules and regulations of the Exchange
         Act and (B) is not also then reportable on Schedule 13D under the
         Exchange Act (or any comparable or successor report); or

                  (3)      are beneficially owned, directly or indirectly, by
         any other Person with which such Person or any of such Person's
         Affiliates or Associates has any oral or written agreement,
         arrangement or understanding (other than customary agreements with and
         between underwriters and selling group members (A) with respect to a
         bona fide public offering of securities or (B) in connection with a
         placement of securities pursuant to Rule 144A under the Securities
         Act) for the purpose of acquiring, holding, voting (other than voting
         pursuant to a revocable proxy as contemplated by the proviso to
         subparagraph (2) of this paragraph) or disposing of any securities of
         the Company.

         Notwithstanding anything in this definition to the contrary, the
phrase "then outstanding," when used with reference to a Person's Beneficial
Ownership of securities of the Company (or to the number of such securities
"beneficially owned"), shall mean the number of such securities then issued and
outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to own beneficially
hereunder.

         (e)      "Board of Directors" means the Board of Directors of the
Company.

         (f)      "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of Georgia are
authorized or obligated by law or executive order to close.

         (g)      "Close of Business" on any given date shall mean 5:00 P.M.,
Atlanta, Georgia time, on such date; PROVIDED, HOWEVER, that if such date is
not a Business Day it shall mean 5:00 P.M., Atlanta, Georgia time, on the next
succeeding Business Day.

         (h)      "Closing Price", with respect to any security, shall mean the
last sale price, regular way, on a specific Trading Day or, in case no such
sale takes place on such Trading 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

                                       3
<PAGE>
or admitted to trading on the New York Stock Exchange or, if such security is
not then 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 such security is listed or admitted to trading or, if such security is
not then listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System or such
other system then in use, or, if on any such Trading Day such security is not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in such
security selected by the Board of Directors. If such security is not publicly
held or so listed or traded, "Closing Price" shall mean the fair value per unit
of such security as determined in good faith by the Board of Directors, whose
determination shall be described and the Closing Price set forth in a statement
filed with the Rights Agent.

         (i)      "Common Shares" when used with reference to the Company shall
mean shares of capital stock of the Company which have no preference over any
other class of stock with respect to dividends or assets, which are not
redeemable at the option of the Company and with respect to which no sinking,
purchase or similar fund is provided and shall initially mean the shares of
Common Stock, $.01 par value per share, of the Company. "Common Shares" when
used with reference to any Person other than the Company shall, if used with
reference to a corporation, mean the capital stock (or equity interest) with
the greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person and, if used with reference to any other Person,
mean the equity interest in such Person (or, if the net worth determined in
accordance with generally accepted accounting principles of another Person
(other than an individual) which controls such first-mentioned Person is
greater than such first-mentioned Person, then such other Person) with the
greatest voting power or managerial power with respect to the business and
affairs of such Person. Common Shares used without reference to the Company or
any other Person shall be deemed to refer to Common Shares of the Company
unless the context otherwise requires.

         (j)      "Company" shall mean Symbion, Inc., a Delaware corporation,
and its successors.

         (k)      "Company Order" means a written request or order signed in
the name of the Company by its Chairman of the Board, its President, its Chief
Executive Officer or a Vice President, and by its Chief Financial Officer, its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Rights Agent.

         (l)      "Corporate Trust Office" means the principal office of the
Rights Agent at which it administers its corporate trust business, which, in
the case of SunTrust Bank, shall, until hereafter changed, be its office at 58
Edgewood Avenue, Room 225, Atlanta, Georgia 30303.

         (m)      "Distribution Date" shall mean the Close of Business on the
earlier of (1) the tenth Business Day after the Shares Acquisition Date or (2)
the tenth Business Day (or

                                       4
<PAGE>
such later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date of
commencement by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any trustee of or fiduciary with respect to any such plan when
acting in such capacity) of, or after the date of the first public announcement
of, the intent of any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any trustee of or fiduciary with respect to any such plan when
acting in such capacity) to commence a tender or exchange offer, the
consummation of which would result in any Person becoming an Acquiring Person;
PROVIDED, HOWEVER, that an occurrence described in clause (2) of this
definition above shall not cause the occurrence of the Distribution Date if the
Board of Directors shall, prior to the Close of Business on such tenth Business
Day (or such later date as described in clause (2) above), determine that such
tender or exchange offer is spurious, unless, thereafter, the Board of
Directors shall make a contrary determination, in which event the Distribution
Date shall occur on the later to occur of the Close of Business on such tenth
Business Day (or the Close of Business on such later date as described in
clause (2) above) and the Close of Business on the date of such latter
determination.

         (n)      "Exchange Act" shall mean the Securities Exchange Act of 1934
and any successor statute thereto.

         (o)      "Final Expiration Date" shall mean the Close of Business on
February 6, 2014.

         (p)      "Person" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability company, joint venture,
association, trust, unincorporated organization, group or other entity, and
shall include any successor (by merger or otherwise) of such entity.

         (q)      "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, $.01 par value per share, of the Company having
the rights and preferences set forth in the form of Certificate of Designation
of Series A Junior Participating Preferred Stock of Symbion, Inc. attached
hereto as EXHIBIT A, and, to the extent that there is not a sufficient number
of shares of Series A Junior Participating Preferred Shares outstanding to
permit the full exercise of the Rights, any other authorized shares of
preferred stock, $.01 par value per share, of the Company having rights and
preferences substantially identical to such Series A Preferred Shares.

         (r)      "Purchase Price" shall mean the initial price at which the
holder of a Right may, subject to the terms and conditions of this Agreement,
purchase one one-thousandth (1/1000) of a Preferred Share (which initial price
is set forth in Section 8(b) hereof), as such price shall be adjusted pursuant
to the terms of this Agreement.

         (s)      "Record Date" shall have the meaning provided in the recitals
to this Agreement.

                                       5
<PAGE>
         (t)      "Redemption Date" shall mean the time at which the Rights are
redeemed pursuant to Section 24 herein or the time at which all of the Rights
are mandatorily redeemed and exchanged pursuant to Section 25 hereof.

         (u)      "Redemption Price" shall have the meaning specified in
Section 24(b) herein.

         (v)      "Right" shall mean one preferred share purchase right which
initially represents the right of the registered holder thereof to purchase one
one-thousandth (1/1000) of a Preferred Share upon the terms and subject to the
conditions set forth herein.

         (w)      "Rights Certificate" shall mean a certificate, in
substantially the form of EXHIBIT B attached to this Agreement, evidencing the
Rights registered in the name of the holder thereof.

         (x)      "Rights Agent" shall mean SunTrust Bank and any successor
thereto appointed in accordance with the terms hereof, in its capacity as agent
for the Company and the holders of the Rights pursuant to this Agreement.

         (y)      "Rights Register" and "Rights Registrar" shall have the
meanings specified in Section 6.

         (z)      "Securities Act" shall mean the Securities Act of 1933 and
any successor statute thereto.

         (aa)     "Shares Acquisition Date" shall mean the first date of public
announcement (which for purposes of this definition shall include without
limitation a report filed pursuant to Section 13 or Section 16 of the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such.

         (bb)     "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the outstanding capital stock or other
equity interests having ordinary voting power in the election of directors or
similar officials is owned, directly or indirectly, by such Person.

         (cc)     "Summary of Rights" shall mean a Summary of Rights to
Purchase Preferred Shares in substantially the form attached as EXHIBIT C to
this Agreement.

         (dd)     "Trading Day" shall mean a day on which the principal
national securities exchange on which any of the Voting Shares are listed or
admitted to trading is open for the transaction of business or, if none of the
Voting Shares is listed or admitted to trading on any national stock exchange,
a Business Day.

         (ee)     "Voting Shares" shall mean (1) the Common Shares of the
Company and (2) any other shares of capital stock of the Company entitled to
vote generally in the election of directors or entitled to vote together with
the Common Shares in respect of any merger or consolidation of the Company, any
sale of all or substantially all of the Company's assets or any liquidation,
dissolution or winding up of the Company. Whenever any provision of this
Agreement requires a determination of whether a number of Voting Shares
comprising a specified percentage of such Voting Shares is, was or will be
beneficially owned or has been

                                       6
<PAGE>
voted, tendered, acquired, sold or otherwise disposed of or a determination of
whether a Person has offered or proposed to acquire a number of Voting Shares
comprising such specified percentage, the number of Voting Shares comprising
such specified percentage of Voting Shares shall in every such case be deemed
to be the number of Voting Shares comprising the specified percentage of all
the Company's then outstanding Voting Shares.

         (ff)     "Wholly-Owned Subsidiary" of a Person shall mean any
corporation or other entity all the outstanding capital stock or other equity
interests of which having ordinary voting power in the election of directors or
similar officials (other than directors' qualifying shares or similar
interests) are owned, directly or indirectly, by such Person.

         Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Shares of the Company) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.

         Section 3. ISSUE OF RIGHTS CERTIFICATES. (a) Until the Distribution
Date, (1) outstanding Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) (A) with respect to Common Shares that are
held in certificated form, by the certificates for outstanding Common Shares of
the Company and not by separate Rights Certificates and (B) with respect to
Common Shares that are held in book-entry form, by a notation in the records of
the Rights Agent (and the records of the Company's transfer agent if different
from the Rights Agent), and (2) the right to receive Rights Certificates will
be transferable only in connection with the transfer of Common Shares of the
Company. As soon as practicable after the Distribution Date, the Company will
prepare and execute, and the Rights Agent will countersign and send, by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares of the Company as of the Close of Business on the Distribution Date, at
the address of such holder shown on the stock transfer records of the Company,
a Rights Certificate evidencing one Right for each Common Share so held,
subject to adjustments as provided herein. From and after the Distribution
Date, the Rights will be evidenced solely by such Rights Certificates.

         (b)      On the Record Date, or as soon thereafter as practicable, the
Company will send a copy of a Summary of Rights, by first-class,
postage-prepaid mail, to each record holder of Common Shares of the Company as
of the Close of Business on the Record Date, at the address of such holder
shown on the stock transfer records of the Company. With respect to Common
Shares outstanding on the Record Date, the certificates evidencing such Common
Shares shall thereafter also evidence the outstanding Rights (as such Rights
may be amended or supplemented) distributed with respect thereto until the
Distribution Date and the registered holders of Common Shares shall also be the
registered holders of the associated Rights. Until the Distribution Date (or,
if earlier, the Redemption Date or Final Expiration Date), the surrender for
registration of transfer or exchange of (1) any certificate for Common Shares
outstanding as of the Close of Business on the Record Date, with or without a
copy of the Summary of Rights attached thereto, and (2) any Common Shares

                                       7
<PAGE>
held in book-entry form, shall also constitute the surrender for registration
of transfer or exchange of the outstanding Rights associated with the Common
Shares represented thereby.

         (c)      The Company agrees that, at any time after the Record Date
and prior to the Distribution Date (or, if earlier, the Redemption Date or
Final Expiration Date) at which it issues any of its Common Shares upon
original issue or out of treasury, it will concurrently distribute to the
holder of such Common Shares one Right for each such Common Share, which Right
shall be subject to the terms and provisions of this Agreement and will
evidence the right to purchase the same number of one one-thousandth (1/1000)
of a Preferred Share at the same Purchase Price as the Rights then outstanding.

         (d)      Certificates for Common Shares issued after the Record Date
but prior to the earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date, whether upon registration of transfer or exchange of
Common Shares outstanding on the Record Date or upon original issue or out of
treasury thereafter, shall also be deemed to be certificates for the Rights and
shall have 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:

                  This certificate also evidences and entitles the holder
         hereof to certain Rights as set forth in a Rights Agreement between
         Symbion, Inc. (the "Company") and SunTrust Bank, as it may be amended
         (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 the Company. Under certain circumstances, as set
         forth in the Rights Agreement, such Rights will be evidenced by
         separate certificates and will no longer be evidenced by this
         certificate. The Company will mail to the holder of this certificate a
         copy of the Rights Agreement without charge after receipt of a written
         request therefor. As described in the Rights Agreement, Rights issued
         to or acquired by any Acquiring Person or any Affiliate or Associate
         thereof (each as defined in the Rights Agreement), whether currently
         held by or on behalf of such Person or by any subsequent holder,
         shall, under certain circumstances, become null and void.

With respect to certificates containing the foregoing legend, until the earlier
of the Distribution Date or the Final Expiration Date, outstanding Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender of any such certificate
for registration of transfer or exchange of the Common Shares evidenced thereby
shall also constitute surrender for registration of transfer or exchange of the
outstanding Rights (as such Rights may be amended or supplemented) associated
with the Common Shares represented thereby. The failure to print the foregoing
legend on any certificate or any other defect therein shall not affect in any
manner whatsoever the application or interpretation of the provisions of
Section 8(e) hereof.

         (e)      If the Company purchases or acquires any of its Common Shares
after the Record Date, but prior to the Distribution Date, any Rights
associated with such Common

                                       8
<PAGE>
Shares shall be deemed canceled and retired so that the Company shall not be
entitled to exercise any Rights associated with the Common Shares which are no
longer outstanding.

         Section 4. FORM OF RIGHTS CERTIFICATES. (a) The form of Rights
Certificates (and the forms of election to purchase Preferred Shares (or other
securities) and of assignment to be printed on the reverse thereof) shall in
form and substance be substantially the same as EXHIBIT B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, 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 as may be necessary to conform to
usage. Subject to the provisions of Section 23 hereof, the Rights Certificates,
whenever issued, shall be dated as of the date of authentication thereof, but,
regardless of any adjustments of the Purchase Price or the number of Preferred
Shares (or other securities) as to which a Right is exercisable (whether
pursuant to this Agreement or any future amendments or supplements to this
Agreement), or both, occurring after the Record Date and prior to the date of
such authentication, such Rights Certificates may, on their face, without
invalidating or otherwise affecting any such adjustment, expressly entitle the
holders thereof to purchase such number of Preferred Shares at the Purchase
Price per one one-thousandth (1/1000) of a Preferred Share as to which a Right
would be exercisable if the Distribution Date were the Record Date; no
adjustment of the Purchase Price or the number of Preferred Shares (or other
securities) as to which a Right is exercisable, or both, effected subsequent to
the date of authentication of any Rights Certificate shall be invalidated or
otherwise affected by the fact that such adjustment is not expressly reflected
on the face or in the provisions of such Rights Certificate.

         (b)      Pending the preparation of definitive Rights Certificates,
the Company may execute, and upon Company Order the Rights Agent shall
authenticate and send, by first-class, insured, postage-prepaid mail, to each
record holder of Common Shares of the Company as of the Close of Business on
the Distribution Date, temporary Rights Certificates which are printed,
lithographed, typewritten, mimeographed or otherwise produced substantially of
the tenor of the definitive Rights Certificates in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Rights Certificates may determine, as
evidenced by their execution of such Rights Certificates.

         (c)      If temporary Rights Certificates are issued, the Company will
cause definitive Rights Certificates to be prepared without unreasonable delay.
After the preparation of definitive Rights Certificates, the temporary Rights
Certificates shall be exchangeable for definitive Rights Certificates, upon
surrender of the temporary Rights Certificates at the Corporate Trust Office of
the Rights Agent, without charge to the holder. Upon surrender for cancellation
of any one or more temporary Rights Certificates, the Company shall execute and
the Rights Agent shall authenticate and deliver in exchange therefor one or
more definitive Rights Certificates, evidencing a like number of Rights. Until
so exchanged, the temporary Rights Certificates shall in all respects be
entitled to the same benefits under this Agreement as definitive Rights
Certificates.

                                       9
<PAGE>
         (d)      Any Rights Certificate issued pursuant to Section 3(a) or
Section 23 hereof that represents Rights beneficially owned by (1) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (2) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (3) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
avoidance of Section 8(e) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 7 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:

         The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified in
Section 8(e) of such Agreement.

         Section 5. EXECUTION, AUTHENTICATION AND DELIVERY. (a) The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President, its Chief Executive Officer or one of its Vice
Presidents, attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Rights Certificates may be manual or
facsimile.

         (b)      Rights Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Rights Certificates or did not hold such offices at the date of
authentication of such Rights Certificates. At any time and from time to time
after the execution and delivery of this Agreement and prior to the
Distribution Date, the Company may deliver Rights Certificates executed by the
Company to the Rights Agent for authentication, together with a Company Order
for the authentication and delivery of such Rights Certificates; and the Rights
Agent in accordance with such Company Order shall authenticate and deliver such
Rights Certificates as provided in this Agreement and not otherwise.

         (c)      No Rights Certificate shall be entitled to any benefit under
this Agreement or be valid or obligatory for any purpose unless there appears
on such Rights Certificate a certificate of authentication substantially in the
form provided for herein executed by the Rights Agent by manual signature, and
such certificate upon any Rights Certificate shall be conclusive evidence, and
the only evidence, that such Rights Certificate has been duly authenticated and
delivered hereunder.

                                      10
<PAGE>
         Section 6. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. From
and after the Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date, the Company shall cause to be kept at the
Corporate Trust Office of the Rights Agent a rights register (a "Rights
Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Rights
Certificates and of transfers of Rights. The Rights Agent is hereby appointed
the registrar and transfer agent (the "Rights Registrar") for the purpose of
registering Rights Certificates and transfers of Rights as herein provided and
the Rights Agent agrees to maintain such Rights Register in accordance with
such regulations so long as it continues to be designated as Rights Registrar
hereunder.

         Upon surrender to the Rights Agent for registration of transfer of any
Rights Certificate, the Company shall execute, and the Rights Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Rights Certificates evidencing a like number of
Rights.

         At the option of the holder, Rights Certificates may be exchanged for
other Rights Certificates upon surrender of the Rights Certificates to be
exchanged to the Rights Agent. Whenever any Rights Certificates are so
surrendered for exchange, the Company shall execute, and the Rights Agent shall
authenticate and deliver, the Rights Certificates which the holder making the
exchange is entitled to receive.

         All Rights Certificates issued upon any registration of transfer or
exchange of Rights Certificates shall be the valid obligations of the Company,
evidencing the same Rights, and entitled to the same benefits under this
Agreement, as the Rights Certificates surrendered upon such registration of
transfer or exchange.

         Every Rights Certificate presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Rights Agent)
be duly endorsed, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Rights Registrar duly executed, by the
holder thereof or his attorney duly authorized in writing.

         No service charge shall be made for any registration of transfer or
exchange of Rights Certificates, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Rights
Certificates, other than exchanges not involving any transfer.

         The provisions of this Section 6 shall be subject to the provisions of
Section 4(d), Section 8(e) and Section 15.

         Section 7. MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES.
(a) If any mutilated Rights Certificate is surrendered to the Rights Agent, the
Company shall execute and the Rights Agent shall authenticate and deliver in
exchange therefor a new Rights Certificate of like tenor, for a like number of
Rights and bearing a registration number not contemporaneously outstanding.

                                      11
<PAGE>
         (b)      If there shall be delivered to the Company and the Rights
Agent (1) evidence to their satisfaction of the destruction, loss or theft of a
Rights Certificate and (2) such security or indemnity, if any, as may be
required by them to save each of them and any agent of either of them harmless,
then, in the absence of notice to the Company or the Rights Agent that such
Rights Certificate has been acquired by a bona fide purchaser, the Company
shall execute and upon its request the Rights Agent shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Rights Certificate, a
new Rights Certificate of like tenor, for a like number of Rights and bearing a
registration number not contemporaneously outstanding.

         (c)      Upon the issuance of any new Rights Certificate under this
Section 7, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Rights Agent)
connected therewith.

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

         (e)      The provisions of this Section 7 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Rights
Certificates.

         Section 8. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) Subject to the provisions of Section 8(e) hereof, the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at its Corporate Trust Office, together with payment of the Purchase
Price for each one one-thousandth (1/1000) of a Preferred Share (or other
securities) as to which the Rights are exercised, at or prior to the earliest
of (1) the Close of Business on the Final Expiration Date, (2) the time of
redemption on the Redemption Date or (3) the time at which such Rights are
mandatorily redeemed and exchanged as provided in Section 25 hereof.

         (b)      The Purchase Price for each one one-thousandth (1/1000) of a
Preferred Share pursuant to the exercise of a Right shall initially be $91.50,
shall be subject to adjustment from time to time as provided in Sections 12 and
14 hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.

         (c)      Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the securities to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of such
Rights Certificate in accordance with Section 10 in cash, or by certified check
or cashier's check payable to the order of the Company, the

                                      12
<PAGE>
Rights Agent shall thereupon promptly (1) (A) requisition from any transfer
agent of the Preferred Shares (or other securities) certificates for such
number of one one-thousandths of a Preferred Share (or other securities) as are
to be purchased and registered in such name or names as may be designated by
the registered holder of such Rights Certificate or, if appropriate, in the
name of a depositary agent or its nominee, and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of Preferred Shares
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from such depositary agent appointed by the Company, depositary
receipts representing such number of one one-thousandths of a Preferred Share
as are to be purchased and registered in such name or names as may be
designated by such holder (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer agent with such
depositary agent), and the Company hereby directs such depositary agent to
comply with all such requests, (2) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 15 hereof, (3) promptly after receipt of such
certificates or depositary receipts registered in such name or names as may be
designated by such holder, cause the same to be delivered to or upon the order
of the registered holder of such Rights Certificate and (4) when appropriate,
after receipt, promptly deliver such cash to or upon the order of such holder.
In the event that the Company is obligated to issue other securities (including
Common Shares) of the Company, pay cash and/or distribute other property
pursuant to Section 12(a) hereof, the Company will make all arrangements
necessary so that other securities, cash and/or other property are available
for distribution by the Rights Agent, if and when appropriate.

         (d)      If the registered holder of the Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equal to the Rights remaining unexercised shall be issued by
the Rights Agent to the registered holder of such Rights Certificate or to his
duly authorized assigns, subject to the provisions of Section 15 hereof.

         (e)      Notwithstanding anything in this Agreement to the contrary,
if any Person shall become an Acquiring Person, thereafter any Rights
beneficially owned by (1) such Acquiring Person or an Associate or Affiliate of
such Acquiring Person, (2) a transferee of such Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (3) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which at least a majority of
the Board of Directors has determined is part of a plan or an agreement,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 8(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 8(e) and Section 4(d) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or

                                      13
<PAGE>
other Person as a result of its failure to make any determinations with respect
to any Acquiring Person or its Affiliates, Associates or transferees hereunder.

         Section 9. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up
or exchange shall, if surrendered to the Company or to any of its other agents,
be delivered to the Rights Agent for such purpose and for cancellation or, if
surrendered to the Rights Agent for such purpose, shall be canceled by it. No
Rights Certificates shall be authenticated in lieu of or in exchange for any
Rights Certificates canceled as provided in this Section 9 except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or shall, pursuant to
a Company Order, destroy such canceled Rights Certificates and in such case
shall deliver a certificate of destruction thereof to the Company.

         Section 10. RESERVATION AND AVAILABILITY OF SHARES. (a) The Company
covenants and agrees that 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, the number of Preferred Shares that will be sufficient to permit
the exercise in full of all outstanding Rights.

         (b)      The Company further covenants and agrees that it will, from
and after the Distribution Date, cause to be reserved and kept available out of
its authorized and unissued Common Shares or any Common Shares held in its
treasury, the number of Common Shares of the Company that will be sufficient to
permit the exercise in full of all outstanding Rights if adjusted pursuant to
Section 12(a)(2).

         (c)      The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares or Common Shares
of the Company issued upon exercise of Rights shall (subject to payment of the
Purchase Price) at the time of delivery of the certificates representing any
such Preferred Shares or Common Shares be duly authorized, validly issued,
fully paid and nonassessable. The Company further covenants and agrees that it
will pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the
Rights Certificates or of any Preferred Shares (or depositary receipts
therefor) or Common Shares of the Company upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or in respect of the issuance or delivery of certificates or
depositary receipts for the Preferred Shares or Common Shares of the Company
upon exercise of Rights evidenced by Rights Certificates in a name other than
that of, the registered holder of the Rights Certificate evidencing Rights
surrendered for transfer or exercise or to issue or deliver any certificates or
depositary receipts for Preferred Shares or Common Shares of the Company upon
the exercise of any Rights until any such tax shall have been paid (any such
tax being payable by the holder of

                                      14
<PAGE>
such Rights Certificate at the time of surrender thereof) or until it has been
established to the Company's satisfaction that no such tax is due.

         (d)      So long as the Common Shares issuable and deliverable upon
the exercise of the Rights may be listed on any national securities exchange,
the Company shall use its best efforts to promptly cause, from and after such
time as the Rights become exercisable, all Common Shares and other securities
reserved for such issuance to be listed on such exchange upon official notice
of issuance upon such exercise.

         Section 11. RECORD DATE. Each Person in whose name any certificate for
Preferred Shares or Common Shares of the Company is issued upon the exercise
of, or upon mandatory redemption and exchange of, Rights shall for all purposes
be deemed to have become the holder of record of the Preferred Shares or Common
Shares represented thereby on, and such certificate shall be dated, (a) in the
case of the exercise of Rights, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made, or (b) in the case of the
mandatory redemption and exchange of Rights, the date of such mandatory
redemption and exchange; PROVIDED, HOWEVER, that, if the date of such surrender
and payment or mandatory redemption and exchange is a date upon which the
transfer books of the Company for its Preferred Shares or Common Shares, as the
case may be, are closed, such Person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which such transfer books of the Company are open.
Prior to the exercise of (or the mandatory redemption and exchange of) the
Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a holder of Preferred Shares (or Common Shares of the
Company) for which the Rights shall be exercisable, including without
limitation the rights to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.

         Section 12. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND TYPE OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares of capital
stock of the Company covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 12.

         (a)      (1) If the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of Preferred Shares or (D)
issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 12(a), the Purchase Price in
effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised thereafter shall be entitled
to receive, upon payment of the Purchase Price for the number of one
one-

                                      15
<PAGE>
thousandths of a Preferred Share for which a Right was exercisable immediately
prior to such date, the aggregate number and kind of shares of capital stock
which, if such Right had been duly exercised immediately prior to such date (at
a time when the Preferred Shares transfer books of the Company were open), such
holder would have acquired upon such exercise and been entitled to receive upon
payment or effectuation of such dividend, subdivision, combination or
reclassification; PROVIDED, HOWEVER, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company issuable upon exercise of one
Right. If an event occurs which would require an adjustment under both Section
12(a)(1) and Section 12(a)(2), the adjustment provided for in this Section
12(a)(1) shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 12(a)(2).

         (2)      Subject to action of the Board of Directors pursuant to
Section 25 of this Agreement, if any Person shall become an Acquiring Person,
unless the event causing such Person to become an Acquiring Person is (A) a
transaction described in Section 14 hereof, or (B) an acquisition of Common
Shares pursuant to a tender offer or an exchange offer for all outstanding
Common Shares at a price and on terms determined by the Board of Directors
(excluding members of the Board of Directors who are representatives, nominees
or Affiliates of an Acquiring Person), after receiving advice from one or more
investment banking firms, to be (i) at a price that is fair to stockholders
(taking into account all factors that such members of the Board deem relevant
including, without limitation, prices that could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize maximum
value) and (ii) otherwise in the best interests of its stockholders, each
holder of a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-thousandths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company as shall equal
the result obtained by (x) multiplying the then current Purchase Price by the
number of one one-thousandths of a Preferred Share for which a Right is then
exercisable and dividing that product by (y) 50% of the then current per share
market price of the Company's Common Shares (determined pursuant to Section
12(d)) on the date such Person became an Acquiring Person. If any Person shall
become an Acquiring Person and the Rights shall then be outstanding, the
Company shall not take any action which would eliminate or diminish the
benefits intended to be afforded by the Rights.

         (3)      In the event that the number of Common Shares that are
authorized by the Company's certificate of incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (2) of this Section 12(a), the Company shall: (A)
determine the excess of (1) the value of the Common Shares issuable upon the
exercise of a Right (the "Current Value"), over (2) the Purchase Price (such
excess, the "Spread"), and (B) with respect to each Right, make adequate
provision to substitute for such Common Shares, upon exercise of the Rights and
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Shares or other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred stock
which the Board of Directors of the Company has deemed to have the same value
as shares of Common Shares (such shares of preferred stock,

                                      16
<PAGE>
"Common Share Equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been determined by
the Board of Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors of the
Company; PROVIDED, HOWEVER, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty days
following the first occurrence of a Shares Acquisition Date, then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, Common Shares (to the extent
available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If the Board of Directors of the Company
shall determine in good faith that it is likely that sufficient additional
Common Shares could be authorized for issuance upon exercise in full of the
Rights, the thirty-day period set forth above may be extended to the extent
necessary, but not more than ninety days after the Shares Acquisition Date, in
order that the Company may seek stockholder approval for the authorization of
such additional shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences of this Section 12(a)(3),
the Company (x) shall provide, subject to Section 8(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspension, the
Company shall promptly notify the Rights Agent in writing of such suspension
and shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect (with prompt written notice to
the Rights Agent that such suspension is no longer in effect). For purposes of
this Section 12(a)(3), the value of Common Shares shall be the current market
price (as determined pursuant to Section 12(d) hereof) per share of the Common
Shares on the Shares Acquisition Date and the value of any Common Stock
Equivalent shall be deemed to have the same value as the Common Shares on such
date.

         (b)      If the Company shall fix 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 shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into or exchangeable for Preferred Shares
or equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (together with any additional consideration required upon
conversion or exchange in the case of a security convertible into or
exchangeable for Preferred Shares or equivalent preferred shares), less than
the current per share market price of the Preferred Shares (determined pursuant
to Section 12(d) on such record date), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Preferred Shares outstanding on such record date
plus the number of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred shares so to be
offered (together with the aggregate of any additional consideration required
upon conversion or exchange in the case of any

                                      17
<PAGE>
convertible or exchangeable securities so to be offered) would purchase at such
current market price and the denominator of which shall be 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 or purchase (or into or for which the convertible or exchangeable
securities so to be offered are initially convertible or exchangeable);
PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon the exercise of one Right. In case
all or part of such subscription or purchase price may be paid in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent. Preferred Shares owned by or held for
the account of the Company or any of its Subsidiaries shall not be deemed
outstanding for the purpose of any computation described in this Section 12(b).
The adjustment described in this Section 12(b) shall be made successively
whenever such a record date is fixed; and, if none of such rights, options or
warrants are so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.

         (c)      If the Company shall fix a record date for the making of a
distribution to all holders of the 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 or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 12(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market price of the
Preferred Shares (determined pursuant to Section 12(d)) on such record date,
less the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be 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 of the Company issuable upon
exercise of one Right. Such adjustments shall be made successively whenever
such a record date is fixed; and, if such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.

         (d)      (1) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 12(d)) on any date shall be deemed to be the average of the
daily Closing Prices per share of such Security for the 30 consecutive Trading
Days immediately prior to, but not including, such date; PROVIDED, HOWEVER,
that, if the issuer of such Security announces (A) a dividend or distribution
on such Security payable in shares of such Security or Securities convertible
into such Security or (B) any subdivision, combination or reclassification of
such Security, and the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, occurs
during such period of 30 Trading Days, then, and in each such case, the current
per share market price of such Security shall be

                                      18
<PAGE>
appropriately adjusted to reflect the current market price per share equivalent
of such Security.

         (2)      For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares shall be determined in the same
manner as set forth above for Common Shares in paragraph (1) of this Section
12(d). 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 shall be conclusively deemed to be the current per
share market price of the Common Shares (determined in the manner provided
above) multiplied by one thousand.

         (e)      No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; PROVIDED, HOWEVER, that any adjustments which by reason of this
Section 12(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
12 shall be made to the nearest cent or to the nearest ten-thousandth of a
Common Share or other share or one ten-millionth of a Preferred Share, as the
case may be, and references herein to the "number of one one-thousandths of a
Preferred Share" (or similar phrases) shall be construed to include fractions
of one one-thousandth of a Preferred Share. Notwithstanding the first sentence
of this Section 12(e), any adjustment required by this Section 12 shall be made
no later than the earlier of (1) three years from the date of the transaction
which requires such adjustment or (2) the thirtieth day preceding the Final
Expiration Date.

         (f)      If as a result of an adjustment made pursuant to Section
12(a), the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
shares contained in this Section 12, and the provisions of this Agreement,
including without limitation Sections 8, 10, 11 and 14, with respect to the
Preferred Shares shall apply on like terms to any such other shares.

         (g)      All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall, whether or not the
Rights Certificate evidencing such Rights reflects such adjusted Purchase
Price, evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-thousandths of a Preferred Share purchasable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment
as provided herein.

         (h)      Unless the Company shall have exercised its election as
provided in Section 12(i), upon each adjustment of the Purchase Price pursuant
to Section 12(b) or 12(c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price per one one-thousandth of a Preferred Share, that
number of one one-thousandths of a Preferred Share obtained by (1) multiplying
(x) the number of one-thousandths of a share covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately prior
to such

                                      19
<PAGE>
adjustment of the Purchase Price and (2) 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 outstanding in lieu of any
adjustment in the number of one one-thousandths of a Preferred Share
purchasable upon the exercise of a Right. Each Right outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment of the Purchase Price. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is adjusted or any
day thereafter, but, if the Rights Certificates have been issued, shall be at
least 10 days later than the date of the public announcement. Until such record
date, however, any adjustment in the number of one one-thousandths of a
Preferred Share for which a Right shall be exercisable made as required by this
Agreement shall remain in effect. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 12(i), the
Company shall, as promptly as practicable, cause to be distributed to holders
of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 15 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and authenticated in the manner provided
for herein and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.

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

         (k)      Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-thousandth of the amount of
consideration per Preferred Share determined by the Board of Directors to be
capital, or below one one-thousandth of the par value, if any, per Preferred
Share issuable upon exercise of the Rights, the Company agrees to take such
corporate action as is within its power, including without limitation
appropriate action by its Board of Directors, and which is, in the opinion of
its counsel, necessary in order that the Company may validly and legally issue
fully paid and nonassessable one one-thousandths of Preferred Shares at such
adjusted Purchase Price.

                                      20
<PAGE>
         (l)      In any case in which this Section 12 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of the Preferred Shares or other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares or other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
PROVIDED, HOWEVER, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional securities upon the occurrence of the event requiring such
adjustment.

         (m)      Anything in this Section 12 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 12, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any combination or subdivision of the Preferred Shares, issuance
wholly for cash of any of the Preferred Shares at less than the current market
price, issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or issuance of
rights, options or warrants referred to in subsection (b) of this Section 12,
hereafter effected by the Company to holders of its Preferred Shares shall not
be taxable to such stockholders.

         (n)      If at any time prior to the Distribution Date, the Company
shall (1) declare or pay any dividend on the Common Shares payable in Common
Shares or (2) effect a subdivision or combination of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision or combination shall be adjusted by
multiplying such Purchase Price by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (B) the number of Rights outstanding immediately after
such event shall be adjusted, either through cancellation of outstanding Rights
or through distribution of additional Rights (but without duplication of the
Company's obligations under Section 3(c)), so that the certificate evidencing
each Common Share outstanding immediately after such event shall also evidence
the associated Right to purchase the same number of one one-thousandths of a
Preferred Share as to which a Right would have entitled the holder thereof to
purchase immediately prior to such event. The adjustment provided for in this
Section 12(n) shall be made successively whenever such a dividend is declared
or paid or such a subdivision or combination is effected. If an event occurs
which would require an adjustment under Section 12(a)(2) and this Section
12(n), the adjustments provided for in this Section 12(n) shall be in addition
and prior to any adjustment required pursuant to Section 12(a)(2).

         Section 13. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 12 or 14 hereof,
the Company shall (a) promptly prepare a certificate setting forth such

                                      21
<PAGE>
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Shares of the Company and the Preferred Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder of record of a
Rights Certificate in accordance with Section 28 hereof.

         Section 14. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. If, directly or indirectly at any time after a Person has become
an Acquiring Person, (a) the Company shall consolidate with, or merge with and
into, any other Person and the Company is not the continuing or surviving
corporation, (b) any Person shall merge with and into the Company and the
Company shall be the continuing or surviving corporation of such merger and, in
connection with any such merger, all or part of the Common Shares of the
Company shall be changed into or exchanged for stock or other securities of any
other Person (or the Company) or cash or any other property, or (c) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one or a series of two or more transactions, assets
of the Company or its Subsidiaries which constitute more than 50% of the assets
or which produce more than 50% of the earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or any Affiliate or Associate of
such Person other than the Company or one or more of its Wholly-Owned
Subsidiaries, then, and in each such case, the Company agrees that, as a
condition to engaging in any such transaction, it will make or cause to be made
proper provision so that (1) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement and in lieu of Preferred
Shares, such number of Common Shares of such other Person (including the
Company as successor thereto or as the surviving corporation) or, if such other
Person is a Subsidiary of another Person, of the Person or Persons (other than
individuals) which ultimately control such first-mentioned Person, as shall be
equal to the result obtained by (x) multiplying the then current Purchase Price
by the number of one one-thousandths of a Preferred Share for which a Right is
then exercisable (without taking into account any adjustment previously made
pursuant to Section 12(a)(2)) and dividing that product by (y) 50% of the
current per share market price of the Common Shares of such other Person
(determined pursuant to Section 12(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; (2) the issuer of such Common
Shares shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (3) the term "Company," as used herein,
shall thereafter be deemed to refer to such issuer; and (4) such issuer shall
take such steps (including without limitation the reservation of a sufficient
number of shares of its Common Shares in accordance with Section 10) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise
of the Rights. The Company shall not enter into any transaction of the kind
referred to in this Section 14 if at the time of such transaction there are
outstanding any rights, warrants, instruments or securities or any agreement,
understanding or arrangements which, as a result of the consummation of such
transaction, would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights. The Company shall not consummate any
such consolidation, merger, sale or transfer unless prior thereto the Company
and such issuer shall have executed and

                                      22
<PAGE>
delivered to the Rights Agent an agreement supplemental to this Agreement
complying with the provisions of this Section 14. The provisions of this
Section 14 shall similarly apply to successive mergers or consolidations or
sales or other transfers. For the purposes of this Section 14, 50% of the
assets of the Company and its Subsidiaries shall be determined by reference to
the book value of such assets as set forth in the most recent consolidated
balance sheet of the Company and its Subsidiaries (which need not be audited)
and 50% of the earning power of the Company and its Subsidiaries shall be
determined by reference to the mathematical average of the operating income
resulting from the operations of the Company and its Subsidiaries for the two
most recent full fiscal years as set forth in the consolidated and
consolidating financial statements of the Company and its Subsidiaries for such
years; PROVIDED, HOWEVER, that, if the Company has, during such period, engaged
in a transaction or series of transactions that individually or in the
aggregate involved a significant amount of assets (determined by reference to
Item 2, Instruction 4 to Form 8-K), the determination of the earning power of
the Company shall be made by reference to the pro forma operating income of the
Company and its Subsidiaries giving effect to such transactions as if they had
occurred at the commencement of such two-year period.

         Section 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue or distribute Rights Certificates which evidence
fractional Rights. If, on the Distribution Date or thereafter, as a result of
any adjustment effected pursuant to Section 12(i) or otherwise hereunder, a
Person would otherwise be entitled to receive a Rights Certificate evidencing a
fractional Right, the Company shall, in lieu thereof, pay or cause to be paid
to such Person an amount in cash equal to the same fraction of the current
market value of a whole Right. For the purpose of this Section 15(a), the
current market value of a whole Right shall be the Closing Price of the Rights
for the Trading Day immediately prior to, but not including, the date on which
such fractional Rights would have been otherwise issuable.

         (b)      The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares. If, on the Distribution Date or thereafter, as a result
of any adjustment effected hereunder in the number of one one-thousandths of a
Preferred Share as to which a Right has become exercisable, a Person would
otherwise be entitled to receive a fractional Preferred Share that is not an
integral multiple of one one-thousandth of a Preferred Share, the Company
shall, in lieu thereof, pay to such Person at the time such Right is exercised
as herein provided an amount in cash equal to the same fraction (which is not
an integral multiple of one one-thousandth of a Preferred Share) of the current
market value of one Preferred Share. For purposes of this Section 15(b), the
current market value of a Preferred Share shall be the Closing Price of a

                                      23
<PAGE>
Preferred Share for the Trading Day immediately prior to, but not including,
the date of such exercise.

         (c)      Should any adjustment contemplated by Section 12(a)(2) or any
mandatory redemption and exchange contemplated by Section 25 occur, the Company
shall not be required to issue fractions of Common Shares upon exercise of the
Rights or to distribute certificates which evidence fractional Common Shares.
If after any such adjustment or mandatory redemption and exchange, a Person
would otherwise be entitled to receive a fractional Common Share of the Company
upon exercise of any Rights Certificate or upon mandatory redemption and
exchange as contemplated by Section 25, the Company shall, in lieu thereof, pay
to such Person at the time such Right is exercised as herein provided or upon
such mandatory redemption and exchange an amount in cash equal to the same
fraction of the current market value of one Common Share. For purposes of this
Section 15(c), the current market value of a Common Share shall be the Closing
Price of a Common Share for the Trading Day immediately prior to the date of
such exercise or the date of such mandatory redemption and exchange.

         (d)      The holder of a Right by the acceptance thereof expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise or mandatory redemption and exchange of a Right (except as provided
above).

         Section 16. RIGHTS OF ACTION. (a) All rights of action in respect of
the obligations and duties owed to the holders of the Rights under this
Agreement are vested in the registered holders of the Rights; and, without the
consent of the Rights Agent or of the holder of any other Rights, any
registered holder of any Rights may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding,
judicial or otherwise, against the Company to enforce, or otherwise to act in
respect of, such holder's right to exercise such Rights in the manner provided
in the Rights Certificate evidencing such Rights and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and will be entitled to
specific performance of the obligations under, and injunctive relief against
actual or threatened violations of, the obligations of any Person subject to
this Agreement.

         (b)      No right or remedy herein conferred upon or reserved to the
registered holder of Rights is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy, whether hereunder or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate right
or remedy.

         (c)      No delay or omission of any registered holder of Rights to
exercise any right or remedy accruing hereunder shall impair any such right or
remedy or constitute a waiver of any default hereunder or an acquiescence
therein. Every right and remedy given hereunder or by law to such holders may
be exercised from time to time, and as often as may be deemed expedient, by
such holders.

                                      24
<PAGE>
         Section 17. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:

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

         (b)      after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the Corporate Trust Office of the Rights Agent 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 Rights Certificate (or, prior to the Distribution
Date, the associated Common Shares certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the associated
Common Shares certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary; and

         (d)      notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or 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, judgment or ruling (whether interlocutory or
final) issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
PROVIDED, HOWEVER, the Company must use its best efforts to have any such
order, decree, judgment or ruling lifted or otherwise overturned as soon as
possible.

         Section 18. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right (whether or not then evidenced by a Rights
Certificate) shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of Preferred Shares, Common Shares of the Company or any
other securities of the Company which may at any time be issuable on the
exercise (or mandatory redemption and exchange) of the Rights represented
thereby, nor shall anything contained herein or in any Rights Certificate be
construed to confer upon any such holder, as such, any of the rights of a
stockholder of the Company, including without limitation any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, to give or withhold consent to any corporate action, to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 26) or to receive dividends or subscription rights or
otherwise.

         Section 19. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to

                                      25
<PAGE>
time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.

         (b)      The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Preferred Shares, Common Shares or other
securities of the Company, Company Order, 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 executed and, where necessary, verified or acknowledged, by the
proper person or persons, or otherwise upon the advice of its counsel as set
forth in Section 20 hereof.

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

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

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

         (c)      The Rights Agent shall be liable hereunder to the Company or
any other Person only for its own gross negligence, bad faith or willful
misconduct. Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including, but not limited to, lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action.

         (d)      The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except its

                                      26
<PAGE>
authentication thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the
Company only.

         (e)      The Rights Agent shall not have any responsibility with
respect to the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or with respect to the
validity or execution of any Rights Certificate (except its authentication
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 12(a)(2) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 12, 14, 24 and 25, or the ascertainment of
the existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Rights Certificates after
actual notice that such change or adjustment is required); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or Common Shares to be
issued pursuant to this Agreement or any Rights Certificate or as to whether
any Preferred Shares or Common Shares will, when issued, be duly authorized,
validly issued, fully paid and nonassessable.

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

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

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

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

                                      27
<PAGE>

         Section 21. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any corporation into which the Rights Agent or any successor Rights Agent may
be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the corporate trust or
stock transfer business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such Person would be eligible for appointment as
a successor Rights Agent under the provisions of Section 22. If at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights Certificates shall have been authenticated but not
delivered, any such successor Rights Agent may adopt the authentication of the
predecessor Rights Agent and deliver such Rights Certificates so authenticated,
and, if at that time any of the Rights Certificates shall not have been
authenticated, any successor Rights Agent may authenticate such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.

         If at any time the name of the Rights Agent shall be changed and at
such time any of the Rights Certificates shall have been authenticated but not
delivered, the Rights Agent may adopt the authentication under its prior name
and deliver Rights Certificates so authenticated; and, in case at that time any
of the Rights Certificates shall not have been authenticated, the Rights Agent
may authenticate such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.

         Section 22. 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 days notice in writing mailed to the Company and to each transfer agent
for the Common Shares of the Company and the Preferred Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent for the Common Shares of
the Company and the Preferred Shares by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the registered
holder of a Rights Certificate (or, prior to the Distribution Date, of Common
Shares), then any registered holder of a Rights Certificate (or, prior to the
Distribution Date, of Common Shares) may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be either (a)
a Person organized and doing business under the laws of the United States or of
any state of the United States, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
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

                                      28
<PAGE>
million or (b) an Affiliate of a Person described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent for the Common Shares of the Company and the Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 22, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.

         Section 23. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price per share and the number or kind or
class of shares or other securities purchasable under the Rights Certificates
made in accordance with the provisions of this Agreement.

         Section 24. REDEMPTION. (a) The Rights may be redeemed by action of
the Board of Directors pursuant to paragraph (b) of this Section 24, or may be
redeemed and exchanged by action of the Board of Directors pursuant to Section
25 herein, but shall not be redeemed in any other manner.

         (b)      The Board of Directors may, at its option, at any time prior
to the time any Person becomes an Acquiring Person redeem all but not less than
all of the then outstanding Rights at a redemption price of one thousandth of
one cent ($0.00001) per Right then outstanding, appropriately adjusted to
reflect any adjustment in the number of Rights outstanding pursuant to Section
12(i) herein (such redemption price being hereinafter referred to as the
"Redemption Price"). Any such redemption of the Rights by the Board of
Directors may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.

         (c)      The right of the registered holders of Rights Certificates to
exercise the Rights evidenced thereby or, if the Distribution Date has not
theretofore occurred, the inchoate right of the registered holders of Rights to
exercise the same shall, without notice to such holders or to the Rights Agent
and without further action, terminate and be of no further force or effect
effective as of the time of adoption by the Board of Directors of a resolution
authorizing and directing the redemption of the Rights pursuant to paragraph
(b) of this Section 24 (or, alternatively, if the Board of Directors qualified
such action as to time, basis or conditions, then at such time, on such basis
and with such conditions as the Board of Directors may have established
pursuant to such paragraph (b)); thereafter, the only right of the holders of
Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any redemption resolution pursuant to paragraph (b) of
this Section 24; PROVIDED, HOWEVER, that the failure to give, or any defect in,
any such

                                      29
<PAGE>
notice shall not affect the validity of such redemption. Within 10 days after
the adoption of any redemption resolution pursuant to paragraph (b) of this
Section 24, the Company shall 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 Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agents
for the Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption shall state the method by which the payment of the
Redemption Price will be made.

         (d)      Neither the Company nor any of its Affiliates or Associates
may acquire (other than, in the case of such Affiliates and Associates, in
their capacity as holders of Common Shares of the Company), redeem or purchase
for value any Rights at any time in any manner other than as specifically set
forth in this Section 24 or in Section 25 herein, and other than in connection
with the purchase of Common Shares prior to the Distribution Date.

         Section 25. MANDATORY REDEMPTION AND EXCHANGE. (a) The Board of
Directors may, at its option, at any time after any Person becomes an Acquiring
Person, issue Common Shares of the Company in mandatory redemption of, and in
exchange for, all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become null and void pursuant to the
provisions of Section 8(e) hereof) at an exchange ratio of one Common Share for
each two Common Shares for which each Right is then exercisable pursuant to the
provisions of Section 12(a)(2) hereof. Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such redemption and exchange at
any time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any such Subsidiary, or
any trustee of or fiduciary with respect to any such plan when acting in such
capacity), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the Voting Shares then outstanding.

         (b)      Immediately upon the action of the Board of Directors
ordering the mandatory redemption and exchange of any Rights pursuant to
subsection (a) of this Section 25 and without any further action and without
any notice, the right to exercise such Rights shall terminate and the only
right thereafter of a holder of such Rights shall be to receive such number of
Common Shares as is provided in paragraph (a) of this Section 25. The Company
shall promptly give public notice of any such redemption and exchange;
PROVIDED, HOWEVER, that the failure to give, or any defect in, such notice
shall not affect the validity of such redemption and exchange. The Company
promptly shall mail a notice of any such redemption and exchange to all the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of mandatory redemption and exchange shall state the method by
which the redemption and exchange of the Common Shares for Rights will be
effected and, in the event of any partial redemption and exchange, the number
of Rights which will be redeemed and exchanged. Any partial redemption and
exchange shall be

                                      30
<PAGE>
effected pro rata based on the number of Rights (other than Rights which have
become null and void pursuant to the provisions of Section 8(e) hereof) held by
each holder of Rights.

         (c)      In any mandatory redemption and exchange pursuant to this
Section 25, the Company, at its option, may substitute Preferred Shares (or
equivalent preferred shares, as such term is defined in Section 12(b) hereof)
for Common Shares, at the initial rate of one one-thousandth of a Preferred
Share (or equivalent preferred share) for each Common Share, as appropriately
adjusted.

         (d)      In any exchange pursuant to this Section 25, the Company, at
its option, may substitute for any Common Shares exchangeable for a Right (i)
Common Share Equivalents, (ii) cash, (iii) debt securities of the Company, (iv)
other assets, or (v) any combination of the foregoing, having an aggregate
value which the Board of Directors shall have determined in good faith to be
equal to the current market price of one Common Share (determined pursuant to
Section 12(d) hereof) on the Trading Day immediately preceding the date of
exchange pursuant to this Section 25.

         Section 26. NOTICE OF CERTAIN EVENTS. If the Company shall, on or
after the Distribution Date, propose (a) to pay any dividend or other
distribution payable in stock of any class of the Company or any Subsidiary of
the Company to the holders of its Preferred Shares, (b) to distribute to the
holders of its Preferred Shares rights 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, (c) to make any other distribution to the
holders of its Preferred Shares (other than a regular quarterly cash dividend),
(d) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), (e) 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 more than
50% of the assets or earning power of the Company and its Subsidiaries
(determined as provided in Section 14 herein) to, any other Person (other than
the Company or a Wholly-Owned Subsidiary or Wholly-Owned Subsidiaries), (f) to
effect the liquidation, dissolution or winding up of the Company or (g) if the
Rights have theretofore become exercisable with respect to Common Shares
pursuant to Section 12(a)(2) herein, to declare or pay any dividend or other
distribution on the Common Shares payable in Common Shares or in stock of any
other class of the Company or any Subsidiary of the Company or to effect a
subdivision or combination of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) then, in each such
case, the Company shall give to each holder of a Rights Certificate, in
accordance with Section 28 hereof, notice of such proposed action, which shall
specify the date of authorization by the Board of Directors of, and record date
for, such stock dividend or such distribution of rights or warrants or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, winding up, subdivision or combination is to take
place and the date of participation therein by the holders of the Common Shares
of the Company or the Preferred Shares, or both, if any such date is to be
fixed. Such notice shall be so given in the case of any action covered by
clause (a), (b) or (g) above at least 20 days prior to the record date for
determining holders of the Preferred Shares or of the Common Shares of the
Company, as the case may be, for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date of the taking of such
proposed

                                      31
<PAGE>
action or the date of participation therein by the holders of the Preferred
Shares or Common Shares of the Company, as the case may be, whichever shall be
the earlier.

         If any of the events set forth in Section 12(a)(2) of this Agreement
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, in accordance with
Section 28 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 12(a)(2) hereof.

         Section 27. SECURITIES LAWS REGISTRATIONS. To the extent legally
required, the Company agrees that it will prepare and file, as soon as
practicable following the Distribution Date, and will use its best efforts to
cause to be declared effective, a registration statement under the Securities
Act registering the offering, sale and delivery of the Preferred Shares
issuable upon exercise of the Rights, and the Company will, thereafter, use its
best efforts to maintain such registration statement (or another) continuously
in effect so long as any Rights remain outstanding and exercisable with respect
to Preferred Shares. Should the Rights become exercisable with respect to
securities of the Company or one of its Subsidiaries other than Preferred
Shares, the Company agrees that it will, to the extent legally required,
promptly thereafter prepare and file, or cause to be prepared and filed, and
will use its best efforts to cause to be declared effective, a registration
statement under such Act registering the offering, sale and delivery of such
other securities and the Company will, thereafter, use its best efforts to
maintain such registration statement (or another) continuously in effect so
long as any outstanding Rights are exercisable with respect to such securities.
The Company further agrees to use its best efforts, from and after the
Distribution Date, to qualify or register for sale the Preferred Shares or
other securities of the Company or one of its Subsidiaries issuable upon
exercise of the Rights under the securities or "blue sky" laws (to the extent
legally required thereunder) of all jurisdictions in which registered holders
of Rights Certificates reside determined by reference to the Rights Register.
The Company may temporarily suspend, for a period of time not to exceed ninety
days after the Distribution Date, the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
Upon any such suspension the Company shall promptly notify the Rights Agent in
writing of such suspension and shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect (with
prompt written notice to the Rights Agent that such suspension is no longer in
effect). Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained, the exercise
thereof shall not be permitted under applicable law or a registration statement
shall not have been declared effective.

         Section 28. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:

                                      32
<PAGE>
                  Symbion, Inc.
                  40 Burton Hills Boulevard, Suite 500
                  Nashville, Tennessee 37215

         Subject to the provisions of Section 22 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:

                  SunTrust Bank
                  Stock Transfer Department
                  58 Edgewood Avenue, Room 225
                  Atlanta, Georgia  30303
                  Attn:  Department Manager
                  Telephone: (404) 588-7622

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the Rights
Register of the Company or, prior to the Distribution Date, on the stock
transfer records for the Common Shares of the Company.

         Section 29. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time supplement or amend this Agreement (which supplement or amendment shall be
evidenced by a writing signed by the Company and the Rights Agent) without the
approval of any holders of any certificates representing Common Shares or any
holders of Rights Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, to make any other provisions in
regard to matters or questions arising hereunder, or to add, delete, modify or
otherwise amend any provision, which the Company may deem necessary or
desirable, including without limitation extending the Final Expiration Date;
PROVIDED THAT the period during which the Rights may be redeemed may not be
extended at a time when the Rights are not then redeemable; PROVIDED FURTHER,
HOWEVER, that, from and after the Shares Acquisition Date, any such amendment
or supplement shall not materially and adversely affect the interests of the
holders of Rights Certificates other than an Acquiring Person or transferees of
such Acquiring Person. Without limiting the foregoing, the Board of Directors
may by resolution adopted at any time prior to such time as any Person becomes
an Acquiring Person amend this Agreement to lower the threshold set forth in
the definition of Acquiring Person herein from 15% to a percentage not less
than the greater of any percentage greater than the largest percentage of the
outstanding Voting Shares then known to the Company to be beneficially owned by
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any trustee
of or fiduciary with respect to any such plan when acting in such capacity) and
10%, if the Board of Directors shall determine that a Person whose interests
are adverse to the Company and its stockholders may seek to acquire control of
the Company. Upon the delivery of a certificate from an appropriate

                                      33
<PAGE>
officer of the Company, which states that the proposed supplement or amendment
is in compliance with the terms of this Section 29 and, provided such
supplement or amendment does not change or increase the Rights Agent's rights,
duties, liabilities or obligations hereunder, the Rights Agent shall execute
such supplement or amendment.

         Section 30. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

         Section 31. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights.

         Section 32. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

         Section 33. GOVERNING LAW. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.

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

         Section 35. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

         Section 36. BOARD OF DIRECTORS. The Board of Directors shall have the
exclusive power and authority to administer this Agreement and to exercise the
rights and powers specifically granted to the Board of Directors or to the
Company. All such actions, calculations, interpretations and determinations
that are done or made by the Board of Directors in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other Persons. The Rights Agent shall always be
entitled to assume that the Company's Board of Directors acted in good faith
and shall be fully protected and incur no liability in reliance thereon.

                                      34
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the day and year first above written.

SYMBION, INC.

By: /s/ Richard E. Francis, Jr.            Attest:
   ---------------------------------
   Richard E. Francis, Jr.
   Chairman and Chief Executive Officer

                                           By: /s/ R. Dale Kennedy
                                              ---------------------------------
                                              R. Dale Kennedy
                                              Secretary

SUNTRUST BANK

By: /s/ Bryan Echols                       Attest:
   ---------------------------------

Title: Group Vice President                By: /s/ A. C. Conn
      ------------------------------          ---------------------------------

                                           Title: Group Vice President
                                                 ------------------------------

                                      35
<PAGE>
                                   EXHIBIT A

                           CERTIFICATE OF DESIGNATION
                                       OF
                 SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
                                       OF
                                 SYMBION, INC.

                     Pursuant to Section 151 of the General
                    Corporation Law of the State of Delaware

         Symbion, Inc., a Delaware corporation (the "Corporation"), through the
undersigned duly authorized officer, in accordance with the provisions of
Sections 103 and 151 of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:

         That, the Board of Directors of the Corporation on February 5, 2004
pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation") and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, adopted the following
resolution creating a series of Preferred Stock, $.01 par value:

         RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation in accordance with the
provisions of Section 4(b) of the Certificate of Incorporation, a series of
500,000 shares of the Preferred Stock, $.01 par value, of the Corporation be,
and it hereby is, created and that the voting powers, designations, preferences
and relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are as
follows:

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK:

         (a)      DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Junior Preferred Stock") and the number of shares constituting the Series A
Junior Preferred Stock shall be 500,000. Such number of shares may be increased
or decreased by resolution of the Board of Directors; PROVIDED, that no
decrease shall reduce the number of shares of Series A Junior Preferred Stock
to a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights
or warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Junior Preferred Stock.

         (b)      DIVIDENDS AND DISTRIBUTIONS.

                  (i)      Subject to the rights of the holders of any shares
         of any series of Preferred Stock (or any similar stock) ranking prior
         and superior to the Series A Junior Preferred Stock with respect to
         dividends, the holders of shares of Series A Junior Preferred Stock,
         in preference to the holders of Common Stock, $.01 par value per share
         (the "Common Stock"), of the Corporation, and of any other junior
         stock, shall be entitled to receive, when, as and if declared by the
         Board of Directors

                                      A-1
<PAGE>
         out of funds legally available for the purpose, quarterly dividends
         payable on the first business day of February, May, August and
         November in each year (each such date being referred to herein as a
         "Quarterly Dividend Payment Date") as provided in paragraphs (ii) and
         (iii) of this Section (b) in an amount per share (rounded to the
         nearest cent) equal to the greater of (A) $1.00 in cash or (B) subject
         to the provision for adjustment hereinafter set forth, 1,000 times the
         aggregate per share amount (payable in cash) of all cash dividends,
         and 1,000 times the aggregate per share amount (payable in kind) of
         all non-cash dividends or other distributions, other than a dividend
         payable in shares of Common Stock or a subdivision of the outstanding
         shares of Common Stock (by reclassification or otherwise), declared on
         the Common Stock since the immediately preceding Quarterly Dividend
         Payment Date or with respect to the first Quarterly Dividend Payment
         Date, since the first issuance of any share or fraction of a share of
         Series A Junior Preferred Stock. If the Corporation shall at any time
         declare or pay any dividend on the Common Stock payable in shares of
         Common Stock, or effect a subdivision or combination or consolidation
         of the outstanding shares of Common Stock (by reclassification or
         otherwise) into a greater or lesser number of shares of Common Stock,
         then in each such case the amount to which holders of shares of Series
         A Junior Preferred Stock were entitled immediately prior to such event
         under clause (B) of the preceding sentence shall be adjusted by
         multiplying such amount by a fraction, the numerator of which is the
         number of shares of Common Stock outstanding immediately after such
         event and the denominator of which is the number of shares of Common
         Stock that was outstanding immediately prior to such event.

                  (ii)     The Corporation shall declare a dividend or
         distribution on the Series A Junior Preferred Stock as provided in
         paragraph (i) of this Section (b) immediately after it declares a
         dividend or distribution on the Common Stock (other than a dividend
         payable in shares of Common Stock); PROVIDED that, if no dividend or
         distribution shall have been declared on the Common Stock during the
         period between any Quarterly Dividend Payment Date and the next
         subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
         share payable in cash on the Series A Junior Preferred Stock shall
         nevertheless accrue and be cumulative on the outstanding shares of
         Series A Junior Preferred Stock as provided in paragraph (iii) of this
         Section (b).

                  (iii)    Dividends shall begin to accrue and be cumulative on
         outstanding shares of Series A Junior Preferred Stock from the
         Quarterly Dividend Payment Date next preceding the date of issue of
         such shares, unless the date of issue of such shares is prior to the
         record date for the first Quarterly Dividend Payment Date, in which
         case dividends on such shares shall begin to accrue from the date of
         issue of such shares, or unless the date of issue is a Quarterly
         Dividend Payment Date or is a date after the record date for the
         determination of holders of shares of Series A Junior Preferred Stock
         entitled to receive a quarterly dividend and before such Quarterly
         Dividend Payment Date, in either of which events such dividends shall
         begin to accrue and be cumulative from such Quarterly Dividend Payment
         Date. Accrued but unpaid dividends shall not bear interest. Dividends
         paid on the shares of Series A Junior Preferred Stock in an amount
         less than the total amount of such dividends at the time accrued and
         payable on such shares shall be allocated pro rata

                                      A-2
<PAGE>
         on a share-by-share basis among all such shares at the time
         outstanding. The Board of Directors may fix a record date for the
         determination of holders of shares of Series A Junior Preferred Stock
         entitled to receive payment of a dividend or distribution declared
         thereon, which record date shall be not more than 60 days prior to the
         date fixed for the payment thereof.

         (c)      VOTING RIGHTS. The holders of shares of Series A Junior
Preferred Stock shall have the following voting rights:

                  (i)      Subject to the provisions for adjustment hereinafter
         set forth, each share of Series A Junior Preferred Stock shall entitle
         the holder thereof to 1,000 votes on all matters submitted to a vote
         of the stockholders of the Corporation. If the Corporation shall at
         any time declare or pay any dividend on Common Stock payable in shares
         of Common Stock, or effect a subdivision or combination of the
         outstanding shares of Common Stock (by reclassification or otherwise)
         into a greater or lesser number of shares of Common Stock, then in
         each such case the number of votes per share to which holders of
         shares of Series A Junior Preferred Stock were entitled immediately
         prior to such event shall be adjusted by multiplying such number by a
         fraction the numerator of which is the number of shares of Common
         Stock outstanding immediately after such event and the denominator of
         which is the number of shares of Common Stock that was outstanding
         immediately prior to such event.

                  (ii)     Except as otherwise provided herein, in the
         Certificate of Incorporation, as it may be amended from time to time,
         in any other Certificate of Designation creating a series of Preferred
         Stock or any similar stock, or by law, the holders of shares of Series
         A Junior Preferred Stock and the holders of shares of Common Stock and
         any other capital stock of the Corporation having general voting
         rights shall vote together as one class on all matters submitted to a
         vote of stockholders of the Corporation.

                  (iii)    Except as set forth herein or as otherwise provided
         by law, holders of Series A Junior Preferred Stock shall have no
         special voting rights and their consent shall not be required (except
         to the extent they are entitled to vote with holders of Common Stock
         as set forth herein) for taking any corporate action.

         (d)      CERTAIN RESTRICTIONS.

                  (i)      Whenever quarterly dividends or other dividends or
         distributions payable on the Series A Junior Preferred Stock as
         provided in Section (b) are in arrears, thereafter and until all
         accrued and unpaid dividends and distributions, whether or not
         declared, on shares of Series A Junior Preferred Stock outstanding
         shall have been paid in full, or declared and a sum sufficient for the
         payment therefor be set apart for payment and be in the process of
         payment, the Corporation shall not:

                           (A)      declare or pay dividends, or make any other
                  distributions, on any shares of stock ranking junior (either
                  as to dividends or upon liquidation, dissolution or winding
                  up) to the Series A Junior Preferred Stock;

                                      A-3
<PAGE>
                           (B)      declare or pay dividends, or make any other
                  distributions, on any shares of stock ranking on a parity
                  (either as to dividends or upon liquidation, dissolution or
                  winding up) with the Series A Junior Preferred Stock, except
                  dividends paid ratably on the Series A Junior Preferred Stock
                  and all such parity stock on which dividends are payable or
                  in arrears in proportion to the total amounts to which the
                  holders of all such shares are then entitled;

                           (C)      redeem or purchase or otherwise acquire for
                  consideration shares of any stock ranking junior (either as
                  to dividends or upon liquidation, dissolution or winding up)
                  to the Series A Junior Preferred Stock, PROVIDED that the
                  Corporation may at any time redeem, purchase or otherwise
                  acquire shares of any such junior stock in exchange for
                  shares of any stock of the Corporation ranking junior (as to
                  both dividends and upon dissolution, liquidation or winding
                  up) to the Series A Junior Preferred Stock; or

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

                  (ii)     The Corporation shall not permit any subsidiary of
         the Corporation to purchase or otherwise acquire for consideration any
         shares of stock of the Corporation unless the Corporation could, under
         paragraph (i) of this Section (d), purchase or otherwise acquire such
         shares at such time and in such manner.

         (e)      REACQUIRED SHARES. Any shares of Series A Junior Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, or in any other Certificate
of Designation creating a series of Preferred Stock or any similar stock or as
otherwise required by law.

         (f)      LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (i)
to the holders of shares of stock ranking junior (either as to dividends or as
to amounts payable upon liquidation, dissolution or winding up) to the Series A
Junior Preferred Stock unless, prior thereto, the holders of Series A Junior
Preferred Stock shall have received an amount per share (rounded to the nearest
cent) equal to the greater of (A) $1,000 per share, or (B) an

                                      A-4
<PAGE>
amount per share, subject to the provision for adjustment hereinafter set
forth, equal to 1,000 times the aggregate amount to be distributed per share to
holders of Common Stock, plus, in either case, an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, or (ii) to the holders of stock ranking on a parity
(either as to dividends or as to amounts payable upon liquidation, dissolution
or winding up) with the Series A Junior Preferred Stock, except distributions
made ratably on the Series A Junior Preferred Stock and all such parity stock
in proportion to the total amounts to which the holders of all such Shares are
entitled upon such liquidation, dissolution or winding up. If the Corporation
shall at any time declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Junior Preferred Stock
were entitled immediately prior to such event under the proviso in clause
(i)(B) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that was outstanding immediately prior to such
event.

         (g)      CONSOLIDATION, MERGER, ETC. If the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, or any combination thereof, then in any
such case each share of Series A Junior Preferred Stock shall at the same time
be similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount of stock, securities, cash or any other property (payable in
kind), or any combination thereof, as the case may be, into which or for which
each share of Common Stock is changed or exchanged. If the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that was
outstanding immediately prior to such event.

         (h)      REDEMPTION. The shares of Series A Junior Preferred Stock
shall not be redeemable. So long as any shares of Series A Junior Preferred
Stock remain outstanding, the Corporation shall not purchase or otherwise
acquire for consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Junior Preferred Stock unless the Corporation shall substantially concurrently
also purchase or acquire for consideration a proportionate number of shares of
Series A Junior Preferred Stock.

         (i)      RANK. The Series A Junior Preferred Stock shall rank, with
respect to payment of dividends and the distribution of assets, junior to all
series of any other class of

                                      A-5
<PAGE>
the Corporation's Preferred Stock; provided that any class or series of the
Corporation's Preferred Stock hereafter created may expressly provide that such
class or series shall be pari passu with the Series A Preferred Stock with
respect to the payment of dividends and distributions, voting rights and/or
distributions upon liquidation, dissolution or winding up of the Corporation.

         (j)      AMENDMENT. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences, privileges or special rights of the Series A
Junior Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of at least two-thirds of the outstanding shares of Series
A Junior Preferred Stock, voting together as a single class.

         IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its President, and attested by its Secretary, this
5th day of February, 2004.

SYMBION, INC.

By:
    ------------------------------------------
    Richard E. Francis, Jr.
    Chairman and Chief Executive Officer

ATTEST:

----------------------------------------------
R. Dale Kennedy
Secretary

                                      A-6
<PAGE>
                                   EXHIBIT B

                           Form of Rights Certificate

Certificate No. R -__________                                      _____ Rights

         NOT EXERCISABLE AFTER FEBRUARY 5, 2014 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.00001 PER RIGHT AND
TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS DEFINED IN
SECTION 1 OF THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID.

                               Rights Certificate

                                 SYMBION, 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 February 6, 2004 (the "Rights
Agreement"), between Symbion, Inc., a Delaware corporation (the "Company"), and
SunTrust Bank (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., Nashville, Tennessee time, on February 6, 2014, at the
Corporate Trust Office of the Rights Agent (or at the office of its successor
as Rights Agent), one one-thousandth (1/1000) of a fully paid non-assessable
share of Series A Junior Participating Preferred Stock, $.01 par value (the
"Preferred Shares"), of the Company, at a purchase price of $91.50 per one
one-thousandth (1/1000) of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one one-thousandths of a Preferred Share which
may be purchased upon exercise hereof) set forth above, and the Purchase Price
set forth above, are the number and Purchase Price as of February 11, 2004,
based on the Preferred Shares as constituted at such date. As provided in the
Rights Agreement, the Purchase Price and the number of one one-thousandths of a
Preferred Share which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events.

         This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the Corporate Trust Office of the Rights Agent.

         This Rights Certificate, with or without other Rights Certificates,
upon surrender at the Corporate Trust Office of the Rights Agent, may be
exchanged for another Rights

                                      B-1
<PAGE>
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of Preferred Shares as
the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.

         Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $.00001 per Right or (ii) may be exchanged by the Company
in whole or in part for Preferred Shares or shares of the Company's common
stock, $.01 par value.

         No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.

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

         This Rights Certificate shall not be entitled to any benefit under the
Rights Agreement or be valid or obligatory for any purpose until it shall have
been authenticated by the Rights Agent.

         WITNESS the facsimile signatures of the proper officers of the Company
and its corporate seal.

Dated as of ___________________, ____.

ATTEST:                                     SYMBION, INC.

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

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

Title:                                      Title:
      ----------------------------                -----------------------------

                                      B-2
<PAGE>
Authentication:

This is one of the Rights Certificates referred to in the within-mentioned
Rights Agreement.

SunTrust Bank,
as Rights Agent

By:
   --------------------------------
Authorized Signature

                  [Form of Reverse Side of Rights Certificate]

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

         FOR VALUE RECEIVED, _______________________ hereby sells, assigns and
transfers unto _________________________________________________________
(Please print name and address of transferee) this Rights Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint __________________ Attorney, to transfer the within
Rights Certificate on the books of the within-named Company, with full power of
substitution.

                                      B-3
<PAGE>
         Dated as of _________________, ____.

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

Signature Guaranteed:

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

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

         [To be executed if statement is correct]

         The undersigned hereby certifies that the Rights evidenced by this
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

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

           [Form of Reverse Side of Rights Certificate -- continued]

                          FORM OF ELECTION TO PURCHASE
                      (To be executed if holder desires to
                        exercise the Rights Certificate)

                                TO SYMBION, INC.

         The undersigned hereby irrevocably elects to exercise _____________
Rights represented by this Rights Certificate to purchase the Preferred Shares
(or other securities) issuable upon the exercise of such Rights and requests
that certificates for such Preferred Shares (or other securities) be issued in
the name of:

                                      B-4
<PAGE>
Please insert social security or other identifying number:

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

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

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

Please insert social security or other identifying number:

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

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

Dated as of _____________, ____.

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

           [Form of Reverse Side of Rights Certificate -- continued]

Signature Guaranteed:

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

-----------------------------------------------------
[To be executed if statement is correct]

         The undersigned hereby certifies that the Rights evidenced by this
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

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

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

                                      B-5
<PAGE>
                                     NOTICE

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

         In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.

                                      B-6
<PAGE>
                                   EXHIBIT C

                         SUMMARY OF RIGHTS TO PURCHASE
                                PREFERRED STOCK

         On February 5, 2004, the Board of Directors of Symbion, Inc. (the
"Company"), authorized the issuance of one preferred share purchase right (a
"Right") with respect to each outstanding share of common stock, $.01 par value
(the "Common Shares"), of the Company. The rights were issued on February 11,
2004 to the holders of record of Common Shares on that date. Each Right
entitles the registered holder to purchase from the Company one one-thousandth
of a share of Series A Junior Participating Preferred Stock, $.01 par value
(the "Preferred Shares"), of the Company at a price of $91.50 per one
one-thousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") dated as of February 6, 2004, between the
Company and SunTrust Bank, as Rights Agent (the "Rights Agent").

         DETACHMENT OF RIGHTS; EXERCISE. Initially, the Rights will attach to
all Common Share certificates representing outstanding shares and no separate
Rights Certificate will be distributed. The Rights will separate from the
Common Shares and a "Distribution Date" will occur upon close of Business (as
defined in the Rights Agreement) on the earlier of (i) 10 business days
following a public announcement that a person or group of affiliated or
associated persons has become an Acquiring Person, or (ii) 10 business days
following the commencement or announcement of an intention to commence a tender
offer or exchange offer the consummation of which would result in a person or
group becoming an Acquiring Person, subject to the right of the Board of
Directors to defer the occurrence of a Distribution Date upon the occurrence of
an event described in this clause (ii).

         In general, a person becomes an Acquiring Person if such person or a
group of which such person is a member becomes the beneficial owner of 15% or
more of the Company's outstanding common stock.

         Until the Distribution Date (or earlier redemption or expiration of
the Rights) (i) the Rights will be evidenced with respect to any of the Common
Shares outstanding on February 11, 2004, by the certificates representing such
Common Shares with a copy of this Summary of Rights attached thereto, (ii) the
Rights will be transferred with and only with the Common Shares, (iii) new
Common Share certificates issued after February 11, 2004, upon transfer or new
issuance of the Common Shares will contain a notation incorporating the Rights
Agreement by reference, and (iv) the surrender for transfer of any certificates
for Common Shares outstanding as of February 11, 2004, even without such
notation or a copy of this Summary of Rights being attached thereto, will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate.

         As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "Rights Certificates") will be mailed
to holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Rights Certificates alone will thereafter
evidence the Rights.

                                      C-1
<PAGE>
         The Rights are not exercisable until the Distribution Date. The Rights
will expire on February 6, 2014 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or the Rights are earlier redeemed or
exchanged by the Company as described below.

         If a person or group were to become an Acquiring Person, then each
Right then outstanding (other than Rights beneficially owned by the Acquiring
Person which would become null and void) would become a right to buy that
number of Common Shares (or under certain circumstances, the equivalent number
of one one-thousandths of a Preferred Share or other assets or securities of
the Company) that at the time of such acquisition would have a market value of
two times the Purchase Price of the Right.

         At any time after a person or group of affiliated or associated
persons becomes an Acquiring Person, if the Company were acquired in a merger
or other business combination transaction or more than 50% of its consolidated
assets or earning power were sold, proper provision will be made so that each
holder of a Right will thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price of the Right, that number of shares
of common stock of the acquiring company which at the time of such transaction
would have a market value of two times the Purchase Price of the Right.

         PREFERRED SHARES. The dividend and liquidation rights, and the
non-redemption feature, of the Preferred Shares are designed so that the value
of one one-thousandth of a Preferred Share purchasable upon exercise of each
Right will approximate the value of one Common Share. The Preferred Shares
issuable upon exercise of the Rights will be non-redeemable and rank junior to
all other series of the Company's preferred stock. Each whole Preferred Share
will be entitled to receive a quarterly preferential dividend in an amount per
share equal to the greater of (i) $1.00 in cash, or (ii) in the aggregate,
1,000 times the dividend declared on each Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to receive a
preferential liquidation payment equal to the greater of (i) $1,000 per share,
or (ii) in the aggregate, 1,000 times the payment made on each Common Share. In
the event of any merger, consolidation or other transaction in which Common
Shares are exchanged for or changed into other stock or securities, cash or
other property, each whole Preferred Share will be entitled to receive 1,000
times the amount received per Common Share. Each whole Preferred Share shall be
entitled to 1,000 votes on all matters submitted to a vote of the stockholders
of the Company, and Preferred Shares shall generally vote together as one class
with the Common Stock and any other capital stock entitled to vote thereon on
all matters submitted to a vote of stockholders of the Company.

         The offer and sale of the Preferred Shares issuable upon exercise of
the Rights will be registered with the Securities and Exchange Commission and
such registration will not be effective until the Rights become exercisable.

         ANTIDILUTION AND OTHER ADJUSTMENTS. The number of one one-thousandths
of a Preferred Share or other securities or property issuable upon exercise of
the Rights, and the Purchase Price payable, are subject to customary
adjustments from time to time to prevent dilution.

                                      C-2
<PAGE>
         The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such
case, prior to the Distribution Date.

         EXCHANGE OPTION. At any time after a person or group of affiliated or
associated persons has become an Acquiring Person and before the acquisition by
a person or group of 50% or more of the outstanding Voting Shares, the Board of
Directors may, at its option, issue Common Shares (or Preferred Shares) in
mandatory redemption of, and in exchange for, all or part of the then
outstanding and exercisable Rights (other than Rights owned by such person or
group which would become null and void) at an exchange ratio of one Common
Share (or one one-thousandth of a Preferred Share) for each two Common Shares
for which each Right then outstanding is then exercisable, subject to
adjustment.

         REDEMPTION OF RIGHTS. At any time prior to the time that a person or
group has become an Acquiring Person, the Board of Directors of the Company may
redeem all but not less than all the then outstanding Rights at a price of
$0.00001 per Right (the "Redemption Price"). The redemption of the Rights may
be made effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish. Immediately upon the
action of the Board of Directors ordering redemption of the Rights, the right
to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.

         NO RIGHTS AS STOCKHOLDER. Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.

         AMENDMENT OF RIGHTS. The terms of the Rights may be amended by the
Board of Directors of the Company without the consent of the holders of the
Rights, including an amendment to extend the Final Expiration Date, and,
provided a Distribution Date has not occurred, to extend the period during
which the Rights may be redeemed, except that after the first public
announcement that a person or group has become an Acquiring Person, no such
amendment may materially and adversely affect the interests of the holders of
the Rights other than the Acquiring Person and transferees of the Acquiring
Person.

         THIS SUMMARY DESCRIPTION OF THE RIGHTS DOES NOT PURPORT TO BE COMPLETE
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT, WHICH IS
HEREBY INCORPORATED HEREIN BY REFERENCE.

         A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
February 6, 2004. A copy of the Rights Agreement is available free of charge
from the Company.

                                      C-3

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