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                                RIGHTS AGREEMENT

                                     between

                            THE STEAK n SHAKE COMPANY

                                       and

                      COMPUTERSHARE INVESTOR SERVICES, LLC

                                 as Rights Agent


                            Dated as of May 16, 2001

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                                      INDEX
                                      -----

                                                                            Page
                                                                            ----

Section 1   Certain Definitions................................................1
Section 2   Appointment of Rights Agent........................................4
Section 3   Issuance of Right Certificates.....................................4
Section 4   Form of Right Certificates.........................................6
Section 5   Countersignature and Registration..................................6
Section 6   Transfer, Split Up, Combination and Exchange of
            Right Certificates; Mutilated, Destroyed, Lost or
            Stolen Right Certificates..........................................6
Section 7   Exercise of Rights; Purchase Price; Expiration Date of Rights......7
Section 8   Cancellation and Destruction of Right Certificates.................8
Section 9   Availability of Capital Stock......................................8
Section 10  Date of Ownership..................................................9
Section 11  Adjustment of Purchase Price, Number of Stock or
            Number of Rights..................................................10
Section 12  Certificate of Adjusted Purchase Price or
            Number of Stock...................................................16
Section 13  Consolidation, Merger or Sale or Transfer
            of Assets or Earning Power........................................16
Section 14  Fractional Rights and Fractional Stock............................17
Section 15  Rights of Action..................................................18
Section 16  Agreement of Right Holders........................................18
Section 17  Right Certificate Holder Not Deemed a Shareholder.................19
Section 18  Concerning the Rights Agent.......................................19
Section 19  Merger or Consolidation or Change of Name of Rights Agent.........20
Section 20  Duties of Rights Agent............................................20
Section 21  Change of Rights Agent............................................22
Section 22  Issuance of New Right Certificates................................23
Section 23  Redemption........................................................23
Section 24  Exchange..........................................................24
Section 25  Notice of Certain Events..........................................25
Section 26  Supplements and Amendments........................................26
Section 27  Successors........................................................27
Section 28  Benefits of this Agreement........................................27
Section 29  Severability......................................................27
Section 30  Governing Law.....................................................27
Section 31  Counterparts......................................................27
Section 32  Descriptive Headings..............................................27


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<PAGE>

                                RIGHTS AGREEMENT
                                ----------------


     This  Agreement is made and entered  into as of May 16,  2001,  between The
Steak n Shake Company, an Indiana corporation (the "Company"), and Computershare
Investor  Services,  LLC, a Delaware  limited  liability  company,  (the "Rights
Agent").

                                    RECITALS
                                    --------

     The Board of  Directors  of the  Company  has  authorized  and  declared  a
dividend of one stock  purchase right (a "Right") for each share of Common Stock
(as hereinafter  defined) of the Company outstanding as of the Close of Business
on May 31, 2001 (the "Record Date"). Each Right represents the right to purchase
one one-hundredth  (1/100) of a share of Series A Preferred Stock of the Company
(a "Preferred Stock Unit"),  upon the terms and subject to the conditions herein
set forth.  The Board of  Directors  of the Company has further  authorized  and
directed  the  issuance of one Right with  respect to each share of Common Stock
that shall  become  outstanding  between the Record Date and the earliest of the
Distribution  Date, the Redemption  Date and the Final  Expiration Date (as such
terms are  hereinafter  defined).  The  Rights  Agent has  agreed to accept  its
appointment as such, and to carry out the duties imposed on it hereunder.

     In  consideration  of the  premises  and the mutual  agreements  herein set
forth, the parties hereby agree as follows:

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

     (a)  "Acquiring  Person" shall mean any Person (as such term is hereinafter
defined) who or which,  together with all  Affiliates  and  Associates  (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is  hereinafter  defined)  of 15% or more of the  Common  Stock of the
Company then outstanding,  but shall not include the Company, any Subsidiary (as
such term is hereinafter  defined) of the Company,  any employee benefit plan of
the Company or any Subsidiary of the Company, or any entity holding Common Stock
for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall become an  "Acquiring  Person" as the result of an  acquisition  of
Common Stock by the Company that, by reducing the number of shares  outstanding,
increases the proportionate  number of shares  beneficially owned by such Person
to 15% or more of the Common  Stock of the Company then  outstanding;  provided,
however,  that if a Person shall become the  Beneficial  Owner of 15% or more of
the Common Stock of the Company then outstanding by reason of share purchases by
the Company and shall,  after such share  purchases by the  Company,  become the
Beneficial Owner of any additional Common Stock of the Company, then such Person
shall be deemed to be an "Acquiring Person".

     (b) "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 such term is hereinafter defined).


<PAGE>

     (c) A Person shall be deemed the "Beneficial  Owner" of and shall be deemed
to "Beneficially Own" any securities:

         (i)   that such Person or any of such Person's Affiliates or Associates
               beneficially owns, directly or indirectly;

         (ii)  that such Person or any of such Person's Affiliates or Associates
               has (A) the right to acquire  (whether such right is  exercisable
               immediately  or only after the  passage of time)  pursuant to any
               agreement,  arrangement  or  understanding  (other than customary
               agreements  with  and  between  underwriters  and  selling  group
               members  with   respect  to  a  bona  fide  public   offering  of
               securities),  or upon the exercise of conversion rights, exchange
               rights, rights (other than these Rights), warrants or options, or
               otherwise;  provided,  however, that a Person shall not be deemed
               the Beneficial Owner of, or to -------- ------- Beneficially Own,
               securities  tendered  pursuant to a tender or exchange offer made
               by or on behalf of such Person or any of such Person's Affiliates
               or  Associates  until such tendered  securities  are accepted for
               purchase or  exchange;  or (B) the right to vote  pursuant to any
               agreement, arrangement or understanding; provided however, that a
               --------  ------- Person shall not be deemed the Beneficial Owner
               of,  or to  Beneficially  Own,  any  security  if the  agreement,
               arrangement  or  understanding  to vote such  security (1) arises
               solely from a revocable  proxy or consent given to such Person in
               response to a public proxy or consent  solicitation made pursuant
               to, and in accordance  with, the applicable rules and regulations
               promulgated  under  the  Exchange  Act and (2) is not  also  then
               reportable  on  Schedule  13D  under  the  Exchange  Act  (or any
               comparable or successor report); or

         (iii) that 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  agreement,  arrangement  or
               understanding  (other than customary  agreements with and between
               underwriters  and selling  group  members  with respect to a bona
               fide public offering of securities) for the purpose of acquiring,
               holding, voting (except to the extent contemplated by the proviso
               to Section  1(c)(ii)(B))  or disposing of any  securities  of the
               Company.

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

     (d) "Business Day" shall mean any day other than a Saturday, a Sunday, or a
day on which the New York Stock Exchange or banking institutions in the State of
Indiana or Illinois are  authorized  or  obligated by law or executive  order to
close.



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<PAGE>

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

     (f) "Common  Stock" when used with  reference to the Company shall mean the
shares of the Company  designated in its Articles of Incorporation,  as amended,
as "Common  Stock".  "Common Stock" when used with reference to any Person other
than the Company shall mean the capital stock or other 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 that ultimately control such
first-mentioned Person.

     (g) "Company" shall have the meaning set forth in the preamble hereof.

     (h)  "Distribution  Date"  shall  have the  meaning  set forth in Section 3
hereof.

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

     (j) "Exchange  Date" shall mean the time at which such Rights are exchanged
as provided in Section 24 hereof.

     (k)  "Exchange  Ratio"  shall have the meaning  set forth in Section  24(a)
hereof.

     (l) "Final  Expiration  Date"  shall mean the Close of  Business on May 16,
2011.

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

     (n) "Preferred Stock Unit" shall mean one one-hundredth  (1/100) of a share
of the Series A Preferred Stock of the Company.

     (o)  "Preferred  Stock" shall mean the shares of the Company  designated in
the Articles of Incorporation of the Company, as amended, as "Series A Preferred
Stock".

     (p) "Purchase  Price" shall  initially be $40.00 for each  Preferred  Stock
Unit  purchasable  pursuant to the exercise of a Right,  and shall be subject to
adjustment  from time to time as  provided in Section 11 and 13 hereof and shall
be payable in lawful money of the United  States of America in  accordance  with
Section 7(c).

     (q) "Record Date" shall have the meaning set forth in the second  paragraph
hereof.

     (r) "Redemption  Date" shall mean the time at which the Rights are redeemed
as provided in Section 23 hereof.



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<PAGE>

     (s)  "Redemption  Price"  shall  have the  meaning  set forth in Section 23
hereof.

     (t)  "Right"  shall  have the  meaning  set forth in the  second  paragraph
hereof.

     (u) "Right  Certificate"  shall have the meaning set forth in Section  3(a)
hereof.

     (v) "Rights Agent" shall have the meaning set forth in the preamble hereof.

     (w) "Rights  Agreement"  shall have the  meaning set forth in Section  3(c)
hereof.

     (x)  "Security"  shall have the meaning set forth in Section  11(d) hereof.

     (y)  "Shares  Acquisition  Date"  shall  mean  the  first  date  of  public
announcement by the Company or an Acquiring  Person that an Acquiring Person has
become such or such  earlier  date as a majority of the  Directors  shall become
aware of the existence of an Acquiring Person.

     (z)  "Subsidiary"  of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or other
equity interest is owned, directly or indirectly, by such Person.

     (aa)  "Trading  Day" shall  have the  meaning  set forth in  Section  11(d)
hereof.

     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 Stock) 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. Issuance of Right Certificates.

     (a)  Until  the  earlier  of (a) the tenth  business  day after the  Shares
Acquisition  Date or (b) the tenth  business  day (or 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 the  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 entity  holding
Common  Stock for or pursuant to the terms of any such plan) of, or of the first
public announcement of the intention 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 entity  holding Common Stock for or pursuant to
the  terms of any such  plan)  to  commence,  a tender  or  exchange  offer  the
consummation of which would result in any person  becoming the Beneficial  Owner
of Common Stock  aggregating 30% or more of the then  outstanding  Common Stock,
including  any such date which is after the date of this  Agreement and prior to
the issuance of the Rights (the  earlier of such dates being herein  referred to
as  the  "Distribution   Date"),  (i)  the  Rights  will  be  evidenced  by  the
certificates  for Common Stock  registered  in the names of the holders  thereof
(which  certificates  shall also be deemed to be Right  Certificates) and not by
separate  Right  Certificates,  and (ii)  the  Rights  Certificates  will not be
transferable  except as a part of the transfer of certificates for Common Stock,
and until the  Distribution  Date (or the earlier of the Redemption  Date or the


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<PAGE>

Final Expiration Date), the surrender for transfer of any certificate for Common
Stock  outstanding on the Record Date,  with or without a copy of the Summary of
Rights  attached  thereto,  shall also  constitute  the  transfer  of the Rights
associated  with the Common Stock  represented  thereby.  As soon as practicable
after the  Distribution  Date, the Company will prepare and execute,  the Rights
Agent will  countersign,  and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class,  insured, postage-prepaid
mail,  to each record  holder of Common Stock as of the Close of Business on the
Distribution  Date,  at the address of such  holder  shown on the records of the
Company,  a separate Right  Certificate,  in substantially the form of Exhibit A
hereto (a "Right  Certificate"),  evidencing  one Right for each share of Common
Stock so held.  Following the Close of Business on the  Distribution  Date,  the
Rights will be evidenced solely by such Right Certificates.

     (b) The Company will make available,  as promptly as practicable  following
the  Record  Date,  a  Summary  of  Rights  to  Purchase   Preferred  Stock,  in
substantially the form of Exhibit B hereto, to any holder of Rights from time to
time prior to the Expiration Date upon the request of the holders.

     (c) Certificates for Common Stock issued after the Record Date but prior to
the  earliest  of the  Distribution  Date,  the  Redemption  Date  or the  Final
Expiration  Date  (whether  as an  original  issuance  of  Common  Stock or as a
transfer or  re-registration  of outstanding  Common Stock) shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:

     THIS  CERTIFICATE  ALSO  EVIDENCES  AND ENTITLES THE HOLDER  HEREOF TO
     CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT  BETWEEN THE STEAK n
     SHAKE COMPANY AND COMPUTERSHARE  INVESTOR  SERVICES,  LLC, DATED AS OF
     MAY 16, 2001 (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  STEAK  n SHAKE  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 STEAK n SHAKE 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 ANY PERSON WHO
     BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) SHALL
     BECOME NULL AND VOID.



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<PAGE>

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

     Section  4. Form of Right  Certificates.  The Right  Certificates  (and the
forms of  election  to purchase  shares and of  assignment  to be printed on the
reverse  thereof)  shall be  substantially  the same as Exhibit A hereto and may
have such marks of identification or designation and such legends,  summaries or
endorsements  printed thereon as the Company may deem appropriate and as are not
inconsistent  with the  provisions of this  Agreement,  or as may be required to
comply with any  applicable  law or with any rule or  regulation  made  pursuant
thereto or with any rule or regulation of the National Association of Securities
Dealers, Inc. or any stock exchange on which the Rights may from time to time be
listed or quoted, or to conform to usage.  Subject to the provisions of Sections
11, 13, and 22 hereof,  the Right Certificates shall entitle the holders thereof
to purchase  such number of Preferred  Stock Units as shall be set forth therein
at the price per Preferred Stock Unit set forth therein (the "Purchase  Price"),
but the amount and type of  securities  purchasable  upon the  exercise  of each
Right and the Purchase  Price thereof shall be subject to adjustment as provided
herein.

     Section 5. Countersignature and Registration.

     (a) The Right  Certificates  shall be  executed on behalf of the Company by
its Chairman of the Board, its President, or any of its Vice Presidents,  either
manually or by facsimile signature and shall be attested by the Secretary or any
Assistant Secretary of the Company,  either manually or by facsimile  signature.
The Right Certificates  shall be manually  countersigned by the Rights Agent and
shall not be valid for any purpose unless countersigned.  In case any officer of
the Company who shall have signed any of the Right  Certificates  shall cease to
be such officer of the Company before  countersignature  by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be  countersigned  by the Rights  Agent and issued and  delivered by the Company
with the same  force and  effect as though  the  person  who  signed  such Right
Certificates  had not ceased to be such  officer of the  Company;  and any Right
Certificate  may be signed on behalf of the  Company by any person  who,  at the
actual  date of the  execution  of such  Right  Certificate,  shall  be a proper
officer of the Company to sign such Right  Certificate,  although at the date of
the execution of this Rights Agreement any such person was not such an officer.

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



                                       6
<PAGE>

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

     (a) Subject to the  provisions of Section 14 hereof,  at any time after the
Close of  Business  on the  Distribution  Date,  and at or prior to the Close of
Business on the earlier of the Redemption Date or the Final Expiration Date, any
Right  Certificate  or  Right   Certificates   (other  than  Right  Certificates
representing  Rights that have become void pursuant to Section  11(a)(ii) hereof
or that have been exchanged  pursuant to Section 24 hereof) may be  transferred,
split  up,  combined  or  exchanged  for  another  Right  Certificate  or  Right
Certificates  entitling  the  registered  holder to  purchase  a like  number of
Preferred  Stock  Units (or other  securities,  as the case may be) as the Right
Certificate or Right  Certificates by the surrender of the Right  Certificate or
Right  Certificates  to be  transferred,  split up, combined or exchanged at the
office of the Rights Agent  designated  for such  purpose,  duly  endorsed  with
signature guaranteed as provided for in the form of Right Certificate,  and with
the  Certificate  as to beneficial  ownership  duly  executed by the  registered
holder.  Thereupon the Rights Agent shall  countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates,  as the case may be,
as so requested.  The Company may require  payment of a sum  sufficient to cover
any tax or  governmental  charge  that may be  imposed  in  connection  with any
transfer, split up, combination or exchange of Right Certificates.

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

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

     (a) The registered  holder of any Right Certificate may exercise the Rights
evidenced  thereby (except as otherwise  provided herein) in whole or in part at
any time after the  Distribution  Date upon surrender of the Right  Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the  Rights  Agent at the  office of the  Rights  Agent  designated  for such
purpose,  together with payment of the Purchase Price for each  Preferred  Stock
Unit (or  other  securities,  as the case may be) as to  which  the  Rights  are
exercised, at or prior to the earliest of (a) the Final Expiration Date, (b) the
Redemption Date, or (c) the Exchange Date.

     (b) The Purchase Price for each Preferred Stock Unit (or other  securities,
as the case may be)  pursuant  to the  exercise of a Right  shall  initially  be
$40.00, shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable  in lawful  money of the United  States of
America in accordance with Section 7(c) below.

     (c) Upon receipt of a Right Certificate  representing  exercisable  Rights,
with the form of election to purchase duly  executed,  accompanied by payment of
the  Purchase  Price for the shares to be  purchased  and an amount equal to any
applicable  transfer  tax  required  to be paid  by the  holder  of  such  Right
Certificate in accordance  with Section 9 hereof by certified  check,  cashier's


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<PAGE>

check or money order payable to the order of the Company, the Rights Agent shall
thereupon  promptly (a) (i) requisition from any transfer agent of the Preferred
Stock  certificates  for the total  number of  shares of  Preferred  Stock to be
purchased (and the Company hereby  irrevocably  authorizes its transfer agent to
comply  with  all  such  requests),  or  (ii)  requisition  from  the  Company's
depositary agent, if any, depositary receipts representing such number of shares
of Preferred Stock as are to be purchased,  in which case  certificates  for the
Preferred Stock  represented by such receipts shall be deposited by the transfer
agent with the  depositary  agent (and the Company hereby directs its depositary
agent to comply with such request),  (b) when appropriate,  requisition from the
Company the amount of cash to be paid in lieu of issuance of  fractional  shares
in  accordance  with  Section  14 hereof,  (c)  promptly  after  receipt of such
certificates (or depositary receipts), cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be  designated  by such  holder  and (d) when  appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.

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

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

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



                                       8
<PAGE>

     Section 9. Availability of Capital Stock.

     (a) The Company  covenants and agrees that it will cause to be reserved and
kept  available  out of its  authorized  and  unissued  Preferred  Stock  or any
authorized and issued Preferred Stock held in its treasury, the number of shares
of Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding  Rights  in  accordance  with  Section  7, and may,  if the Board of
Directors deems advisable,  so reserve and keep available a sufficient number of
shares of Common Stock (and/or other securities) which may be required to permit
the  exercise  in full of the Rights  pursuant  to this  Agreement.  The Company
covenants  and agrees that it will take all such action as may be  necessary  to
ensure that all securities  delivered upon exercise of Rights shall, at the time
of delivery of the certificates  for such securities  (subject to payment of the
Purchase  Price),  be duly and validly  authorized and issued and fully paid and
nonassessable.

     (b) 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 Right  Certificates  or of
any Preferred  Stock (or Common Stock and/or other  securities,  as the case may
be) upon the exercise of Rights. The Company shall not, however,  be required to
pay any  transfer tax that may be payable in respect of any transfer or delivery
of Right  Certificates  to a Person  other than,  or the issuance or delivery of
certificates  or depositary  receipts for the  Preferred  Stock (or Common Stock
and/or other  securities,  as the case may be) in a name other than that of, the
registered  holder of the Right Certificate  evidencing  Rights  surrendered for
exercise,  or to issue or to deliver any certificates or depositary receipts for
Preferred  Stock (or Common Stock and/or other  securities,  as the case may be)
upon the  exercise  of any  Rights  until any such tax shall have been paid (any
such tax being  payable by the holder of such Right  Certificate  at the time of
surrender)  or  until  it  has  been  established  to the  Company's  reasonable
satisfaction that no such tax is due.

     (c) The Company  covenants and agrees that it will (i) prepare and file, as
soon as practicable after the Distribution Date, a registration  statement under
the Securities Act of 1933, as amended (the "Securities Act"), on an appropriate
form with respect to the securities  issuable upon exercise of the Rights,  (ii)
use its best efforts to cause the registration  statement to become effective as
soon as  practicable  after filing,  and (iii) use its best efforts to cause the
registration  statement  to remain  effective  (with a  prospectus  at all times
meeting the  requirements  of the Securities  Act and the rules and  regulations
thereunder)  until the  earlier  of the  exercise  of all of the  Rights and the
Expiration  Date. The Company will also take all actions required to comply with
the state  securities  laws  applicable  to the Rights and  Preferred  Stock (or
Common Stock and/or other securities, as the case may be) issuable upon exercise
of the Rights. The Company may temporarily  suspend, for a period of time not to
exceed 90 days,  the  exercisability  of the Rights in order to prepare and file
the registration statement. Upon any such suspension,  the Company shall issue a
public   announcement   and  notice  to  the  Rights  Agent   stating  that  the
exercisability  of the Rights has been  temporarily  suspended,  and the Company
shall  issue a public  announcement  and  notice to the  Rights  Agent  when the
suspension  is no  longer  in  effect.  Notwithstanding  any  provision  of this
Agreement  to  the  contrary,  the  Rights  shall  not  be  exercisable  in  any
jurisdiction in which any requisite  registration or qualification  has not been
obtained or any requisite notice of exemption has not been filed.



                                       9
<PAGE>

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

     Section 11.  Adjustment  of Purchase  Price,  Number of Shares or Number of
Rights.  The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.

     (a)  (i) In the event the Company  shall at any time after the date of this
     Agreement  (1)  declare  a  dividend  on the  Preferred  Stock  payable  in
     Preferred Stock, (2) subdivide the outstanding Preferred Stock, (3) combine
     the outstanding Preferred Stock into a smaller number of Preferred Stock or
     (4) issue any  securities  in a  reclassification  of the  Preferred  Stock
     (including any such  reclassification in connection with a consolidation or
     merger in which the Company is the  continuing  or surviving  corporation),
     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  after such time shall be  entitled  to receive the
     aggregate  number and kind of shares of capital  stock that,  if such Right
     had been  exercised  immediately  prior to such date and at a time when the
     Preferred  Stock transfer books of the Company were open, such holder would
     have owned upon such  exercise  and been  entitled  to receive by virtue of
     such   dividend,   subdivision,   combination  or   reclassification.   The
     adjustments  provided for in this Section 11(a) shall be made  successively
     whenever  such a  dividend  is  declared  or paid  or  such a  subdivision,
     combination or consolidation is effected.



                                       10
<PAGE>

          (ii) In the event (1) any Person alone or together with its Affiliates
     and Associates shall become an Acquiring Person, or (2) during such time as
     there  is an  Acquiring  Person,  there  shall be any  reclassification  of
     securities  (including  any reverse  stock  split) or  recapitalization  or
     reorganization of the Company which has the effect,  directly or indirectly
     of increasing by more than 1% the  proportionate  share of the  outstanding
     shares of any  class of  equity  securities  of the  Company  or any of its
     Subsidiaries beneficially owned by any Acquiring Person or any Affiliate or
     Associate thereof, each holder of a Right shall, for a period of sixty (60)
     days after the later of the  occurrence  of any such event or the effective
     date of the registration  statement referred to in Section 9 hereof, have a
     right  to  receive,  upon  exercise  thereof  at a price  equal to the then
     current  Purchase Price in accordance with the terms of this Agreement such
     number of shares of Preferred  Stock (or, in the  discretion  of the Board,
     Common  Stock) as shall equal the result  obtained by (x)  multiplying  the
     then  current  Purchase  Price by the number of  Preferred  Stock Units for
     which a Right is then  exercisable  and (y) dividing that product by 50% of
     the then  current per share  market  price of the  Company's  Common  Stock
     (determined  pursuant  to Section  11(d)  hereof)  on the date such  Person
     became an Acquiring Person.  In the event that 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.

     From and after the  occurrence  of the earlier of the events  described  in
     clauses  (i) and  (ii)  above,  any  Rights  that are or were  acquired  or
     beneficially  owned by such Acquiring Person (or any Associate or Affiliate
     of such Acquiring Person) shall be void and any holder of such Rights shall
     thereafter  have no right to exercise  such Rights  under any  provision of
     this Agreement.  No Right Certificate shall be issued pursuant to Section 3
     that  represents  Rights  Beneficially  Owned by an Acquiring  Person whose
     Rights would be void pursuant to the preceding sentence or any Associate or
     Affiliate  thereof;  no Right  Certificate shall be issued at any time upon
     the  transfer of any Rights to an  Acquiring  Person  whose Rights would be
     void  pursuant to the  preceding  sentence or any  Associate  or  Affiliate
     thereof or to any nominee of such Acquiring Person, Associate or Affiliate;
     and any Right Certificate  delivered to the Rights Agent for transfer to an
     Acquiring  Person  whose  Rights  would be void  pursuant to the  preceding
     sentence or any Associate or Affiliate thereof shall be cancelled.

     If any event described in clauses (i) and (ii) above shall occur,  then the
     Company shall as soon as  practicable  thereafter  give to each holder of a
     Right  Certificate,  in accordance with Section 26 hereof,  a notice of the
     occurrence  of such event,  which notice shall  describe such event and the
     consequences  of such  event to holders  of Rights  under  this  Section 11
     (a)(ii).

          (iii) If the  Board of  Directors  elects  to  issue  Common  Stock as
     provided  in the  foregoing  subparagraph  (ii),  and if there shall not be
     sufficient  Common  Stock  issued but not  outstanding  or  authorized  but
     unissued to permit the  exercise in full of the Rights in  accordance  with
     the  foregoing  subparagraph  (ii),  then the  Company  shall take all such
     action as may be necessary to authorize  additional  shares of Common Stock
     for  issuance  upon  exercise  of the  Rights,  including  the calling of a
     meeting of shareholders.  If the Company shall, after good faith effort, be
     unable  to take all such  action  as may be  necessary  to  authorize  such
     additional shares of Common Stock, the Company shall  substitute,  for each
     share of Common Stock that would  otherwise be issuable  upon exercise of a
     Right,  a  number  of  shares  of  Preferred  Stock  (or  a  security  with
     substantially  similar rights,  privileges,  preferences,  voting power and
     economic  rights)  such  that the  current  per share  market  price of one
     Preferred  Stock Unit (or such other  security) is equal to the current per
     share  market price of one share of Common Stock as of the date of issuance
     of such Preferred Stock (or other security).



                                       11
<PAGE>

     (b) If the  Company  shall fix a record  date for the  issuance  of rights,
options or warrants  to all holders of  Preferred  Stock  entitling  them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase  Preferred  Stock (or shares having the same rights,  privileges and
preferences  as  the  Preferred  Stock  ("equivalent   preferred   shares"))  or
securities  convertible into Preferred Stock or equivalent preferred shares at a
price per share of Preferred  Stock or equivalent  preferred  share (or having a
conversion  price per share, if a security  convertible  into Preferred Stock or
equivalent  preferred  shares) less than the then current per share market price
of the Preferred  Stock (as defined in Section  11(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 shares of Preferred
Stock  outstanding  on such record  date plus the number of shares of  Preferred
Stock  that the  aggregate  offering  price of the  total  number  of  shares of
Preferred Stock and/or equivalent  preferred shares so to be offered (and/or the
aggregate  initial  conversion  price  of the  convertible  securities  so to be
offered)  would  purchase at such current  market price and the  denominator  of
which  shall be the  number of shares of  Preferred  Stock  outstanding  on such
record  date plus the number of  additional  shares of  Preferred  Stock  and/or
equivalent  preferred shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible). In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration  shall be as
determined  in good  faith  by the  Board of  Directors  of the  Company,  whose
determination  shall be  described in a statement  filed with the Rights  Agent.
Shares of Preferred  Stock owned by or held for the account of the Company shall
not be  deemed  outstanding  for  the  purpose  of any  such  computation.  Such
adjustment shall be made successively  whenever such a record date is fixed; and
in the event that such  rights,  options  or  warrants  are not so  issued,  the
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 Stock (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  Stock) or
subscription  rights or warrants  (excluding  those referred to in Section 11(b)
hereof),  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  Stock on such record date,  less the fair
market  value (as  determined  in good  faith by the Board of  Directors  of the
Company,  whose  determination  shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription  rights or warrants  applicable to one share
of Preferred  Stock and the denominator of which shall be such current per share
market price of the Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the 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.



                                       12
<PAGE>

     (d)  (i) For the purpose of any  computation  hereunder,  the  "current per
     share market price" of any security (a "Security")  for the purpose of this
     Section 11(d)(i) 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 (as such term is hereinafter  defined) immediately prior to such date;
     provided,  however,  that in the event that the  current  per share  market
     price  of  the  Security  is  determined  during  a  period  following  the
     announcement  by  the  issuer  of  such  Security  of  (1)  a  dividend  or
     distribution  on such  Security  payable  in  shares  of such  Security  or
     securities   convertible   into  such  shares,   or  (2)  any  subdivision,
     combination  or  reclassification  of  such  Security,  and  prior  to  the
     expiration of 30 Trading Days after the ex-dividend  date for such dividend
     or  distribution  or the record date for such  subdivision,  combination or
     reclassification, then, and in each such case, the current per share market
     price shall be  appropriately  adjusted to reflect the current market price
     per share equivalent of such Security. The closing price for each day shall
     be the last sale price,  regular  way, or, in case no such sale takes place
     on such day, the average of the closing bid and asked prices,  regular way,
     in  either  case as  reported  in the  principal  consolidated  transaction
     reporting  system with respect to securities  listed or admitted to trading
     on the New York  Stock  Exchange  or,  if the  Security  is not  listed  or
     admitted  to trading on the New York Stock  Exchange,  as  reported  in the
     principal  consolidated   transaction  reporting  system  with  respect  to
     securities listed on the principal  national  securities  exchange on which
     the  Security is listed or  admitted to trading or, if the  Security is not
     listed or admitted to trading on any national securities exchange, the last
     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
     ("Nasdaq")  or such other  system then in use,  or, if on any such date the
     Security is not quoted by any such organization, the average of the closing
     bid and asked prices as furnished by a  professional  market maker making a
     market in the  Security  selected by the Board of Directors of the Company.
     The term  "Trading  Day" shall mean a day on which the  principal  national
     securities  exchange on which the Security is listed or admitted to trading
     is open for the  transaction  of business or, if the Security is not listed
     or admitted to trading on any national securities exchange, a Business Day.

          (ii) For the purpose of any  computation  hereunder,  the "current per
     share  market  price"  of  the  Preferred  Stock  shall  be  determined  in
     accordance with the method set forth in Section 11(d)(i).  If the Preferred
     Stock is not publicly  traded,  the "current per share market price" of the
     Preferred  Stock shall be  conclusively  deemed to be the current per share
     market price of the Common Stock as determined pursuant to Section 11(d)(i)
     (appropriately  adjusted  to reflect  any stock  split,  stock  dividend or
     similar  transaction  occurring  after the date hereof),  multiplied by one
     hundred.  If neither the Common Stock nor the Preferred  Stock are publicly
     held or so listed or traded,  "current per share  market  price" shall mean
     the fair  value  per  share as  determined  in good  faith by the  Board of
     Directors  of the  Company,  whose  determination  shall be  described in a
     statement filed with the Rights Agent.

     (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 that by reason of this Section
11(e) are not  required  to be made  shall be  carried  forward  and taken  into
account in any subsequent  adjustment.  All  calculations  under this Section 11
shall be made to the nearest cent or to the nearest one  hundredth of a share of
Preferred Stock or one  one-hundredth of any other share or security as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required  by this  Section  11 shall be made no later  than the  earlier  of (a)
twelve months from the date of the transaction which requires such adjustment or
(b) the date of the expiration of the right to exercise any Rights.



                                       13
<PAGE>

     (f) If, as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right  thereafter  exercised  shall become entitled to receive
any securities of the Company other than Preferred Stock,  thereafter the number
of such other  securities  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 Preferred Stock
contained in Sections  11(a) through  11(c),  inclusive,  and the  provisions of
Sections 7, 9, 10 and 13 with respect to the Preferred Stock shall apply on like
terms to any such other securities.

     (g)  All  Rights  originally  issued  by  the  Company  subsequent  to  any
adjustment  made to the Purchase  Price  hereunder  shall  evidence the right to
purchase,  at the  adjusted  Purchase  Price,  the number of shares of Preferred
Stock  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  11(i),  upon each  adjustment of the Purchase  Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding  immediately
prior to the making of such adjustment  shall  thereafter  evidence the right to
purchase,  at the adjusted  Purchase  Price,  that number of shares of Preferred
Stock  obtained  by (a)  multiplying  (x) the number of  Preferred  Stock  Units
covered by a Right  immediately  prior to this  adjustment  by (y) the  Purchase
Price in effect  immediately  prior to such adjustment of the Purchase Price and
(b) dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.

     (i) The  Company  may elect on or after the date of any  adjustment  of the
Purchase  Price  to  adjust  the  number  of  Rights,  in  substitution  for any
adjustment  in the  number of shares of  Preferred  Stock  purchasable  upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights  shall be  exercisable  for the  number of shares of  Preferred
Stock for which a Right was exercisable  immediately  prior to such  adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights  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  Right
Certificates have been issued,  shall be at least 10 days later than the date of
the public  announcement.  If Right  Certificates  have been  issued,  upon each
adjustment of the number of Rights  pursuant to this Section 11(i),  the Company
shall, as promptly as practicable,  cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14  hereof,  the  additional  Rights to which such  holders  shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause  to  be  distributed  to  such  holders  of  record  in  substitution  and
replacement for the Right Certificates held by such holders prior to the date of
adjustment,  and upon surrender thereof,  if required by the Company,  new Right
Certificates  evidencing  all the Rights to which such holders shall be entitled
after such adjustment.  Right Certificates so to be distributed shall be issued,
executed  and  countersigned  in the  manner  provided  for  herein and shall be
registered  in the names of the holders of record of Right  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 shares of Preferred  Stock  issuable  upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase  Price and the number of Preferred  Stock Units that were expressed
in the initial Right Certificates issued hereunder.



                                       14
<PAGE>

     (k) Before  taking any action that would cause an  adjustment  reducing the
Purchase Price of the Preferred Stock issuable upon exercise of the Rights,  the
Company shall take any corporate action that may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally  issue fully paid
and nonassessable shares of Preferred Stock at such adjusted Purchase Price.

     (l) In any case in which this Section 11 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  Stock,  Common  Stock or other  securities  of the  Company,  if any,
issuable  upon such  exercise  over and above the number of shares of  Preferred
Stock,  Common Stock or other securities of the Company,  if any,  issuable upon
such  exercise  on the  basis  of the  Purchase  Price in  effect  prior to such
adjustment;  provided  however,  that the Company shall deliver to such holder a
due bill or other  appropriate  instrument  evidencing  such  holder's  right to
receive such  additional  shares upon the occurrence of the event requiring such
adjustment.

     (m)  Anything  in this  Section  11 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 11, as and to
the extent that it, in its sole  discretion,  shall determine to be advisable in
order that any (i)  consolidation  or subdivision of the Preferred  Stock,  (ii)
issuance  wholly for cash of any Preferred Stock at less than the current market
price,  (iii) issuance wholly for cash of Preferred Stock or securities which by
their terms are convertible  into or exchangeable  for Preferred  Stock, or (iv)
dividends on Preferred  Stock payable in Preferred  Stock or issuance of rights,
options or warrants referred to hereinabove in Section 11, hereafter made by the
Company  to  holders  of its  Preferred  Stock  shall  not be  taxable  to  such
stockholders.

     (n)  Anything in this  Agreement to the  contrary  notwithstanding,  in the
event that at any time after the date of this Rights  Agreement and prior to the
Distribution  Date the  Company  shall (i)  declare or pay any  dividend  on the
Common  Stock  payable in shares of Common  Stock or (ii) effect a  subdivision,
combination  or  consolidation  of the  Common  Stock  (by  reclassification  or
otherwise than by payment of dividends in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in any such case (A) the number
of shares of Preferred Stock  purchasable  after such event upon proper exercise
of each  Right  shall be  determined  by  multiplying  the  number  of shares of
Preferred  Stock so purchasable  immediately  prior to such event by a fraction,
the  numerator  of which is the  number of shares  of Common  Stock  outstanding
immediately  before  such  event and the  denominator  of which is the number of
shares of Common Stock  outstanding  immediately  after such event, and (B) each
share of Common Stock outstanding immediately after such event shall have issued
with  respect  to it that  number of  Rights  that  each  share of Common  Stock
outstanding  immediately  prior to such event had issued with respect to it. The
adjustments  provided for in the preceding  sentence shall be made  successively
whenever such a dividend is declared or paid or such a subdivision,  combination
or consolidation is effected.



                                       15
<PAGE>

     Section  12.  Certificate  of Adjusted  Purchase  Price or Number of Stock.
Whenever an  adjustment  is made as  provided  in Sections 11 or 13 hereof,  the
Company shall promptly (a) prepare a certificate  setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Preferred Stock and Common
Stock a copy of such  certificate  and (c) if a Distribution  Date has occurred,
mail a brief summary thereof to each holder of a Right  Certificate.  The Rights
Agent shall be fully  protected in relying on such  certificate and shall not be
deemed to have  knowledge  of any  adjustment  unless  and  until it shall  have
received such certificate.

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

     (a) In the event, directly or indirectly, (i) the Company shall consolidate
with,  or merge  with  and  into,  any  other  Person,  (ii)  any  Person  shall
consolidate with the Company, or merge with and into the Company and the Company
shall  be the  continuing  or  surviving  corporation  of such  merger  and,  in
connection  with such  merger,  all or part of the Common Stock shall be changed
into or exchanged for securities of any other Person (or the Company) or cash or
any other  property,  or (iii) the Company shall sell or otherwise  transfer (or
one or more of its  Subsidiaries  shall sell or otherwise  transfer),  in one or
more transactions, assets or earning power aggregating 50% or more of the assets
or earning power of the Company and its  Subsidiaries  (taken as a whole) to any
other  person  other  than  the  Company  or one  or  more  of its  wholly-owned
Subsidiaries,  then, and in each such case,  proper  provision  shall be made so
that (1) each holder of a Right  (except as  otherwise  provided  herein)  shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current  Purchase Price  multiplied by the number of Preferred Stock
Units for which a Right is then  exercisable,  in  accordance  with the terms of
this Agreement and in lieu of shares of Preferred  Stock,  such number of shares
of freely tradeable Common Stock of such other Person  (including the Company as
successor thereto or as the surviving corporation), free and clear of any liens,
rights of call or first refusal,  encumbrances or other adverse claims, as shall
equal the result obtained by (A) multiplying the then current  Purchase Price by
the number of Preferred  Stock Units for which a Right is then  exercisable  and
dividing  that  product by (B) 50% of the then current per share market price of
the Common  Stock of such other  Person  (determined  pursuant to Section  11(d)
hereof)  on the date of  consummation  of such  consolidation,  merger,  sale or
transfer;  (2) the issuer of such Common Stock 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" shall thereafter be deemed to refer to such issuer;  and (4) such
issuer shall take such steps (including,  but not limited to, the reservation of
a sufficient  number of shares of its Common Stock in accordance  with Section 9
hereof) in connection with such  consummation as may be necessary to ensure that
the provisions  hereof shall  thereafter be applicable,  as nearly as reasonably
may be, in relation to the Common Stock thereafter deliverable upon the exercise
of the Rights.

     (b) The Company shall not consummate any such  consolidation,  merger, sale
or transfer unless prior thereto the Company and such issuer shall have executed
and  delivered to the Rights Agent a  supplemental  agreement  providing for the
terms set forth in Section 13(a) hereof and further  providing  that, as soon as
practicable  after the date of any  consolidation,  merger,  sale or transfer of
assets mentioned in Section 13(a) hereof, such issuer at its own expense shall:



                                       16
<PAGE>

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

         (ii)  use its best  efforts to qualify or  register  the Rights and the
               securities purchasable upon exercise of the Rights under the blue
               sky  laws  of  such   jurisdictions   as  may  be   necessary  or
               appropriate; and

         (iii) deliver to holders of the Rights historical  financial statements
               for such issuer and each of its  Affiliates  which  comply in all
               material  respects with the requirements for registration on Form
               10 under the Exchange Act.

     (c) The Company shall not enter into any  transaction  of the kind referred
to in this Section 13 if at the time of such  transaction  there are any rights,
warrants,   instruments   or  securities   outstanding   or  any  agreements  or
arrangements  that, as a result of the consummation of such  transaction,  would
eliminate or substantially  diminish the benefits intended to be afforded by the
Rights.  The provisions of this Section 13 shall  similarly  apply to successive
mergers or consolidations or sales or other transfers.

     Section 14. Fractional Rights and Fractional Shares.

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



                                       17
<PAGE>

     (b) The  Company  shall not be  required  to issue  fractions  of shares of
Preferred  Stock  (other  than  fractions  that are  integral  multiples  of one
one-hundredth  of a share of Preferred  Stock) upon exercise of the Rights or to
distribute  certificates which evidence  fractional  Preferred Stock (other than
fractions  that  are  integral  multiples  of one  one-hundredth  of a share  of
Preferred Stock).  Fractions of a share of Preferred Stock in integral multiples
of one  one-hundredth  of a share of Preferred Stock 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  Stock  represented  by  such  depositary
receipts.  In lieu of fractional shares of Preferred Stock that are not integral
multiples of one  one-hundredth of a share of Preferred Stock, the Company shall
pay to the registered  holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one share of Preferred  Stock.  For the purposes of this
Section 14(b),  the current market value of a share of Preferred  Stock shall be
the closing price of the Preferred  Stock (as determined  pursuant to the second
sentence of Section  11(d)(ii)  hereof) for the Trading Day immediately prior to
the date of such exercise.

     (c) The holder of a Right by the acceptance of the Right  expressly  waives
such holder's  right to receive any fractional  Rights or any fractional  shares
upon exercise of a Right except as expressly provided above.

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

     Section  16.  Agreement  of Right  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:


                                       18
<PAGE>

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

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

     (c) the Company and the Rights Agent may deem and treat the person in whose
name the Right  Certificate (or, prior to the Distribution  Date, the associated
Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby  (notwithstanding any notations of ownership or writing
on the Right  Certificates or the associated  Common Stock  certificate  made by
anyone other than the Company or the Rights Agent) for all purposes  whatsoever,
and neither the Company nor the Rights  Agent shall be affected by any notice to
the contrary.

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

     Section 18.  Concerning the Rights Agent.  The Company agrees to pay to the
Rights Agent reasonable  compensation for all services  rendered by it hereunder
and, from time to time, on demand of the Rights Agent,  its reasonable  expenses
and counsel  fees and other  disbursements  incurred in the  administration  and
execution  of this  Agreement  and the exercise  and  performance  of its duties
hereunder.  The  Company  also  agrees to  indemnify  the  Rights  Agent and its
Affiliates for, and to hold them harmless against,  any damage loss,  liability,
cost or  expense,  incurred  without  gross  negligence,  bad  faith or  willful
misconduct on the part of the Rights Agent or its Affiliates,  for anything done
or  omitted  by the  Rights  Agent  or its  Affiliates  in  connection  with the
acceptance  and  administration  of this  Agreement,  including  the  costs  and
expenses of defending against any demand or claim of liability in the premises.

     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 Right  Certificate  or
certificate for the Preferred  Stock or Common Stock or for other  securities of
the  Company,   instrument  of  assignment  or  transfer,   power  of  attorney,
endorsement,   affidavit,  letter,  notice,  direction,   consent,  certificate,
statement,  or other  paper or  document  believed by it to be genuine and to be
signed, executed and, where necessary,  verified or acknowledged,  by the proper
person or  persons,  or  otherwise  upon the  advice of  counsel as set forth in
Section 20 hereof.


                                      19
<PAGE>

     Section 19. 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 corporation  resulting from
any merger or  consolidation  to which the Rights Agent or any successor  Rights
Agent shall be a party, or any  corporation  succeeding to the stock transfer or
corporate  trust  business of the Rights Agent or any  successor  Rights  Agent,
shall be the  successor  to the Rights  Agent under this  Agreement  without the
execution  or filing of any paper or any  further  act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor  Rights Agent under the provisions of Section 21 hereof.  In case
at the time such  successor  Rights Agent shall succeed to the agency created by
this Agreement any of the Right  Certificates  shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the   predecessor   Rights  Agent  and  deliver  such  Right   Certificates   so
countersigned;  and in case at that time any of the Right Certificates shall not
have been  countersigned,  any successor Rights Agent may countersign such Right
Certificates  either in the name of the predecessor  Rights Agent or in the name
of the  successor  Rights Agent;  and in all such cases such Right  Certificates
shall  have  the full  force  provided  in the  Right  Certificates  and in this
Agreement.

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

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

     (a) The Rights Agent may consult with legal  counsel of its own choice (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 or the 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.



                                       20
<PAGE>

     (c) The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own gross negligence, bad faith or willful misconduct. In no
event  shall the  Rights  Agent be liable for  special,  indirect,  punitive  or
consequential  loss or damage of any kind whatsoever  (including but not limited
to lost profits).

     (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 Right
Certificates (except its countersignature  thereof) or be required to verify the
same, but all such  statements and recitals are and shall be deemed to have been
made by the Company only.

     (e) The Rights  Agent shall not be under any  responsibility  in respect of
the validity of this Agreement or the execution and delivery  hereof (except the
due  execution  hereof by the Rights  Agent) or in respect  of the  validity  or
execution of any Right Certificate (except its  countersignature  thereof);  nor
shall it be  responsible  for any  breach  by the  Company  of any  covenant  or
condition contained in this Agreement or in any Right Certificate;  nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section  11(a)(ii) hereof) or any adjustment in
the terms of the  Rights  (including  the  manner,  method  or  amount  thereof)
provided  for in  Section  3,  11,  13,  23 or 24,  or the  ascertaining  of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right  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  Stock,  Common Stock or other
securities to be issued  pursuant to this Agreement or any Right  Certificate or
as to whether any Preferred  Stock,  Common Stock or other securities will, when
issued, be validly authorized and issued, fully paid and non-assessable.

     (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 of  performing  by the Rights Agent of
the provisions of this Agreement.

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

     (h) Any application by the Rights Agent for written  instructions  from the
Company may, at the option of the Rights Agent,  set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this Rights  Agreement
and the date on and/or after which such action  shall be taken or such  omission
shall be  effective.  The Rights  Agent shall not be liable for any action taken
by, or omission of, the Rights Agent in accordance  with a proposal  included in
any such application on or after the date specified in such  application  (which
date shall not be less than five  Business  Days after the date any such officer
of the Company actually receives such application, unless any such officer shall
have  consented in writing to an earlier date) unless,  prior to taking any such
action (or the  effective  date in the case of an  omission),  the Rights  Agent
shall  have  received  written  instructions  in  response  to such  application
specifying the action to be taken or omitted.



                                       21
<PAGE>

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

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

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

     Section  21.  Change of Rights  Agent.  The Rights  Agent or any  successor
Rights Agent may resign and be discharged  from its duties under this  Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Preferred  Stock and Common Stock by registered or certified mail, and to
the  holders of the Right  Certificates  by  first-class  mail.  The Company may
remove the Rights  Agent or any  successor  Rights  Agent upon 30 days notice in
writing,  mailed to the Rights Agent or successor  Rights Agent, as the case may
be,  and to each  transfer  agent of the  Preferred  Stock and  Common  Stock by
registered or certified  mail, and to the holders of the Right  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 holder of a Right  Certificate (who shall,
with such notice,  submit his Right  Certificate for inspection by the Company),
then the registered  holder of any Right  Certificate  may apply to any court of
competent  jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent,  whether appointed by the Company or by such a court, shall be (i)
an entity  organized and doing  business  under the laws of the United States or
the  State of  Indiana  (or of any other  state of the  United  States)  validly
existing  and  that  is  authorized  to act as  Rights  Agent  hereunder.  After
appointment,  the  successor  Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent  without  further  act or deed;  but the  predecessor  Rights  Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance,  conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment   the  Company  shall  file  notice  thereof  in  writing  with  the
predecessor  Rights  Agent  and  each  transfer  agent  of the  Common  Stock or
Preferred Stock, and mail a notice thereof in writing to the registered  holders
of the Right  Certificates.  Failure  to give any  notice  provided  for in this
Section 21,  however,  or any defect  therein,  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.


                                       22
<PAGE>

     Section 22. Issuance of New Right Certificates.  Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary,  the Company may,
at its option,  issue new Right  Certificates  evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.

     Section 23. Redemption.

     (a) The Board of Directors  of the Company may, at its option,  at any time
prior to the tenth  business day after any Person  becomes an Acquiring  Person,
redeem all but not less than all of the then outstanding  Rights at a redemption
price of $.001 per Right,  appropriately  adjusted to reflect  any stock  split,
stock  dividend or similar  transaction  occurring  after the date hereof  (such
redemption  price  being  hereinafter  referred to as the  "Redemption  Price");
provided,  however,  that  during  the time  period in which the  Rights  may be
redeemed, the Board of Directors of the Company may extend the time during which
the Rights may be redeemed for a time period as may be  determined  by the Board
of  Directors.  Notwithstanding  anything  contained  in this  Agreement  to the
contrary,  the Rights shall not be exercisable after the first occurrence of the
event  described in Section  11(a)(ii) until such time as the Company's right of
redemption  hereunder has expired.  The redemption of the Rights by the Board of
Directors of the Company may be made  effective at such time,  on such basis and
with such  conditions  as the Board of  Directors  of the  Company,  in its sole
discretion,  may  establish.  The Company may, at is option,  pay the Redemption
Price in cash,  Common Stock  (based on the current  market price at the time of
redemption) or any other form of consideration  deemed  appropriate by the Board
of Directors.

     (b) In  addition,  in the  exercise  of its sole  discretion  the  Board of
Directors  of the  Company  may  redeem  all but not  less  than all of the then
outstanding  Rights at the Redemption Price following the occurrence of a Shares
Acquisition Date but prior to any event described in Section 13(a) either (a) in
connection  with any event  specified  in Section  13(a) in which all holders of
Preferred  Stock  Units are  treated  alike and not  involving  (other than as a
holder of Preferred  Stock Units being  treated like all other such  holders) an
Acquiring  Person or an Affiliate  or  Associate  of an Acquiring  Person or any
other Person in which such Acquiring Person, Affiliate or such Associate has any
interest,  or any other Person acting  directly or indirectly on behalf of or in
association  with any such  Acquiring  Person,  Affiliate or  Associate,  or (b)
following  the  occurrence  of an event set forth in, and the  expiration of any
period  during which the holder of Rights may exercise the rights under  Section
11(a)(ii)  if and for as long as the  Acquiring  Person  is not  thereafter  the
Beneficial Owner of 15% or more of the outstanding Common Stock, and at the time
of redemption there are no other persons who are Acquiring Persons.


                                       23
<PAGE>

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

    Section 24. Exchange.

     (a) The Board of Directors  of the Company may, at its option,  at any time
after any person becomes an Acquiring  Person,  exchange all or part of the then
outstanding  and  exercisable  Rights (which shall not include  Rights that have
become void pursuant to the provisions of Section  11(a)(ii)  hereof) for Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted  to reflect any stock  split,  stock  dividend  or similar  transaction
involving  either the Preferred  Stock or the Common Stock  occurring  after the
date hereof (such exchange ratio being hereinafter  referred to as the "Exchange
Ratio").  Notwithstanding  the  foregoing,  the Board of Directors  shall not be
empowered to effect such  exchange at any time after any Person  (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any such  Subsidiary,  or any entity  holding Common Stock for or pursuant to
the terms of any such plan), together with all Affiliates and Associates of such
person,  becomes the Beneficial  Owner of more than 50% of the Common Stock then
outstanding.

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



                                       24
<PAGE>

     (c) In any  exchange  pursuant  to this  Section  24, the  Company,  at its
option, may substitute  Preferred Stock (or equivalent preferred shares, as such
term is defined in Section  11(b)  hereof)  for some or all of the Common  Stock
exchangeable  for Rights,  at the initial rate of one  Preferred  Stock Unit (or
equivalent  preferred  shares) for each share of Common Stock, as  appropriately
adjusted to reflect  adjustments  in the voting  rights of the  Preferred  Stock
pursuant to the terms thereof,  so that shares of Preferred  Stock  delivered in
lieu of each  share of Common  Stock  shall have the same  voting  rights as one
share of Common Stock.

     (d) The  Company  shall not be required  to issue  fractions  of a share of
Common Stock or Preferred  Stock or to distribute  certificates  which  evidence
fractional shares of Common Stock or Preferred Stock. In lieu of such fractional
shares  of  Common  Stock or  Preferred  Stock,  the  Company  shall  pay to the
registered  holders  of  the  Right  Certificates  with  regard  to  which  such
fractional  share of Common Stock or Preferred Stock would otherwise be issuable
an amount in cash equal to the same  fraction of the current  market  value of a
whole share of Common Stock or Preferred Stock. For the purposes of this Section
24(d),  the current  market  value of a whole share of Common Stock or Preferred
Stock Unit shall be the closing price of a share of Common Stock (as  determined
pursuant to the second sentence of Section  11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.

     Section 25. Notice of Certain Events. (a) In case the Company shall propose
(i) to pay any  dividend  payable  in shares of any class to the  holders of its
Preferred  Stock  or to  make  any  other  distribution  to the  holders  of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer to
the holders of its  Preferred  Stock rights or warrants to  subscribe  for or to
purchase  any  additional  Preferred  Stock or  shares of any class or any other
securities,  rights or  options,  (iii) to effect  any  reclassification  of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding Preferred Stock), (iv) to effect any consolidation or merger into or
with,  or to effect any sale or other  transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of 50% or  more  of  the  assets  or  earning  power  of  the  Company  and  its
Subsidiaries  (taken  as a whole)  to,  any  other  Person,  (v) to  effect  the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any  dividend  on the  Common  Stock  payable  in  Common  Stock or to  effect a
subdivision,   combination   or   consolidation   of  the   Common   Stock   (by
reclassification  or otherwise  than by payment of  dividends in Common  Stock),
then,  in each such  case,  the  Company  shall  give to each  holder of a Right
Certificate,  in  accordance  with Section 26 hereof,  a notice of such proposed
action,  which  shall  specify  the record  date for the  purposes of such stock
dividend,  or  distribution  of rights or  warrants,  or the date on which  such
reclassification,    consolidation,   merger,   sale,   transfer,   liquidation,
dissolution,  or  winding  up is to take  place  and the  date of  participation
therein by the holders of the Preferred  Stock, if any such date is to be fixed,
and such  notice  shall be so given in the case of any action  covered by clause
(i) or (ii)  above at least 10 days  prior to the  record  date for  determining
holders of the Preferred  Stock for purposes of such action,  and in the case of
any such other action,  at least 10 days prior to the date of the taking of such
proposed  action or the date of  participation  therein  by the  holders  of the
Common Stock, whichever shall be the earlier.



                                       25
<PAGE>

     (b) In case the event set forth in Section  11(a)(ii)  hereof  shall occur,
then (i) the Company shall as soon as practicable thereafter give to each holder
of a Right  Certificate,  in accordance with Section 26 hereof,  a notice of the
occurrence  of such  event,  which  notice  shall  describe  such  event and the
consequences of such event to holders of Rights under Section  11(a)(ii)  hereof
and (ii) all references in the foregoing  Section 25(a) to Preferred Stock shall
be deemed  thereafter to refer also, if appropriate,  to Common Stock and/or, if
appropriate, other securities of the Company.

     Section 26. Notices.  Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right  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:

                  The Steak n Shake Company
                  500 Century Building
                  36 Pennsylvania Street
                  Indianapolis, IN  46204
                  Attention:  Corporate Secretary

Subject to the provisions of Section 21 hereof,  any notice or demand authorized
by this  Agreement  to be given or made by the  Company  or by the holder of any
Right Certificate to or on the Rights Agent 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:

                  Computershare Investor Services, LLC
                  2 North LaSalle Street
                  3rd Floor
                  Chicago, Illinois 60602
                  Attn:  Gerry Lane
                  with a copy to:  Keith Bradley

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

     Section 27.  Supplements and Amendments.  The Company may from time to time
supplement or amend this Agreement  without the approval of any holders of Right
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,  or to make any other  provisions with respect to the Rights
which the Company may deem necessary or desirable,  including but not limited to
extending  the Final  Expiration  Date,  any such  supplement or amendment to be
evidenced  by a writing  signed by the Company and the Rights  Agent;  provided,
however,  that this  Agreement  shall not be amended in any manner  which  would
adversely affect the interests of the holders of Rights.



                                       26
<PAGE>

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

     Section 29. 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 Right  Certificates  (and,  prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement and this Agreement shall be for the sole and exclusive  benefit of the
Company,  the Rights Agent and the registered  holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).

     Section 30. 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  31.  Governing  Law.  This  Agreement,  each  Right and each Right
Certificate  issued  hereunder  shall be deemed to be a contract  made under the
laws of the State of  Indiana  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 and with the Indiana  Business
Corporation Law.

     Section 32.  Counterparts.  This  Agreement  may be executed in one or more
counterparts with the same effect as if each party had signed the same document;
that all counterparts  shall be construed  together and shall constitute one and
the same document;  and that facsimile  transmissions of the executed version of
this Agreement or any  counterpart  thereof shall have the same force and effect
as the original.

     Section  33.  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.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



                                       27
<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.

                                         THE STEAK n SHAKE COMPANY



                                         By /s/ Alan B. Gilman
                                            ------------------------------------
                                             Alan B. Gilman, President

Attest:


By: /s/ Mary E. Ham
    --------------------------------
    Mary E. Ham, Secretary


                                         Computershare Investor Services, LLC



                                         By: /s/ Bruce R. Hartney
                                             -----------------------------------

                                         Name: Bruce R. Hartney
                                               ---------------------------------

                                         Title: Relationship Manager
                                                --------------------------------

Attest:


By: /s/ Michael Millikan
    --------------------------------


Name: Michael Millikan
      -------------------------------

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


                                       28
<PAGE>


                                    Exhibit A
                                    ---------

                            Form of Right Certificate


Certificate No. R-                                              _________ Rights

          NOT EXERCISABLE AFTER MAY 16, 2001 OR EARLIER IF REDEMPTION OR
          EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001
          PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
          AGREEMENT.


                                Right Certificate

                            THE STEAK n SHAKE COMPANY

     This certifies that  __________________________,  or registered assigns, is
the  registered  owner of the  number  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 May 16,  2001,  (the  "Rights  Agreement"),
between The Steak n Shake Company, an Indiana  corporation (the "Company"),  and
Computershare  Investor Services, LLC (the "Rights Agent"), to purchase from the
Company at any time after the Distribution  Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., Eastern Standard Time, on May 16, 2011
at the office of the Rights Agent designated for such purpose,  or at the office
of its  successor  as  Rights  Agent,  one  one-hundredth  of a fully  paid  and
non-assessable  share of  Preferred  Stock (a  "Preferred  Stock  Unit")  of the
Company,  at a purchase price of $40.00 per Preferred  Stock Unit (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly  executed.  The number of Rights  evidenced by this
Right  Certificate  (and the  number of shares of  Preferred  Stock  that may be
purchased  upon  exercise  hereof) set forth above,  and the Purchase  Price set
forth above,  are the number and Purchase Price as of May 31, 2001, based on the
Preferred  Stock Units as  constituted  at such date.  As provided in the Rights
Agreement,  the Purchase Price and the number of shares of Preferred Stock which
may be  purchased  upon the  exercise  of the  Rights  evidenced  by this  Right
Certificate  are subject to  modification  and adjustment  upon the happening of
certain events.

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



                                      A-1
<PAGE>

     This Right  Certificate,  with or without  other Right  Certificates,  upon
surrender at the  principal  office of the Rights  Agent,  may be exchanged  for
another  Right  Certificate  or  Right  Certificates  of  like  tenor  and  date
evidencing  Rights  entitling the holder to purchase a like aggregate  number of
shares of Preferred  Stock or other  securities  as the Rights  evidenced by the
Right  Certificate or Right  Certificates  surrendered  shall have entitled such
holder to purchase.  If this Right  Certificate  shall be exercised in part, the
holder  shall be  entitled  to  receive  upon  surrender  hereof  another  Right
Certificate or Right 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
$.001 per Right or (ii) may be exchanged  in whole or in part for the  Company's
Common Stock.

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

     No holder of this Right  Certificate  shall be  entitled to vote or receive
dividends or be deemed for any purpose the holder of  Preferred  Stock or of any
other securities of the Company that 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
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof,  or to give or
withhold  consent to any  corporate  action or to receive  notice of meetings or
other  actions  affecting   shareholders  (except  as  provided  in  the  Rights
Agreement), or to receive dividends or subscription rights, or otherwise,  until
the  Right or  Rights  evidenced  by this  Right  Certificate  shall  have  been
exercised as provided in the Rights Agreement.

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



                                      A-2
<PAGE>

     WITNESS the  facsimile  signature  of the proper  officers of the  Company.
Dated as of ___________________.

ATTEST:                             THE STEAK n SHAKE COMPANY


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

------------------------------------
Countersigned:


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


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



                                      A-3
<PAGE>

                    Form of Reverse Side of Right Certificate


                               FORM OF ASSIGNMENT
                               ------------------


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


     FOR VALUE RECEIVED __________________________________________ hereby sells,
assigns and transfers unto _____________________________________________________
                              (Please print name and address of transferee)


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


Dated:__________________, 20___


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

Signature Guaranteed:

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

                                   CERTIFICATE
                                   -----------

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



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


                                      A-4
<PAGE>


             Form of Reverse Side of Right Certificate --- continued

                          FORM OF ELECTION TO PURCHASE

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


To THE STEAK n SHAKE COMPANY:

     The  undersigned  hereby  irrevocably  elects  to  exercise  ______  Rights
represented by this Right  Certificate to purchase the Preferred  Stock,  Common
Stock or such other  securities  issuable  upon the  exercise of such Rights and
requests that certificates for such Preferred Stock,  Common Stock or such other
securities be issued in the name of:

Please insert social security
or other identifying number:

                         (Please print name and address)


If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right 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: _________________, 20____



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

Signature Guaranteed:

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


                                      A-5
<PAGE>

                                   CERTIFICATE
                                   -----------

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



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


                                     NOTICE
                                     ------

     The  signature in the  foregoing  Forms of  Assignment  and  Election  must
conform to the name as written upon the face of this Right  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 Right 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.


                                      A-6

<PAGE>
                                                                       Exhibit B


                          SUMMARY OF RIGHTS TO PURCHASE
                                 PREFERRED STOCK


     On May 16, 2001,  the Board of Directors of The Steak n Shake  Company (the
"Company") adopted a Shareholder Rights Plan (the "Rights Plan") effective as of
May 16,  2001.  The  purposes of the Rights Plan are to deter  certain  coercive
takeover tactics and enable the Board of Directors to represent  effectively the
interests of shareholders and other  constituencies  of the Company in the event
of a takeover  attempt.  The Rights  Plan does not deter  negotiated  mergers or
business  combinations that the Board of Directors  determines to be in the best
interest of the Company and its shareholders.

     To implement the Rights Plan the Board of Directors  declared a dividend of
one preferred  share  purchase  right (a "Right") for each share of  outstanding
Common  Stock of the Company (the  "Common  Stock").  The dividend is payable to
shareholders of record on May 31, 2001 (the "Record Date").  Each Right entitles
the registered  holder to purchase from the Company one one-hundredth of a share
of Preferred Stock (a "Preferred Stock Unit") at a price of $40.00 per Preferred
Stock Unit (the "Purchase  Price"),  subject to adjustment.  The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and Computershare  Investor  Services,  LLC, as Rights Agent
(the "Rights Agent").

Rights Attach to Common Stock Initially

     Initially and until a  Distribution  Date (as defined  below)  occurs,  the
Rights  are  attached  to all  shares of Common  Stock  and no  separate  Rights
certificates will be issued. During this initial period,

     o    the Rights are not exercisable;

     o    the  Rights  are  transferred  with  the  Common  Stock  and  are  not
          transferable separately from the Common Stock;

     o    new Common Stock certificates or book entry shares issued will contain
          a notation incorporating the Rights Agreement by reference; and

     o    the  transfer of any shares of Common Stock will also  constitute  the
          transfer of the Rights associated with those shares.

Distribution of Rights

     Separate  certificates  evidencing  the Rights will be mailed to holders of
record  of the  Common  Stock  in the  event a  "Distribution  Date"  occurs.  A
Distribution  Date  occurs on the earlier of the  following  two events (or such
later date as may be determined by the Board of Directors):



                                      B-1
<PAGE>

     o    10  business  days  following a public  announcement  that a person or
          group of affiliated or associated persons (an "Acquiring Person") have
          acquired beneficial ownership of 15% or more of the outstanding Common
          Stock; or

     o    10 business days (or 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  commencement  of, or  announcement of an
          intention to make, a tender offer or exchange  offer the  consummation
          of which would result in the beneficial ownership by a person or group
          of 30% or more of the outstanding Common Stock.

     Acquisitions  by the  following  persons  will  not  result  in the  person
becoming an Acquiring Person: the Company, any subsidiary or an employee benefit
plan of the Company.

     After a Distribution  Date, the Rights would be tradeable  separately  from
the Common Stock.  After the Distribution  Date and after the Company's right to
redeem (as described below) has expired,  the Rights would be exercisable in two
different ways depending on the circumstances as set forth below.

Right to Purchase Company Stock

     After a  Distribution  Date and after the  Company's  redemption  right has
expired,  each holder of a Right (except those held by the Acquiring  Person and
its affiliates and associates) would have the right to purchase,  upon exercise,
that number of shares of Preferred Stock (or, in certain  circumstances,  shares
of Common Stock or other similar  securities of the Company in lieu of Preferred
Stock) having a market value of two times the exercise  price of the Right (such
right being called the "Subscription  Right").  The Subscription  Right would be
exercisable  for a 60-day  period  after the  effective  date of a  registration
statement  under the Securities Act of 1933, as amended,  covering the Preferred
Stock (or Common Stock or other securities).

Right to Purchase Acquiring Person Stock

     Alternatively,  if the Company is  acquired  in a merger or other  business
combination  transaction  or 50% or more of its  consolidated  assets or earning
power are  sold,  each  holder  of a Right  could  then  purchase  shares of the
acquiring  company  having a market value of two times the exercise price of the
Right  (such  right being  called the  "Merger  Right").  Each holder of a Right
(other than an Acquiring  Person) will continue to have the Merger Right whether
or not such holder exercises the Subscription Right.


                                      B-2
<PAGE>

Exchange of Company Stock for Rights

     At any time after the  acquisition  by a person or group of  affiliated  or
associated  persons of  beneficial  ownership of 15% or more of the  outstanding
Common Stock or the announcement of a tender or exchange offer that could result
in the  beneficial  ownership  by a  Person  or  group  of 30%  or  more  of the
outstanding  Common Stock,  and prior to the acquisition by such Person or group
of more than 50% of the outstanding  Common Stock, the Board of Directors of the
Company may  exchange  the Rights  (other  than  Rights  owned by such person or
group,  which will have become void),  in whole or in part, at an exchange ratio
of one share of Common Stock per Right (subject to adjustment).

     With  certain  exceptions,  no  adjustment  in the  Purchase  Price will be
required until  cumulative  adjustments  require an adjustment of at least 1% in
such Purchase  Price.  No fractional  shares of Common Stock or Preferred  Stock
will be  issued  (other  than  fractions  that  are  integral  multiples  of one
one-hundredth of a share of Preferred Stock) and, in lieu thereof, an adjustment
in cash will be made based on the market  price of the Common Stock or Preferred
Stock on the last trading day prior to the date of exercise.

Adjustment of Shares

     The Purchase Price payable,  and the number of shares of Preferred Stock or
other securities issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent  dilution (i) in the event of a stock  dividend on,
or a subdivision,  combination or reclassification of, the Preferred Stock, (ii)
upon the grant to holders of the Preferred  Stock of certain  rights or warrants
to  subscribe  for  or  purchase  Preferred  Stock  at a  price,  or  securities
convertible  into Preferred  Stock with a conversion  price,  less than the then
current market price of the Preferred  Stock or (iii) upon the  distribution  to
holders of the Preferred Stock of evidences of indebtedness or assets (excluding
regular  periodic cash  dividends  paid out of earnings or retained  earnings or
dividends  payable on  Preferred  Stock) or of  subscription  rights or warrants
(other than those referred to above).

     The Purchase Price payable,  and the number of shares of Preferred Stock or
other  securities  issuable,  upon  exercise  of the Rights are also  subject to
adjustment  in the event of a split of the Common  Stock,  or a dividend  on the
Common  Stock  payable  in Common  Stock,  or  subdivisions,  consolidations  or
combinations  of the Common  Stock  occurring,  in any such  case,  prior to the
Distribution Date.


                                      B-3
<PAGE>

Redemption

     At any time  prior to the  close of  business  on the  tenth  business  day
following  the  acquisition  by a person or group of  affiliated  or  associated
persons of beneficial  ownership of 15% or more of the outstanding  Common Stock
or the  announcement  of a tender or  exchange  offer that  could  result in the
beneficial  ownership  by a Person  or  group of 30% or more of the  outstanding
Common Stock and subject to extension of the  redemption  period by the Board of
Directors, the Board of Directors of the Company may redeem the Rights in whole,
but not in part,  at a price of $.001 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.  Additionally  the Company may,  following the time that a person has
become an Acquiring Person, redeem the then outstanding Rights in whole, but not
in part,  at the  Redemption  Price  provided  that  such  redemption  is (i) in
connection with a merger or other business combination  transaction or series of
transactions  involving  the  Company in which all  holders of Common  Stock are
treated  alike but not  involving an  Acquiring  Person or any person who was an
Acquiring  Person or (ii)  following an event giving rise to, and the expiration
of the  exercise  period for,  the  Subscription  Right if and for as long as no
person  beneficially  owns securities  representing 15% or more of the Company's
outstanding  Common Stock.  Immediately  upon any 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.

Expiration of Rights

     The  Rights  will  expire on May 16,  2011  unless the  expiration  date is
extended by amendment  as  described  below or unless the Rights are redeemed or
exchanged by the Company as described above.

Amendments

     As long as the  Rights  are  redeemable,  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,  except that no such  amendment may adversely  affect the
interests of the holders of the Rights.

Miscellaneous

     The number of  outstanding  Rights  and the  number of shares of  Preferred
Stock  issuable  upon  exercise  of each Right are subject to  adjustment  under
certain circumstances.

     Because of the nature of the dividend, liquidation and voting rights of the
Preferred  Stock,  the  value  of the  shares  of  Preferred  Stock  that may be
purchased upon exercise of each Right should  approximate the value of one share
of Common Stock.

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

     A copy of the  Rights  Agreement  has been filed  with the  Securities  and
Exchange Commission as an Exhibit to a Current Report on Form 8-K. A copy of the
Rights  Agreement is  available  free of charge from the Company upon request to
the Corporate Secretary of the Company.

     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.


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