Document:

<PAGE>
                                                                    Exhibit 10.3

                          REGISTRATION RIGHTS AGREEMENT

         This REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is entered into as
of December 19, 2002, by and between Quiksilver, Inc., a Delaware corporation
(the "COMPANY"), and the undersigned (each an "INVESTOR" and together the
"INVESTORS").

                                    RECITALS

         WHEREAS, the Investors were holders of outstanding shares of Ug
Manufacturing Co. Pty Ltd, ACN 005 047 941, a Victoria corporation (the
"AUSTRALIAN COMPANY"), UMTT Pty Ltd, ACN 102 794 230, a Victoria corporation,
and/or Quiksilver Japan K.K., a Japanese corporation (the "JAPANESE COMPANY");

         WHEREAS, pursuant to the terms and conditions of that certain Merger
Agreement dated as of November 18, 2002 (the "MERGER AGREEMENT") by and among
the Company, Quiksilver Australia Pty Ltd, a Victoria corporation, the
Australian Company, the Japanese Company, QSJ Holdings Pty Ltd, a Victoria
corporation, the Investors and the other parties thereto, each Investor became a
holder of shares of the common stock of the Company ("COMMON STOCK"); and

         WHEREAS, in connection with entering into the Merger Agreement, the
Company agreed to grant the Investors certain registration rights with respect
to the shares of Common Stock issued to the Investors pursuant to the Merger
Agreement.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

1.       DEFINITIONS

         The following terms, as used herein, shall have the following meanings:

         "COMMISSION" means the Securities and Exchange Commission.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, as they each may, from
time to time, be in effect.

         "PURCHASE SHARES" means the aggregate number of shares of Common Stock
received by the Investors pursuant to the Merger Agreement as set forth on
Exhibit A attached hereto.

         "RIGHTS HOLDERS" means the Investors during such time as they hold
Registrable Shares.
<PAGE>
         "REGISTRABLE SHARES" means:

            (a) the Purchase Shares; and

            (b) any other securities issued in respect of the Purchase Shares
(because of stock splits, stock dividends, reclassifications, recapitalizations,
or similar events);

PROVIDED, HOWEVER, that shares which are Registrable Shares shall cease to be
Registrable Shares:

            (i) upon any sale or other transfer of such shares pursuant to a
Registration Statement or Rule 144 under the Securities Act or any similar
provision then in force; or

            (ii) if such shares are capable of being distributed pursuant to
Rule 144 under the Securities Act subject only to volume limitations; or

            (iii) upon any sale or transfer to a person or entity to which,
pursuant to Section 12 of this Agreement, the rights provided by this Agreement
are not transferable.

         "REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission for a public offering and sale of Common Stock
(other than a registration statement covering only securities proposed to be
issued in exchange for securities or assets of another person or entity or in
connection with an employee benefit plan).

         "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, as they each may, from time to
time, be in effect.

         "PIGGY BACK REGISTRATION RIGHTS" means the rights of the Rights Holders
to have their Registrable Shares registered on the terms and conditions of this
Agreement pursuant to a Registration Statement under the Securities Act that is
filed by the Company as contemplated in Subsection 2.1 of this Agreement.

2.       REGISTRATION RIGHTS

         2.1 PIGGY BACK REGISTRATION. If the Company proposes to file a
Registration Statement for shares of Common Stock to be issued by the Company in
connection with a firm underwriting (other than a Registration Statement (i) on
Form S-4 or Form S-8 or any successor Form thereto or (ii) filed in connection
with an exchange offer) (a "PIGGY BACK REGISTRATION STATEMENT") at any time
until the date that such shares cease to be Registrable Shares then, the Company
will, prior to such filing, give written notice to all Rights Holders of its
intention to do so and, upon the written request of Rights Holders holding in
the aggregate at least Twenty-Five Percent (25%) of the Registrable Shares given
within twenty (20) days after the Company provides such notice (which request
shall state the intended method of disposition of such Registrable Shares), the
Company shall use its best efforts to cause all Registrable Shares which the
Company has been requested by such Rights Holders to register to be registered
under such Piggy Back Registration Statement; PROVIDED, HOWEVER, that the
Company shall have the right to postpone or withdraw any registration effected
pursuant to this Section 2.1 without incurring any liability to any Rights
Holder for doing so. Subject to

                                       2
<PAGE>
Section 2.2 below, if any Registrable Shares are to be registered pursuant to
this Section 2.1, then the Company shall provide notice of such fact to all
Rights Holders, and all Rights Holders will then have the right to register
their Registrable Shares under such Piggy Back Registration Statement. In the
event the Company and its underwriters permit all eligible Registrable Shares to
be registered under such Piggy Back Registration Statement without any Cutback
(as hereinafter defined), and such Registration Statement (i) is declared
effective by the Commission and (ii) remains effective as required under Section
3.1(b), then, the Piggy Back Registration Rights under this Section 2.1 shall
terminate at the end of such time period.

         2.2 UNDERWRITER CUTBACK. In connection with any registration under
Section 2.1 above, the Company shall not be required to include any Registrable
Shares in such registration unless the holders thereof accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (provided that such terms must be consistent with this Agreement and the
terms customarily included in agreements of this nature for underwritten public
offerings). If in the opinion of the managing underwriter it is appropriate
because of marketing factors to limit the number of Registrable Shares to be
included in the offering, then the Company shall be required to include in the
registration only that number of Registrable Shares, if any, which the managing
underwriter believes should be included therein. If the number of Registrable
Shares to be included in the offering in accordance with the foregoing is less
than the total number of shares which the holders of Registrable Shares have
requested to be included ("CUTBACK"), then the holders of Registrable Shares who
have requested registration and other holders of securities entitled to include
securities in such registration shall participate in the registration pro rata
based upon their total ownership of Common Stock. If any holder would thus be
entitled to include more securities than such holder requested to be registered,
the excess shall be allocated among other requesting holders pro rata in the
manner described in the preceding sentence.

3.       REGISTRATION PROCEDURES

         If and whenever the Company is required by the provisions of this
Agreement to use its best efforts to effect the registration under the
Securities Act of any of the Registrable Shares, the Company shall:

            (a) as expeditiously as reasonably practicable prepare and file with
the Commission a Registration Statement with respect to such Registrable Shares
and use its best efforts to cause that Registration Statement to become
effective as soon as possible thereafter;

            (b) as expeditiously as reasonably practicable prepare and file with
the Commission any amendments and supplements to the Registration Statement and
the prospectus included in the Registration Statement as may be necessary to
keep the Registration Statement effective until each underwriter has completed
the distribution of all securities purchased by it;

            (c) as expeditiously as reasonably practicable furnish to each
selling Rights Holder such reasonable numbers of copies of the prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents, as the selling Rights Holder may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares owned by the selling Rights Holder; and

                                       3
<PAGE>
            (d) as expeditiously as reasonably practicable use its best efforts
to register or qualify the Registrable Shares covered by the Registration
Statement under the securities or Blue Sky laws of such states as the selling
Rights Holders shall reasonably request, and do any and all other acts and
things that may be necessary or desirable to enable the selling Rights Holders
to consummate the public sale or other disposition in such states of the
Registrable Shares owned by the selling Rights Holder; PROVIDED, HOWEVER, that
the Company shall not be required in connection with this Section 3(d) to
qualify as a foreign corporation or execute a general consent to service of
process in any jurisdiction.

If at any time after giving written notice of its intention to effect any
registration of securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register such securities, the Company may, at
its election, give written notice of such determination to each Shareholder and
thereupon it shall be relieved of its obligation to register any Registrable
Securities in that proposed registration of securities (but not of its
obligation to pay registration expenses).

4.       ALLOCATION OF EXPENSES

         The Company will pay all Registration Expenses of any registration
under this Agreement. For purposes of this Section 4, the term "REGISTRATION
EXPENSES" shall mean all expenses incurred by the Company in complying with this
Agreement, including, without limitation, all registration and filing fees,
exchange listing fees, printing expenses, fees and expenses of counsel for the
Company, state Blue Sky fees and expenses, and the expense of any special audits
incidental to or required by any such registration, but excluding underwriting
discounts, selling commissions and the fees and expenses of any selling Rights
Holder's own counsel, or other out-of-pocket expenses of the Rights Holders or
their agents.

5.       INDEMNIFICATION AND CONTRIBUTION

         5.1 In the event of any registration under the Securities Act of any
Registrable Shares pursuant to this Agreement, the Company will indemnify and
hold harmless the seller of such Registrable Shares and each other person, if
any, who controls such seller within the meaning of the Securities Act or the
Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such seller or controlling person may become subject under the
Securities Act, the Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse such seller and each such
controlling person for any legal or any other expenses reasonably incurred by
such seller or controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action as and when incurred by them;
PROVIDED, HOWEVER, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission made in such

                                       4
<PAGE>
Registration Statement, preliminary prospectus or final prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Company, in writing, by or on behalf of such seller or
controlling person specifically for use in the preparation thereof.

         5.2 In the event of any registration under the Securities Act of any of
the Registrable Shares pursuant to this Agreement, each seller of Registrable
Shares, severally and not jointly, will indemnify and hold harmless the Company,
each of its directors and officers and each underwriter (if any) and each
person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such seller furnished in writing
to the Company by or on behalf of such seller specifically for use in connection
with the preparation of such Registration Statement, prospectus, amendment or
supplement; PROVIDED, HOWEVER, that the obligations of such Rights Holders
hereunder shall be limited to an amount equal to the proceeds to each Rights
Holder of Registrable Shares sold in connection with such registration. The
terms of any underwriting agreement entered into by the Company to effect a
registration of the Registrable Securities shall require the underwriter to
indemnify and hold harmless the Company, its officers, directors, controlling
persons and agents and each selling Rights Holder on substantially the same
basis as that of the indemnification of the Company by each selling holder as
provided in this Section 5.

         5.3 Each party entitled to indemnification under this Section 5
("INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification ("INDEMNIFYING PARTY") promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; PROVIDED, HOWEVER, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 5 (except to the extent
such failure to give notice has resulted in increased losses, damages or
liabilities for the Indemnifying Party). The Indemnified Party may participate
in such defense at such party's expense and the Indemnified Party and not the
Indemnifying Party shall bear or be responsible for the expenses thereof,
unless:

            (a) the Indemnifying Party and the Indemnified Party shall have
mutually agreed to the retention of such counsel, or

            (b) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnified Party and the Indemnifying Party
and representation

                                       5
<PAGE>
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them.

No Indemnifying Party, in the defense of any such claim or litigation shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect of such claim or litigation, and no
Indemnified Party shall consent to entry of any judgment or settle such claim or
litigation without the prior written consent of the Indemnifying Party, which
shall not be unreasonably withheld.

         5.4 In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either:

            (a) any holder of Registrable Shares exercising rights under this
Agreement, or any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 5 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 5 provides for indemnification in such case; or

            (b) contribution under the Securities Act may be required on the
part of any such selling Rights Holder or any such controlling person in
circumstances for which indemnification is provided under this Section 5;

then, in each such case, the Company and such Rights Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportions as is appropriate
to reflect the relative fault of the Indemnifying Party and Indemnified Parties
in connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations;
PROVIDED, HOWEVER, that, in any such case:

            (i) no such holder will be required to contribute any amount in
      excess of the proceeds to it of all Registrable Shares sold by it pursuant
      to such Registration Statement; and

            (ii) no person or entity guilty of fraudulent misrepresentation,
      within the meaning of Section 11(f) of the Securities Act, shall be
      entitled to contribution from any person or entity who is not guilty of
      such fraudulent misrepresentation.

6.       INDEMNIFICATION BY RIGHTS HOLDERS

         In the event that Registrable Shares are sold pursuant to a
Registration Statement in an underwritten offering, each selling Rights Holder
agrees to enter into a customary underwriting agreement including, without
limitation, customary provisions with respect to indemnification by such selling
Rights Holder of the underwriters of such offering.

                                       6
<PAGE>
7.       INFORMATION BY RIGHTS HOLDER

         Each Rights Holder including Registrable Shares in any registration
shall furnish to the Company such information regarding such Rights Holder as
the Company may reasonably request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement.

8.       "STAND-OFF" AGREEMENT

         Each Rights Holder, if requested by the Company and the managing
underwriter of a firmly underwritten offering by the Company of Common Stock or
other securities of the Company pursuant to a Registration Statement, shall
agree not to sell publicly or otherwise transfer, pledge or dispose of any
Registrable Shares or other securities of the Company held by such Rights Holder
for a specified period of time (not to exceed 120 days) following the effective
date of such Registration Statement.

9.       NO LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS

         Nothing contained in this Agreement shall prohibit the Company from
granting to any holder or prospective holder of any securities of the Company
registration rights which would allow such holder or prospective holder to
include securities of the Company in any Registration Statement filed by the
Company.

10.      RULE 144 REQUIREMENTS

         The Company agrees to:

            (a) comply with the requirements of Rule 144(c) under the Securities
Act with respect to current public information about the Company;

            (b) use its reasonable efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and

            (c) furnish to any holder of Registrable Shares upon request:

            (i) a written statement by the Company as to its compliance with the
      requirements of Rule 144(c) under the Securities Act, and the reporting
      requirements of the Securities Act and the Exchange Act (at any time after
      it has become subject to such reporting requirements);

            (ii) a copy of the most recent annual or quarterly report of the
      Company; and

            (iii) such other reports and documents of the Company as such holder
      may reasonably request to avail itself of any similar rule or regulation
      of the Commission allowing it to sell any such securities without
      registration.

                                       7
<PAGE>
11.      TERMINATION

         All of the Company's obligations to register Registrable Shares under
this Agreement shall terminate upon the last to occur of (i) the sale of all
Registrable Shares by the Rights Holders thereof pursuant to this Agreement or
(ii) the earliest date as of which all Registrable Shares have ceased being
Registrable Shares.

12.      NO TRANSFERS OF RIGHTS

This Agreement, and the rights and obligations of each Rights Holder hereunder,
may not be assigned (including assignment by law) by such Rights Holder without
the written consent of the Company.

13.      OTHER PUBLIC OFFERINGS

         This Agreement is not intended to and shall not preclude the Company
from listing its Common Stock on any reputable non-United States exchange.

14.      NOTICES

         Each notice relating to this Agreement shall be in writing and shall be
delivered in person, by overnight air carrier, by registered or certified mail
or by facsimile transmission, to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice, provided
that notices of a change of address shall be effective only upon receipt
thereof):

            (a)            IF TO COMPANY:

                           Quiksilver, Inc.
                           15202 Graham Street
                           Huntington Beach, CA  92649
                           Attention:  Charles S. Exon
                           Facsimile No.:  (714) 889-4250

                           WITH A COPY TO:

                           John D. Hudson
                           Hewitt & O'Neil LLP
                           19900 MacArthur Blvd., Suite 1050
                           Irvine, CA  92612
                           Facsimile No.:  (949) 798-0511

                                       8
<PAGE>
            (b) IF TO AN INVESTOR:

                The address set forth below such investor's signature hereon

         Unless otherwise specifically provided in this Agreement, a notice
shall be deemed to have been effectively given if mailed by registered or
certified mail to the proper address (with such notice to be effective upon the
earlier of actual receipt or five days after deposit in the mail), if given in
person or by overnight air carrier when delivered in person or by overnight air
carrier, if given by telecopy upon receipt if confirmed by return telecopy or
telephonic confirmation or otherwise; PROVIDED, HOWEVER, that no notice shall be
deemed received on a day that is not a business day in the jurisdiction in which
notices are to be addressed to such party. Any such notice shall not be
effective until the next business day in such jurisdiction.

15.      ENTIRE AGREEMENT

         This Agreement contains the entire agreement between the parties hereto
with respect to the transactions contemplated herein and supersedes all previous
oral and written and all contemporaneous oral negotiations, commitments and
understandings.

16.      AMENDMENTS AND WAIVERS

         Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the holders of a majority of the Registrable Shares.
No waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term, condition or provision.

17.      COUNTERPARTS

         This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same instrument.

18.      SEVERABILITY

         The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.

19.      GOVERNING LAW

         This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York without reference to conflict of laws
principles thereof.

20.      SECTION HEADINGS

         The heading of each section, subsection or other subdivision of this
Agreement is for reference purposes only and shall not limit or control the
meaning thereof.

                                       9
<PAGE>
         IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.

PARENT:

QUIKSILVER, INC., a Delaware corporation

By:         /s/ Charles S. Exon
          -----------------------------
Name:     Charles S. Exon
          -----------------------------
Title:    EVP, Business & Legal Affairs
          -----------------------------

Address:  15202 Graham Street
          Huntington Beach, CA  92649
Fax No:   1 714 889-4250

                                 RIGHTS HOLDERS:

<TABLE>
<S>                                                            <C>
DOVALI PTY LTD:                                                ALIMOC PTY LTD:

Signed for and on behalf of                                    Signed for and on behalf of
DOVALI PTY LTD                                                 ALIMOC PTY LTD
(ACN 005 796 556) by:                                          (ACN 005 793 466) by:

/s/ A.L. Green                                                 /s/ John Law
----------------------------------                             ----------------------------------
Director                                                       Director
Print Name:  A.L. Green                                        Print Name:  John Law
             ---------------------                                          ---------------------

/s/ B.A. Green                                                 /s/ Geraldine Law
----------------------------                                   ----------------------------------
Director                                                       Director
Print Name:  B.A. Green                                        Print Name:  Geraldine Law
             ---------------------                                          ---------------------

Address:  105 Strathmore Drive                                 Address:  Quiksilver Drive
          Jan Juc, Victoria  3228                                        Torquay, Victoria  3228
Fax No:   03-5261-6241                                         Fax No:   03 5261 5599
</TABLE>

                                       10
<PAGE>
<TABLE>
<S>                                                            <C>
HEENALU PTY LTD:                                               ECHO BEACH PTY LTD:

Signed for and on behalf of                                    Signed for and on behalf of
HEENALU PTY LTD                                                ECHO BEACH PTY LTD
(ACN 006 279 232) by:                                          (ACN 006 159 726) by:

/s/ John Law                                                   /s/ A.L. Green
----------------------------------                             ----------------------------------
Director                                                       Director
Print Name:   John Law                                         Print Name:   A.L. Green
             ---------------------                                          ---------------------

/s/ Geraldine Law                                              /s/ B.A. Green
----------------------------------                             ----------------------------------
Director                                                       Director
Print Name:   Geraldine Law                                    Print Name:   B.A. Green
             ---------------------                                          ---------------------

Address:  Quiksilver Drive                                     Address:  105 Strathmore Drive
          Torquay, Victoria  3228                                        Jan Juc, Victoria  3228
Fax No:   03 5261 6241                                         Fax No:   03 5261 6241

Signed by YASUO TOKITA in the presence of:

                                                               /s/ Yosuo Tokita
----------------------------------                             ----------------------------------
                                                               Yasuo Tokita
Print Name:                                                    Address:  8-4, 4-101 Light Town
             ---------------------                                       Chigasaki-City, Japan  253-0081
                                                               Fax No:   81 467 53 0860

Signed by JOHN ANDREW LAW in the presence of:

                                                               /s/ John Andrew Law
----------------------------------                             ----------------------------------
                                                               John Andrew Law
Print Name:                                                    Address:  151 Ocean Blvd.
             ---------------------                                       Jan Juc, Victoria  3228
                                                               Fax No:   03 5261 5599
</TABLE>

                                       11Exhibit 4.1

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

                                    CNS, INC.

                                       and

                        WELLS FARGO BANK MINNESOTA, N.A.
                                  Rights Agent

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

                      AMENDED AND RESTATED RIGHTS AGREEMENT

                          Dated as of December 20, 2002

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

                                       1
<PAGE>

                                TABLE OF CONTENTS

Section                                                                     Page
-------                                                                     ----

Section 1. Certain Definitions................................................6

Section 2. Appointment of the Rights Agent...................................13

Section 3. Issue of Rights Certificates......................................13

Section 4. Form of Rights Certificates.......................................15

Section 5. Countersignature and Registration.................................17

Section 6. Transfer, Split Up, Combination and Exchange of Rights
           Certificates; Mutilated, Destroyed, Lost or Stolen
           Rights Certificates...............................................18

Section 7. Exercise of Rights; Purchase Price; Expiration Date of
           Rights............................................................21

Section 8. Cancellation and Destruction of Rights Certificates...............25

Section 9. Reservation and Availability of Capital Stock.....................26

Section 10. Preferred Stock Record Date......................................28

Section 11. Adjustment of Purchase Price, Number and Kind of
            Stock or Number of Rights........................................29

Section 12. Certificate of Adjusted Purchase Price or Number of
            Stock............................................................42

Section 13. Consolidation, Merger, Statutory Share Exchange or
            Sale or Transfer of Assets, Cash Flow or Earning
            Power............................................................42

Section 14. Fractional Rights and Fractional Stock...........................46

                                       2
<PAGE>

Section 15. Rights of Action.................................................49

Section 16. Agreement of Rights Holders......................................50

Section 17. Rights Certificate Holder Not Deemed a Shareholder...............51

Section 18. Concerning the Rights Agent......................................51

Section 19. Merger or Consolidation or Change of Name of
            Rights Agent.....................................................52

Section 20. Duties of Rights Agent...........................................53

Section 21. Change of Rights Agent...........................................56

Section 22. Issuance of New Rights Certificates..............................58

Section 23. Redemption and Termination.......................................58

Section 24. Exchange.........................................................60

Section 25. Notice of Certain Events.........................................62

Section 26. Notices..........................................................64

Section 27. Supplements and Amendments.......................................64

Section 28. Successors.......................................................65

Section 29. Benefits of this Agreement.......................................65

Section 30. Administration of Agreement......................................66

Section 31. Severability.....................................................66

                                       3
<PAGE>

Section 32. Governing Law....................................................66

Section 33. Counterparts.....................................................67

Section 34. Descriptive Headings.............................................67

[Form of Rights Certificate].................................................74

................................................................................

                                       4
<PAGE>

                                RIGHTS AGREEMENT

         RIGHTS AGREEMENT, amended and restated as of December 20, 2002 (the
"Agreement"), between CNS, Inc., a Delaware corporation (the "Company"), and
Wells Fargo Bank Minnesota, N.A., a Minnesota corporation (the "Rights Agent").

                               W I T N E S S E T H

         WHEREAS, on July 20, 1995, the Board of Directors of the Company (the
"Board") authorized and declared a dividend distribution of one Right (as such
term is hereinafter defined) for each outstanding share of the Company's Common
Stock, par value $.01 per share (the "Common Stock") outstanding at the close of
business on August 3, 1995 (the "Record Date"), each Right representing the
right to purchase one one-hundredth of a share of Series A Junior Participating
Preferred Stock of the Company having the rights, powers and preferences set
forth in the form of Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock attached hereto as Exhibit A, upon
the terms and subject to the conditions hereinafter set forth (the "Rights"),
and further authorized the issuance of one Right with respect to each share of
Common Stock that would become outstanding after the close of business on the
Record Date in accordance with the terms and subject to the conditions
hereinafter set forth;

         WHEREAS, the Company and the Rights Agent entered into a Rights
Agreement on July 20, 1995, which permitted the amendment thereof;

         WHEREAS, the Board of Directors of the Company authorized the amendment
and restatement of the Rights Agreement on January 23, 2002;

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

                                       5
<PAGE>

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

                  (a) "Act" shall have the meaning set forth in Section 9(c)
         hereof.

                  (b) "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, without the prior approval of a
         majority of the members of the Board of Directors of the Company, shall
         be the Beneficial Owner (as such term is hereinafter defined) of voting
         securities having seventeen percent (17%) or more of the then voting
         power of the Company, but shall not include (i) the Company, (ii) any
         Subsidiary of the Company, (iii) any employee benefit plan of the
         Company or of any Subsidiary of the Company, or (iv) any entity
         organized, appointed or established by the Company for or pursuant to
         the terms of any such plan; provided, however, that if a Person is the
         Beneficial Owner at the close of business on the date of this Agreement
         of seventeen percent (17%) or more of the voting power of the Company,
         such Person shall not be deemed an Acquiring Person unless and until
         such Person acquires any additional Common Stock in any manner other
         than pursuant to a stock dividend, stock split, recapitalization or
         similar transaction that does not affect the percentage of outstanding
         Common Stock beneficially owned by such Person. Notwithstanding the
         foregoing, no Person shall become an "Acquiring Person" as the result
         of an acquisition of Common Stock by the Company which, by reducing the
         number of shares outstanding, increases the proportionate number of
         shares beneficially owned by such Person to seventeen percent (17%) or
         more of the then voting power of the Company then outstanding;
         provided, however, that if a Person shall become the

                                       6
<PAGE>

         Beneficial Owner of seventeen percent (17%) or more of the then voting
         power of the Company then outstanding by reason of shares purchased by
         the Company and shall, after such share purchases by the Company,
         become the Beneficial Owner of any additional Common Stock of the
         Company, then such Person shall be deemed to be an "Acquiring Person."
         Notwithstanding the foregoing, if the majority of the members of the
         Board of Directors of the Company then in office determines in good
         faith that a Person who would otherwise be an "Acquiring Person", as
         defined pursuant to the foregoing provisions of this paragraph (a), has
         become such inadvertently, without any intention of changing or
         influencing control of the Company, and such Person divests as promptly
         as practicable a sufficient number of shares of Common Stock so that
         such Person would no longer be an Acquiring Person, as defined pursuant
         to the foregoing provisions of this paragraph (a), then such Person
         shall not be deemed to be an "Acquiring Person" for any purposes of
         this Agreement.

                  (c) "Acquisition Event" shall mean the Flip-In Event or any
         event described in Section 13(a) hereof.

                  (d) "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.

                  (e) 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, including without limitation securities

                                       7
<PAGE>

                  with respect to which such Person or any such Person's
                  Affiliates or Associates has "beneficial ownership" pursuant
                  to Rule 13d-3 of the General Rules and Regulations under the
                  Exchange Act, as in effect on the date of this Agreement;

                           (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 the Rights at any
                  time prior to the occurrence of an Acquisition Event, but
                  thereafter including the Rights acquired from and after the
                  Distribution Date (as defined in Section 3(a) below) other
                  than pursuant to Section 3(a) below), 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

                                       8
<PAGE>

                  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 and other than
                  customary agreements with and between underwriters and selling
                  group members with respect to a bona fide public offering of
                  securities), for the purpose of acquiring, holding, voting
                  (except pursuant to a revocable proxy as described in clause
                  (B) of subparagraph (ii) of this paragraph (d)) or disposing
                  of any voting securities of the Company.

                           Notwithstanding the foregoing, a Person shall not be
                  deemed to be the "Beneficial Owner" of or to "beneficially
                  own" any securities that are issued, or proposed to be issued,
                  to such Person pursuant to any stock option plan or other
                  employee compensation plan or arrangement of the Company or
                  any of its Subsidiaries or any securities for which such
                  Person serves as trustee pursuant to an employee stock
                  ownership or similar plan of the Company or any of its
                  Subsidiaries. Furthermore, directors and officers of the
                  Company shall not be deemed to beneficially own each others
                  Common Stock solely due to their status as a director or
                  officer of the Company.

                           Notwithstanding anything in this definition of
                  Beneficial Ownership to the contrary, the phrase "then
                  outstanding," when used with reference to a Person's
                  Beneficial Ownership of securities of the Company, shall mean
                  the number of such securities then issued and outstanding
                  together with the number of such

                                       9
<PAGE>

                  securities not then actually issued and outstanding which such
                  Person would be deemed to own beneficially hereunder.

                  (f) "Board" shall have meaning set forth in the preamble.

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

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

                  (i) "Common Stock" shall mean the Common Stock, par value $.01
         per share, of the Company (as such term is defined in the introductory
         paragraphs above) or any other shares of capital stock of the Company
         into which the Common Stock shall be reclassified or changed, except
         that "Common Stock" when used with reference to any Person other than
         the Company shall mean the shares of capital stock of such Person (if
         such Person is a corporation) of any class or series, or units of
         equity interests in such Person (if such Person is not a corporation)
         of any class or series, the terms of which do not limit (as a fixed
         amount and not merely in proportional terms) the amount of dividends or
         income payable or distributable on such class or series or the amount
         of assets distributable on such class or series upon any voluntary or
         involuntary liquidation, dissolution or winding up of such Person and
         do not provide that such class or series is subject to redemption at
         the option of such Person, or any shares of capital stock or units of
         equity interests into which the foregoing shall be reclassified or
         changed; provided,

                                       10
<PAGE>

         however, that if at any time there shall be more than one such class or
         series of capital stock or equity interests of such Person, "Common
         Stock" of such Person shall include all such classes and series
         substantially in the proportion of the total number of shares or other
         units of each class or series outstanding at such time.

                  (j) "common stock equivalent" shall have the meaning set forth
         in Section 11(a)(iii) hereof.

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

                  (l) "current market price" shall have the meaning set forth in
         Section 11(d) hereof.

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

                  (n) "equivalent preferred stock" shall have the meaning set
         forth in Section 11(b) hereof.

                  (o) "Exchange Act" shall have the meaning set forth in Section
         1(c) hereof.

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

                  (q) "Expiration Date" and "Final Expiration Date" shall have
         the meanings set forth in Section 7 hereof.

                  (r) "Flip-In Event" shall have the meaning set forth in
         Section 11(a)(ii) hereof.

                  (s) "Nasdaq" shall have the meaning set forth in Section 11(d)
         hereof.

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

                                       11
<PAGE>

                  (u) "Preferred Stock" shall mean shares of Series A Junior
         Participating Preferred Stock, par value $.01 per share, of the
         Company.

                  (v) "Purchase Price" shall have the meaning set forth in
         Section 4(a) hereof.

                  (w) "Principal Party" shall have the meaning set forth in
         Section 13(b) hereof.

                  (x) "Record Date" shall have the meaning set forth in the
         preamble.

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

                  (z) "Rights" shall have the meaning set forth in the preamble.

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

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

                  (cc) "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.

                  (dd) "Subsidiary" shall mean, with reference to any other
         Person, any corporation of which a majority of any class of equity
         security is beneficially owned, directly or indirectly, by such other
         Person.

                  (ee) "Summary of Rights" shall have the meaning set forth in
         Section 3(b) hereof.

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

                  (gg) "Voting power of the Company" shall mean the collective
         voting power of the Common Stock of the Company.

         Any determination required by the definitions contained in this Section
1 shall be made by the Board of Directors of the Company in its good faith
judgment, which determination shall be final and binding on the Rights Agent.

                                       12
<PAGE>

         Section 2. Appointment of the 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 Agent shall
be as the Company shall determine.

         Section 3. Issue of Rights Certificates.

                  (a) Until the earlier of (i) the close of business on the
         tenth (10th) Business Day after the Stock Acquisition Date, or (ii) the
         close of business on the tenth (10th) Business Day (or such later date
         as may be determined by action of the majority of the members of the
         Board of Directors of the Company prior to such time as any Person
         becomes an Acquiring Person) 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 of any Subsidiary of the Company or any entity
         organized, appointed or established by the Company for or pursuant to
         the terms of any such plan), to commence, a tender or exchange offer
         which would result in such person becoming an Acquiring Person
         (including any such date which is after the date of this Agreement and
         prior to the issuance of the Rights) (the earliest of (i) and (ii)
         being herein referred to as the "Distribution Date"), (x) the Rights
         will be evidenced (subject to the provisions of paragraph (b) of this
         Section 3) by the certificates for Common Stock registered in the names
         of the holders of the Common Stock (which certificates for

                                       13
<PAGE>

         Common Stock shall be deemed also to be certificates for Rights) and
         not by separate certificates, and (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 (including a
         transfer to the Company). As soon as practicable after the Distribution
         Date, the Rights Agent will send by first-class, 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, one or more rights certificates, in
         substantially the form of Exhibit B hereto (the "Rights Certificates"),
         evidencing one Right for each share of Common Stock so held. As of and
         after the Distribution Date, the Rights will be evidenced solely by
         such Rights Certificates.

                  (b) On the Record Date, or as soon as practicable thereafter,
         the Company will send a copy of a Summary of the Shareholders' Rights
         Plan, in substantially the form attached hereto as Exhibit C (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
         Record Date, at the address of such holder shown on the records of the
         Company. With respect to certificates for the Common Stock outstanding
         as of the Record Date, until the Distribution Date, the Rights will be
         evidenced by such certificates for the Common Stock and the registered
         holders of the Common Stock shall also be the registered holders of the
         associated Rights. Until the earlier of the Distribution Date or the
         Expiration Date (as such term is defined in Section 7 hereof), the
         surrender for transfer of any of the certificates for the Common Stock
         outstanding on the Record Date shall also constitute the transfer of
         the Rights associated with the Common Stock represented by such
         certificate.

                                       14
<PAGE>

                  (c) Certificates for the Common Stock issued after the Record
         Date but prior to the earlier of the Distribution Date or the
         Expiration Date, shall be deemed also to be certificates for Rights,
         and shall bear the following legend:

                  This certificate also evidences and entitles the holder hereof
                  to certain Rights as set forth in the Rights Agreement between
                  CNS, Inc. and Wells Fargo Bank Minnesota, N.A. as amended and
                  restated as of December 20, 2002, as such may subsequently be
                  amended (the "Rights Agreement"), the terms of which are
                  hereby incorporated herein by reference and a copy of which is
                  on file at the principal offices of CNS, Inc. Under certain
                  circumstances, as set forth in the Rights Agreement, such
                  Rights will be evidenced by separate certificates and will no
                  longer be evidenced by this certificate. CNS, Inc. will mail
                  to the holder of this certificate a copy of the Rights
                  Agreement without charge promptly after receipt of a written
                  request therefor. Under certain circumstances, Rights issued
                  to, or held by, an Acquiring Person, or an Affiliate or
                  Associate thereof (as such terms are defined in the Rights
                  Agreement) and any subsequent holder of such Rights may become
                  null and void.

         With respect to such certificates containing the foregoing legend,
         until the earlier of (i) the Distribution Date or (ii) the Expiration
         Date, the Rights associated with the Common Stock represented by such
         certificates shall be evidenced by such certificates alone and the
         registered holders of Common Stock shall also be the registered holders
         of the associated Rights, 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 certificates. In
         the event the Company purchases or acquires any Common Stock after the
         Record Date but prior to the Distribution Date, any Rights associated
         with such Common Stock shall be deemed canceled and retired so that the
         Company shall not be entitled to exercise any Rights associated with
         the Common Stock which is no longer outstanding.

         Section 4. Form of Rights Certificates.

                                       15
<PAGE>

                  (a) The Rights Certificates (and the forms of election to
         exercise and of assignment to be printed on the reverse thereof) shall
         each be substantially in the form attached hereto as Exhibit B and may
         have such marks of identification or designation and such legends,
         summaries or endorsements printed thereon as the Company may deem
         appropriate and as are not inconsistent with the provisions of this
         Agreement, or as may be required to comply with any applicable law or
         with any rule or regulation made pursuant thereto or with any rule or
         regulation of 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 22 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
         Preferred Stock (or Common Stock, as the case may be) 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.

                  (b) Any Rights Certificate issued pursuant to Section 3(a) or
         Section 22 hereof that represents Rights beneficially owned by: (i) an
         Acquiring Person or any Associate or Affiliate of an Acquiring Person,
         (ii) a transferee of an Acquiring Person (or any such Associate or
         Affiliate) who becomes a transferee after the Acquiring Person becomes
         such, except a transferee purchasing from or through a nationally
         recognized broker-dealer where such transferee and such transferee's
         Associates and Affiliates do not collectively acquire, and will not
         have acquired during the preceding twenty (20) calendar days, in
         combination with the proposed transfer, an amount of Common Stock equal
         to more than one percent (1%) of the outstanding shares of Common
         Stock, and

                                       16
<PAGE>

         (iii) a transferee of an Acquiring Person (or any such Associate or
         Affiliate) who becomes a transferee prior to or concurrently with the
         Acquiring Person becoming such and receives such Rights pursuant to
         either (A) a transfer (whether or not for consideration) from the
         Acquiring Person to or on behalf of holders of equity interests in such
         Acquiring Person or to any Person with whom the Acquiring Person has
         any continuing agreement, arrangement or understanding regarding the
         transferred Rights or (B) a transfer which the majority of the members
         of the Board of Directors of the Company otherwise conclude in good
         faith is part of a plan, arrangement or understanding which has as a
         primary purpose or effect avoidance of Section 7(e) hereof, and any
         Rights Certificate issued pursuant to Section 6 or Section 11 hereof
         upon transfer, exchange, replacement or adjustment of any other Rights
         Certificate referred to in this sentence, shall contain (to the extent
         feasible and reasonably identifiable as such) the following legend:

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

         The provisions of Section 7(e) of the Rights Agreement shall be
operative whether or not the foregoing legend is contained on any such Rights
Certificate.

         Section 5. Countersignature and Registration.

                  (a) The Rights Certificates shall be executed on behalf of the
         Company by its Chief Executive Officer, its President, its Chief
         Financial Officer or any Vice President either manually or by facsimile
         signature, which shall be attested by the Secretary or any

                                       17
<PAGE>

         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.

                  (b) Following the Distribution Date, the Rights Agent will
         keep or cause to be kept, at its offices in South St. Paul, Minnesota
         or New York, New York, 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.

                  (a) Subject to the provisions of Section 14 hereof, at any
         time after the close of business on the Distribution Date, and at or
         prior to the close of business on the Expiration Date, any Rights
         Certificate or Certificates (other than Rights Certificates

                                       18
<PAGE>

         representing rights that have become null and void pursuant to Section
         11(a)(ii) hereof or that have been exchanged pursuant to Section 24
         hereof) may be transferred, split up, combined or exchanged for another
         Rights Certificate or Certificates, entitling the registered holder to
         purchase a like number of shares of Preferred Stock as the Rights
         Certificate or 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 office or offices of the Rights Agent
         designated for such purpose. Neither the Rights Agent nor the Company
         shall be obligated to take any action whatsoever with respect to the
         transfer of any such surrendered Rights Certificate or Certificates
         until the registered holder shall have completed and signed the
         certificate in the form of assignment on the reverse side of such
         Rights Certificate or Certificates and shall have provided 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. Thereupon the Rights Agent shall, subject to
         Section 4(b), Section 7(e), Section 14 and Section 24, 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.

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

                                       19
<PAGE>

         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 Certificate so lost, stolen, destroyed or mutilated.

                                       20
<PAGE>

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

                  (a) The registered holder of any Rights Certificate may
         exercise the Rights evidenced thereby (except as otherwise provided
         herein including without limitation, the restrictions on exercisability
         set forth in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof)
         in whole or in part at any time after the Distribution Date upon
         surrender of the Rights Certificate, with the form of election to
         exercise on the reverse side thereof duly executed, to the Rights Agent
         at the office or offices of the Rights Agent designated for such
         purpose, together with payment of the Purchase Price for each one
         one-hundredth of a share of Preferred Stock (or, if applicable, such
         other number of shares or other securities) as to which the Rights are
         exercised, at or prior to the earlier of (i) the close of business on
         July 20, 2005 (the "Final Expiration Date"), or (ii) the time at which
         the Rights are redeemed as provided in Section 23 hereof (such earlier
         time being herein referred to as the "Expiration Date"). Any Person who
         prior to the Distribution Date becomes a record holder of shares of
         Common Stock may exercise all of the rights of a registered holder of a
         Rights Certificate with respect to the Rights associated with such
         shares of Common Stock in accordance with and subject to the provisions
         of this Agreement, including the provisions of Section 7(e) hereof, as
         of the date such Person becomes a record holder of shares of Common
         Stock.

                  (b) The Purchase Price for each one one-hundredth of a share
         of Preferred Stock pursuant to the exercise of a Right shall initially
         be One Hundred Twenty Dollars ($120), and shall be subject to
         adjustment from time to time as provided in Section 11 hereof

                                       21
<PAGE>

         and shall be payable in lawful money of the United States of America in
         accordance with paragraph (c) below.

                 (c) Upon receipt of a Rights Certificate representing
         exercisable Rights, with the form of election to exercise duly
         executed, accompanied by payment of the Purchase Price for the shares
         to be purchased and an amount equal to any applicable transfer tax to
         be paid by the holder of such Right Certificate in accordance with
         Section 9, the Rights Agent shall thereupon promptly (i) (A)
         requisition from any transfer agent of the shares of Preferred Stock
         (or make available, if the Rights Agent is the transfer agent for such
         shares) certificates for the number of shares of Preferred Stock to be
         purchased and the Company hereby irrevocably authorizes its transfer
         agent to comply with all such requests, or (B) if the Company, in its
         sole discretion, shall have elected to deposit the shares of Preferred
         Stock issuable upon exercise of the Rights hereunder into a depositary,
         requisition from the depositary agent depositary receipts representing
         such number of one one-hundredth of a share of Preferred Stock as are
         to be purchased (in which case certificates for the shares of Preferred
         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 fractional shares in accordance with Section 14 hereof, (iii)
         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
         thereof, deliver such cash, if any, to or upon the order of the
         registered holder of such Rights Certificate. The payment of the

                                       22
<PAGE>

         Purchase Price (as such amount may be reduced pursuant to Section
         11(a)(iii) hereof) shall be made in cash or by certified check,
         cashier's check, bank draft or money order payable to the order of the
         Company, except that if so provided by the Board of Directors of the
         Company, the payment of the Purchase Price following the Flip-In Event
         and until the first occurrence of an event described in Section 13 may
         be made wholly or in part by delivery of a certificate or certificates
         (with appropriate stock powers executed in blank attached thereto)
         evidencing a number of shares of Common Stock of the Company equal to
         the then Purchase Price divided by the closing price (as determined
         pursuant to Section 11(d) hereof) per share of Common Stock on the
         Trading Day immediately preceding the date of such exercise. In the
         event that the Company is obligated to issue other securities of the
         Company, pay cash and/or distribute other property pursuant to Section
         11(a)(iii) hereof, the Company will make all arrangements necessary so
         that such other securities, cash, and/or property are available for
         distribution by the Rights Agent, if and when appropriate. In addition,
         in the case of an exercise of the Rights by a holder 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 and 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).

                  (d) 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

                                       23
<PAGE>

         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 Certificate or to his duly authorized
         assigns, subject to the provisions of Section 14 hereof.

                 (e) Notwithstanding anything in this Agreement to the
         contrary, from and after the occurrence of a Flip-In Event, any Rights
         beneficially owned by (a) an Acquiring Person or an Associate or
         Affiliate of an Acquiring Person, (b) except as provided below or in
         Section 4(b), a transferee of an Acquiring Person (or any such
         Associate or Affiliate) who becomes a transferee after the Acquiring
         Person becomes such, and (c) except as provided below, a transferee of
         an Acquiring Person (or any such Associate or Affiliate) who becomes a
         transferee prior to or concurrently with the Acquiring Person becoming
         such and receives such Rights pursuant to either (i) a transfer
         (whether or not for consideration) from the Acquiring Person to or on
         behalf of holders of equity interests in such Acquiring Person or to
         any Person with whom the Acquiring Person has any continuing agreement,
         arrangement or understanding regarding the transferred Rights or (ii) a
         transfer which the majority of the members of the Board of Directors of
         the Company otherwise conclude in good faith is part of a plan,
         arrangement or understanding which has as a primary purpose or effect
         avoidance of this Section 7(e), shall become null and void without any
         further action, and any holder of such Rights shall thereupon have no
         right to exercise such Rights under any provision of this Agreement. A
         majority of the members of the Board of Directors of the Company may in
         appropriate circumstances waive application of this Section 7(e) and
         the requirements of Section 4(b) to any transfer by an Acquiring Person
         in connection with a transfer or

                                       24
<PAGE>

         series of transfers which cause an Acquiring Person to become the
         Beneficial Owner of voting securities having less than seventeen
         percent (17%) of the voting power of the Company. The Company shall use
         all reasonable efforts to insure that the provisions of this Section
         7(e) hereof are complied with, but shall have no liability to any
         holder of Rights for the inability to make any determinations with
         respect to an Acquiring Person or any of their respective Affiliates,
         Associates or transferees hereunder.

                  (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 of any
         Rights Certificate upon the occurrence of any purported exercise as set
         forth in this Section 7 unless the certificate contained in the
         appropriate form of election to purchase set forth on the reverse side
         of the Rights Certificate surrendered for such exercise shall have been
         completed and signed 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) of such Rights
         Certificate or Affiliates or Associates thereof as the Company shall
         reasonably request.

         Section 8. Cancellation and Destruction of Rights Certificates. 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 canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights

                                       25
<PAGE>

Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company.

         Section 9. Reservation and Availability of Capital Stock.

                  (a) The Company covenants and agrees that it will cause to be
         reserved and kept available out of its authorized and unissued shares
         of Preferred Stock (and, following the occurrence of an Acquisition
         Event, Common Stock and/or other securities) or any authorized and
         issued shares of Preferred Stock (and following the occurrence of an
         Acquisition Event, Common Stock and/or other securities) held in its
         treasury, the number of shares of Preferred Stock (and, following the
         occurrence of an Acquisition Event, Common Stock and/or other
         securities) that, except as provided in Section 11(a)(iii) and subject
         to Section 7(e) hereof, will be sufficient to permit the exercise in
         full of all outstanding Rights.

                  (b) So long as the shares of Preferred Stock (and, following
         the occurrence of an Acquisition Event, Common Stock and/or 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 reserved for such issuance to be listed on such
         exchange upon official notice of issuance upon such exercise.

                  (c) The Company shall use its best efforts to (i) file, as
         soon as practicable following the Distribution Date, a registration
         statement under the Securities Act of 1933 (the "Act"), with respect to
         the Rights and the securities purchasable upon exercise of the Rights
         on an appropriate form, (ii) cause such registration statement to
         become effective as soon as practicable after such filing, and (iii)
         cause such registration statement to

                                       26
<PAGE>

         remain effective (with a prospectus at all times meeting the
         requirements of the Act) until the date of 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. The Company may
         temporarily suspend, for a period of time not to exceed ninety (90)
         calendar days, the exercisability of the Rights in order to prepare and
         file any required registration statement. Upon any such suspension, the
         Company shall issue a public announcement stating that the
         exercisability of the Rights has been temporarily suspended.
         Notwithstanding any provision of this Agreement to the contrary, the
         Rights shall not be exercisable in any jurisdiction unless the
         qualification in such jurisdiction shall have been obtained, the
         exercise thereof shall be permitted under applicable law and a
         registration statement shall have been declared effective.

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

                  (e) 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 and of any certificates for shares of Preferred
         Stock (or Common Stock and/or other securities, as the case may be)
         upon the exercise of Rights. The Company shall not, however, be
         required to pay any transfer tax which may be payable in respect of any
         transfer or delivery of Rights

                                       27
<PAGE>

         Certificates to a person other than, or the issuance or delivery of the
         shares of Preferred Stock (or Common Stock and/or other securities, as
         the case may be) in respect of a name other than that of, the
         registered holder of the Rights Certificates evidencing Rights
         surrendered for exercise or to issue or deliver any certificates for
         shares of Preferred Stock (or Common Stock and/or other securities, as
         the case may be) 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.

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

                                       28
<PAGE>

distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.

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

                  (a) (i) In the event the Company shall at any time after the
         date of this Agreement (A) declare a dividend on the Preferred Stock
         payable in shares of Preferred Stock, (B) subdivide the outstanding
         Preferred Stock, (C) combine the outstanding Preferred Stock into a
         smaller number of shares, or (D) issue any shares of its capital stock
         in a reclassification of the Preferred Stock (including any such
         reclassification in connection with a consolidation or merger in which
         the Company is the continuing or surviving corporation), except as
         otherwise provided in this Section 11(a) and in Section 7(e) hereof,
         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 Preferred Stock
         or capital stock, as the case may be, issuable on such date, shall be
         proportionately adjusted so that the holder of any Right exercised
         after such time shall be entitled to receive, upon payment of the
         Purchase Price then in effect, the aggregate number and kind of shares
         of Preferred Stock or capital stock, as the case may be, which, if such
         Right had been exercised immediately prior to such date and at a time
         when the Preferred Stock transfer books of the Company were open, such
         holder would have owned upon such

                                       29
<PAGE>

         exercise and been entitled to receive by virtue of such dividend,
         subdivision, combination or reclassification; provided, however, that
         in no event shall the consideration to be paid upon the exercise of one
         Right be less than the aggregate par value of the shares of capital
         stock of the Company issuable upon exercise of one Right. 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) Subject to Section 24 of this Agreement, at the close of
         business on the tenth (10th) Business Day after the Stock Acquisition
         Date (the "Flip-In Event"), proper provision shall be made so that each
         holder of a Right, except as provided below and in Section 7(e) hereof,
         shall thereafter have a right to receive, upon exercise thereof at the
         then current Purchase Price in accordance with the terms of this
         Agreement, in lieu of shares of Preferred Stock, such number of shares
         of Common Stock of the Company as shall equal the result obtained by
         (x) multiplying the then current Purchase Price by the then number of
         one one-hundredths of a share of Preferred Stock for which a Right is
         then exercisable and dividing that product by (y) fifty percent (50%)
         of the current market price (determined pursuant to Section 11(d)
         hereof) per share of Common Stock on the date on which the first of the
         events listed above in this subparagraph (ii) occurs. In the event that
         any Person shall become an Acquiring Person and the Rights shall then
         be outstanding, the Company shall not take any action which would
         eliminate or diminish the benefits intended to be afforded by the
         Rights.

                                       30
<PAGE>

                  (iii) In lieu of issuing shares of Common Stock in accordance
         with Section 11(a)(ii) hereof, the Company may, if the majority of the
         Board of Directors of the Company then in office determine that such
         action is necessary or appropriate and not contrary to the interests of
         holders of Rights, elect to issue or pay, upon the exercise of the
         Rights, cash, property, shares of Common Stock, other securities or any
         combination thereof having an aggregate value equal to the value of the
         shares of Common Stock which otherwise would have been issuable
         pursuant to Section 11(a)(ii), which value shall be determined by a
         nationally recognized investment banking firm selected by a majority of
         the members of the Board of Directors of the Company then in office.
         For purposes of the preceding sentence, the value of any preferred
         stock which a majority of the members of the Board of Directors of the
         Company determines to be a "common stock equivalent" shall be deemed to
         have the same value as the Common Stock. Any such election by the Board
         of Directors of the Company must be made and publicly announced within
         sixty (60) calendar days of the Flip-In Event. Following the occurrence
         of the Flip-In Event, a majority of the members of the Board of
         Directors of the Company then in office may suspend the exercisability
         of the Rights for a period of up to sixty (60) calendar days following
         the occurrence of such Flip-In Event to the extent that the Board of
         Directors of the Company has not determined whether to exercise their
         rights of election under this paragraph (a)(iii). In the event of any
         such suspension, the Company shall issue a public announcement stating
         that the exercisability of the Rights has been temporarily suspended.

                                       31
<PAGE>

                  (b) In case the Company shall fix a record date for the
         issuance of rights, options or warrants to all holders of Preferred
         Stock entitling them to subscribe for or purchase (for a period
         expiring within forty-five (45) calendar days after such record date)
         Preferred Stock (or shares having the same rights, privileges and
         preferences as the shares of Preferred Stock ("equivalent preferred
         stock")) or securities convertible into Preferred Stock or equivalent
         preferred stock at a price per share of Preferred Stock or per share of
         equivalent preferred stock (or having a conversion price per share, if
         a security convertible into Preferred Stock or equivalent preferred
         stock) less than the current market price (as determined pursuant to
         Section 11(d) hereof) per share of Preferred 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 Preferred Stock outstanding on such record
         date, plus the number of shares of Preferred Stock which the aggregate
         offering price of the total number of shares of Preferred Stock and/or
         equivalent preferred stock so to be offered (and/or the aggregate
         initial conversion price of the convertible securities so to be
         offered) would purchase at such current market price and the
         denominator of which shall be the number of shares of Preferred Stock
         outstanding on such record date, plus the number of additional shares
         of Preferred Stock and/or equivalent preferred stock to be offered for
         subscription or purchase (or into which the convertible securities so
         to be offered are initially convertible); provided, however, that in no
         event shall the consideration to be paid upon the exercise of one Right
         be less than the aggregate par value of the shares of capital stock of
         the Company issuable upon exercise of one Right. In case such
         subscription price may be paid in a consideration part

                                       32
<PAGE>

         or all of which shall be in a form other than cash, the value of such
         consideration shall be as determined in good faith by the Board, whose
         determination shall be described in a statement filed with the Rights
         Agent and shall be binding on the Rights Agent and the holders of the
         Rights. Shares of Preferred Stock owned by or held for the account of
         the Company shall not be deemed outstanding for the purpose of any such
         computation. Such adjustment shall be made successively whenever such a
         record date is fixed; and in the event that such rights or warrants are
         not so issued, the Purchase Price shall be adjusted to be the Purchase
         Price which would then be in effect if such record date had not been
         fixed.

                  (c) In case the Company shall fix a record date for a
         distribution to all holders of Preferred 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 Preferred Stock, but including any dividend payable
         in stock other than Preferred 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
         determined pursuant to Section 11(d) hereof) per one one-hundredth of a
         share of Preferred Stock on such record date, less the fair market
         value (as determined in good faith by the Board, whose determination
         shall be described in a statement filed with the Rights Agent) of the
         portion of the cash, assets or evidences of indebtedness so to be
         distributed or of such subscription rights or

                                       33
<PAGE>

         warrants applicable to a share of Preferred Stock and the denominator
         of which shall be such current market price (as determined pursuant to
         Section 11(d) hereof) per one one-hundredth of a share of Preferred
         Stock; provided, however, that in no event shall the consideration to
         be paid upon the exercise of one Right be less than the aggregate par
         value of the shares of capital stock of the Company to be issued upon
         exercise of one Right. 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 be adjusted to be
         the Purchase Price which would have been in effect if such record date
         had not been fixed.

                  (d) (i) For the purpose of any computation hereunder, 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 (as such term is hereinafter defined) immediately
                  prior to such date; provided, however, that in the event that
                  the current market price per share of the Common Stock is
                  determined during a period 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
                  securities convertible into shares of such Common Stock (other
                  than the Rights), or (B) any subdivision, combination or
                  reclassification of such Common Stock, and prior to the
                  expiration of the thirty (30) Trading Day period 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

                                       34
<PAGE>

                  trading. The closing price for each day shall be the last sale
                  price, regular way, or, in case no such sale takes place on
                  such day, the average of the closing bid and asked prices,
                  regular way, in either case as reported in the principal
                  consolidated transaction reporting system with respect to
                  securities listed or admitted to trading on the New York Stock
                  Exchange or, if the shares of Common Stock are not listed or
                  admitted to trading on the New York Stock Exchange, as
                  reported in the principal consolidated transaction reporting
                  system with respect to securities listed on the principal
                  national securities exchange on which the shares of Common
                  Stock are listed or admitted to trading or, if the shares of
                  Common Stock are not listed or admitted to trading on any
                  national securities exchange, the last quoted sale 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, if on any such date the shares of Common Stock are not
                  quoted by any such organization, the average of the closing
                  bid and asked prices as furnished by a professional market
                  maker making a market in the Common Stock selected by the
                  Board. If on any such date no market maker is making a market
                  in the Common Stock, the fair value of such shares on such
                  date as determined in good faith by the majority of the
                  members of the Board of Directors of the Company then in
                  office shall be used. The term "Trading Day" shall mean a day
                  on which the principal national securities exchange on which
                  the shares of Common Stock are listed or

                                       35
<PAGE>

                  admitted to trading is open for the transaction of business
                  or, if the shares of Common Stock are not listed or admitted
                  to trading on any national securities exchange, a Business
                  Day. 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 as determined in good faith by the Board
                  of Directors of the Company, whose determination shall be
                  described in a statement filed with the Rights Agent and shall
                  be conclusive for all purposes.

                           (ii) For the purpose of any computation hereunder,
                  the "current market price" per share of Preferred Stock shall
                  be determined in the same manner as set forth above for the
                  Common Stock in clause (i) of this Section 11(d) (other than
                  the last sentence thereof). If the current market price per
                  share of Preferred Stock cannot be determined in the manner
                  provided above, the "current market price" per share of
                  Preferred Stock shall be conclusively deemed to be an amount
                  equal to one hundred (100) times the current market price per
                  share of Common Stock, as appropriately adjusted for stock
                  splits, stock dividends or similar transactions after the date
                  hereof. If neither the Common Stock nor the Preferred Stock is
                  publicly held or so listed or traded, "current market price"
                  per share shall mean the fair value per share as determined in
                  good faith by the Board of Directors of the Company, whose
                  determination shall be described in a statement filed with the
                  Rights Agent and shall be conclusive for all purposes.

                  (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

                                       36
<PAGE>

         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 or
         one-millionth of a share of Preferred Stock, 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) three (3) years from the date of the transaction which
         mandates such adjustment, or (ii) the Expiration Date.

                  (f) If as a result of an adjustment made pursuant to Section
         11(a) or Section 13, the holder of any Right thereafter exercised shall
         become entitled to receive any shares of capital stock other than
         Preferred 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 contained in Section 11(a), (b), (c),
         (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7,
         9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply
         on like terms to any such other shares.

                  (g) All Rights originally issued by the Company subsequent to
         any adjustment made to the Purchase Price hereunder shall evidence the
         right to purchase, at the adjusted Purchase Price, the number of shares
         of Preferred Stock purchasable from time to time hereunder upon
         exercise of the Rights, all subject to further adjustment as provided
         herein.

                  (h) Unless the Company shall have exercised its election as
         provided in Section 11(i), upon each adjustment of the Purchase Price
         as a result of the calculations made in Sections 11(b) and (c), each
         Right outstanding immediately prior to the making of such adjustment
         shall thereafter evidence the right to purchase, at the adjusted
         Purchase Price,

                                       37
<PAGE>

         that number of one one-hundredth of a share of Preferred Stock
         (calculated to the nearest one-millionth) obtained by (i) multiplying
         (x) the number of one one-hundredth of a share covered by the 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 Preferred
         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 one one-hundredth of a share of Preferred
         Stock for which a Right was exercisable immediately prior to such
         adjustment. Each Right held of record prior to such adjustment of the
         number of Rights shall become that number of Rights (calculated to the
         nearest one ten-thousandth) obtained by dividing the Purchase Price in
         effect immediately prior to adjustment of the Purchase Price by the
         Purchase Price in effect immediately after adjustment of the Purchase
         Price. The Company shall make a public announcement of its election to
         adjust the number of Rights, indicating the record date for the
         adjustment, and, if known at the time, the amount of the adjustment to
         be made. This record date may be the date on which the Purchase Price
         is adjusted or any day thereafter, but, if the Rights Certificates have
         been issued, shall be at least ten (10) calendar 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

                                       38
<PAGE>

         record of Rights Certificates on such record date Rights Certificates
         evidencing, subject to Section 14 hereof, the additional Rights to
         which such holders shall be entitled as a result of such adjustment,
         or, at the option of the Company, shall cause to be distributed to such
         holders of record in substitution and replacement for the 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.

                  (j) Irrespective of any adjustment or change in the Purchase
         Price or the number of one one-hundredth of a share of Preferred 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.

                  (k) Before taking any action that would cause an adjustment
         reducing the Purchase Price below the then stated or par value, if any,
         of the shares of Preferred Stock issuable upon exercise of the Rights,
         the Company shall take any corporate action which may, in the opinion
         of its counsel, be necessary in order that the Company may validly and
         legally issue fully paid and non-assessable shares of Preferred Stock,
         Common Stock or other securities at such adjusted Purchase Price.

                                       39
<PAGE>

                  (l) In any case in which this Section 11 shall require that an
         adjustment in the Purchase Price be made effective as of a record date
         for a specified event, the Company may elect to defer until the
         occurrence of such event the issuance to the holder of any Right
         exercised after such record date the shares of Preferred Stock and
         other capital stock or securities of the Company, if any, issuable upon
         such exercise over and above the shares of Preferred 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.

                  (m) Anything in this Section 11 to the contrary
         notwithstanding, the Company shall be entitled to make such reductions
         in the Purchase Price, in addition to those adjustments expressly
         required by this Section 11, as and to the extent that in their sole
         discretion a majority of the members of the Board of Directors of the
         Company then in office shall determine to be advisable in order that
         any (i) consolidation or subdivision of the Preferred Stock, (ii)
         issuance wholly for cash of any shares of Preferred Stock at less than
         the current market price, (iii) issuance wholly for cash of shares of
         Preferred Stock or securities which by their terms are convertible into
         or exchangeable for shares of Preferred Stock, (iv) stock dividends or
         (v) issuance of rights, options or warrants referred to in this Section
         11, hereafter made by the Company to holders of its Preferred Stock
         shall not be taxable to such shareholders.

                  (n) The Company covenants and agrees that it shall not, at any
         time after the Distribution Date, (i) consolidate with, (ii) merge with
         or into, or (iii) sell or transfer (or

                                       40
<PAGE>

         permit any Subsidiary to sell or transfer), in one or more
         transactions, assets, cash flow or earning power aggregating more than
         fifty percent (50%) of the assets, cash flow or earning power of the
         Company and its Subsidiaries (taken as a whole) to, any other Person if
         at the time of or immediately after such consolidation, merger or sale
         there are any rights, warrants or other instruments or securities
         outstanding or agreement in effect which would substantially diminish
         or otherwise eliminate the benefits intended to be afforded by the
         Rights.

                  (o) The Company covenants and agrees that, after the Stock
         Acquisition Date, it will not, except as permitted by Sections 23, 24
         or 27 hereof, take (or permit any Subsidiary to take) any action the
         purpose or effect of which is to diminish substantially or otherwise
         eliminate the benefits intended to be afforded by the Rights.

                  (p) Anything in this Agreement to the contrary
         notwithstanding, in the event that the Company shall at any time after
         the date of this Agreement and prior to the Distribution Date (i)
         declare a dividend on the outstanding shares of Common Stock payable in
         shares of Common Stock, (ii) subdivide the outstanding Common Stock,
         (iii) combine the outstanding Common Stock into a smaller number of
         shares, or (iv) issue any shares of its capital stock in a
         reclassification of the outstanding Common Stock, the number of Rights
         associated with each share of Common Stock shall be proportionately
         adjusted so that the number of Rights thereafter associated with each
         share of Common Stock following any such event shall equal the result
         obtained by multiplying the number of Rights associated with each share
         of Common Stock immediately prior to such event by a fraction the
         numerator of which shall be the total number of shares of Common Stock
         outstanding immediately prior to the occurrence of the event and the
         denominator

                                       41
<PAGE>

         of which shall be the total number of shares of Common Stock
         outstanding immediately following the occurrence of such event.

                  (q) 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, including the rights represented by
         Section 13.

         Section 12. Certificate of Adjusted Purchase Price or Number of Stock.
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 Preferred Stock
and the Common Stock a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate 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, Statutory Share Exchange or Sale or
Transfer of Assets, Cash Flow or Earning Power.

                  (a) In the event that, following the Stock Acquisition Date,
         directly or indirectly, (w) the Company shall effect a statutory share
         exchange with the outstanding Common Stock of the Company being
         exchanged for stock or other securities of any other Person, money or
         other property, (x) the Company shall consolidate with, or merge with
         and into, any other Person, and the Company shall not be the continuing
         or surviving corporation of

                                       42
<PAGE>

         such consolidation or merger, (y) any Person shall consolidate with, or
         merge with or into, the Company, and the Company shall be the
         continuing or surviving corporation of such consolidation or merger
         and, in connection with such consolidation or merger, all or part of
         the outstanding shares of Common Stock shall be changed into or
         exchanged for stock or other securities of any other Person or cash or
         any other property, or (z) the Company shall sell or otherwise transfer
         (or one or more of its Subsidiaries shall sell or otherwise transfer),
         in one or more transactions, assets, cash flow or earning power
         aggregating more than fifty percent (50%) of the assets, cash flow or
         earning power of the Company and its Subsidiaries (taken as a whole) to
         any Person or Persons (other than the Company or any Subsidiary of the
         Company), then, and in each such case, proper provision shall be made
         so that: (i) each holder of a Right, shall thereafter 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 validly
         authorized and issued, fully paid, non-assessable and freely tradable
         shares of 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
         (1) multiplying the then current Purchase Price by the then number of
         one one-hundredth of a share of Preferred Stock for which a Right is
         then exercisable (without giving effect to the occurrence, if any, of
         any transaction described in Section 11(a)(ii) hereof) and (2) dividing
         that product by fifty percent (50%) of the current market price
         (determined pursuant to Section 11(d)(i) hereof) per share of the
         Common Stock of such Principal Party on the date of consummation of
         such consolidation, merger, share exchange, sale or transfer; (ii) such
         Principal Party shall thereafter be liable for, and shall assume, by
         virtue of such consolidation, merger, share exchange, sale or transfer,
         all the obligations and duties of the Company pursuant to this
         Agreement; (iii) the term "Company" shall thereafter be

                                       43
<PAGE>

         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 connection with the consummation of any such
         transaction as may be necessary to assure that the provisions hereof
         shall thereafter be applicable, as nearly as reasonably may be
         possible, 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 (w),
                  (x) or (y) of the first sentence 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,
                  share exchange or consolidation, and if no securities are so
                  issued, the Person that is the other party to such merger,
                  share exchange or consolidation; and

                           (ii) in the case of any transaction described in (z)
                  of the first sentence in Section 13(a), the Person that is the
                  party receiving the greatest portion of the assets, cash flow
                  or earning power transferred pursuant to such transaction or
                  transactions;

         provided, however, that in any such case, (1) if the Common Stock of
         such Person is not at such time and has not been continuously over the
         preceding twelve (12) month period registered under Section 12 of the
         Exchange Act, and such Person is a direct or indirect Subsidiary of
         another Person the Common Stock of which is and has been so registered,
         "Principal Party" shall refer to such other Person; (2) in case such
         Person is a Subsidiary, directly or indirectly, of more than one
         Person, the Common Stocks of two or more of

                                       44
<PAGE>

         which are and have been so registered, "Principal Party" shall refer to
         whichever of such Persons is the issuer of the Common Stock having the
         greatest aggregate market value; and (3) in case such Person is owned,
         directly or indirectly, by a joint venture formed by two or more
         Persons that are not owned, directly or indirectly, by the same Person,
         the rules set forth in (1) and (2) above shall apply to each of the
         chains of ownership having an interest in such joint venture as if such
         party were a "Subsidiary" of both or all of such joint venturers 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 any such consolidation,
         merger, sale or transfer unless the Principal Party shall have a
         sufficient number of authorized shares of its common stock which have
         not been issued or reserved for issuance to permit the exercise in full
         of the Rights in accordance with this Section 13 and unless prior
         thereto the Company and such Principal Party 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 or sale of assets mentioned in paragraph (a) of
         this Section 13, the Principal Party 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, and will use its best efforts to cause such registration
                  statement to (A) become effective as soon as practicable after
                  such filing and (B) remain

                                       45
<PAGE>

                  effective (with a prospectus at all times meeting the
                  requirements of the Act) until the Expiration Date;

                           (ii) take all other actions as may be necessary to
                  enable the Principal Party to issue the securities upon
                  exercise of the Rights , including but not limited to the
                  registration or qualification of such securities under all
                  requisite securities laws of jurisdictions of the various
                  states and the listing of such securities on such exchanges
                  and trading markets as may be necessary or appropriate; and

                           (iii) will 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.

         The Company shall not enter into any transaction of the kind referred
         to in this Section 13 if at the time of such transaction there are any
         rights, warrants, instruments or securities outstanding or any
         agreements or arrangements which, as a result of the consummation of
         such transaction, would eliminate or substantially diminish the
         benefits intended to be afforded by the Rights. The provisions of this
         Section 13 shall similarly apply to successive mergers or
         consolidations or sales or share exchanges or other transfers. The
         rights under this Section 13 shall be in addition to the rights to
         exercise Rights and adjustments under Section 11(a)(ii) and shall
         survive any exercise thereof.

         Section 14. Fractional Rights and Fractional Stock.

                  (a) The Company shall not be required to issue fractions of
         Rights, except prior to the Distribution Date as provided in Section
         11(p) hereof, 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

                                       46
<PAGE>

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

                  (b) The Company shall not be required to issue fractions of
         shares of Preferred Stock (other than fractions which are integral
         multiples of one one-hundredth of a share of Preferred Stock) upon
         exercise of the Rights or to distribute certificates which

                                       47
<PAGE>

         evidence fractional shares of Preferred Stock (other than fractions
         which are integral multiples of one one-hundredth of a share of
         Preferred Stock). Fractions of shares of Preferred Stock in integral
         multiples of one one-hundredth of a share of Preferred Stock may, at
         the election of the Company, be evidenced by depositary receipts,
         pursuant to an appropriate agreement between the Company and a
         depositary selected by it; provided, that such agreement shall provide
         that the holders of such depositary receipts shall have all the rights,
         privileges and preferences to which they are entitled as beneficial
         owners of the shares of Preferred Stock represented by such depositary
         receipts. In lieu of fractional shares of Preferred Stock that are not
         integral multiples of one one-hundredth of a share of Preferred Stock,
         the Company may pay to the registered holders of Rights Certificates at
         the time such Rights are exercised as herein provided an amount in cash
         equal to the same fraction of the current market value of one
         one-hundredth of a share of Preferred Stock. For purposes of this
         Section 14(b), the current market value of one one-hundredth of a share
         of Preferred Stock shall be one one-hundredth of the closing sale price
         of a share of Preferred Stock (as determined pursuant to of Section
         11(d)(ii) hereof) for the Trading Day immediately prior to the date of
         such exercise.

                  (c) Following the occurrence of an Acquisition Event, 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 Rights Certificates at the time such Rights are exercised as herein
         provided an amount in cash equal to the same fraction of the current
         market value of one (1) share of Common Stock. For purposes of this
         Section 14(c), the current market value of one (1) share of

                                       48
<PAGE>

         Common Stock shall be the closing sale price of a share of Common Stock
         (as determined pursuant to Section 11(d)(i) hereof) for the Trading Day
         immediately prior to the date of such exercise.

                  (d) 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, except as permitted by this
         Section 14.

         Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, 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.

                                       49
<PAGE>

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

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

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

                  (c) the Company and the Rights Agent may deem and treat the
         person in whose name 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 Certificate 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; and

                  (d) notwithstanding anything in this Agreement to the
         contrary, neither the Company nor the Rights Agent shall have any
         liability to any holder of a Right or other Person as a result of its
         inability to perform any of its obligations under this Agreement by
         reason of any preliminary or permanent injunction or other order,
         decree or ruling issued by a court of competent jurisdiction or by a
         governmental, regulatory or administrative agency or commission, or any
         statute, rule, regulation or executive order promulgated or enacted by
         any governmental authority, prohibiting or otherwise

                                       50
<PAGE>

         restraining performance of such obligation; provided, however, that the
         Company shall use reasonable efforts to have any such order, decree or
         ruling lifted or otherwise overturned as soon as possible.

         Section 17. Rights Certificate Holder Not Deemed a Shareholder. 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 Preferred
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (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 hereof.

         Section 18. Concerning the Rights Agent.

                  (a) The Company agrees to pay to the Rights Agent reasonable
         compensation for all services rendered by it hereunder and, from time
         to 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

                                       51
<PAGE>

         acceptance and administration of this Agreement, including the costs
         and expenses of defending against any claim of liability arising
         therefrom, directly or indirectly.

                  (b) The Rights Agent shall be protected and shall incur no
         liability for or in respect of any action taken, suffered or omitted by
         it in connection with its administration of this Agreement in reliance
         upon any Rights Certificate or certificate for Common Stock or for
         other securities of the Company, instrument of assignment or transfer,
         power of attorney, endorsement, affidavit, letter, notice, direction,
         consent, certificate, statement, or other paper or document believed by
         it to be genuine and to be signed, executed and, where necessary,
         verified or acknowledged, by the proper Person or Persons or otherwise
         upon the advice of counsel as set forth in Section 20 hereof.

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

                  (a) Any corporation into which the Rights Agent or any
         successor Rights Agent may be merged or with which it may be
         consolidated, or any corporation resulting from any merger or
         consolidation to which the Rights Agent or any successor Rights Agent
         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, however, 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 a predecessor Rights Agent and deliver such Rights
         Certificates so countersigned; and in

                                       52
<PAGE>

         case at that time any of the Rights Certificates shall not have been
         countersigned, 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.

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

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

                  (a) The Rights Agent may consult with legal counsel 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 and the determination of "current market

                                       53
<PAGE>

         price") 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 Chief Executive Officer, the President, the Chief
         Financial Officer or any Vice President, 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 or be required to verify the same (except
         as to its countersignature on such Rights Certificates), 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 or 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

                                       54
<PAGE>

         such adjustment (except with respect to the exercise of Rights
         evidenced by Right Certificates after actual notice of any such
         adjustment); 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 Preferred Stock to be issued pursuant to
         this Agreement or any Rights Certificate or as to whether any shares of
         Common Stock or Preferred Stock will, when so issued, be validly
         authorized and issued, fully paid and nonassessable.

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

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

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

                                       55
<PAGE>

         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, or omission,
         default, neglect or misconduct of any such attorneys or agents or for
         any loss to the Company resulting from any such act, or omission,
         default, neglect or misconduct; provided, however, 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.

         Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) calendar days' notice in writing mailed to the Company, and to
each transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) calendar days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the

                                       56
<PAGE>

Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty (30) calendar days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or of the States of Minnesota
or New York (or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the States
of Minnesota or New York), in good standing, having a principal office in the
States of Minnesota or New York, 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 or (b) an Affiliate
controlled by a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and the
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided

                                       57
<PAGE>

for in this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.

         Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by the Board 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. In addition, the Company may,
if deemed necessary or appropriate by the Board, issue Rights Certificates in
connection with the sale of shares of Common Stock following the Distribution
Date.

         Section 23. Redemption and Termination.

                           (a) (i) By a decision of a majority of the members of
                  the Board of Directors of the Company, the Board may, at its
                  option, at any time prior to the close of business on the
                  earlier of (i) the Flip-In Event, or (ii) the Final Expiration
                  Date, redeem all but not less than all the then outstanding
                  Rights at a redemption price of $.001 per Right, appropriately
                  adjusted to reflect any stock split, stock dividend or similar
                  transaction occurring after the date hereof (such redemption
                  price being hereinafter referred to as the "Redemption
                  Price"). The redemption of the Rights by the Board may be made
                  effective at such time, on such basis and with such conditions
                  as the Board in its sole discretion may establish.

                           (ii) In addition, the majority of the members of the
                  Board of Directors of the Company may redeem all but not less
                  than all of the then outstanding Rights

                                       58
<PAGE>

                  at the Redemption Price following the occurrence of a Stock
                  Acquisition Date but prior to any event described in Section
                  13(a) either (x) if each of the following shall have occurred
                  and remain in effect: (1) a Person who is an Acquiring Person
                  shall have transferred or otherwise disposed of a number of
                  shares of Common Stock in a manner satisfactory to the Board
                  of Directors of the Company such that such Person is
                  thereafter a Beneficial Owner of voting securities having less
                  than seventeen percent (17%) of the voting power of the
                  Company, and (2) there is no other Person, immediately
                  following the occurrence of the event described in clause (1),
                  who is an Acquiring Person, or (y) in connection with any
                  transaction not involving an Acquiring Person or an Affiliate
                  or Associate of an Acquiring Person.

                  (b) In the case of a redemption permitted under Section
         23(a)(i), immediately upon the action of the Board of Directors of the
         Company ordering the redemption of the Rights, evidence of which shall
         have been filed with the Rights Agent 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 23(a)(ii), evidence of which shall have been filed
         with the Rights Agent, the right to exercise the Rights will terminate
         and represent only the right to receive the Redemption Price only after
         ten (10) Business Days following the giving of notice of such
         redemption to the holders of such Rights. Within ten (10) Business Days
         after the action of the Board of Directors of the Company, ordering any
         such redemption of the Rights, the Company shall give notice of such
         redemption to the Rights Agent and the holders of the then outstanding
         Rights by mailing

                                       59
<PAGE>

         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.

         Section 24. Exchange.

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

                  (b) Immediately upon the action of the Board of Directors of
         the Company ordering the exchange of any Rights pursuant to paragraph
         (a) of this Section 24 and without any further action and without any
         notice, the right to exercise such Rights shall

                                       60
<PAGE>

         terminate and the only right thereafter of a holder of such Rights
         shall be to receive that number of shares of Common Stock equal to the
         number of such Rights held by such holder multiplied by the Exchange
         Ratio. The Company shall promptly give public notice of any such
         exchange; provided, however, that the failure to give, or any defect
         in, such notice shall not affect the validity of such exchange. The
         Company promptly shall mail a notice of any such exchange to all of the
         holders of such Rights at their last addresses as they appear upon the
         registry books of the Rights Agent. Any notice which is mailed in the
         manner herein provided shall be deemed given, whether or not the holder
         receives the notice. Each such notice of exchange shall state the
         method by which the exchange of the Common Stock for Rights will be
         effected and, in the event of any partial exchange, the number of
         Rights which will be exchanged. Any partial exchange shall be effected
         pro rata based on the number of Rights (other than Rights which have
         become null and void pursuant to the provisions of Section 11(a)(ii)
         hereof) held by each holder of Rights.

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

                                       61
<PAGE>

                  (d) In the event that there shall not be sufficient shares of
         Common Stock or Preferred Stock issued but not outstanding or
         authorized but unissued to permit any exchange of Rights as
         contemplated in accordance with this Section 24, the Company shall take
         all such action as may be necessary to authorize additional Common
         Stock or Preferred Stock for issuance upon exchange of the Rights.

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

         Section 25. Notice of Certain Events. In case the Company shall
propose, at any time after the Distribution Date, (a) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred 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 Preferred Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or shares of stock
of any class or any other securities, rights or options, or (c) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), or (d) to effect

                                       62
<PAGE>

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, cash flow 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, to the extent feasible and 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 Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (a) or (b) above at least twenty (20)
calendar days prior to the record date for determining holders of the shares of
Preferred Stock for purposes of such action, and in the case of any such other
action, at least twenty (20) calendar 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 Preferred Stock whichever shall be the earlier.

         In case any of the events set forth in Section 11(a)(ii) of this
Agreement shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and 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, and (ii) all
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.

                                       63
<PAGE>

         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:

                           CNS, Inc.
                           7615 Smetana Lane
                           Eden Prairie, Minnesota 55344
                           Attention:  Chief Executive Officer

Subject to the provisions of Section 21, 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:

                           Wells Fargo Bank Minnesota, N.A.
                           161 N. Concord Exchange
                           South St. Paul, Minnesota 55075
                           Attention:  Account Management

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.

         Section 27. Supplements and Amendments. The Board and the Rights Agent
shall from time to time, if the Board so directs, supplement or amend this
Agreement without the approval of any holders of Rights 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 any of the
provisions hereunder which the Board may deem necessary or desirable or (iv)
following the

                                       64
<PAGE>

Distribution Date, to change or supplement any of the provisions hereunder in
any manner which the Board may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights Certificates (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, however, that, following the Distribution Date, this Agreement shall
not be supplemented or amended to lengthen any time period relating to the
Rights, including, without limitation, the time period during which the Rights
may be redeemed, unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of and benefits to the holders of the Rights
(excluding in each case Rights held by an Acquiring Person or an Associate or
Affiliate of an Acquiring Person whose Rights have or may become null and void
pursuant to Section 7(e) hereof). 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. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

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

                                       65
<PAGE>

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, registered holders of the Common Stock).

         Section 30. Administration of 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 interpret the Agreement and to make all determinations deemed necessary
or advisable for the administration of this Agreement. All such acts,
interpretations and determinations done or made by the Board in good faith shall
be final, conclusive and binding on the Company, the Rights Agent and the
holders of the Rights. Accordingly, the Board of Directors of the Company shall
not be liable to the holders of Rights, Rights Certificates or any other party
for any determination made, action taken, or action omitted to be taken pursuant
to the terms of this Agreement, if such determination, action or omitted action
was made or taken in good faith.

         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 unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

         Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware

                                       66
<PAGE>

and for all purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts made and to be performed entirely
within such State.

         Section 33. 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 34. 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 as of the day and year first above written.

                                                CNS, INC.
Attest:

By:  /s/  Patrick Delaney                       By:  /s/  Marti Morfitt
    -----------------------------                   ----------------------------
  Its Secretary                                   Its Chief Executive Officer

                                                WELLS FARGO BANK MINNESOTA, N.A.

Attest:

By:  /s/  Katherine M. Johnson                  By:  /s/  Cindy Gesme
    -----------------------------                   ----------------------------
  Its:  Assistant Vice President                  Its Account Manager/Officer

                                       67
<PAGE>

                                                                       Exhibit A

                                     FORM OF
               CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
                OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

                                       of

                                    CNS, INC.

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

         We, Daniel E. Cohen, Chief Executive Officer, and Frederick T. Strobl,
Secretary, of CNS, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 103 thereof, DO HEREBY CERTIFY:

         That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the said Corporation, the said Board of
Directors on July 20, 1995 adopted the following resolution creating a series of
One Million (1,000,000) shares of preferred stock designated as Series A Junior
Participating Preferred Stock:

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

     Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock," par value $.01
per share, and the number of shares constituting such series shall be One
Million (1,000,000). Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided that no decrease shall reduce the
number of shares of Series A Junior Participating Preferred Stock to a number
less than that of the shares then outstanding plus the number of shares issuable
upon exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.

     Section 2.  Dividends and Distributions.

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

                                       68
<PAGE>

available for the purpose, quarterly dividends payable in cash on the last day
of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock, in an
amount per whole share (rounded to the nearest cent), subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Junior Participating
Preferred Stock. In the event the Corporation shall at any time declare or pay
any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision (by stock split or otherwise) or combination (by reverse stock split
or otherwise) or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the amount to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event
(and rounding the result to the nearest whole number); and provided further that
if at any time after August 3, 1995, the Corporation shall issue any shares of
its capital stock in a reclassification or change of the outstanding shares of
Common Stock (including any such reclassification or change in connection with a
merger in which the Corporation is the surviving corporation), then in such
event the amount to which holders of Series A Junior Participating Preferred
Stock are entitled shall be appropriately adjusted to reflect such
reclassification or change.

     (B) The Corporation shall declare a dividend or distribution on the Series
A Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).

     (C) The holders of shares of Series A Junior Participating Preferred Stock
shall not be entitled to receive any dividends or other distributions except as
provided herein.

     Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:

     (A) Each share of Series A Junior Participating Preferred Stock shall
entitle the holder thereof to one hundred (100) votes, subject to adjustment in
the manner set forth in Section 2(A), on all matters on which holders of the
Common Stock or shareholders generally are entitled to vote.

                                       69
<PAGE>

     (B) Except as otherwise provided herein or by applicable law, the holders
of shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of shareholders of the Corporation.

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

     Section 4.  Certain Restrictions.

         (A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:

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

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

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

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

                                       70
<PAGE>

         (B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.

         Section 5. Reacquired Stock. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall, upon their cancellation, become
authorized but unissued shares of preferred stock and may be reissued as part of
a new series of preferred stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein or as otherwise required by law.

         Section 6.  Liquidation, Dissolution or Winding Up.

         (A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Liquidation Preference"). Following the
payment of the full amount of the Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Liquidation Preference by
(ii) 100 (as appropriately adjusted as set forth in subparagraph C below to
reflect such events as stock splits, stock dividends and recapitalization with
respect to the Common Stock) (such number in clause (ii) being herein referred
to as the "Adjustment Number"). Following the payment of the full amount of the
Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Junior Preferred Stock and Common Stock, respectively,
holders of Series A Junior Participating Preferred Stock and holders of shares
of Common Stock shall proportionately share in the remaining assets in the ratio
of the Adjustment Number (per share of Preferred Stock) to 1 (per share of
Common Stock).

         (B) In the event there are not sufficient assets available to permit
payment in full of the Liquidation Preference and the liquidation preferences of
all other series of preferred stock, if any, which rank on a parity with the
Series A Junior Participating Preferred Stock, then such remaining assets shall
be distributed ratably to the holders of such parity shares in proportion to
their respective liquidation preferences. In the event there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.

         (C) In the event the Corporation shall at any time (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii)

                                       71
<PAGE>

combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

         Section 7. Consolidation, Merger etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Junior Participating Preferred
Stock shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

         Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.

         Section 9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's preferred stock which
may hereafter be authorized as to the payment of dividends and the distribution
of assets, unless the terms of any such series shall provide otherwise.

         Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of two-thirds (2/3) or more of the outstanding
shares of Series A Junior Participating Preferred Stock, voting separately as a
class.

         Section 11. Fractional Stock. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in liquidating distributions and to have the
benefit of all other rights of holders of Series A Junior Participating
Preferred Stock.

                                       72
<PAGE>

         IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 21st day
of July, 1995.

Attest:

-------------------------                          -----------------------------
Frederick T. Strobl,                               Daniel E. Cohen,
Secretary                                           Chief Executive Officer

                                       73
<PAGE>

                                                                       Exhibit B

         [Form of Rights Certificate]

Certificate No. R-________                                    _________   Rights

         NOT EXERCISABLE AFTER July 20, 2005, OR EARLIER IF REDEEMED BY THE
         COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
         COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
         AGREEMENT REFERRED TO HEREIN. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
         BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN
         THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
         BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE
         OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
         PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
         TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT
         CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
         IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.](1)

                               Rights Certificate

                                    CNS, INC.

         This certifies that _____________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of July 20, 1995, as amended and restated by that
certain Amended and Restated Rights Agreement dated as of December 20, 2002 (the
"Rights Agreement"), between CNS, Inc., a Delaware corporation (the "Company"),
and _______________________.

         (1)The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.

                                       74
<PAGE>

Wells Fargo Bank Minnesota, N.A. (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. (Minneapolis, Minnesota time) on July
20, 2005 at the office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one one-hundredth of a fully paid,
non-assessable share of Series A Junior Participating Preferred Stock (the
"Preferred Stock") of the Company, at a purchase price of One Hundred Twenty
Dollars ($120) per one one-hundredth of a share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the Form of Election
to Exercise 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 per share set forth above, are
the number and Purchase Price as of July 20, 1995, based on the Preferred Stock
as constituted at such date.

         If the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person or Associate or Affiliate of such
Acquiring Person except as provided in Section 4(b) of the Rights Agreement, or
(iii) under certain circumstances, a transferee of persons who became an
Acquiring Person or Affiliate or Associate of such Acquiring Person following
such transfer, such Rights shall become null and void upon the occurrence of a
Flip-In Event described in Section 11(a)(ii) of the Rights Agreement and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such event.

         As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities which may be purchased
upon the exercise of the

                                       75
<PAGE>

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, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under certain circumstances specified in such Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent or
the Company.

         This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged 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 Preferred 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.

                                       76
<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 $.001 per Right.

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

         No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
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 shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this 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.

                                       77
<PAGE>

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

Dated: ________________

ATTEST:                                              CNS, INC.

_______________________                              By_________________________
Secretary                                                Title:

Countersigned:

WELLS FARGO BANK MINNESOTA, N.A.

By_____________________
  Authorized Signature

                                       78
<PAGE>

                  [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.

         The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:

         (1)  this Rights Certificate

[ ] is

or

[ ] is 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 an Acquiring Person (as such
terms are defined in the Rights Agreement); and

                                       79
<PAGE>

         (2)  the undersigned

[ ] did

or

[ ] 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: _________________

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

Signature Medallion Guaranteed:

                                     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.

                                       80
<PAGE>

                          FORM OF ELECTION TO EXERCISE

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

To:  CNS, INC.:

         The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of:

__________________________________
__________________________________
__________________________________

  (Please print name and address)

__________________________________
  (Please insert social security
   or other identifying number)

         The Rights Certificate indicating the balance, if any, of such Rights
which may still be exercised pursuant to Section 11(a)(ii) of the Rights
Agreement shall be returned to the undersigned unless such person requests that
the Rights Certificate be registered in the name of and delivered to: (complete
only if Rights Certificate is to be registered in a name other than the
undersigned)

__________________________________
__________________________________
__________________________________

  (Please print name and address)

__________________________________
  (Please insert social security
   or other identifying number)

                                       81
<PAGE>

         The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:

         (1)  the Rights evidenced by this Rights Certificate

[ ] are

or

[ ] are not

being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement); and

         (2)  the undersigned

[ ] did

or

[ ] 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: _________________

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

Signature Medallion Guaranteed:

                                       82
<PAGE>

                                     NOTICE

         The signature to the foregoing Election to Exercise 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.

                                                                       EXHIBIT C

                      SUMMARY OF SHAREHOLDERS' RIGHTS PLAN

         On July 20, 1995 the Board of Directors of CNS, Inc. (the "Company")
adopted a shareholder rights plan by declaring a dividend of one Right for each
outstanding share of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), to the Company's shareholders of record at the close of
business on August 3, 1995 (the "Record Date"). Except as set forth below, each
Right entitles the registered holder to purchase from the Company one
one-hundredth (1/100) of a share of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Preferred Stock"), at a price of $120 per
one one-hundredth of a share (the "Purchase Price"). The terms of the Rights are
set forth in a Rights Agreement (the "Rights Agreement") as amended and restated
as of December 20, 2002 between the Company and Wells Fargo Bank Minnesota,
N.A., as Rights Agent.

         Initially, the Rights will be attached implicitly to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of ten (10)
Business Days following (i) a public announcement that, without the prior
consent of the Board of Directors, a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of voting securities having 17% or more of the voting power
of the Company (the "Stock Acquisition Date"), or (ii) the commencement of (or a
public announcement of an intention to make) a tender offer or exchange offer
which would result in any person or group and related persons having beneficial
ownership of voting securities having 17% or more of the voting power of the
Company (the earlier of such dates referred to in (i) and (ii) above being
called the "Distribution Date"), the Rights will be evidenced, with respect to
any of the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificates.

         The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with Common Stock certificates. From as
soon as practicable after the Record Date and until the Distribution Date (or
earlier redemption or expiration of the Rights), new Common Stock certificates
issued after the Record Date upon transfer or new issuance of the Common Stock
will contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock outstanding as of
the Record Date will also

                                       83
<PAGE>

constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. 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 are not exercisable until the Distribution Date. The Rights
will expire on July 20, 2005, unless earlier redeemed by the Company as
described below.

         In the event that any person becomes the beneficial owner of 17% or
more of the voting power of the Company, ten (10) days thereafter (the "Flip-In
Event") each holder of a Right will thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price of the Right, Common Stock
(or, in certain circumstances, a combination of cash, other property, Common
Stock or other securities) which has a value of two times the Purchase Price of
the Right (such right being called the "Flip-In Right"). In the event that the
Company is acquired in a merger or other business combination transaction where
the Company is not the surviving corporation or in the event that 50% or more of
its assets, cash flow or earning power is sold, proper provision shall be made
so that each holder of a Right will thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price of the Right, common
stock of the acquiring entity which has a value of two times the Purchase Price
of the Right (such right being called the "Flip-Over Right"). The holder of a
Right will continue to have the Flip-Over Right whether or not such holder
exercises the Flip-In Right. Upon the occurrence of the Flip-In Event, any
Rights that are or were at any time owned by an Acquiring Person shall become
null and void insofar as they relate to the Flip-In Right.

         For example, at a Purchase Price of $120 per Right, if any person
becomes the beneficial owner of 17% or more of the voting power of the Company,
ten (10) Business Days thereafter each Right other than a Right owned by such
17% beneficial owner would entitle its holder to purchase $240 worth of the
Company's Common Stock (or other consideration, as noted above) for $120.
Assuming that the Common Stock had a per share value of $24 at such time, the
holder of each Right would effectively be entitled to purchase 10 shares of
Common Stock for $120.

         Similarly, assuming, following the Stock Acquisition Date, the
occurrence of a business combination with another entity in which the Company's
Common Stock is converted or exchanged, or a sale of 50% or more of the
Company's assets, cash flow or earning power, each Right would entitle its
holder to purchase $240 worth of the acquiring entity's stock for $120.

         The Purchase Price payable, and the number of shares of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the Preferred Stock or (iii)
upon the distribution to holders of the

                                       84
<PAGE>

Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).

         At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 17% or more of the voting power of
the Company and prior to the acquisition by such person or group of 50% or more
of the voting power of the Company, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which have
become null and void), in whole or in part, at an exchange ratio of one share of
Common Stock, or one one-hundredth of a share of Preferred Stock (or of a share
of a class or series of the Company's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).

         With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the 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 Preferred
Stock on the last trading date prior to the date of exercise.

         At any time prior to the earlier to occur of (i) the tenth (10th)
Business Day after the Stock Acquisition Date, or (ii) the expiration of the
Rights, the Company may redeem the Rights in whole, but not in part, at a price
of $.001 per Right (the "Redemption Price"), which redemption shall be effective
at such time as the Board of Directors of the Company shall establish.
Additionally, the majority of the members of the Board of Directors of the
Company may, following the tenth (10th) Business Day after the Stock Acquisition
Date, redeem the then outstanding Rights in whole, but not in part, at the
Redemption Price provided that either (a) the Acquiring Person reduces his
beneficial ownership to less than 17% of the voting power of the Company in a
manner which is satisfactory to the majority of the members of the Board of
Directors of the Company and there are no other Acquiring Persons, or (b) 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. The redemption of Rights
described in the preceding sentence shall be effective only after ten (10)
Business Days prior notice. Upon the effective date of the redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.

         The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable. Each share of Preferred Stock will have a preferential quarterly
dividend in an amount equal to 100 times the dividend declared on each share of
Common Stock. In the event of liquidation, the holders of Preferred Stock will
receive a preferred liquidation payment of $100 per whole share of Preferred
Stock. Each whole share of Preferred Stock will have 100 votes, voting together
with the Common Stock. In the event of any merger, consolidation or other
transaction in which Common Stock are exchanged, each share of Preferred Stock
will be entitled to receive 100 times the amount and type of consideration
received per share of Common Stock. The rights of the Preferred Stock as to
dividends and liquidations, and in the event of mergers and consolidations, are
protected by customary anti-dilution provisions. Fractional shares of Preferred
Stock in integral multiples of one one-hundredth of a share of Preferred Stock
will be

                                       85
<PAGE>

issued unless the Company elects to distribute depositary receipts in lieu of
such fractional shares. In lieu of fractional shares other than fractions that
are multiples of one one-hundredth of a share, an adjustment in cash will be
made based on the market price of the Preferred Stock on the last trading date
prior to the date of exercise.

         Until a Right is exercised, it will not entitle the holder to any
rights as a shareholder of the Company (other than those as an existing
shareholder), including, without limitation, the right to vote or to receive
dividends.

         The terms of the Rights may be amended by the Board of Directors of the
Company (i) prior to the Distribution Date in any manner, and (ii) on or after
the Distribution Date to cure any ambiguity, to correct or supplement any
provision of the Rights Agreement which may be defective or inconsistent with
any other provisions, or in any manner not adversely affecting the interests of
the holders of the Rights.

         A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A/A. 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.

                                       86

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