8-K

                             FORM 8-K


                Securities and Exchange Commission
                     Washington, D.C.  20549



                          CURRENT REPORT


              Pursuant to Section 13 or 15(d) of the
                 Securities Exchange Act of 1934


Date of Report (date of earliest event reported):  June 17, 1997


                    Surety Capital Corporation                   
      (exact name of registrant as specified in its charter)



         Delaware            33-1983            75-2065607       
     (State or other       (Commission         (IRS Employer     
     jurisdiction of       File Number)       Identification     
     incorporation)                               Number)        



     1845 Precinct Line Road, Suite 100, Hurst, Texas  76054     
             (address of principal executive offices)



Registrant's telephone number, including area code:  817-498-2749



                          Not applicable                         
  (Former name or former address, if changed since last report)

PAGE


Item 5.  Other Events

     Pursuant to the Surety Capital Corporation Rights Agreement dated
as of June 17, 1997 (the "Rights Agreement"), between Surety Capital
Corporation (the "Company") and Securities Transfer Corporation, as
Rights Agent, the Company declared a dividend of one right (a "Right")
for each outstanding share of common stock, $0.01 par value, of the
Company (the "Common Stock") to stockholders of record at the close of
business on June 6, 1997 (the "Record Date").

     Each Right, when exercisable, entitles the registered holder (a)
to purchase from the Company one share of Common Stock, at a price of
$50.00 per share (the "Purchase Price"), subject to adjustment; (b) to
purchase additional shares of Common Stock ("Adjustment Shares") at a
rate set forth below; and (c) under certain circumstances to purchase
shares of stock of a corporation that merges with or into the Company
(the "Merger Right"), as described below.  The Rights are not exercisable
until the Distribution Date (as defined below).

     The "Distribution Date" is defined as the earlier of (a) the first
date of public announcement by the Company or by a person (an "Acquiring
Person") who or which shall be the beneficial owner of securities
representing fifteen percent (15%) or more of the voting power of all
securities of the Company outstanding or such date within ten (10)
business days thereafter as shall be determined by the Board of
Directors of the Company in its sole discretion (the "Stock Acquisition
Date"); or (b) the tenth (10th) day after the date of the commencement
of, or first public announcement of the intent of any person (other
than the Company, any subsidiary of the Company, or any employee
benefit plan of the Company or any of its subsidiaries) to commence
(which intention to commence remains in effect for five (5) business
days after such announcement), a tender or exchange offer which would
result in such person becoming an Acquiring Person, unless such date is
extended by the Board of Directors of the Company (provided such
extended date shall be no later than the Stock Acquisition Date).

     Once an Acquiring Person becomes such, then any Rights that are or
were beneficially owned by the Acquiring Person or any associate or
affiliate of such Acquiring Person shall become void, and any holder of
such Rights shall thereafter have no right to exercise such Rights.

     Until the Distribution Date (or earlier redemption or expiration
of the Rights), the following will apply to the Rights:

          (a)  Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificates together with the "Summary of Rights to
Purchase Common Stock of Surety Capital Corporation" (the "Summary of
Rights") in the form attached to the Rights Agreement as Exhibit B. 

          (b)  Rights will be transferred with and only with Common
Stock certificates, and the surrender for transfer of any certificates
for Common Stock outstanding as of the Record Date (with or without the
Summary of Rights attached) will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificates.

          (c)  New Common Stock certificates issued after the Record
Date upon transfer or new issuances of Common Stock will contain a
notation incorporating the Rights Agreement by reference.

     After the Distribution Date, the Rights will separate from the
shares of Common Stock.  As soon as practicable following the Distri-
bution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date, and the separate
Rights Certificates alone will evidence the Rights.

PAGE


     The Rights will expire on the earliest of (a) June 16, 2000, (b)
redemption by the Company as described below, or (c) consummation of a
merger transaction with a person or group who acquires Common Stock
pursuant to a Permitted Offer (as defined below), and who offers in the
merger the same price per share and form of consideration paid in the
Permitted Offer.

     A "Permitted Offer" is defined as a tender offer or exchange offer
for all outstanding shares of Common Stock at a price and on terms
determined by at least a majority of the members of the Board of
Directors who are not officers of the Company to be both adequate and
otherwise in the best interests of the Company and its stockholders.

     The Purchase Price payable, and the number of shares of Common
Stock or other securities or property issuable, upon exercise of the
Rights, are subject to adjustment from time to time to prevent dilution
(a) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Common Stock, (b) upon the grant to holders
of the Common Stock of certain rights, options or warrants to subscribe
for Common Stock, certain convertible securities or securities having
the same or more favorable rights, privileges and preferences as the
Common Stock at less than the current market price of the Common Stock,
or (c) upon the distribution to holders of the Common Stock of evidences of
indebtedness, cash or assets (excluding regular quarterly
cash dividends out of earnings or retained earnings and dividends
payable in Common Stock) or of subscription rights or warrants (other
than those referred to above).

     The right to purchase Adjustment Shares arises at the time any
person becomes an Acquiring Person (unless pursuant to a Permitted
Offer).  At such time, proper provision shall be made so that each
holder of a Right (except for the Acquiring Person) will for a 60-day
period thereafter have the right to receive upon exercise of each Right
at the Purchase Price, that number of shares of Common Stock equal to
the result obtained by dividing the Purchase Price by fifty percent
(50%) of the then current market price of the Common Stock.  If there
is an insufficient number of shares of Common Stock available, then the
holder of a Right shall receive (after all authorized and unreserved
shares of Common Stock have been issued) a common stock equivalent
(such as preferred stock or another equity security with at least the
same economic value as the Common Stock) or such number of shares of
Common Stock or common stock equivalents as the Board of Directors of
the Company shall determine to be available on a pro rata basis. 
However, in the event that the Merger Right arises (as described
below), the right to purchase Adjustment Shares shall become void.

     The Merger Right arises in the event that, after the first date of
public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such, the Company, or any subsidiary of the
Company, is acquired in a merger or other business combination transaction
in which the Common Stock is exchanged or changed, or fifty
percent (50%) or more of the Company's assets or earning power are
sold.  At such time, each holder of a Right (except for the Acquiring
Person) shall thereafter have the right to receive, upon the exercise
of the Right at the Purchase Price, that number of shares of common
stock of the surviving or acquiring company equal to the result
obtained by dividing the Purchase Price by fifty percent (50%) of the
then current market price of the common stock of the surviving or
acquiring company.

     With certain exceptions, no adjustments in the Purchase Price will
be required until cumulative adjustments require an adjustment of at
least one percent (1%) in such Purchase Price.  No fractions of shares
will be issued and, in lieu thereof, an adjustment in cash will be made
based on the market price of the Common Stock on the last trading date
prior to the date of exercise.

                                 -2-
PAGE


     At any time prior to the earlier to occur of (a) ten (10) business
days after the time any person becomes an Acquiring Person or (b) the
expiration of the Rights, the Company may redeem the Rights in whole,
but not in part, at a price of $0.0001 per Right (the "Redemption
Price") which redemption shall be effective upon the action of the
Board of Directors.  Additionally, the Company may thereafter redeem
the then outstanding Rights in whole, but not in part, at the Redemption 
Price (i) provided that such redemption is incidental to a merger
or other business combination transaction or series of transactions
involving the Company 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 right to
purchase Adjustment Shares if and for as long as an Acquiring Person
ceases to beneficially own securities representing fifteen percent
(15%) or more of the voting power of the Company's voting securities
and at the time of redemption there are no other persons who are
Acquiring Persons.  The redemption of Rights described in the preceding
sentence shall be effective only as of such time when the right to
purchase Adjustment Shares is not exercisable, and in any event, only
after ten (10) business days prior notice.

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

     As of the Record Date there were 5,751,882 shares of Common Stock
outstanding, 40,698 shares reserved for issuance pursuant to the
exercise of options granted under the Company's 1988 Incentive Stock
Option Plan, 49,158 shares reserved for issuance pursuant to the
exercise of options granted under the Company's 1995 Incentive Stock
Option Plan, and 20,000 shares reserved for issuance pursuant to the
exercise of options granted under the Company's Stock Option Plan for
Directors.  Each outstanding share of Common Stock on the Record Date
will receive one Right.  So long as the Rights are attached to the
Common Stock, the Company will issue one Right for each share of Common
Stock issued between the Record Date and the Distribution Date (subject
to adjustment in certain circumstances specified in the Rights Agreement) 
so that all such shares will have attached Rights.

     The Rights have certain anti-takeover effects.  The Rights will
cause substantial dilution to a person or group that attempts to
acquire the Company without conditioning the offer on a substantial
number of Rights being acquired.  The Rights, however, will not
interfere with any merger or other business combination approved by the
Board of Directors since the Board may, at its option, at any time
prior to the earlier to occur of (a) ten (10) business days after the
time any person becomes an Acquiring Person or (b) the expiration of
the Rights, redeem the Rights in whole, but not in part, at a price
equal to $0.0001 per Right, which redemption shall be effective upon
the action of the Board of Directors.

     A copy of the Rights Agreement between the Company and the Rights
Agent specifying the terms of the Rights, which includes as Exhibit A
the form of Right Certificate and as Exhibit B the Summary of Rights,
is attached hereto as Exhibit 1 and is incorporated herein by reference.  
The foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to such exhibit.

Item 7.  Exhibits

     1    Rights Agreement dated as of June 17, 1997 between Surety
          Capital Corporation and Securities Transfer Corporation, as
          Rights Agent, which includes as Exhibit A the form of Right
          Certificate and as Exhibit B the Summary of Rights.

     2    Letter to stockholders of Surety Capital Corporation explaining
          the Rights Agreement.

     3    Press Release.

                                  -3-

PAGE


                              SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.

                                        SURETY CAPITAL CORPORATION


DATE:  June 18, 1997                    /s/ B. J. Curley       
                                        ----------------
                                        B. J. Curley, Vice President,
                                        Chief Financial Officer and
                                        Secretary

                                 -4-

EX-1

                                                            EXHIBIT 1


                      SURETY CAPITAL CORPORATION

                           RIGHTS AGREEMENT



                            June 17, 1997


PAGE


                          TABLE OF CONTENTS


Section                                                          Page


 1.  Certain Definitions . . . . . . . . . . . . . . . . . . . . .  1

 2.  Appointment of Rights Agent . . . . . . . . . . . . . . . . .  4

 3.  Issue of Rights Certificates. . . . . . . . . . . . . . . . .  4

 4.  Form of Rights Certificates . . . . . . . . . . . . . . . . .  5

 5.  Countersignature and Registration . . . . . . . . . . . . . .  6

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

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

 8.  Cancellation and Destruction of Rights Certificates . . . . .  8

 9.  Reservation and Availability of Common Stock. . . . . . . . .  8

10.  Common Stock Record Date. . . . . . . . . . . . . . . . . . .  9

11.  Adjustment of Purchase Price, Number and Kind of Shares or
     Number of Rights. . . . . . . . . . . . . . . . . . . . . . . 10

12.  Certificate of Adjusted Purchase Price or Number of Shares. . 14

13.  Consolidation, Merger or Sale or Transfer of Assets or
     Earning Power . . . . . . . . . . . . . . . . . . . . . . . . 14

14.  Additional Covenants. . . . . . . . . . . . . . . . . . . . . 17

15.  Fractional Rights and Fractional Shares . . . . . . . . . . . 17

16.  Rights of Action. . . . . . . . . . . . . . . . . . . . . . . 18

17.  Agreement of Rights Holders . . . . . . . . . . . . . . . . . 18

18.  Rights Certificate Holder Not Deemed a Stockholder. . . . . . 19

19.  Concerning the Rights Agent . . . . . . . . . . . . . . . . . 19

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

21.  Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . 20

22.  Change of Rights Agent. . . . . . . . . . . . . . . . . . . . 22

23.  Issuance of New Rights Certificates . . . . . . . . . . . . . 22

24.  Redemption and Termination. . . . . . . . . . . . . . . . . . 22

PAGE


25.  Notice of Certain Events. . . . . . . . . . . . . . . . . . . 23

26.  Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

27.  Supplements and Amendments. . . . . . . . . . . . . . . . . . 25

28.  Determination and Actions by the Board of Directors, etc. . . 25

29.  Successors. . . . . . . . . . . . . . . . . . . . . . . . . . 25

30.  Benefits of this Agreement. . . . . . . . . . . . . . . . . . 25

31.  Severability. . . . . . . . . . . . . . . . . . . . . . . . . 25

32.  Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 26

33.  Descriptive Headings. . . . . . . . . . . . . . . . . . . . . 26


Exhibit A --   Form of Rights Certificate

Exhibit B --   Summary of Rights to Purchase Common Stock of Surety
               Capital Corporation

Exhibit C --   Form of Election to Purchase

                                -ii-

PAGE


                           RIGHTS AGREEMENT


     This Rights Agreement (the "Agreement"), dated as of June 17,
1997, between Surety Capital Corporation, a Delaware bank holding
company (the "Company"), and Securities Transfer Corporation (the
"Rights Agent").

     WHEREAS, on June 17, 1997, the Board of Directors of the Company
authorized and issued a distribution of one right for each share of
common stock, $0.01 par value, of the Company ("Common Stock") outstanding
on June 6, 1997 (the "Record Date"), and contemplates the
issuance of one right (subject to adjustment) for each share of Common
Stock issued between the date hereof and the earlier of the Distribution 
Date and the Expiration Date (as such terms are hereafter defined
in Section 1), each right representing the right to purchase one share
of Common Stock (as adjusted) upon the terms and subject to the
conditions set forth herein (the "Rights");

     NOW, THEREFORE, in consideration of the premises and the material
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
(as such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, except pursuant to a Permitted
Offer (as such term is hereinafter defined), shall be the Beneficial
Owner (as such term is hereinafter defined) of securities representing
fifteen percent (15%) or more of the Voting Power (as such term is
hereinafter defined) or who was such a Beneficial Owner at any time
after the date hereof, whether or not such Person continues to be the
Beneficial Owner of securities representing fifteen percent (15%) or
more of the Voting Power; provided, however, that

              (i) in no event shall a Person become an Acquiring
Person solely as a result of a reduction of the number of shares of
outstanding Common Stock, including repurchases of outstanding shares
of Common Stock by the Company, which reduction increases the percentage 
of outstanding shares of Common Stock beneficially owned by such
Person; and

              (ii)   "Acquiring Person" shall not mean (A) any
Person who has purchased shares pursuant to a Permitted Offer (as such
term is hereinafter defined) made by such Person, (B) the Company, any
Subsidiary of the Company (as such term is hereinafter defined), any
employee benefit plan of the Company or any of its Subsidiaries or any
entity holding securities of the company organized, appointed or
established by the Company or any of its Subsidiaries for or pursuant
to the terms of any such plan, or (C) a Person who becomes the Beneficial 
Owner (as such term is hereinafter defined) of securities representing 
fifteen percent (15%) or more of the Voting Power (as such term
is hereinafter defined) as a result of exercising Rights pursuant to
this Agreement.

       (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 Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date of this Agreement.

       (c)  A Person shall be deemed the "Beneficial Owner" of,
and shall be deemed to "beneficially own," any securities:

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

PAGE


            (ii) which such Person or any of such Person's
Affiliates or Associates has

                 (A)  the right or obligation to acquire (whether
such right or obligation is exercisable or effective immediately or
only after the passage of time) pursuant to any agreement, arrangement
or understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, 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 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 (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange Act and (2) is not
also then reportable by such person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or

            (iii)     which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except pursuant
to a revocable proxy as described in clause (B) of subparagraph (ii) of
this paragraph (c)) or disposing of any securities of the Company.

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

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

       (f)  The "Closing Price" for any security shall be

            (i)  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 principal national
securities exchange on which such security is listed or admitted to
trading, or

            (ii) if such 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 Quotation System ("NASDAQ") or such
other system then in use, or

            (iii)     if on any such date such security is not quoted
by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in
such security selected by the Board of Directors of the Company.  If on
any such date no market maker is making a market in such security, the
fair value of such security on such date as determined reasonably and
with good faith by the Board of Directors of the Company shall be used
and shall be binding on the Rights Agent.

                                  -2-
PAGE


       (g)  "Common Stock" shall mean the Common Stock, $0.01
par value, of the Company, except that "Common Stock" when used with
reference to stock issued by any Person other than the Company shall
mean the capital stock with the greatest aggregate voting power with
respect to, or the equity securities or other equity interest having
power to control or direct the management of, such Person or, if such
Person is a Subsidiary of another Person, with respect to, such capital
stock or of the Person which ultimately controls such first mentioned
Person and which has issued and outstanding such capital stock, equity
securities or equity interests.

       (h)  The "Distribution Date" shall mean the earlier of
(i) the Stock Acquisition Date or (ii) the tenth (10th) day after the
date of the commencement of, or first public announcement of the intent
of any Person (other than the Company, any Subsidiary of the Company,
or any employee benefit plan of the Company or any of its Subsidiaries)
to commence (which intention to commence remains in effect for five (5)
business days after such announcement), a tender or exchange offer
which would result in such Person becoming an Acquiring Person, unless
such date is extended by the Board of Directors of the Company (such
date shall be no later than the Stock Acquisition Date).

       (i)  "Expiration Date" shall have the meaning ascribed
to it in Section 7(a) hereof.

       (j)  "Final Expiration Date" shall mean the Close of
Business on June 16, 2000.

       (k)  A "Permitted Offer" shall mean an offer for shares
of Common Stock at a price and on terms determined by at least a
majority of the members of the Board of Directors who are not officers
of the Company and who are not representatives, nominees, Affiliates or
Associates of an Acquiring Person, to be (i) fair and adequate to
stockholders (taking into account all factors which such members of the
Board deem relevant including, without limitation, prices which could
reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (ii) otherwise in
the best interests of the Company and its stockholders, employees,
customers, depositors and communities in which the Company does
business; provided, however, that in making such determination the
Board of Directors shall only take into account the interests of
stockholders other than the Person or an Affiliate or Associate thereof
on whose behalf the offer is being made.

       (l)  "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity.

       (m)  "Purchase Price" shall have the meaning ascribed to
it in Sections 4 and 7(b).

       (n)  "Record Date" shall have the meaning ascribed to it
in the preamble to this Agreement.

       (o)  "Redemption Price" shall have the meaning ascribed
to it in Section 24(a)(i).

       (p)  "Rights" shall have the meaning ascribed to it in
the preamble to this Agreement.

                                 -3-
PAGE


       (q)  "Rights Certificates" shall have the meaning
ascribed to it in Section 3(c).

       (r)  "Stock 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 date within ten (10) business
days thereafter as shall be determined by the Board of Directors of the
Company in its sole discretion.

       (s)  A "Subsidiary" or any "Subsidiaries" of any Person
shall mean any corporation or other entity of which a majority of the
voting power of the voting equity securities or voting interests is
owned, directly or indirectly, by such Person, or which is otherwise
controlled by such Person.

       (t)  "Trading Day" shall mean a day on which the
principal national securities exchange on which any security is listed
or admitted to trading is open for the transaction of business or, if
such security is not listed or admitted to trading on any national
securities exchange, a Business Day.

       (u)  "Voting Power" shall mean the voting power of all
securities of the Company then outstanding generally entitled to vote
for the election of directors of the Company.

    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.
In the event the Company appoints one or more Co-Rights Agents,
the respective duties of the Rights Agent and any Co-Rights Agents
shall be as the Company shall determine.

    Section 3.   Issue of Rights Certificates.

       (a)  Until the Distribution Date (or earlier redemption
or expiration of the Rights), (i) the Rights will be evidenced (subject
to the provisions of paragraph (b) of this Section 3) by the certificates
for Common Stock outstanding as of the date hereof registered in
the names of the holders of the Common Stock, together with the Summary
of Rights (as defined in this Section 3), and not by separate certificates, 
and (ii) the registered holders of the Common Stock shall be the
registered holders of the associated Rights, and the certificates for
Common Stock shall be deemed also to be certificates for Rights.  Until
the Distribution Date (or earlier redemption or expiration of the
Rights), (x) the surrender for transfer of any of the certificates for
the Common Stock outstanding on the date hereof, even without a copy of
the Summary of Rights (as defined in this Section 3) attached thereto,
shall also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate, (y) the Rights (and the
right to receive certificates therefor) will be transferable only in
connection with the transfer of the underlying shares of Common Stock,
and (z) the Rights cannot be exercised.

            As soon as practicable following the date hereof, the
Company will send a copy of a Summary of Rights, in the form attached
hereto as Exhibit B (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of the Common Stock as of the Close
of Business on the date hereof, at the address of such holder shown on
the records of the Company.

                                -4-
PAGE


       (b)  Certificates issued for Common Stock (including,
without limitation, certificates issued upon transfer or exchange of
Common Stock) after the Record Date, but prior to the earlier of the
Distribution Date or the Expiration Date (as such term is hereinafter
defined), shall be deemed also to be certificates for Rights, and shall
have impressed, printed, stamped, written or otherwise affixed onto
them the following legend:

  This certificate also evidences and entitles the holder
  hereof to certain Rights as set forth in a Rights Agreement
  between Surety Capital Corporation and Securities Transfer
  Corporation as Rights Agent, the terms of which are incorporated
  herein by reference and a copy of which is on file at
  the principal offices of Surety Capital Corporation.  Under
  certain circumstances, as set forth in the Rights Agreement,
  such Rights may be redeemed, may expire, or may be evidenced
  by separate certificates and will no longer be evidenced by
  this certificate.  Surety Capital Corporation will mail to
  the holder of this certificate a copy of the Rights Agreement
  without charge within five days after receipt of a written
  request therefor.  Under certain circumstances, Rights issued
  to Acquiring Persons (as defined in the Rights Agreement) or
  certain related persons and any subsequent holder of such
  Rights may become null and void with respect to certain
  rights set forth in the Rights Agreement.

With respect to such certificates containing the foregoing legend,
until the Distribution Date (or earlier redemption or expiration of the
Rights), the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and
the surrender for transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.

       (c) As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, insured, postage prepaid
mail, to each record holder of the 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 certificate for Rights, in substantially
the form of Exhibit A hereto (the "Rights Certificates"),
evidencing one Right for each share of Common Stock so held, all as
more fully described in Section 4; provided, however, that no such
Rights Certificates shall be issued in the name of, or distributed to,
any Acquiring Person or to any Affiliate or Associate of such Acquiring
Person, and the Rights associated with shares of Common Stock beneficially
owned or held by any of such persons as of the Stock Acquisition
Date shall become null and void on such Stock Acquisition Date.  As of
and after the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates and will be transferable only in connection
with the transfer of the Rights Certificates.

    Section 4.   Form of Rights Certificates.  The Rights Certifi-
cates (and the forms of assignment and of certification to be printed
on the reverse thereof) shall be substantially in the form set forth in
Exhibit A hereto, and the form of election to purchase shares shall be
substantially in the form set forth in Exhibit C, and each 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 any
stock exchange on which the Rights may from time to time be listed, or
to conform to usage.  Subject to the provisions of Section 11 and
Section 23 hereof, the Rights Certificates, whenever distributed, shall
be dated as of the Record Date, and on their face shall entitle the
holders thereof to purchase such number of shares of Common Stock as
shall be set forth therein at the price per share set forth therein
(the "Purchase Price"), but the number of such shares and the Purchase
Price shall be subject to adjustment as provided herein.

                                -5-

PAGE


    Section 5.   Countersignature and Registration.  The Rights
Certificates shall be executed on behalf of the Company by its Chairman
of the Board, any Vice Chairman of the Board, any President, Chief
Executive Officer or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile
signature.  The Rights Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so
countersigned.  In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of
the Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Rights 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 Rights Certificates had not ceased to be such officer of
the Company; and any Rights Certificates may be signed on behalf of the
Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign
such Rights Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.

       Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its offices at 16910 Dallas Parkway, Suite 100,
Dallas, Texas 75248, books for registration and transfer of the Rights
Certificates issued hereunder.  Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates 
and the date of each of the Rights Certificates.

    Section 6.   Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.  Subject to the provisions of Section 15 hereof regarding
fractional shares, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate or Certificates may be transferred,
split up, combined or exchanged for another Rights Certificate
or Rights Certificates, entitling the registered holder to purchase a
like number of shares of Common Stock as the Rights Certificate or
Rights Certificates surrendered then entitled such holder to purchase. 
Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate 
or Rights Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent.  Thereupon the
Company will execute and deliver a new Rights Certificate of like tenor
to the Rights Agent and the Rights Agent shall countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights 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 Rights Certificates.

       Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or 
mutilation of a Rights Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to
them, and 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 Rights Certificate if mutilated,
the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificates so lost, stolen,
destroyed or mutilated.

                                -6-
PAGE


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

       (a) The registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the Distribution Date
upon presentation of the Rights Certificate, with the appropriate form
of election to purchase on the reverse side thereof duly executed, to
the Rights Agent at the principal office of the Rights Agent, together
with payment of the Purchase Price for each share of Common Stock (or
such other number of shares or other securities) as to which the Rights
are exercised, at or prior to the earliest of (i) the Close of Business
on June 16, 2000 (the "Final Expiration Date"), or (ii) the time at
which the Rights are redeemed as provided in Section 24 hereof, or
(iii) the consummation of a transaction contemplated by Section 13(f)
hereof (such earlier time being herein referred to as the "Expiration
Date").

       (b) The Purchase Price for each share of Common Stock
to be purchased pursuant to the exercise of a Right shall initially be
Fifty No/100 Dollars ($50.00), 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
paragraph (c) below.

       (c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the appropriate form of election to purchase
duly executed, accompanied by payment of the Purchase Price for the
shares (or other securities) to be purchased and an amount equal to any
applicable transfer tax payable in respect of certain transfers
pursuant to Section 9(d), in cash, or by certified check or bank draft
payable to the order of the Company, the Rights Agent shall, subject to
Section 21(k), thereupon promptly:

            (i)  (A)  requisition from any transfer agent of
the shares of Common Stock (or make available, if the Rights Agent is
the transfer agent) certificates for the number of shares of Common
Stock to be purchased, and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the
Company, in its sole discretion, shall have elected to deposit the
shares of Common Stock issuable upon exercise of the Rights hereunder
into a depositary, requisition from the depositary agent depositary
receipts representing such number of shares of Common Stock as are to
be purchased (in which case certificates for the shares of Common Stock
represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company will direct the depositary
agent to comply with such request,

            (ii) when appropriate, requisition from the Company
the amount of cash, if any, to be paid in lieu of issuance of fractional 
shares in accordance with Section 15,

            (iii)     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 Rights Certificate, registered
in such name or names as may be designated by such holder, and

            (iv) when appropriate, after receipt promptly
deliver such cash to or upon the order of the registered holder of such
Rights Certificate.
In the event that the Company is obligated to issue other securities of
the Company, the Company will make all arrangements necessary so that
such other securities and/or property are available for distribution by
the Rights Agent, if and when appropriate.

       (d) In the case of an exercise of the Rights by a
holder solely pursuant to Section 11(a)(ii), the Rights Agent shall
return such Rights Certificate to the registered holder thereof after
imprinting, stamping or otherwise indicating thereon that the rights
represented by such Rights Certificate no longer include the rights
provided by Section 11(a)(ii) of the Rights Agreement, or, if less than
all the Rights represented by such Rights Certificate were so exercised, 
the Rights Agent shall indicate on the Rights Certificate the
number of Rights represented thereby which continue to include the
rights provided by Section 11(a)(ii).
           
                                 -7-
PAGE


            In case the registered holder of any Rights Certificate
shall exercise (except pursuant to Section 11(a)(ii)) less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Rights
Certificates or to his duly authorized assigns, subject to the provisions 
of Section 15 hereof regarding fractional shares.

       (e) Notwithstanding anything in this Agreement to the
contrary, if any of the transactions described in Section 11(a)(ii) or
Section 13(a) has occurred or occurs, then any Rights that are or were
on or after the Distribution Date beneficially owned by an Acquiring
Person or any Associate or Affiliate shall become void with respect to
the Rights provided under this Section 7, Section 11(a)(ii) and Section
13(a), and any holder of such Rights shall thereafter have no right to
exercise such Rights under the provisions of this Section 7, Section
11(a)(ii) and Section 13(a).

       (f) 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 the certificate set forth on the reverse side of the Rights
Certificate surrendered for such exercise shall have been properly
completed and duly executed by the registered holder thereof and the
Company shall have been provided with such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably
request.

    Section 8.   Cancellation and Destruction of Rights Certifi-
cates.  All Rights Certificates surrendered for the purpose of exercise, 
transfer, split up, combination or exchange shall, if surrendered
to the Company or 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 Rights 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 Rights Certificates purchased or
acquired by the Company otherwise than upon the exercise thereof.  The
Rights Agent shall deliver all cancelled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.

    Section 9.   Reservation and Availability of Common Stock.

       (a) The Company covenants and agrees that it will cause
to be reserved and kept available out of its authorized and unissued
shares of Common Stock, or any authorized and issued shares of Common
Stock held in its treasury, the number of shares of Common Stock that
will be sufficient to permit the exercise in full of all outstanding
Rights and, after the occurrence of an event specified in Section 11,
shall 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 Section 11 and this
Agreement.

                                -8-
PAGE


       (b) So long as the shares of Common Stock (and, after
the occurrence of an event specified in Section 11, any other securities)
issuable upon the exercise of the Rights may be listed on any
national securities exchange, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all
shares (or other securities) reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.

       (c) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of Common
Stock and/or other securities delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares or other
securities (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable shares
or securities.

       (d) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates or of any certificates for shares
of Common Stock and/or other securities upon the exercise of Rights. 
The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Rights
Certificates to a person other than, or in respect of the issuance or
delivery of the shares of Common Stock and/or other securities in a
name other than that of, the registered holder of the Rights Certificates 
evidencing Rights surrendered for exercise; nor shall the Company
be required to issue or deliver any certificates for shares of Common
Stock and/or other securities in a name other than that of the registered 
holder upon the exercise of any Rights until such tax shall have
been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established
to the Company's satisfaction that no such tax is due.

       (e) The Company shall use its best efforts to (i) file,
as soon as practicable following the Distribution Date, a registration
statement on an appropriate form under the Securities Act of 1933, as
amended (the "Act"), with respect to the securities purchasable upon
exercise of the Rights, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and (iii)
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 of the Rights.  The
Company will also take such action as may be appropriate under the blue
sky laws of the various states.

    Section 10.  Common Stock Record Date.  Each person in whose name
any certificate for shares of Common Stock (or other securities) is
issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Common Stock (or
other securities) represented thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate evidencing such
Rights was duly presented and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the
date of such presentation and payment is a date upon which the Common
Stock (or other securities) transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding
Business Day on which the Common Stock (or other securities) transfer
books of the Company are open.  Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate, as such, shall
not be entitled to any rights of a stockholder of the Company with
respect to shares 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.

                                   -9-
PAGE


    Section 11.  Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights.  The Purchase Price, the number 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 (A) declare a dividend on the Common
Stock payable in shares of Common Stock, (B) subdivide the outstanding
Common Stock, (C) combine the outstanding Common Stock into a smaller
number of shares or divide the Common Stock into a larger number of
shares, or (D) issue any shares of its capital stock in a reclassification
of the Common 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,
except as otherwise provided in this Section 11(a) and in Section 7(e),
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 and other securities which, if such
Right had been exercised immediately prior to such date and at a time
when the Common Stock transfer books of the Company were open, the
holder would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or reclassifica-
tion.  If an event occurs which would require an adjustment under both
Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii).

              (ii) In the event that any Person, alone or together
with its Affiliates and Associates, shall become an Acquiring Person,
then proper provision shall be made so that each holder of a Right,
except the Acquiring Person and other Persons as provided in Section
7(e) hereof, shall, for a period of sixty (60) days after the later of
the occurrence of any such event and the effective date of an appropriate
registration statement pursuant to Section 9, have a right to
receive, upon exercise of such Right at the then current Purchase Price
in accordance with the terms of this Agreement, such number of shares
of Common Stock of the Company as shall equal the result obtained by
multiplying the then number of shares of Common Stock for which a Right
is then exercisable by a fraction, the numerator of which is equal to
the current Purchase Price, and the denominator of which is equal to
fifty percent (50%) of the current market price per one share of Common
Stock (determined pursuant to Section 11(d)) on the date prior to the
date of the occurrence of the event set forth in this subparagraph (ii)
(such number of shares being referred to as the "number of Adjustment
Shares"); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this
Section 11(a)(ii).

              (iii)   In the event that there shall not be sufficient
treasury shares or authorized but unissued and unreserved shares of
Common Stock to permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) and the Rights become so exercisable,
notwithstanding any other provision of this Agreement, to the
extent necessary and permitted by applicable law and any agreements in
effect on the date hereof to which the Company is a party, each Right
shall thereafter represent the right to receive, upon exercise thereof
at the then current Purchase Price in accordance with the terms of this
Agreement, a number of shares, or units of shares, of (x) Common Stock
(up to the maximum number of shares of Common Stock which may permissibly
be issued using the allocation procedure specified in the second
sentence of Section 11(j)) and (y) preferred stock (or other equity
securities) of the Company equal in the aggregate to the number of,
Adjustment Shares where the Board of Directors of the Company shall
have deemed such shares or units, other than the shares of Common
Stock, to have at least the same economic value and voting rights as
the Common Stock (a "common stock equivalent"); provided, however, if
there are unavailable sufficient shares (or fractions of shares) of
Common Stock and/or common stock equivalents, then the Company shall
take all such action as may be necessary to authorize additional shares
of Common Stock or common stock equivalents for issuance upon exercise
of the Rights, including the calling of a meeting of stockholders; and
provided, further, that the Company shall issue no common stock
equivalent upon exercise of the Rights until the Company has first
issued all authorized and unreserved shares of Common Stock; and
provided, further, that if the Company is unable to cause sufficient
shares of Common Stock and/or common stock equivalents to be available
for issuance upon exercise in full of the Rights, then each Right shall
thereafter represent the right to receive the Adjusted Number of Common
Shares upon exercise at the Adjusted Purchase Price (as such terms are
hereinafter defined).  As used herein, the term "Adjusted Number of
Common Shares" shall be equal to that number of shares of Common Stock
(and/or shares or units of common stock equivalents) equal to the
product of (x) the number of Adjustment Shares and (y) a fraction, the
numerator of which is the number of shares of Common Stock (and/or
shares or units of common stock equivalents) available for issuance
upon exercise of the Rights, and the denominator of which is the
aggregate number of Adjustment Shares otherwise issuable upon exercise
in full of all Rights (assuming there were sufficient shares of Common
Stock available) (such fraction being referred to as the "Proration
Factor").  The "Adjusted Purchase Price" shall mean the product of the
Purchase Price and the Proration Factor.  The Board of Directors may,
but shall not be required to, establish procedures to allocate the
right to receive the Adjusted Number of Common Shares upon exercise of
the Rights among holders of Rights in order to effect the purposes of
this Agreement.

                                  -10-
PAGE


      (b)     If the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Stock
entitling them (for a period expiring within forty-five (45) calendar
days after such record date) to subscribe for or purchase Common Stock
(or shares having the same or more favorable rights, privileges and
preferences as the Common Stock ("equivalent common stock")) or
securities convertible into Common Stock or equivalent common stock, at
a price per share of Common Stock or equivalent common stock (or having
a conversion price per share, if a security, convertible into Common
Stock or equivalent common stock) less than the current market price
(as defined in Section 11(d)) per share of Common Stock 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 Common Stock outstanding on such record
date, plus the number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock and/or
equivalent common stock 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 Common Stock outstanding on such
record date, plus the number of additional shares of Common Stock
and/or equivalent common stock 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 determined reasonably
and with good faith to the holders of Rights by the Board of Directors
of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent. 
Shares of Common 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 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.

                                 -11-
PAGE


      (c)     If the Company shall fix a record date for the
making of a distribution to all holders of Common Stock (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of
the earnings or retained earnings of the Company), assets (other than
a dividend payable in Common Stock, but including any dividend payable
in stock other than Common Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to
be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be the current market price
(as defined in Section 11(d)) per share of Common Stock on such record
date, less the fair market value (as determined reasonably and with
good faith to the holders of Rights by the Board of Directors of the
Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent) of the
portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants distributable in
respect of one share of Common Stock, and the denominator of which
shall be the current market price per share of the Common 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 be in effect if such record date had not been fixed.

      (d)     For the purpose of any computation hereunder, other
than in Section 11(a)(iii), the "current market price" per share of
Common Stock on any date shall be deemed to be the average of the daily
Closing Prices per share of such Common Stock for the thirty (30)
consecutive Trading Days immediately prior to such date; provided,
however, that in the event that the current per-share market price of
the Common Stock is determined during and following the announcement by
the issuer of such Common Stock of (A) a dividend or distribution on
such Common Stock payable in shares of such Common Stock or equivalent
common shares or (B) any subdivision, combination or reclassification
of such Common Stock, and prior to the expiration of thirty (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 market price" shall
be properly adjusted to take into account ex-dividend trading.  If the
Common Stock is not publicly held or not so listed or traded, "current
market price" per share shall mean the fair value per share determined
reasonably and with good faith to the holders of Rights by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent.

      (e)     Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment 
would require an increase or decrease of at least one percent (1%)
in the Purchase Price; provided, however, that any adjustments which 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 ten-thousandth of a share of Common Stock or
other share, 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 (i) one (1) year from the date of the
transaction which mandates such adjustment or (ii) the Expiration Date.

      (f)     If as a result of any provision of Section 11(a),
the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Common
Stock, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares contained in Section 11(a)
through (c), inclusive, and the provisions of Sections 7, 9, 10, 13 and
15 hereof with respect to the Common Stock shall apply on like terms to
any such other shares.

                                  -12-
PAGE


      (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 Common 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 Section 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 Common Stock (calculated 
to the nearest ten-thousandth) obtained by (i) multiplying (x)
the number of shares of Common Stock 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 (ii) dividing
the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.

      (i)     The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Common Stock
purchasable upon the exercise of a Right.  Each of the Rights outstanding 
after the adjustment in the number of Rights shall be exercisable
for the number of shares of Common 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 (calculated to the nearest ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment
of the Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price.  The Company shall make a public
announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made.  This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if
the Rights Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement.  If Rights
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 Rights
Certificates on such record date Rights Certificates evidencing,
subject to Section 15 hereof regarding fractional shares, the additional 
Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment.  Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified
in the public announcement.  Irrespective of any adjustment or change
in the Purchase Price or the number of shares of Common Stock issuable
upon the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price per
share and the number of shares which were expressed in the initial
Rights Certificates issued hereunder.

      (j)     Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if
any, of the shares of Common Stock or other securities issuable upon
exercise of the Rights, the Company shall take any corporate action
which, in the opinion of its counsel, may be necessary in order that
the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock or other securities at such adjusted Purchase
Price.  If upon any exercise of the Rights, a holder is to receive a
combination of Common Stock and common stock equivalents, a portion of
the consideration paid upon such exercise, equal to at least the then
par value of a share of Common Stock of the Company, shall be allocated
as the payment for each share of Common Stock of the Company so
received.

                                  -13-
PAGE


      (k)     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 issuing to the holder of any Right
exercised after such record date the shares of Common Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the shares of Common Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.

      (l)     Anything to the contrary in this Section 11
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 consolidation 
or subdivision of the Common Stock, issuance wholly for cash of
any shares of Common Stock at less than the current market price,
issuance wholly for cash of shares of Common Stock or securities which
by their terms are convertible into or exchangeable for shares of
Common Stock, stock dividends, or issuance of rights, options or
warrants referred to hereinabove in this Section 11, hereafter made by
the Company to holders of its Common Stock shall not be taxable to such
stockholders.

      (m)     The exercise of Rights under Section 11(a)(ii)
shall only result in the loss of rights under Section 11(a)(ii) to the
extent so exercised and shall not otherwise affect the rights represented 
by the Rights under this Rights Agreement.

    Section 12.  Certificate of Adjusted Purchase Price or Number of
Shares.  Whenever an adjustment is made as provided in Sections 11 and
13 hereof, the Company shall (a) promptly prepare a certificate setting
forth such adjustment and a brief statement of the facts accounting for
such adjustment, (b) promptly file with the Rights Agent and with each
transfer agent for the Common Stock a copy of such certificate and (c)
mail a brief summary thereof to each holder of Rights in accordance
with Section 26 hereof.  The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained.

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

      (a)     In the event that, following the Stock Acquisition
Date, directly or indirectly,

              (w) the Company shall consolidate with, or merge
with and into, any other Person,

              (x) 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,
 
                                     -14-
PAGE


              (y) any subsidiary of the Company shall consolidate
with, or merge with and into any other Person or any Person shall
consolidate with, or merge with and into, any subsidiary of the Company
(other than, in the case of any transaction described in (w), (x) or
(y)), a merger or consolidation which would result in all of the Voting
Power represented by the securities of the Company or subsidiary
outstanding immediately prior thereto continuing to represent, directly
or indirectly (either by remaining outstanding or by being converted
into securities of the surviving entity), all of the Voting Power
represented by the securities of the Company, subsidiary or such
surviving entity outstanding immediately after such merger or consolidation
and the holders of such securities not having changed as a
result of such merger or consolidation), or

              (z) the Company shall sell, mortgage or otherwise
transfer (or one or more of its subsidiaries shall sell, mortgage or
otherwise transfer), in one or more transactions, assets or earnings
power aggregating more than fifty percent (50%) of the assets or
earning power of the Company and its subsidiaries (taken as a whole) to
any other Person (other than to the Company or any of its subsidiaries), 
then, and in each such case, proper provision shall be made so
that

              (i) following the Distribution Date, each holder
of a Right shall have the right to receive, upon the exercise thereof
at the then current Purchase Price in accordance with the terms of this
Agreement, such number of shares of freely tradeable Common Stock of
the Principal Party (as hereinafter defined), free and clear of liens,
rights of call or first refusal, encumbrances or other adverse claims,
as shall be equal to the result obtained by (A) multiplying the then
current Purchase Price by the number of shares of Common Stock for
which a Right is then exercisable and (B) dividing that product by
fifty percent (50%) of the current market price per share of the Common
Stock of such Principal Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale
or transfer;

              (ii)   such Principal Party 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;

              (iii)  the term "Company" shall thereafter be deemed
to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall apply to such Principal
Party; and

              (iv)   such Principal Party 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 assure that
the provisions hereof shall hereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights.

      (b)     "Principal Party" shall mean:

              (i) in the case of any transaction described in
clause (w) or (x) of Section 13(a), the person that is the issuer of
any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to the merger or consolidation;

              (ii)   in the case of any transaction described in
clause (y) of Section 13(a), the surviving or resulting Person in such
merger or consolidation; and

                                  -15-
PAGE


              (iii)  in the case of any transaction described in
clause (z) of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case,

                  (A)     if the Common Stock of such Person is not at
such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect subsidiary or Affiliate of one or more other
Persons, "Principal Party" shall refer to any such other Person the
Common Stock of which is and has been so registered, unless the Common
Stock of two or more of such other Persons are and have been so
registered, in which case "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Stock having the greatest
aggregate market value,

                  (B)     if the Common Stock of such Person is and has
not been so registered and such Person is a direct or indirect subsidiary 
or Affiliate of one or more other Persons, whose Common Stock are
and have been so registered, "Principal Party" shall refer to the
senior such Person having outstanding Common Stock; and

                  (C)     in case such Person is owned, directly or
indirectly, by a joint venture or partnership formed by two or more
Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in (A) and (B) above shall apply to each of the
chains of ownership having an interest in such joint venture or
partnership as if such party were a "Subsidiary" of both or all of such
joint venturers or partners and the Principal Parties in each such
chain shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to
the total of such interests.

      (c)     The Company shall not consummate, nor will it
permit any subsidiary to consummate, any such consolidation, merger,
sale or transfer unless prior thereto the Company, the subsidiary, if
appropriate, and each Principal Party and each other Person who may
become a Principal Party as a result of such consolidation, merger,
sale or transfer shall have executed and delivered to the Rights Agent
a supplemental agreement providing for the terms set forth in paragraphs 
(a) and (b) of this Section 13 and further providing that, as
soon as practicable after the date of any consolidation, merger, sale
or transfer of assets mentioned in paragraph (a) of this Section 13,
the Principal Party at its own expense will:

              (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) 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 the Principal Party and each of its Affiliates
which comply in all material respects with the requirements for
registration on Form 10 under the Exchange Act.

                                 -16-
PAGE


      (d)     The provisions of this Section 13 are intended to
provide to the holders of Rights a significant continuing equity
interest in the business of the Company following the consummation of
any transaction of the types described in paragraph (a) of this Section
13, and any attempt by any Acquiring Person or Principal Party to avoid
the provisions of this Section 13 or to limit the impact thereof shall
not be given any effect.

      (e)     The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or other
transfers.  The Company will cause its subsidiary or subsidiaries to
adhere to the terms and provisions of this Agreement, to the extent
applicable to such subsidiaries.

      (f)     Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described
in subparagraphs (w), (x) and (y) of Section 13(a) if (i) such transaction 
is consummated with a Person or Persons (or a wholly-owned
subsidiary of any such Person or Persons) who acquired shares of Common
Stock pursuant to a Permitted Offer, (ii) the price per share of Common
Stock offered in such transaction is not less than the price per common
share paid to all holders of Common Stock whose shares were purchased
pursuant to such Permitted Offer, and (iii) the form of consideration
being offered to the remaining holders of Common Stock pursuant to such
transaction is the same as the form of consideration paid pursuant to
such Permitted Offer.  Upon consummation of any such transaction
contemplated by this subsection (f), all Rights under this Agreement
shall expire.

     Section 14.  Additional Covenants.

      (a)     After the Stock Acquisition Date, the Company
covenants and agrees that it shall not (i) consolidate with, (ii) merge
with or into, or (iii) sell or transfer, in one or more transactions,
assets or earning power aggregating more than fifty percent (50%) of
the assets or earning power of the Company and its Subsidiaries taken
as a whole, to any other Person if at the time of or after such
consolidation, merger or sale there are any charter or by-law provisions 
or any rights, warrants or other instruments outstanding or any
other action taken which would diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.  The Company shall not
consummate any such consolidation, merger or sale unless prior thereto
the Company and such other Person shall have executed and delivered to
the Rights Agent a supplemental agreement evidencing compliance with
this subsection.

      (b)     The Company covenants and agrees that, after the
Stock Acquisition Date, it will not, except as permitted by Section 24
hereof regarding redemption of the Rights, take any action the purpose
or effect of which is to diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.

    Section 15.  Fractional Rights and Fractional Shares.

      (a)     The Company shall not be required to issue fractions of 
Rights or to distribute Rights Certificates which evidence
fractional Rights.  In lieu of such fractional Rights, there shall be
paid to the registered holders of the Rights 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 15(a), the current
market value of a whole Right shall be the Closing Price per Right of
the Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable.

                                 -17-
PAGE


      (b)     The Company shall not be required to issue fractions of 
shares of Common Stock upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Common
Stock.  In lieu of fractional shares of Common Stock the Company may
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 shares of Common Stock. 
For purposes of this Section 15(b), the current market value of one
share of Common Stock shall be the Closing Price of a share of Common
Stock for the Trading Day immediately prior to the date of such
exercise.

      (c)     Following the occurrence of one of the transactions
or events specified in Section 11 giving rise to the right to receive
common stock equivalents (other than Common Stock) or other securities
upon the exercise of a Right, the Company shall not be required to
issue fractions of shares or units of such common stock equivalents or
other securities upon exercise of the Rights or to distribute certificates 
which evidence fractional shares of such common stock equivalents
or other securities.  In lieu of fractional shares or units of such
common stock equivalents or other securities, the Company may 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 a share or unit of such common
stock equivalent or other securities.  For purposes of this Section
15(c), the current market value shall be determined in the manner set
forth in Section 11(d) hereof for the Trading Day immediately prior to
the date of such exercise and, if such common stock equivalent is not
traded, each such common stock equivalent shall have the value of one
share of Common Stock.

      (d)     Except as otherwise expressly provided herein, the
holder of a Right by the acceptance of the Rights expressly waives his
right to receive any fractional Rights or any fractional shares upon
exercise of a Right.

    Section 16.  Rights of Action.  All rights of action in respect of
this Agreement are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered 
holders of the Common Stock); and any registered holder of any
Rights 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 Rights 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 Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement.  Without
limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this
Agreement and shall be entitled to specific performance of the obligations 
hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this
Agreement.  Holders of Rights shall be entitled to recover the reasonable 
costs and expenses, including attorneys' fees, incurred by them in
any action to enforce the provisions of this Agreement.

    Section 17.  Agreement of Rights Holders.  Every holder of a Right,
by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:

      (a)     prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
 
                                -18-
PAGE


      (b)     after the Distribution Date, the Rights Certificates are 
transferable only on the registry books of the Rights Agent
if surrendered at the principal office of the Rights Agent, 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 a Rights 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 Rights
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 18.  Rights Certificate Holder Not Deemed a Stockholder. 
No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the
shares of Common 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 Rights Certificate 
be construed to confer upon the holder of any Rights Certificate,
as such, any of the rights of a stockholder of the Company or any right
to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to
any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by such Rights Certificate shall have been exercised 
in accordance with the provisions thereof.

    Section 19. 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 disbursements and other
disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. 
The Company also agrees to indemnify the Rights Agent for, and to hold
it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly.

      The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by
it in connection with its administration of this Agreement in reliance
upon any Rights Certificate or certificate for 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.

    Section 20. 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 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 Rights 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 Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been counter-
signed, any successor Rights Agent may countersign such Rights Certificates 
either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in
this Agreement.

                                  -19-
PAGE


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

    Section 21. Duties of Rights Agent.  The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:

      (a)     The Rights Agent may consult with legal counsel
selected by it (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 (including, without limitation, the identity of
any Acquiring Person) 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 the Chairman of the Board, any Vice Chairman of the
Board, any President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance
upon such certificate.

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

      (d)     The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates (except as to the fact that it
has countersigned the Rights Certificates) 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 Rights
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 Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of
Sections 11 and 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to
the exercise of Rights evidenced by Rights Certificates after actual
notice of any such adjustment); nor shall it be responsible for any
determination by the Board of Directors of the Company of the current
market value of the Rights or Common Stock pursuant to the provisions
of Section 15 hereof regarding fractional shares; nor shall it by any
act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Common Stock or other
securities to be issued pursuant to this Agreement or any Rights
Certificate, or as to whether any shares of Common Stock or other
securities will, when so issued, be validly authorized and issued,
fully paid and nonassessable.

                                -20-
PAGE


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

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

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

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

      (j)     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.

      (k)     If, with respect to any Rights Certificate surrendered to 
the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase, as
the case may be, has either not been completed or indicates an affirmative 
response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise of
transfer without first consulting with the Company.

                                -21-
PAGE


     Section 22. Change of Rights Agent.  The Rights Agent or any 
successor Rights Agent may resign and be discharged from its 
duties under this Agreement upon thirty (30) days' notice in 
writing mailed to the Company and to each transfer agent of the 
Common Stock by certified mail, and to holders of the Rights by 
first-class mail.  The Company may remove the Rights Agent or any 
successor Rights Agent upon thirty (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 Common Stock by 
certified mail, and to the holders of the Rights 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 thirty (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 (who 
shall, with such notice, submit his Rights Certificate (if any) 
for inspection by the Company), then the registered holder of any 
Rights may apply to any court of competent jurisdiction for the 
appointment of a new Rights Agent.  Any successor Rights Agent, 
whether appointed by the Company or by such a court, shall be a 
corporation organized and doing business under the laws of the 
United States or of the State of Texas (or of any other state of 
the United States so long as such corporation is authorized to do 
business in the State of Texas), in good standing, having a 
principal office in the State of Texas, which is authorized under 
such laws to exercise corporate trust powers and is subject to 
supervision or examination by federal or state authority and 
which has at the time of its appointment as Rights Agent a 
combined capital and surplus of at least $50,000,000.  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, convey-
ance, 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, and mail a notice 
thereof in writing to the registered holders of the Rights.  
Failure to give any notice provided for in this Section 22, 
however, or any defect therein, shall not affect the legality or 
validity of the resignation or removal of the Rights Agent or the 
appointment of the successor Rights Agent, as the case may be.

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

	Section 24.	Redemption and Termination.

           (a) (i)  The Board of Directors of the Company may, at 
its option, at any time prior to the earlier of (x) ten (10) 
business days after the time that any person becomes an Acquiring 
Person or (y) 5:00 P.M., Fort Worth, Texas time, on the Final 
Expiration Date, redeem all but not less than all of the then 
outstanding Rights at a redemption price of $0.0001 per Right, 
appropriately adjusted to reflect any stock split, stock dividend 
or similar transaction occurring after the date hereof (such 
price being hereinafter referred to as the "Redemption Price").  
If the total Redemption Price for all of the Rights held of 
record by a holder is less than $0.01, the total Redemption Price 
shall be rounded up to $0.01.  In all other cases, the Redemption 
Price shall be rounded up to the nearest $0.01.

                                  -22-
PAGE


               (ii)    In addition, 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 occur-
rence of a Stock Acquisition Date but prior to any transaction 
described in Section 13(a), following 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 ceases to be the Beneficial Owner of securities 
representing fifteen percent (15%) or more of the outstanding 
shares of the Voting Power, and at the time of redemption there 
are no other persons who are Acquiring Persons.

              (iii)   Upon consummation of any transaction 
specified in Section 13(a) pursuant to a Permitted Offer and 
complying with the terms of Section 13(f), all Rights under this 
Agreement shall expire.

         (b)     In the case of a redemption permitted under 
Section 24(a)(i) or 24(a)(iii), 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.

             In the case of a redemption permitted only under 
Section 24(a)(ii), the right to exercise the Rights will 
terminate and represent only the right to receive the Redemption 
Price only after the giving of notice of such redemption to the 
holder of such Rights upon the later of ten (10) Business Days 
following the giving of such notice or the expiration of any 
period during which the rights under Section 11(a)(ii) may be 
exercised.

           After the action of the Board of Directors ordering
any such redemption of the Rights, the Company shall promptly 
give notice of such redemption to the Rights Agent and the 
holders of the then outstanding Rights by mailing such notice to 
the Rights Agent and 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.

       (c)     In the case of a redemption permitted under 
Section 24(a)(i) or (ii), the Company may, at its option, 
discharge all of its obligations with respect to the Rights by 
(i) issuing a press release announcing the manner of redemption 
of the Rights and (ii) mailing payment of the Redemption Price to 
the registered holders of the Rights at their last addresses as 
they appear on the registry books of the Rights Agent, or, prior 
to the Distribution Date, on the registry books of the Transfer 
Agent of the Common Stock, and upon such action, all outstanding 
Rights Certificates shall be null and void without any further 
action by the Company.

        Section 25. Notice of Certain Events.  In case the Company 
shall propose

		(a)	to pay any dividend payable in stock of any 
class to the holders of Common Stock or to make any other 
distribution to the holders of Common Stock (other than a regular 
quarterly cash dividend out of earnings or retained earnings of 
the Company), or

		(b)	to offer to the holders of Common Stock rights 
or warrants to subscribe for or to purchase any additional shares 
of Common Stock or shares of stock of any class or any other 
securities, rights or options, or

                                -23-

PAGE

		(c)	to effect any reclassification of its Common 
Stock (other than a reclassification involving only the 
subdivision of outstanding shares of Common Stock), or

		(d)	to effect any consolidation or merger into or 
with, or to effect any sale or other transfer (or to permit one 
or more of its Subsidiaries to effect any sale or other 
transfer), in one or more transactions, of more than fifty 
percent (50%) of the assets or earning power of the Company and 
its Subsidiaries (taken as a whole) to any other Person, or

		(e)	to effect the liquidation, dissolution or 
winding up of the Company, then, in each such case, the Company 
shall give to each holder of a Rights 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, 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 
shares of Common 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 (a) or (b) above at least twenty (20) days prior to the 
record date for determining holders of the shares of Common Stock 
for purposes of such action, and in the case of any such other 
action, at least twenty (20) days prior to the date of the taking 
of such proposed action or the date of participation therein by 
the holders of the shares of Common Stock, whichever shall be the 
earlier.  In case any of the events set forth in Section 
11(a)(ii) shall occur, then, in any such case, the Company shall 
as soon as practicable thereafter give to each holder of a Rights 
Certificate, in accordance with Section 26 hereof, a notice of 
the occurrence of such event, which shall specify the event and 
the consequences of the event to holders of Rights under Section 
11(a)(ii) hereof.

	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 Rights Certificate to or on the Company shall be 
sufficiently given or made if sent by first-class mail, postage 
prepaid, addressed (until another address is filed in writing 
with the Rights Agent) as follows:

		Surety Capital Corporation
		1845 Precinct Line Road, Suite 100
		Hurst, Texas  76054
		Attention:  Mr. Bobby W. Hackler

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

		Securities Transfer Corporation
		16910 Dallas Parkway, Suite 100
		Dallas, Texas  75248
		Attention:  Mr. Kevin Halter, Jr.

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

                              -24-
PAGE


	Section 27.	Supplements and Amendments.  The Company and the 
Rights Agent may from time to time supplement or amend this 
Agreement without approval of any holders of Right Certificates 
in order (i) to cure any ambiguity, (ii) to correct or supplement 
any provision contained herein which may be defective or 
inconsistent with any other provisions herein, (iii) prior to the 
Distribution Date, to change or supplement the provisions 
hereunder which the Company, in its sole discretion, may deem 
necessary or desirable, and (iv) following the Distribution Date, 
to change or supplement the provisions hereunder in any manner 
which the Company may deem necessary or desirable and which shall 
not adversely affect the interests of the holders of Rights 
Certificates.  Upon the delivery of a certificate from an 
appropriate officer of the Company which states that the proposed 
supplement or amendment is in compliance with the terms of this 
Section 27, the Rights Agent shall execute such supplement or 
amendment unless the Rights Agent shall have determined in good 
faith that such supplement or amendment would adversely affect 
its interests under this Agreement.  Prior to the Distribution 
Date, the interests of the holders of Rights shall be deemed 
coincident with the interests of the holders of Common Stock.

	Section 28.	Determination and Actions by the Board of Direc-
tors, etc.  For all purposes of this Agreement, any calculation 
of the number of shares of Common Stock outstanding at any 
particular time, including for purposes of determining the 
particular percentage of such outstanding shares of Common Stock 
or any other securities of which any Person is the Beneficial 
Owner, shall be made in accordance with the last sentence of Rule 
13d- 3(d)(1)(i) of the General Rules and Regulations under the 
Exchange Act as in effect on the date of this Agreement.  The 
Board of Directors of the Company shall have the exclusive power 
and authority to administer this Agreement and to exercise all 
rights and powers specifically granted to the Board of Directors, 
or the Company, or as may be necessary or advisable in the 
administration of this Agreement, including, without limitation, 
the right and power to (i) interpret and amend the provisions of 
this Agreement, and (ii) make all determinations deemed necessary 
or advisable for the administration of this Agreement (including 
a determination to redeem or not redeem the Rights or to amend 
the Agreement).  All such actions, calculations, interpretations 
and determinations (including, for purposes of clause (y) below, 
all omissions with respect to the foregoing) which are done or 
made by the Board in good faith, shall (x) be final, conclusive 
and binding on the Company, the Rights Agent, the holders of the 
Rights Certificates and all other parties, and (y) not subject 
the Board to any liability to the holders of the Rights 
Certificates.

	Section 29.	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 30.	Benefits of this Agreement.  Nothing in this 
Agreement shall be construed to give to any person or corporation 
other than the Company, the Rights Agent and the registered 
holders of the Rights Certificates (and, prior to the 
Distribution Date, the Common Stock) any legal or equitable 
right, remedy or claim under this Agreement; but this Agreement 
shall be for the sole and exclusive benefit of the Company, the 
Rights Agent and the registered holders of the Rights 
Certificates (and, prior to the Distribution Date, the Common 
Stock).

	Section 31.	Severability.  If any term, provision, covenant 
or restriction of this Agreement is held by a court of competent 
jurisdiction or other authority to be invalid, void or unenforce-
able, 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.


                                  -25-
PAGE


	Section 32.	Counterparts.  This Agreement may be executed in 
any number of counterparts and each of such counterparts shall 
for all purposes be deemed to be an original, and all such 
counterparts shall together constitute but one and the same 
instrument.

	Section 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.

	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.

Attest:                                       SURETY CAPITAL CORPORATION


        /s/ B. J. Curley                      By:     /s/ Bobby W. Hackler 
        ----------------                             ----------------------
Name:   B. J. Curley                          Name:   Bobby W. Hackler
Title:  Secretary                             Title:  Vice Chairman and
                                                      Chief Operating Officer

Attest:                                       SECURITIES TRANSFER CORPORATION


       /s/ George Johnson                     By: /s/ Kevin Halter, Jr. 
       ------------------                         ---------------------
Name:  George Johnson                         Name:   Kevin Halter, Jr.
Title: Vice President                         Title:  President


                                 -26-
PAGE


                               EXHIBIT A

	The front of the Rights Certificate is represented by the 
form in Exhibit A-1.  The reverse side of the Rights Certificate 
is represented by the forms in Exhibit A-2 and Exhibit A-3.

PAGE

                              EXHIBIT A-1


                     [Form of Rights Certificate]

Certificate No. R-			            Rights

	NOT EXERCISABLE AFTER JUNE 16, 2000 OR EARLIER IF 
NOTICE OF REDEMPTION IS GIVEN.  THE RIGHTS ARE SUBJECT 
TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.0001 
PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS 
AGREEMENT.  THIS RIGHTS CERTIFICATE AND THE RIGHTS 
REPRESENTED HEREBY MAY BECOME VOID TO THE EXTENT 
PROVIDED IN AND UNDER THE CIRCUMSTANCES SPECIFIED IN 
THE RIGHTS AGREEMENT.

	Rights Certificate

	SURETY CAPITAL CORPORATION

This certifies that ________________, or registered assigns, is 
the registered owner of the number of Rights set forth above, 
each of which entitles the owner thereof, subject to the terms, 
provisions and conditions of the Rights Agreement dated as of 
June 17, 1997 (the "Rights Agreement") between SURETY CAPITAL 
CORPORATION (the "Company") and SECURITIES TRANSFER CORPORATION 
(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. (Fort Worth, Texas time) 
on June 16, 2000 at the principal office of the Rights Agent one 
fully paid, nonassessable share of Common Stock (the "Common 
Stock") of the Company, at an initial purchase price of $50.00 
per share, subject to adjustment as provided in the Rights 
Agreement (the "Purchase Price"), upon presentation and surrender 
of this Rights Certificate with the appropriate Form of Election 
to Purchase duly executed.  The number of Rights evidenced by 
this Rights Certificate (and the number of shares which may be 
purchased upon exercise thereof) set forth above, and the 
Purchase Price set forth above, are the numbers and Purchase 
Price as of _______________, 19__, based on the Common Stock as 
constituted at such date.

	As provided in the Rights Agreement, the Purchase Price and 
the number of shares of Common Stock or other securities which 
may be purchased upon the exercise of the Rights evidenced by 
this Rights Certificate are subject to modification and 
adjustment upon the happening of certain events.

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

	This Rights Certificate, with or without other Rights 
Certificates, upon surrender at the principal office of the 
Rights Agent, may be exercised for another Rights Certificate or 
Rights Certificates of like tenor and date evidencing Rights 
entitling the holder to purchase a like aggregate number of 
shares of Common Stock as the Rights evidenced by the Rights 
Certificate or Rights Certificates surrendered shall have 
entitled such holder to purchase.  If this Rights Certificate 
shall be exercised (other than pursuant to Section 11(a)(ii) of 
the Rights Agreement) in part, the holder shall be entitled to 
receive upon surrender hereof another Rights Certificate or 
Rights Certificates for the number of whole Rights not exercised. 
 If this Rights Certificate shall be exercised in whole or in 
part pursuant to Section 11(a)(ii) of the Rights Agreement, the 
holder shall be entitled to receive this Rights Certificate duly 
marked to indicate that such exercise has occurred as set forth 
in the Rights Agreement.

PAGE


	Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the 
Company at its option at a redemption price of $0.0001 per Right. 
 Subject to the provisions of the Rights Agreement, the Company, 
at its option, may elect to mail payment of the redemption price 
to the registered holder of the Right at the time of redemption, 
in which event this Certificate may become void without any 
further action by the Company.

	The Company is not obligated to issue fractional shares of 
Common Stock upon the exercise of any Right or Rights evidenced 
hereby, but in lieu thereof a cash payment may be made, as 
provided in the Rights Agreement.

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

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

Dated as of _______________, 199_.

Attest:                                  SURETY CAPITAL CORPORATION



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

SECURITIES TRANSFER CORPORATION



					
Name:					
Title:					


                                      -2-

PAGE

                                 EXHIBIT A-2

               [Form of Reverse Side of Rights Certificate]

                              FORM OF ASSIGNMENT

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

FOR VALUE RECEIVED_______________________________________________

hereby sells, assigns and transfers unto_________________________

_________________________________________________________________
	(Please print name and address of transferee)

_________________________________________________________________

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

Dated:___________, 19__ 

                                     ----------------------------
                                               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.

PAGE

                                 EXHIBIT A-3

                [Form of Reverse Side of Rights Certificate]
       
                                 Certificate

	The undersigned hereby certifies by checking the appropriate 
boxes that:

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

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

Dated:_______________, 19__ 



                                 ______________________________
                                           Signature

                                     NOTICE

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

PAGE

                                   EXHIBIT B


                               SUMMARY OF RIGHTS
                           TO PURCHASE COMMON STOCK
                        OF SURETY CAPITAL CORPORATION


	Pursuant to the Surety Capital Corporation Rights Agreement 
dated as of June 17, 1997 (the "Rights Agreement"), between 
Surety Capital Corporation (the "Company") and Securities 
Transfer Corporation, as Rights Agent, the Company declared a 
dividend of one right (a "Right") for each outstanding share of 
common stock, $0.01 par value, of the Company (the "Common 
Stock") to stockholders of record at the close of business on 
June 6, 1997 (the "Record Date").

	A SUMMARY OF THE RIGHTS AGREEMENT IS SET FORTH BELOW.  
HOWEVER, THIS SUMMARY IS PROVIDED FOR CONVENIENCE ONLY, AND DOES 
NOT PURPORT TO FULLY REPRESENT THE TERMS AND CONDITIONS GOVERNING 
THE RIGHTS.  FOR A FULL DESCRIPTION OF SUCH TERMS AND CONDITIONS, 
CONSULT THE RIGHTS AGREEMENT.

	Each Right, when exercisable, entitles the registered holder 
(a) to purchase from the Company one share of Common Stock, at a 
price of $50.00 per share (the "Purchase Price"), subject to 
adjustment; (b) to purchase additional shares of Common Stock 
("Adjustment Shares") at a rate set forth below; and (c) under 
certain circumstances to purchase shares of stock of a 
corporation that merges with or into the Company (the "Merger 
Right"), as described below.  The Rights are not exercisable 
until the Distribution Date (as defined below).

	The "Distribution Date" is defined as the earlier of (a) the 
first date of public announcement by the Company or by a person 
(an "Acquiring Person") who or which shall be the beneficial 
owner of securities representing fifteen percent (15%) or more of 
the voting power of all securities of the Company outstanding or 
such date within ten (10) business days thereafter as shall be 
determined by the Board of Directors of the Company in its sole 
discretion (the "Stock Acquisition Date"); or (b) the tenth 
(10th) day after the date of the commencement of, or first public 
announcement of the intent of any person (other than the Company, 
any subsidiary of the Company, or any employee benefit plan of 
the Company or any of its subsidiaries) to commence (which 
intention to commence remains in effect for five (5) business 
days after such announcement), a tender or exchange offer which 
would result in such person becoming an Acquiring Person, unless 
such date is extended by the Board of Directors of the Company 
(provided such extended date shall be no later than the Stock 
Acquisition Date).

	Once an Acquiring Person becomes such, then any Rights that 
are or were beneficially owned by the Acquiring Person or any 
associate or affiliate of such Acquiring Person shall become 
void, and any holder of such Rights shall thereafter have no 
right to exercise such Rights.

	Until the Distribution Date (or earlier redemption or 
expiration of the Rights), the following will apply to the 
Rights:

		(a)	Rights will be evidenced, with respect to any of 
the Common Stock certificates outstanding as of the Record Date, 
by such Common Stock certificates together with this Summary of 
Rights.

PAGE


		(b)	Rights will be transferred with and only with
Common Stock certificates, and the surrender for transfer of any 
certificates for Common Stock outstanding as of the Record Date 
(with or without this Summary of Rights attached) will also 
constitute the transfer of the Rights associated with the Common 
Stock represented by such certificates.

		(c)	New Common Stock certificates issued after the 
Record Date upon transfer or new issuances of Common Stock will 
contain a notation incorporating the Rights Agreement by 
reference.

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

	The Rights will expire on the earliest of (a) June 16, 2000, 
(b) redemption by the Company as described below, or (c) 
consummation of a merger transaction with a person or group who 
acquires Common Stock pursuant to a Permitted Offer (as defined 
below), and who offers in the merger the same price per share and 
form of consideration paid in the Permitted Offer.

	A "Permitted Offer" is defined as a tender offer or exchange 
offer for all outstanding shares of Common Stock at a price and 
on terms determined by at least a majority of the members of the 
Board of Directors who are not officers of the Company to be both 
adequate and otherwise in the best interests of the Company and 
its stockholders.

	The Purchase Price payable, and the number of shares of 
Common Stock or other securities or property issuable, upon 
exercise of the Rights, are subject to adjustment from time to 
time to prevent dilution (a) in the event of a stock dividend on, 
or a subdivision, combination or reclassification of, the Common 
Stock, (b) upon the grant to holders of the Common Stock of 
certain rights, options or warrants to subscribe for Common 
Stock, certain convertible securities or securities having the 
same or more favorable rights, privileges and preferences as the 
Common Stock at less than the current market price of the Common 
Stock, or (c) upon the distribution to holders of the Common 
Stock of evidences of indebtedness, cash or assets (excluding 
regular quarterly cash dividends out of earnings or retained 
earnings and dividends payable in Common Stock) or of 
subscription rights or warrants (other than those referred to 
above).

	The right to purchase Adjustment Shares arises at the time 
any person becomes an Acquiring Person (unless pursuant to a 
Permitted Offer).  At such time, proper provision shall be made 
so that each holder of a Right (except for the Acquiring Person) 
will for a 60-day period thereafter have the right to receive 
upon exercise of each Right at the Purchase Price, that number of 
shares of Common Stock equal to the result obtained by dividing 
the Purchase Price by fifty percent (50%) of the then current 
market price of the Common Stock.  If there is an insufficient 
number of shares of Common Stock available, then the holder of a 
Right shall receive (after all authorized and unreserved shares 
of Common Stock have been issued) a common stock equivalent (such 
as preferred stock or another equity security with at least the 
same economic value as the Common Stock) or such number of shares 
of Common Stock or common stock equivalents as the Board of 
Directors of the Company shall determine to be available on a pro 
rata basis.  However, in the event that the Merger Right arises 
(as described below), the right to purchase Adjustment Shares 
shall become void.

	The Merger Right arises in the event that, after the first 
date of public announcement by the Company or an Acquiring Person 
that an Acquiring Person has become such, the Company, or any 
subsidiary of the Company, is acquired in a merger or other 
business combination transaction in which the Common Stock is 
exchanged or changed, or fifty percent (50%) or more of the 
Company's assets or earning power are sold.  At such time, each 
holder of a Right (except for the Acquiring Person) shall 
thereafter have the right to receive, upon the exercise of the 
Right at the Purchase Price, that number of shares of common 
stock of the surviving or acquiring company equal to the result 
obtained by dividing the Purchase Price by fifty percent (50%) of 
the then current market price of the common stock of the 
surviving or acquiring company.

                                    -2-
PAGE


	With certain exceptions, no adjustments in the Purchase 
Price will be required until cumulative adjustments require an 
adjustment of at least one percent (1%) in such Purchase Price.  
No fractions of shares will be issued and, in lieu thereof, an 
adjustment in cash will be made based on the market price of the 
Common Stock on the last trading date prior to the date of 
exercise.

	At any time prior to the earlier to occur of (a) ten (10) 
business days after the time any person becomes an Acquiring 
Person or (b) the expiration of the Rights, the Company may 
redeem the Rights in whole, but not in part, at a price of 
$0.0001 per Right (the "Redemption Price") which redemption shall 
be effective upon the action of the Board of Directors.  
Additionally, the Company may thereafter redeem the then 
outstanding Rights in whole, but not in part, at the Redemption 
Price (i) provided that such redemption is incidental to a merger 
or other business combination transaction or series of 
transactions involving the Company 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 right to purchase Adjustment Shares if 
and for as long as an Acquiring Person ceases to beneficially own 
securities representing fifteen percent (15%) or more of the 
voting power of the Company's voting securities and at the time 
of redemption there are no other persons who are Acquiring 
Persons.  The redemption of Rights described in the preceding 
sentence shall be effective only as of such time when the right 
to purchase Adjustment Shares is not exercisable, and in any 
event, only after ten (10) business days prior notice.

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

	A COPY OF THE RIGHTS AGREEMENT IS AVAILABLE FREE OF CHARGE 
FROM 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 INCORPORATED HEREIN 
BY REFERENCE.


                                     -3-

PAGE


                                  EXHIBIT C


                       FORM OF ELECTION TO PURCHASE

                [To be executed upon the exercise of Rights]

To SURETY CAPITAL CORPORATION

	The undersigned hereby irrevocably elects to exercise ______ 
Rights represented by Rights Certificate Number R-____________ to 
purchase the shares of Common Stock (or such other securities of 
the Company or any other Person) issuable upon the exercise of 
the Rights and requests that certificates for such shares be 
issued in the name of:

_________________________________________________________________
    (Please insert social security or other identifying number)

_________________________________________________________________
                   (Please print name and address)

_________________________________________________________________

	The Rights Certificate indicating the balance, if any, of 
such Rights which may still be exercised shall be returned to the 
undersigned unless such person requests that the Rights 
Certificate be registered in the name of and delivered to:

_________________________________________________________________
	(Please insert social security or other identifying number)
	(complete only if Rights Certificate is to be registered
	in a name other than the undersigned)

_________________________________________________________________
	(Please print name and address)

_________________________________________________________________

Dated:____________, 19__ 



                                  _______________________________
                                              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.
 

EX-2

                                                    EXHIBIT 2

	[SURETY CAPITAL CORPORATION LETTERHEAD]


		June 18, 1997


Dear Stockholder:

	To ensure our ability to protect the interests of our stock-
holders in the event of a hostile takeover attempt, the Board of 
Directors has adopted a Rights Agreement (the "Agreement") which 
provides for granting to the current stockholders the right to 
purchase one share of common stock, $0.01 par value, of the 
Company (the "Common Stock") for each outstanding share of common 
stock held by such stockholder, as described in the enclosed 
"Summary of Rights to Purchase Common Stock of Surety Capital 
Corporation" (the "Summary").  This letter, together with the 
enclosed Summary, describes the Agreement, the rights to purchase 
shares of Common Stock of the Company (the "Rights"), and the 
Board's reasons for adopting the Agreement.

	The Rights contain provisions to protect you and the other 
stockholders in the event of an unsolicited attempt to acquire 
the Company, including a gradual accumulation of shares in the 
open market, a partial or two-tier tender offer that does not 
treat all stockholders equally and other abusive takeover tactics 
which are prevalent these days and which the Board believes are 
not in the best interests of the stockholders.  These tactics can 
be used to unfairly pressure stockholders, squeeze them out of 
their investment in the Company without giving them any real 
choice, and deprive them of the full value of their shares.  Many 
companies, including many of the companies in the Fortune 500, 
have issued rights of the kind the Board has approved.  Over the 
past ten years several cases involving agreements similar to the 
Agreement have been litigated applying both Delaware corporate 
law and the corporate laws of other jurisdictions.  Although not 
all decisions have supported these agreements, we believe the 
Agreement is valid under Delaware law.  The Board considers the 
Rights to be the best available means of protecting both your 
right to retain your equity investment in the Company and the 
full value of that investment, while not precluding a fair 
acquisition bid for the Company.

	The Rights are not being distributed in response to any 
specific effort to acquire control of the Company, and the Board 
is not aware of any such effort.  The Agreement is being adopted 
in order to assure the ability of the Board to protect your 
interests.  The Rights are not intended to prevent a takeover of 
the Company, and will not do so.  However, they should deter an 
attempt to acquire the Company in a manner or on terms which the 
Board determines are not in the best interests of the stock-
holders.  The Rights are designed to deal with the very serious 
problem of another company using abusive tactics to deprive the 
Company's Board and its stockholders of any real opportunity to 
determine the destiny of the Company.  The Rights may be redeemed 
by the Company at $0.0001 per Right at any time prior to the 
tenth day after the public announcement of the accumulation of 
15% or more of the Company's share by a single person or group 
(an "Acquiring Person").  Also, the Rights are redeemable even 
after a 15% acquisition, if the Board so determines, in 
connection with a merger with a "white knight" and under other 
circumstances.

	Issuance of the Rights does not in any way weaken the finan-
cial strength of the Company or interfere with its business 
plans.  The issuance of the Rights has no dilutive effect, will 
not affect reported earnings per share, is not taxable to the 
Company or to you, and will not change the way in which you can 
presently trade the Company's shares.

PAGE


June 18, 1997
Page 2

	The Board was aware when it adopted the Agreement that some 
people have advanced arguments that securities of the sort being 
issued deter legitimate acquisition proposals.  The Board 
carefully considered these views and concluded that the arguments 
are speculative and do not justify leaving stockholders without 
adequate protection against unfair treatment by an acquiror -- 
who, after all, is seeking his own company's advantage, not 
yours.  The Board believes these Rights represent a sound and 
reasonable means of addressing the complex issues of corporate 
policy created by the current takeover environment.

	The Rights will be issued to stockholders of record as of 
the close of business on June 6, 1997, and will expire in three 
years, on June 16, 2000.  Initially, the Rights will not be 
exercisable, certificates will not be sent to you, and the Rights 
will automatically trade with the Common Stock.  However, ten 
days after an Acquiring Person either acquires 15% or more of the 
Company's Common Stock or announces an offer, the consummation of 
which would result in such person or group owning 15% or more of 
the Company's Common Stock, the Rights will become exercisable 
and separate certificates representing the Rights will be 
distributed.  The Board expects that the Rights will begin to 
trade independently from the Company's Common Stock at that time. 
 At no time will the Rights have any voting power.

	Depending on the circumstances in which the Rights become 
exercisable, a holder will be entitled (a) to purchase from the 
Company one share of Common Stock at a price of $50.00 per share 
(the "Purchase Price"), subject to adjustment; (b) to purchase 
additional shares of Common Stock ("Adjustment Shares") at a rate 
set forth below and in the enclosed Summary; or (c) under certain 
circumstances to purchase shares of stock of a corporation that 
merges with or into the Company (the "Merger Right"), as also set 
forth below and in the enclosed Summary.

	The right to purchase Adjustment Shares arises at the time 
any person becomes an Acquiring Person (unless pursuant to a 
transaction approved by the Board).  At such time, each holder of 
a Right (except for the Acquiring Person) will for a 60-day 
period thereafter have the right to receive upon exercise of each 
Right at the Purchase Price, that number of shares of Common 
Stock equal to the result obtained by dividing the Purchase Price 
by 50% of the then current market price of the Common Stock.  For 
example, if the then current market price is $10.00, the holder 
of each Right would be entitled to purchase ten shares of the 
Company's Common Stock for $50.00, i.e. at 50% of the market 
value.  However, in the event that the Merger Right arises (as 
described below), the right to purchase Adjustment Shares becomes 
void.

	The Merger Right arises in the event that, after the first 
date of a public announcement by the Company or an Acquiring 
Person that an Acquiring Person has become such, the Company, or 
any subsidiary of the Company, is acquired in a merger or other 
business combination transaction in which the Common Stock is 
exchanged or changed, or 50% or more of the Company's assets or 
earning power are sold.  At such time, each holder of a Right 
(except for the Acquiring Person) shall thereafter have the right 
to receive, upon the exercise of the Right at the Purchase Price, 
that number of shares of common stock of the surviving or 
acquiring company equal to the result obtained by dividing the 
Purchase Price by 50% of the then current market price of the 
common stock of the surviving or acquiring company.  For example, 
if at the time of the business combination the surviving or 
acquiring company's stock has a then current market price of 
$10.00, the holder of each Right would be entitled to purchase 
ten shares of the acquiring company's common stock for $50.00, 
i.e., at a 50% discount.

PAGE


June 18, 1997
Page 3

	A copy of the Agreement is available free of charge from the 
Company upon request.  This letter does not purport to be a 
complete description of the Rights and is qualified in its 
entirety by reference to the Agreement, which is incorporated 
herein by reference.  A copy of the Agreement is also being filed 
with the Securities and Exchange Commission as an Exhibit to a 
Current Report on Form 8-K.

	The Board has labored long and hard in reaching this 
decision, and each member sincerely believes the Board's decision 
is appropriate for the Company.  In adopting the Agreement, we 
have expressed our confidence, which we know you share, in the 
Company's future and our determination that you, our stockholders,
be given every opportunity to participate fully in that future.

                                             Sincerely,

                                             THE BOARD OF DIRECTORS OF SURETY
                                             CAPITAL CORPORATION

                                             /s/ C. Jack Bean

                                             C. Jack Bean, Chairman
 

EX-3

                                                          EXHIBIT 3

                              **News Release**


                         SURETY CAPITAL CORPORATION

For Release:  Immediately                     Contact:  C. Jack Bean
Date: June 18, 1997                            Chairman of the Board
AMEX Symbol: SRY                                    1 (800) SRY-5995


	SURETY CAPITAL CORPORATION DECLARES DIVIDEND DISTRIBUTION
                      OF COMMON STOCK PURCHASE RIGHTS


	Hurst, Texas, June 17, 1997 -- The Board of Directors of 
Surety Capital Corporation ("Surety") today declared a dividend 
of one Common Stock Purchase Right (the "Rights") for each share 
of $0.01 par value Common Stock to stockholders of record at the 
close of business on June 6, 1997.  Each Right will initially 
entitle stockholders to buy one share of Common Stock at an 
exercise price of $50.00 (the "Purchase Price").  The Rights will 
be exercisable only if a person or group acquires 15% or more of 
the Common Stock or announces a tender offer the consummation of 
which would result in ownership by such person or group of 15% or 
more of the Common Stock.  Surety will be entitled to redeem the 
Rights at $0.0001 per Right at any time prior to the tenth day 
after a person or group acquires 15% or more of the Common Stock, 
other than pursuant to a transaction approved by the Board.  The 
Rights are redeemable even after a 15% or more acquisition, if 
the Board so determines, in connection with a merger of Surety 
with a "white knight" and under other circumstances.

	The Rights are not being distributed in response to any 
specific effort to acquire control of the Company, and the Board 
is not aware of any such effort.  The Rights are not intended to 
prevent a takeover, but are designed to assure that all 
stockholders receive fair treatment in the event of any takeover 
and to guard against abusive tactics to gain control of the 
Company.

	In the event of a 15% or more acquisition, each Right will 
entitle its holder to purchase that number of shares of Common 
Stock equal to the result obtained by dividing the Purchase Price 
by 50% of the then current market price of the Common Stock.

	If Surety, or any subsidiary of Surety, is acquired in a 
merger or other business combination transaction in which the 
Common Stock is exchanged or changed, or 50% or more of Surety's 
assets or earning power are sold, each Right will entitle its 
holder to purchase that number of shares of common stock of the 
surviving or acquiring entity equal to the result obtained by 
dividing the Purchase Price by 50% of the then current market 
price of the common stock of the surviving or acquiring entity.