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                                                                     EXHIBIT 4.1

                              AMENDED AND RESTATED
                            CLASS B WARRANT AGREEMENT

         WARRANT AGREEMENT dated as of September 27, 2002 by and between
Hypertension Diagnostics, Inc., a Minnesota corporation (the "Company"), and
Mellon Investor Services LLC, a New Jersey limited liability company, as Warrant
Agent (the "Warrant Agent").

         A. The Company has issued up to 2,752,192 Redeemable Class B Warrants
(the "Warrants") evidencing the right to purchase an aggregate of up to
2,752,192 authorized but previously unissued shares of Common Stock, $.01 par
value per share, of the Company (the "Common Stock"). The Warrants are governed
by that certain Warrant Agreement dated as of January 4, 2001 and as
subsequently amended, by and between the Company and U.S. Bank, N.A. (formerly
known as Firstar Bank, N.A.), as warrant agent (the "Class B Warrant
Agreement").

         B. The Company desires to engage the Warrant Agent to act on behalf of
the Company as warrant agent with respect to the Warrants in substitution of
U.S. Bank, N.A., and the Warrant Agent desires so to act, in connection with the
issuance, registration, transfer, exchange and exercise of the Warrants. The
Company and the Warrant Agent desire to amend and restate the Class B Warrant
Agreement to set forth the rights and obligations of each with respect to the
Warrant.

         NOW THEREFORE, it is agreed as follows:

                                   ARTICLE 1.
                     APPOINTMENT OF WARRANT AGENT; ISSUANCE,
                   FORM AND EXECUTION OF WARRANT CERTIFICATES

         Section 1.1 Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as Agent for the Company, and the Warrant Agent hereby
accepts the agency established herein and agrees to perform its agency duties in
accordance with the terms and conditions of this Warrant Agreement.

         Section 1.2 Warrant Certificates. The Company shall execute and deliver
to the Warrant Agent certificates which the Company has authorized to represent
the Warrants ("Warrant Certificates"). The Warrant Certificates shall be
substantially as set forth in Exhibit A hereto and may have such legends,
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate (but which do not affect the rights, immunities,
duties or liabilities of the Warrant Agent) and as are not inconsistent with the
provisions of this Warrant Agreement, or as may be required to comply with any
law or with any rule or regulation relating to listing of the Warrants on The
Nasdaq Stock Market ("Nasdaq"), including the

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SmallCap Market, or on any stock exchange or to conform to usage. The Warrant
Certificates shall be dated with the date of their issuance.

         Section 1.3 Execution of Warrant Certificates. The Warrant Certificates
shall be executed on behalf of the Company by a duly authorized officer of the
Company, either manually or by facsimile signature printed thereon. The Warrant
Certificates shall be manually countersigned by the Warrant Agent and shall not
be valid for any purpose unless so countersigned. Any Warrant Certificate may be
signed on behalf of the Company by the person who at the actual date of the
signing of such Warrant Certificate shall have been the proper officer of the
Company, although at the date of issuance of such Warrant Certificate any such
person has ceased to be such officer of the Company.

                                   ARTICLE II.
                              EXERCISE OF WARRANTS

         Section 2.1 Exercise. Any or all of the Warrants represented by each
Warrant Certificate may be exercised by the holder thereof on or before 5:00
p.m., Minneapolis time, on January 23, 2006, unless extended by the Company, by
surrender of the Warrant Certificate with the Purchase Form, which is printed on
the reverse thereof (or a reasonable facsimile thereof) duly executed by such
holder, to the Warrant Agent at its office designated for such purpose,
accompanied by payment, in cash or by certified or official bank check payable
to the order of the Company, in an amount equal to the product of the number of
shares of Common Stock issuable upon exercise of the Warrant represented by such
Warrant Certificate, as adjusted pursuant to the provisions of Article III
hereof, multiplied by the exercise price of $1.50, as adjusted pursuant to the
provisions of Article III hereof (such price as so adjusted from time to time
being herein called the "Exercise Price"), and such holder shall be entitled to
receive such number of fully paid and nonassessable shares of Common Stock, as
so adjusted, at the time of such exercise. The Warrant Agent shall have no duty
(i) to determine or calculate the Exercise Price or (ii) confirm or verify the
accuracy or correctness of the Exercise Price; the Warrant Agent's sole duty
under this paragraph being the acceptance of the certificates evidencing the
Warrants and taking possession for the benefit of the Company of the Exercise
Price delivered to it by a Warrant holder.

         Section 2.2 Time of Exercise. Each exercise of Warrants shall be deemed
to have been effective immediately prior to the close of business on the
business day on which the Warrant Certificate relating to such Warrants shall
have been surrendered to the Warrant Agent as provided in Section 2.1, and at
such time the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such exercise as
provided in Section 2.3, shall be deemed to have become the holder or holders of
record thereof.

         Section 2.3 Issuance of Shares of Common Stock; No Fractional Shares.
As soon as practicable after the exercise of any Warrant, and in any event
within ten (10) days after receipt by the Warrant Agent of the notice of
exercise under Section 2.1, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of

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and delivered to the holder thereof or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct,

                  (a) certificate or certificates for the number of fully paid
         and nonassessable shares of Common Stock to which such holder shall be
         entitled upon such exercise plus, in lieu of any fractional share to
         which such holder would otherwise be entitled, an amount in cash equal
         to such fraction multiplied by the then current value of a share of
         Common Stock, determined as follows:

                           (i) if the Common Stock is listed or admitted to
                  unlisted trading privileges on any single stock exchange, then
                  such current value shall be computed on the basis of the last
                  reported sale price of the Common Stock on such exchange on
                  the last business day prior to the date of the exercise of
                  such Warrant upon which a sale shall have been effected; or

                           (ii) if the Common Stock is not so listed or admitted
                  to unlisted trading privileges and bid and ask prices are
                  reported by Nasdaq, including the SmallCap Market system (or,
                  if not so quoted on Nasdaq, by the National Quotation Bureau,
                  Inc.), then the current value shall be the last reported sale
                  on the last business day prior to the date of the exercise of
                  such Warrant, or, in the event the last reported sale is
                  unavailable, the average of the closing bid and ask prices on
                  the last business day prior to the date of the exercise of
                  such Warrant as so reported; or

                           (iii) if the Common Stock is listed or admitted to
                  unlisted trading privileges on more than one stock exchange or
                  one or more stock exchanges and quoted on Nasdaq, then the
                  current value shall, if different as a result of calculation
                  under the applicable method(s) described above in this
                  Section, be deemed to be the higher number calculated in
                  connection therewith; or

                           (iv) if the Common Stock is not so listed or admitted
                  to unlisted trading privileges and bid and ask prices are not
                  so reported, then the current value shall be computed on the
                  basis of the book value of Common Stock as of the close of
                  business on the last day of the month immediately preceding
                  the date upon which such Warrant was exercised, as determined
                  by the Company,

                  and

                  (b) in case such exercise includes only part of the Warrants
         represented by any Warrant Certificate, a new Warrant Certificate or
         Warrant Certificates of like tenor, calling in the aggregate on the
         face or faces thereof for the number of shares of Common Stock equal
         (without giving effect to any adjustment therein) to the number of such
         shares called for on the face of such Warrant Certificate minus the
         number of such shares designated by the holder for such exercise as
         provided in Section 2.1. Warrants, represented by a properly assigned
         Warrant Certificate, may be exercised by a new holder without first
         having a new Warrant Certificate issued.

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         Section 2.4 Extension of Exercise Period; Change of Exercise Price. The
Company may, upon notice given to the Warrant Agent, and without the consent of
the holders of the Warrant Certificates, (i) reduce the Exercise Price during
all or any portion of the originally stated exercise period, or (ii) extend the
period over which the Warrants are exercisable beyond January 23, 2006 and
increase the Exercise Price for any period the Warrant exercise period is
extended. In the case of the extension of the exercise period or a change in the
Exercise Price, the Company must provide the Warrant Agent and the Warrant
holders of record notice of such extension of the exercise period, specifying,
as the case may be, the time to which such exercise period is extended, or
specifying the new Exercise Price and the periods for which such new Exercise
Price is in effect, a reasonable time prior to the date such extension or new
Exercise Price is to take effect, such reasonable time to be commercially
reasonable and consistent with applicable securities laws and regulations.

                                  ARTICLE III.
                             ANTIDILUTION PROVISIONS

         Section 3.1 Adjustment of Exercise Price.

                  (a) The Exercise Price shall be subject to the following
         adjustments. In the event that:

                           (i) any dividends on any class of stock of the
                  Company payable in Common Stock or securities convertible into
                  Common Stock shall be paid by the Company; or

                           (ii) the Company shall subdivide its then outstanding
                  shares of Common Stock into a greater number of shares; or

                           (iii) the Company shall combine outstanding shares of
                  Common Stock, by reclassification or otherwise;

         then, in any such event, the Exercise Price in effect immediately prior
         to such event shall (until adjusted again pursuant hereto) be adjusted
         immediately after such event to a price (calculated to the nearest full
         cent) determined by dividing (A) the number of shares of Common Stock
         outstanding immediately prior to such event, multiplied by the then
         existing Exercise Price, by (B) the total number of shares of Common
         Stock outstanding immediately after such event (including the maximum
         number of shares of Common Stock issuable in respect of any securities
         convertible into Common Stock), and the resulting quotient shall be the
         adjusted Exercise Price per share.

                  (b) No adjustment of the Exercise Price shall be made if the
         amount of such adjustments shall be less than one cent per share, but
         in such case any adjustment that would otherwise be required to be made
         shall be carried forward and shall be made at the

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         time and together with the next subsequent adjustment which, together
         with any adjustment or adjustments so carried forward, shall amount to
         not less than one cent per share.

         Section 3.2 Adjustment of Number of Shares Purchasable on Exercise of
Warrants. Upon each adjustment of the Exercise Price pursuant to Section 3.1,
the registered holder of each Warrant shall thereafter (until another such
adjustment) be entitled to purchase at the adjusted Exercise Price the number of
shares, calculated to the nearest full share, obtained by multiplying the number
of shares specified in such Warrant (as adjusted as a result of all adjustments
in the Exercise Price in effect prior to such adjustment) by the Exercise Price
in effect prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.

         Section 3.3 Notice as to Adjustment. Upon any adjustment of the
Exercise Price and an increase or decrease in the number of shares of Common
Stock purchasable upon the exercise of the Warrants, then, and in each such
case, the Company shall within ten (10) days after the effective date of such
adjustment give written notice thereof, by first class mail, postage prepaid,
addressed to each registered Warrant holder at the address of such Warrant
holder as shown on the books of the Company (and written notice thereof to the
Warrant Agent), which notice shall state the adjusted Exercise Price and the
increased or decreased number of shares purchasable upon the exercise of the
Warrants, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.

         Section 3.4 Effect of Reorganization, Reclassification, Merger, Etc. If
at any time while any Warrant is outstanding there should be any capital
reorganization or reclassification of the capital stock of the Company (other
than the issue of any shares of Common Stock in subdivision of outstanding
shares of Common Stock by reclassification or otherwise and other than a
combination of shares provided for in Section 3.1 hereof) or any consolidation
or merger of the Company with another corporation or any sale, conveyance, lease
or other transfer by the Company of all or substantially all of its assets to
any other corporation, the holder of any Warrant shall, during the remainder of
the period such Warrant is exercisable, be entitled to receive, upon payment of
the Exercise Price, the number of shares of stock or other securities or
property of the Company, or of the successor corporation resulting from such
consolidation or merger, or of the corporation to which the assets of the
Company has been sold, conveyed, leased or otherwise transferred, as the case
may be, to which the Common Stock (and any other securities and property) of the
Company, deliverable upon the exercise of such Warrant, would have been entitled
upon such capital reorganization, reclassification of capital stock,
consolidation, merger, sale, conveyance, lease or other transfer if such Warrant
had been exercised immediately prior to such capital reorganization,
reclassification of capital stock, consolidation merger, sale, conveyance, lease
or other transfer; and, in any such case, appropriate adjustment (as determined
by the Board of Directors of the Company) shall be made in the application of
the provisions set forth in this Warrant Agreement with respect to the rights
and interests thereafter of the Warrant holders to the end that the provisions
set forth in this Warrant Agreement (including the adjustment of the Exercise
Price and the number of shares issuable upon the exercise of the Warrants) shall
thereafter be applicable, as near as may be reasonably practicable, in relation
to any shares or other property thereafter deliverable upon the exercise of

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the Warrants as if the Warrants had been exercised immediately prior to such
capital reorganization, reclassification of capital stock, such consolidation,
merger, sale, conveyance, lease or other transfer and the Warrant holders had
carried out the terms of the exchange as provided for by such capital
reorganization, reclassification, consolidation or merger. The Company shall not
effect any such capital reorganization, consolidation, merger or transfer
unless, upon or prior to the consummation thereof, the successor corporation or
the corporation to which the property of the Company has been sold, conveyed,
leased or otherwise transferred shall assume by written instrument the
obligation to deliver to the holder of each Warrant such shares of stock,
securities, cash or property as in accordance with the foregoing provisions such
holder shall be entitled to purchase.

         Section 3.5 Prior Notice as to Certain Events. In case at any time:

                  (a) The Company shall pay any dividend upon its Common Stock
         payable in stock or make any distribution (other than cash dividends)
         to the holders of its Common Stock; or

                  (b) The Company shall offer for subscription pro rata to the
         holders of its Common Stock any additional shares of stock of any class
         or any other rights; or

                  (c) There shall be any capital reorganization or
         reclassification of the capital stock of the Company, or consolidation
         or merger of the Company with, or sale, conveyance, lease or other
         transfer of all or substantially all of its assets to, another
         corporation; or

                  (d) There shall be a voluntary or involuntary dissolution,
         liquidation or winding up of the Company;

then in any one or more of such cases, the Company shall give prior written
notice, by first class mail, postage prepaid, addressed to each registered
Warrant holder at the address of such Warrant holder as shown on the books of
the Company (and written notice thereof to the Warrant Agent), of the date on
which (i) the books of the Company shall close or a record shall be taken for
such stock dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up shall take place, as the case may be. Such notice
shall also specify the date as of which the holders of the Common Stock of
record shall participate in such dividend, distribution or subscription rights
or shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding up, as the case may be. Such
written notice shall be given at least twenty (20) days prior to the action in
question and not less than twenty (20) days prior to the record date or the date
on which the Company's transfer books are closed in respect thereto.

         Section 3.6 Certain Obligations of the Company. The Company will not,
by amendment of its articles of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid

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or seek to avoid the observance or performance of any of the terms of this
Warrant Agreement or the Warrant Certificate, but will at all times in good
faith assist in the carrying out of all such terms. Without limiting the
generality of the foregoing, the Company (a) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of such stock upon the exercise of all
Warrants from time to time outstanding, and (b) will not (i) transfer all or
substantially all of its properties and assets to any other person or entity, or
(ii) consolidate with or merge into any other entity where the Company is not
the continuing or surviving entity, or (iii) permit any other entity to
consolidate with or merge into the Company where the Company is the continuing
or surviving entity but, in connection with such consolidation or merger, the
Common Stock then issuable upon the exercise of the Warrants shall be changed
into or exchanged for shares or other securities or property of any other entity
unless, in any such case, the other entity acquiring such properties and assets,
continuing or surviving after such consolidation or merger or issuing or
distributing such shares or other securities or property, as the case may be,
shall expressly assume in writing and be bound by all the terms of this Warrant
Agreement and the Warrant Certificates.

         Section 3.7 Reservation and Listing of Common Stock. The Company will
at all times reserve and keep available, solely for issuance and delivery upon
the exercise of the Warrants, all shares of Common Stock from time to time
issuable upon such exercise. All such shares shall be duly and validly issued,
fully paid and nonassessable with no liability on the part of the holder
thereof. The Company, at its expense, will list on The Nasdaq SmallCap Market
(subject to official notice of issuance) and will maintain such listing of, the
shares of Common Stock from time to time issuable upon the exercise of the
Warrants.

         Section 3.8 Registration or Exemption of Common Stock. The Company will
use its best efforts (a) at all times the Warrants are exercisable to maintain
an effective registration statement under the Securities Act of 1933, as amended
(the "Act"), covering Common Stock issuable upon exercise of the Warrants, (b)
from time to time to amend or supplement the prospectus contained in such
registration statement to the extent necessary in order to comply with
applicable law, (c) to qualify for exemption from the registration requirements
of the Act the Common Stock issuable upon exercise of the Warrants, and (d) to
maintain exemptions or qualifications, in those jurisdictions in which the
original registration statement relating to the Warrants was initially
qualified, to permit the exercise of the Warrants and the issuance of the Common
Stock pursuant to such exercise. The Warrant Agent shall have no responsibility
or liability for the maintenance of such exemptions or qualifications or for
liabilities arising from the exercise or attempted exercise of Warrants in
jurisdictions where exemptions or qualifications have not been maintained or are
otherwise unavailable.

                                   ARTICLE IV.
                              REDEMPTION OF WARRANT

         Section 4.1 Redemption Price. The Warrants may be redeemed at the
option of the Company, anytime following a period of five (5) consecutive
trading days where the per share closing bid price of the Common Stock exceeds
$13.50, on notice as set forth in Section 4.2, and

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at a redemption price equal to $.01 per Warrant. For purposes of this Section,
the closing bid price of the Common Stock shall be determined by the closing bid
price as reported by The Nasdaq SmallCap Market so long as the Common Stock is
quoted on The Nasdaq SmallCap Market and, if the Common Stock is listed on a
stock exchange, shall be determined by the last reported sale price on the
primary exchange on which the Common Stock is traded.

         Section 4.2 Notice of Redemption. In the case of any redemption of
Warrants, the Company or, at its request, the Warrant Agent in the name of and
at the expense of the Company shall give notice of such redemption to the
holders of the Warrants to be redeemed as hereinafter provided in this Section
4.2. Notice of redemption to the holders of Warrants shall be given by mailing
by first-class mail a notice of such redemption at any time following the
five-day consecutive trading period referenced in Section 4.1 and not less than
30 days prior to the date fixed for redemption. Any notice which is given in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the holder receives the notice. In any case, failure duly to give
such notice, or any defect in such notice, to the holder of any Warrant
Certificate shall not affect the validity of the proceedings for the redemption
of Warrants represented by any other Warrant Certificate. Each such notice shall
specify the date fixed for redemption, the place of redemption and the
redemption price of $.01 at which each Warrant is to be redeemed, and shall
state that payment of the redemption price of the Warrants will be made on
surrender of the Warrants at such place of redemption, and that if not exercised
by the close of business on the date fixed for redemption the exercise rights of
the Warrants identified for redemption shall expire unless extended by the
Company. Such notice shall also state the current Exercise Price and the date on
which the right to exercise the Warrants will expire unless extended by the
Company.

         Section 4.3 Payment of Warrants on Redemption; Deposit of Redemption
Price. If notice of redemption shall have been given as provided in Section 4.2,
the redemption price of $.01 per Warrant shall, unless the Warrant is
theretofore exercised pursuant to the terms hereof, become due and payable on
the date and at the place stated in such notice. On and after such date of
redemption, provided that cash sufficient for the redemption thereof shall then
be deposited by the Company with the Warrant Agent for that purpose, the
exercise rights of the Warrants identified for redemption shall expire. On
presentation and surrender of Warrant Certificates at such place of payment in
such notice specified, the Warrants identified for redemption shall be paid and
redeemed at the redemption price of $.01 per Warrant. Prior to the date fixed
for redemption, the Company shall deposit with the Warrant Agent an amount of
money sufficient to pay the redemption price of all the Warrants identified for
redemption. Any monies which shall have been deposited with the Warrant Agent
for redemption of Warrants and which are not required for that purpose by reason
of exercise of Warrants shall be repaid to the Company upon delivery to the
Warrant Agent of evidence satisfactory to it of such exercise.

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                                   ARTICLE V.
                      CERTAIN OTHER PROVISIONS RELATING TO
                    RIGHTS OF HOLDERS OF WARRANT CERTIFICATES

         Section 5.1 No Rights of Shareholders. The Warrant Certificates shall
be issued in registered form only. No Warrant Certificate shall entitle the
holder thereof to any of the rights of a holder of shares of Common Stock of the
Company, including, without limitation, the right to vote, to receive dividends
and other distributions, or to receive any notice of, or to attend, meetings of
holders of Common Stock or any other proceedings of the Company.

         Section 5.2 Loss, Theft, Destruction or Mutilation of Warrant
Certificates. Upon receipt by the Warrant Agent of evidence reasonably
satisfactory to the Warrant Agent of the loss, theft, destruction or mutilation
of any Warrant Certificate, and (a) in the case of any such loss, theft, or
destruction, upon delivery to the Warrant Agent of an indemnity bond in form and
amount, and issued by a bonding company, satisfactory to the Company and to the
Warrant Agent, or (b) in the case of any such mutilation upon surrender to and
cancellation by the Warrant Agent of such Warrant Certificate, the Company at
its expense will execute and cause the Warrant Agent to countersign and deliver,
in lieu thereof, a new Warrant Certificate of like tenor.

         Section 5.3 Transfer Agent; Cancellation of Warrant Certificates;
Unexercised Warrants. Firstar Bank, N.A. (and any successor), as transfer agent
(the "Transfer Agent"), is hereby irrevocably authorized and directed at all
times to reserve such number of authorized and unissued shares of Common Stock
as shall be sufficient to permit the exercise in full of all Warrants from time
to time outstanding. The Company will keep a copy of this Agreement on file with
the Transfer Agent. The Warrant Agent, and any successor thereto, is hereby
irrevocably authorized to requisition from time to time from the Transfer Agent
certificates for shares of Common Stock required for exercise of Warrants. The
Company will supply the Transfer Agent with duly executed certificates for
shares of Common Stock for such purpose and will make available any cash
required in settlement of fractional share interests. All Warrant Certificates
surrendered upon the exercise or redemption of Warrants shall be canceled by the
Warrant Agent and shall thereafter be delivered to the Company; such canceled
Warrant Certificates, with the Purchase Form on the reverse thereof duly filled
in and signed, shall constitute conclusive evidence as between the parties
hereto of the numbers of shares of Common Stock which shall have been issued
upon exercises of Warrants. Promptly after the last day on which the Warrants
are exercisable (set forth in Section 2.1 above), the Warrant Agent shall
certify to the Company the aggregate number of Warrants then outstanding and
unexercised. No shares of Common Stock shall be subject to reservation with
respect to Warrants not exercised prior to the time and date identified in
Section 2.1 above as the last time and date at which Warrants may be exercised.

                                   ARTICLE VI.
                  TRANSFER AND EXCHANGE OF WARRANT CERTIFICATES

         Section 6.1 Warrant Register; Transfer or Exchange of Warrant
Certificates. The Warrant Agent shall cause to be kept at the office of the
Warrant Agent designated for such purpose a register (the "Warrant Register") in
which, subject to such reasonable regulations as the Company may prescribe,
provisions shall be made for the registration of transfers and

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exchanges of Warrant Certificates. Upon surrender for transfer or exchange of
any Warrant Certificates, properly endorsed, to the Warrant Agent, the Warrant
Agent at the Company's expense will issue and deliver to or upon the order of
the holder thereof a new Warrant Certificate or Warrant Certificates of like
tenor, in the name of such holder or as such holder (upon payment by such holder
of any applicable taxes or governmental charges) may direct, calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face of the Warrant Certificate so surrendered. Any Warrant
Certificate surrendered for transfer or exchange shall be canceled by the
Warrant Agent and shall thereafter be delivered to the Company. The Warrant
Agent shall have no duty or obligation to take any action under any Section of
this Agreement which requires the payment by a Warrant holder of applicable
taxes and governmental charges unless and until the Warrant Agent is satisfied
that all such taxes and/or charges have been paid.

         Section 6.2 Identity of Warrant holders. Until a Warrant Certificate is
transferred in the Warrant Register, the Company and the Warrant Agent may treat
the person in whose name the Warrant Certificate is registered as the absolute
owner thereof and of the Warrants represented thereby for all purposes,
notwithstanding any notice to the contrary, except that, if and when any Warrant
Certificate is properly assigned in blank, the Company and the Warrant Agent may
(but shall not be obligated to) treat the bearer thereof as the absolute owner
of the Warrant Certificate and of the Warrants represented thereby for all
purposes, notwithstanding any notice to the contrary.

                                  ARTICLE VII.
                          CONCERNING THE WARRANT AGENT

         Section 7.1 Taxes. The Company will, from time to time, promptly pay to
the Warrant Agent, or make provision satisfactory to the Warrant Agent for the
payment of, all taxes and charges that may be imposed by the United States or
any State upon the Company or the Warrant Agent upon the transfer or delivery of
shares of Common Stock upon the exercise of Warrants, but the Company shall not
be obligated to pay any tax imposed in connection with any transfer involved in
the delivery of a certificate for shares of Common Stock in any name other than
that of the registered holder of the Warrant Certificate surrendered in
connection with the purchase thereof.

         Section 7.2 Replacement of Warrant Agent in Certain Circumstances.

                  (a) The Warrant Agent or any successor Warrant Agent may
         resign its duties and be discharged from all further duties and
         liabilities hereunder after giving thirty (30) days' notice in writing
         to the Company, except that such shorter notice may be given as the
         Company shall, in writing, accept as sufficient. The Company may
         discharge the Warrant Agent at any time with or without reason,
         effective upon thirty (30) days written notice to the Warrant Agent or
         such shorter period as the Warrant Agent shall, in writing, accept as
         sufficient. If the office of Warrant Agent becomes vacant by
         resignation, discharge, incapacity to act or otherwise, the Company
         shall appoint in writing a new

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         Warrant Agent. If the Company shall fail to make such appointment
         within a period of thirty (30) days after it has been notified in
         writing of such resignation or incapacity by the resigning or
         incapacitated Warrant Agent or by the holder of a Warrant Certificate,
         then the holder of any Warrant Certificate may apply to any court of
         competent jurisdiction for the appointment of a new Warrant Agent. Any
         new Warrant Agent, whether appointed by the Company or by such a court,
         shall be a person authorized to do business in Minnesota and is subject
         to supervision or examination by Federal or State authority. Any new
         Warrant Agent appointed hereunder shall execute, acknowledge and
         deliver to the Company an instrument accepting such appointment
         hereunder and thereupon such new Warrant Agent without any further act
         or deed shall become vested with all the rights, powers, duties and
         responsibilities of the Warrant Agent hereunder with like effect as if
         it had been named as the Warrant Agent; but if for any reason it
         becomes necessary or expedient to have the former Warrant Agent execute
         and deliver any further assurance, conveyance, act or deed, the same
         shall be done and shall be legally and validly executed and delivered
         by the former Warrant Agent. Not later than the effective date of any
         such appointment, the Company shall file notice thereof with the former
         Warrant Agent. The Company shall promptly give notice of any such
         appointment to the holders of the Warrant Certificates by mail to their
         addresses as shown in the Warrant Register. Failure to file or give
         such notice, or any defect therein, shall not affect the legality or
         validity of the appointment of the successor Warrant Agent.

                  (b) Any person into which the Warrant Agent or any new Warrant
         Agent may be merged or converted or with which it may be consolidated
         or any person resulting from any merger, conversion or consolidation to
         which the Warrant Agent shall be a party shall be the successor Warrant
         Agent under this Warrant Agreement without any further act; provided
         that if such person would not be eligible for appointment as a
         successor Warrant Agent under the provisions of paragraph (a) of this
         Section 7.2, the Company shall forthwith appoint a new Warrant Agent in
         accordance with such provisions. Any such successor Warrant Agent may
         adopt the prior countersignature of any predecessor Warrant Agent and
         deliver Warrant Certificates countersigned and not delivered by such
         predecessor Warrant Agent or may countersign Warrant Certificates
         either in the name of any predecessor Warrant Agent or the name of the
         successor Warrant Agent.

         Section 7.3 Remuneration of Warrant Agent. The Company will pay the
Warrant Agent reasonable remuneration for its services as Warrant Agent
hereunder and will reimburse the Warrant Agent upon demand for all expenditures
that the Warrant Agent may reasonably incur in the preparation, administration,
delivery, execution and amendment of this Agreement and the performance of its
duties under this Agreement.

         Section 7.4 Further Assurances. The Company will perform, exercise,
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 Warrant Agent for the carrying out or performing
by the Warrant Agent of the provisions of this Warrant Agreement.

                                       11
<PAGE>

         Section 7.5 Limitations on Liabilities of the Warrant Agent.

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

                  (b) Whenever, in the performance of its duties under this
         Warrant Agreement, the Warrant Agent shall deem it necessary or
         desirable that any matter be proved or established, or that any
         instructions with respect to the performance of its duties hereunder be
         given, by the Company prior to taking, suffering or omitting any action
         hereunder, such matter (unless other evidence in respect thereof be
         herein specifically prescribed) may be deemed to be conclusively proved
         and established, or such instructions may be given, by a certificate or
         instrument signed by an officer of the Company and delivered to the
         Warrant Agent; and such certificate or instrument shall be full
         authorization and protection to the Warrant Agent for any action taken.
         Suffered or omitted by it under the provisions of this Warrant
         Agreement in reliance upon such certificate or instrument; but in its
         discretion the Warrant Agent may in lieu thereof accept other evidence
         of such matter or may require such further or additional evidence as it
         may deem reasonable.

                  (c) The Warrant Agent shall be liable hereunder only for its
         own gross negligence or willful misconduct (each as finally determined
         by a court of competent jurisdiction). The Warrant Agent shall act
         hereunder solely as agent, and its duties shall be determined solely by
         the provisions hereof. The Company agrees to indemnify the Warrant
         Agent and save it harmless against any and all losses, liabilities and
         expenses, including judgments, damages, fines, penalties, claims,
         demands, settlements, costs and reasonable counsel fees and expenses,
         for anything done or omitted by the Warrant Agent arising out of or in
         connection with this Agreement except as a result of its gross
         negligence or willful misconduct (each as finally determined by a court
         of competent jurisdiction). The costs and expenses incurred by the
         Warrant Agent in enforcing the right to indemnification shall be paid
         by the Company unless it is determined by a final order, judgment,
         decree or ruling of a court of competent jurisdiction that the Warrant
         Agent is not entitled to indemnification due to its own gross
         negligence or willful misconduct. In no event will the Warrant Agent be
         liable for special, indirect, incidental, punitive or consequential
         loss or damage of any kind whatsoever, even if the Warrant Agent has
         been advised of the possibility of such loss or damage. Any liability
         of the Warrant Agent under this Agreement to the Company will be
         limited to the amount of fees paid by the Company to the Warrant Agent.

                  (d) The Warrant Agent shall not be liable for or by reason of
         any of the statements of fact or recitals contained in this Warrant
         Agreement or in the Warrant Certificates (except its countersignature
         thereof) or be required to verify the same, but all such statements and
         recitals are and shall be deemed to have been made by the Company only.

                                       12
<PAGE>

                  (e) The Warrant Agent shall not be under any responsibility in
         respect to the validity or execution of any Warrant Certificate (except
         its countersignature thereof); nor shall it be responsible for any
         breach by the Company of any covenant or condition contained in this
         Warrant Agreement or in any Warrant Certificate; nor shall it be
         responsible for the making of any adjustment in the Exercise Price, or
         number of shares issuable upon exercise of the Warrant Certificates or
         responsible for the manner, method or amount of any such adjustment or
         the facts that would require 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 to be
         issued pursuant to this Warrant Agreement or any Warrant Certificate or
         as to whether any shares of Common Stock or other securities are or
         will be validly authorized and issued and fully paid and nonassessable.

                  (f) The Warrant Agent is hereby authorized and directed to
         accept instructions with respect to the performance of its duties
         hereunder from any one of the Chairman of the Board, the President, a
         Vice President, the Secretary or the Treasurer of the Company, and to
         apply to such officers for advice or instructions in connection with
         its duties, and such instructions shall be full authorization and
         protection to the Warrant Agent, and the Warrant Agent shall not be
         liable for any action taken, suffered or omitted to be taken by it in
         accordance with instructions of any such officer.

                  (g) The Warrant 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 non-employee agents,
         and the Warrant Agent shall not be answerable or accountable for any
         act, default, neglect or misconduct of any such attorneys or
         non-employee agents or for any loss to the Company resulting from any
         such act, default, neglect or misconduct, absent gross negligence or
         willful misconduct (each as finally determined by a court of competent
         jurisdiction) in the selection and continued employment thereof.

                  (h) No provision of this Agreement shall require the Warrant
         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 it believes that repayment of such funds or
         adequate indemnification against such risk or liability is not
         reasonably assured to it.

                  (i) The provisions of this Section 7.5 and Section 7.3 above
         shall survive the termination of this Agreement, the exercise or
         expiration of the Warrants and the resignation or removal of the
         Warrant Agent.

         Section 7.6 Amendment and Modification. The Warrant Agent may (but is
not required if the supplement or amendment changes the rights, immunities,
duties or liabilities of the Warrant Agent), without the consent or concurrence
of the holders of the Warrant Certificates, by supplemental agreement or
otherwise, join with the Company in making any

                                       13
<PAGE>

changes or corrections in this Warrant Agreement that they shall have been
advised by counsel (a) are required to cure any ambiguity or to correct any
defective or inconsistent provision or clerical omission or mistake or manifest
error herein contained, (b) add to the obligations of the Company in this
Warrant Agreement further obligations thereafter to be observed by it, or
surrender any right or power reserved to or conferred upon the Company in this
Warrant Agreement, or (c) do not or will not adversely affect, alter or change
the rights, privileges or immunities of the holders of Warrant Certificates not
provided for under this Warrant Agreement; provided, however, that any term of
this Warrant Agreement or any Warrant Certificate may be changed, waived,
discharged or terminated by an instrument in writing signed by each party
against which enforcement of such change, waiver, discharge or termination is
sought, or by which the same is to be performed or observed.

                                  ARTICLE VIII.
                                  OTHER MATTERS

         Section 8.1 Successors and Assigns. All the covenants and provisions of
this Warrant Agreement by or for the benefit of the Company or the Warrant Agent
shall bind and inure to the benefit of their respective successors and assigns.

         Section 8.2 Notices. Any notice or demand authorized by this Warrant
Agreement to be given or made by the Warrant Agent or by the holder of any
Warrant Certificate to or on the Company shall be sufficiently given or made if
sent by first class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Company with the Warrant Agent) or by
facsimile transmission as follows:

                  Attn:  President
                  Hypertension Diagnostics, Inc.
                  2915 Waters Road, Suite 108
                  Eagan, MN 55121-1562
                  Facsimile No.:  651-687-0485

                  With a copy to:

                  Girard P. Miller, Esq.
                  Lindquist & Vennum P.L.L.P.
                  4200 IDS Center
                  80 South Eighth Street
                  Minneapolis, MN 55402-2205
                  Facsimile No.:  612-371-3207

Any notice or demand authorized by this Warrant Agreement to be given or made by
the holder of any Warrant Certificate or by the Company to or on the Warrant
Agent shall be sufficiently given or made if sent by first class or registered
mail, postage prepaid, addressed (until another

                                       14
<PAGE>

address is filed in writing by the Warrant Agent with the Company) or by
facsimile transmission as follows:

                  Mellon Investor Services LLC
                  150 N Wacker Drive
                  Chicago, IL  60606
                  Attention: Relationship Manager
                  Facsimile No.:  312-704-7112

                  With a copy to:

                  Mellon Investor Services LLC
                  85 Challenger Road
                  Ridgefield Park, New Jersey  07660
                  Attention:  General Counsel
                  Facsimile No.:  201-296-4004

                                       15
<PAGE>

         Section 8.3 Governing Law. This Warrant Agreement and the Warrant
Certificates are being delivered in the State of Minnesota and shall be
construed and enforced in accordance with and governed by the laws of such
state; provided, however, that all provisions regarding the rights, immunities,
duties and liabilities of the Warrant Agent shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely within such State.

         Section 8.4 No Benefits Conferred. Nothing in this Warrant Agreement
expressed and nothing that may be implied from any of the provisions hereof is
intended, or shall be construed, to confer upon, or give to, any person or
corporation other than the Company, the Warrant Agent, and the holders of the
Warrant Certificates, any right, remedy or claim under or by reason of this
Warrant Agreement or of any covenant, condition, stipulation, promise or
agreement herein; and all covenants, conditions, stipulations, promises and
agreements in this Warrant Agreement contained shall be for the sole and
exclusive benefit of the Company, the Warrant Agent, their respective successors
and the holders of the Warrant Certificates.

         Section 8.5 Headings. The descriptive headings used in this Warrant
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, this Warrant Agreement has been duly executed by
the parties hereto as of the day and year first above written.

                                       HYPERTENSION DIAGNOSTICS, INC.

                                       By:  Greg H. Guettler
                                         --------------------------------
                                            Its President

                                       MELLON INVESTOR SERVICES LLC

                                       By:  Kenneth Franke
                                         --------------------------------
                                            Its Vice President

                                       16<PAGE>
                                                                     Exhibit 4.4

--------------------------------------------------------------------------------
                              AMENDED AND RESTATED

                                RIGHTS AGREEMENT

                          THE NEIMAN MARCUS GROUP, INC.

                                       and

                          MELLON INVESTOR SERVICES LLC

                                 as Rights Agent

                           Dated as of August 8, 2002
--------------------------------------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                               PAGE
<S>          <C>                                                                                               <C>
Section 1.   Certain Definitions..................................................................................3

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

Section 3.   Issue of Right Certificates.........................................................................14

Section 4.   Form of Right Certificates..........................................................................17

Section 5.   Countersignature and Registration...................................................................18

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

Section 7.   Exercise of Rights, Purchase Price; Expiration Date of Rights.......................................20

Section 8.   Cancellation and Destruction of Right Certificates..................................................22

Section 9.   Availability of Shares of Preferred Stock...........................................................22

Section 10.  Preferred Stock Record Date.........................................................................25

Section 11.  Adjustment of Purchase Price, Number of Shares and Number of Rights.................................25

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

Section 13.  Consolidation, Merger or Sale or Transfer of Assets or Earnings Power...............................43

Section 14.  Fractional Rights and Fractional Shares.............................................................49

Section 15.  Rights of Action....................................................................................51

Section 16.  Agreement of Right Holders..........................................................................52

Section 17.  Right Certificate Holder Not Deemed a Stockholder...................................................52

Section 18.  Concerning the Rights Agent.........................................................................53

Section 19.  Merger or Consolidation or Change of Name of Rights Agent...........................................54

Section 20.  Duties of Rights Agent..............................................................................55

Section 21.  Change of Rights Agent..............................................................................59

Section 22.  Issuance of New Right Certificates,.................................................................61

Section 23.  Redemption..........................................................................................61
</Table>

                                       i
<PAGE>

<Table>
<Caption>
                                                                                                               PAGE
<S>          <C>                                                                                               <C>
Section 24.   Exchange...........................................................................................62

Section 25.   Notice of Certain Events...........................................................................66

Section 26.   Notices............................................................................................67

Section 27.   Supplements and Amendments.........................................................................69

Section 28.   Successors.........................................................................................69

Section 29.   Benefits of this Agreement.........................................................................69

Section 30.   Severability.......................................................................................70

Section 31.   Governing Law......................................................................................70

Section 32.   Counterparts.......................................................................................70

Section 33.   Descriptive Headings...............................................................................71

Section 34.   Administration.....................................................................................71
</Table>

                                       ii
<PAGE>

                                RIGHTS AGREEMENT

                  Amended and Restated Rights Agreement (the "Agreement"), dated
as of August 8, 2002, between The Neiman Marcus Group, Inc., a Delaware
corporation (the "Company"), and Mellon Investor Services LLC, a New Jersey
limited liability company (the "Rights Agent").

                  The Board of Directors of the Company on October 6, 1999
(i)(A) authorized the issuance and declared a dividend of one preferred share
purchase right (a "Class A Right") for each share of Class A Common Stock (as
hereinafter defined) outstanding as of the close of business (as defined below)
on October 18, 1999 (the "Record Date"), each Class A Right representing the
right to purchase one one-thousandth (subject to adjustment) of a share of
Series A Preferred Stock (as hereinafter defined), upon the terms and subject to
the conditions herein set forth in a Rights Agreement, dated October 9, 1999,
between the Company and BankBoston, N.A., (the "Rights Agreement"), and (B)
further authorized and directed the issuance of one Class A Right (subject to
adjustment as provided herein) with respect to each share of Class A Common
Stock that shall become outstanding between the Record Date and the earliest of
the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are hereinafter defined); provided, however, that Class A Rights may
be issued with respect to shares of Class A Common Stock that shall become
outstanding after the Distribution Date and prior to the Redemption Date and the
Final Expiration Date in accordance with Section 22, (ii)(A) authorized the
issuance and declared a dividend of one preferred share purchase right (a "Class
B Right") for each share of Class B Common Stock (as hereinafter defined)
outstanding as of the close of business (as defined below) on the Record Date,
each Class B Right representing the right to purchase one one-thousandth
(subject to adjustment) of a share of Series B Preferred

<PAGE>
                                                                               2

Stock (as hereinafter defined), upon the terms and subject to the conditions set
forth in the Rights Agreement, and (B) further authorized and directed the
issuance of one Class B Right (subject to adjustment as provided herein) with
respect to each share of Class B Common Stock that shall become outstanding
between the Record Date and the earliest of the Distribution Date, the
Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined); provided, however, that Class B Rights may be issued with respect to
shares of Class B Common Stock that shall become outstanding after the
Distribution Date and prior to the Redemption Date and the Final Expiration Date
in accordance with Section 22 and (iii)(A) authorized and directed the issuance
of one preferred share purchase right (a "Class C Right" and together with the
Class A Rights and the Class B rights, the "Rights") (subject to adjustment as
provided herein) with respect to each share of Class C Common Stock (as
hereinafter defined) that shall become outstanding between the Record Date and
the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are hereinafter defined), each Class C Right
representing the right to purchase one one-thousandth (subject to adjustment) of
a share of Series C Preferred Stock (as hereinafter defined), upon the terms and
subject to the conditions herein set forth; provided, however, that Class C
Rights may be issued with respect to shares of Class C Common Stock that shall
become outstanding after the Distribution Date and prior to the Redemption Date
and the Final Expiration Date in accordance with Section 22.

                  The Board of Directors of the Company, desiring to appoint
Mellon Investor Services LLC as successor Rights Agent, desire to restate and
amend the terms of the Agreement herein as so amended.

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

<PAGE>
                                                                               3

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

                  (a) "Acquiring Person" shall mean any Person (as such term is
         hereinafter defined) who or which shall be the Beneficial Owner (as
         such term is hereinafter defined) of (a) 15% or more of the shares of
         Class B Common Stock (as such term is hereinafter defined) then
         outstanding or (b) shares of Common Stock representing, in the
         aggregate, 15% or more of the total number of votes entitled to be cast
         generally (other than in an election of directors) by the holders of
         the Common Stock then outstanding, but shall not include an Exempt
         Person (as such term is hereinafter defined); provided, however, that
         if the Board of Directors of the Company determines in good faith that
         a Person who would otherwise be an "Acquiring Person" has become such
         inadvertently (including, without limitation, because (i) such Person
         was unaware that it beneficially owned a percentage of Common Stock
         that would otherwise cause such Person to be an "Acquiring Person" or
         (ii) such Person was aware of the extent of its Beneficial Ownership of
         Common Stock but had no actual knowledge of the consequences of such
         Beneficial Ownership under this Rights Agreement) and without any
         intention of changing or influencing control of the Company, and such
         Person as promptly as practicable divested or divests himself or itself
         of Beneficial Ownership of a sufficient number of shares of Common
         Stock so that such Person would no longer be an Acquiring Person, then
         such Person shall not be deemed to be or to have become an "Acquiring
         Person" for any purposes of this Agreement. Notwithstanding the
         foregoing, no Person shall become an "Acquiring Person" as the result
         of an acquisition of shares of Common Stock by the Company which, by
         reducing the number of shares outstanding, increases

<PAGE>
                                                                               4

         the proportionate number of shares beneficially owned (or votes
         entitled to be cast) by such Person to (a) 15% or more of the shares of
         Class B Common Stock then outstanding or (b) shares of Common Stock
         representing, in the aggregate, 15% or more of the total number of
         votes entitled to be cast generally (other than in an election of
         directors) by the holders of the Common Stock then outstanding;
         provided, however, that if a Person shall become the Beneficial Owner
         of (a) 15% or more of the shares of Class B Common Stock then
         outstanding or (b) shares of Common Stock representing, in the
         aggregate, 15% or more of the total number of votes entitled to be cast
         generally (other than in an election of directors) by the holders of
         the Common Stock then outstanding by reason of such share acquisitions
         by the Company and thereafter become the Beneficial Owner of any
         additional shares of Class B Common Stock, in the case of clause (a)
         above, or Common Stock, in the case of clause (b) above, then such
         Person shall be deemed to be an "Acquiring Person" unless upon the
         consummation of the acquisition of such additional shares of Class B
         Common Stock or Common Stock, as the case may be, such Person does not
         beneficially own (a) 15% or more of the shares of Class B Common Stock
         then outstanding or (b) shares of Common Stock representing, in the
         aggregate, 15% or more of the total number of votes entitled to be cast
         generally (other than in an election of directors) by the holders of
         the Common Stock then outstanding. The phrase "then outstanding", when
         used with reference to a Person's Beneficial Ownership of securities of
         the Company, shall mean the number of such securities then issued and
         outstanding together with the number of such securities not then
         actually issued and outstanding which such Person would be deemed to
         own beneficially hereunder.

<PAGE>
                                                                               5

                  (b) "Affiliate" and "Associate" shall have the respective
         meanings ascribed to such terms in Rule 12b-2 of the General Rules and
         Regulations under the Securities Exchange Act of 1934, as amended (the
         "Exchange Act"), as in effect on the date of this Agreement.

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

                           (i) which such Person or any of such Person's
                  Affiliates or Associates is deemed to beneficially own,
                  directly or indirectly within the meaning of 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 to acquire (whether
                  such right is exercisable immediately or only after the
                  passage of time) pursuant to any agreement, arrangement or
                  understanding (other than customary agreements with and
                  between underwriters and selling group members with respect to
                  a bona fide public offering of securities), or upon the
                  exercise of conversion rights, exchange rights, rights,
                  warrants or options, or otherwise; provided, however, that a
                  Person shall not be deemed the Beneficial Owner of, or to
                  beneficially own, (x) securities tendered pursuant to a tender
                  or exchange offer made by or on behalf of such Person or any
                  of such Person's Affiliates or Associates until such tendered
                  securities are accepted for purchase, (y) securities which
                  such Person has a right to acquire on the exercise of Rights
                  at any time prior to the time a Person becomes an

<PAGE>
                                                                               6

                  Acquiring Person or (z) securities issuable upon exercise of
                  Rights from and after the time a Person becomes an Acquiring
                  Person if such Rights were acquired by such Person or any of
                  such Person's Affiliates or Associates prior to the
                  Distribution Date or pursuant to Section 3(a) or Section 22
                  hereof ("original Rights") or pursuant to Section 11(i) or
                  Section 11(n) with respect to an adjustment to original
                  Rights; or (B) the right to vote pursuant to any agreement,
                  arrangement or understanding; provided, however, that a Person
                  shall not be deemed the Beneficial Owner of, or to
                  beneficially own, any security by reason of such agreement,
                  arrangement or understanding if the agreement, arrangement or
                  understanding to vote such security (1) arises solely from a
                  revocable proxy or consent given to such Person in response to
                  a public proxy or consent solicitation made pursuant to, and
                  in accordance with, the applicable rules and regulations
                  promulgated under the Exchange Act and (2) is not also then
                  reportable on Schedule 13D under the Exchange Act (or any
                  comparable or successor report); or

                           (iii) which are beneficially owned, directly or
                  indirectly, by any other Person with which such Person or any
                  of such Person's Affiliates or Associates has any agreement,
                  arrangement or understanding (other than customary agreements
                  with and between underwriters and selling group members with
                  respect to a bona fide public offering of securities) for the
                  purpose of acquiring, holding, voting (except to the extent
                  contemplated by the proviso to Section 1(c)(ii)(B)) or
                  disposing of any securities of the Company;

         provided, however, that notwithstanding anything else contained in this
Section 1(c):

<PAGE>
                                                                               7

                  (1) no Smith Holder shall be deemed to be the Beneficial Owner
of securities beneficially owned by any other Person that is not a Smith Holder
solely by reason of such other Person's status as an Affiliate or Associate of
any Smith Holder or any other Person, other than Harcourt General, Inc. or its
subsidiaries unless (A) one or more Smith Holders, collectively, beneficially
owns fifty percent or more of the voting power of such other Person or such
other Person beneficially owns fifty percent or more of the voting power of a
Smith Holder that is not a natural person, (B) a majority of the board of
directors or other governing body of such other Person is comprised of Smith
Holders or such other Person has the power to nominate a majority of the board
of directors or other governing body of a Smith Holder that is not a natural
person, (C) such other Person is a spouse or lineal descendant of a grandparent
of a Smith Holder (or any spouse of a lineal descendent of a grandparent of a
Smith Holder) or (D) a primary purpose of such other Person becoming an
Affiliate or Associate of a Smith Holder or any other Person after the date of
this Agreement is to circumvent the purposes of this Agreement;

                  (2) no Person, other than Harcourt General, Inc. and its
subsidiaries, shall be deemed to be the Beneficial Owner of securities
beneficially owned by a Smith Holder solely by reason of such Person's status as
an officer, director or employee of a Smith Holder or any Smith Holder's or
other Person's status as an Affiliate or Associate of such Person, unless (A)
one or more Smith Holders, collectively, beneficially owns fifty percent or more
of the voting power of such Person, or such Person beneficially owns fifty
percent or more of the voting power of a Smith Holder that is not a natural
person, (B) a majority of the board of directors or other governing body of such
Person is comprised of Smith Holders or such Person has the power to nominate a
majority of the board of directors or other governing body of a

<PAGE>
                                                                               8

Smith Holder that is not a natural person, (C) such Person is a spouse or lineal
descendant of a grandparent of a Smith Holder (or any spouse of a lineal
descendant of a grandparent of a Smith Holder) or (D) a primary purpose of such
Smith Holder becoming an Affiliate or Associate of any other Person after the
date of this Agreement is to circumvent the purposes of this Agreement; and

                  (3) no bona fide financial institution that is a pledgee of a
Smith Holder (a "Pledgee") shall be deemed to the Beneficial Owner of securities
beneficially owned by a Smith Holder solely by reason of such Pledgee's status
as a pledgee of a Smith Holder and so long as such Pledgee may report the
ownership of those shares that are acquired pursuant to the pledge on a Schedule
13G (or any comparable or successor report) under the Exchange Act, provided
however, that if such Pledgee forecloses on any such pledge and a Smith Holder
thus ceases to beneficially own such pledged shares, the Pledgee shall be deemed
to beneficially own such shares; unless such pledged shares are sold within
one-hundred and eighty (180) days of such foreclosure;

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

              (e) "Class A Common Stock" shall mean the Class A Common Stock,
         par value $.01 per share, of the Company.

              (f) "Class B Common Stock" shall mean the Class B Common Stock,
         par value $.01 per share, of the Company.

              (g) "Class C Common Stock" shall mean the Class C Common Stock,
         par value $.01 per share, of the Company.

<PAGE>
                                                                               9

              (h) "Class A Right" shall have the meaning set forth in the
         Recitals hereto.

              (i) "Class B Right" shall have the meaning set forth in the
         Recitals hereto.

              (j) "Class C Right" shall have the meaning set forth in the
         Recitals hereto.

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

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

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

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

              (o) "Common Stock" when used with reference to the Company shall
         mean, collectively, the Class A Common Stock, the Class B Common Stock
         and the Class C Common Stock. "Common Stock" when used with reference
         to any Person other than the Company shall mean the capital stock (or,
         in the case of an unincorporated entity, the equivalent equity
         interest) with the greatest voting power of such other Person or, if
         such other Person is a subsidiary of another Person, the Person or
         Persons which ultimately control such first-mentioned Person.

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

              (q) "Exempt Person" shall mean (i) the Company, (ii) any
         Subsidiary (as such term is hereinafter defined) of the Company, (iii)
         any employee benefit plan of the

<PAGE>
                                                                              10

         Company or of any Subsidiary of the Company, (iv) any entity or trustee
         holding Common Stock for or pursuant to the terms of any such plan or
         for the purpose of funding any such plan or funding other employee
         benefits for employees of the Company or of any Subsidiary of the
         Company, (v) Harcourt General, Inc., a Delaware corporation, but only
         for the period beginning on the Record Date and ending at 12:01 a.m. on
         October 23, 1999 or (vi) the Smith Family Group, so long as the Smith
         Family Group does not acquire beneficial ownership of (A) additional
         shares of Class B Common Stock after the date of this Agreement (other
         than shares of Common Stock, employee stock options or other equity
         securities of the Company granted by the Company after this Agreement
         to a member of the Smith Family Group in his or her capacity as a
         director, officer or employee of the Company, including shares issuable
         upon the exercise or conversion of such employee stock options or other
         equity securities) that would represent, together with all shares of
         Class B Common Stock acquired by the Smith Family Group after the date
         of this Agreement, more than 6% of the outstanding shares of Class B
         Common Stock then outstanding after giving effect to such acquisition
         and (B) additional shares of Common Stock after the date of this
         Agreement (other than shares of Common Stock, employee stock options or
         other equity securities of the Company granted by the Company after the
         date of this Agreement to a member of the Smith Family Group in his or
         her capacity as a director, officer or employee of the Company,
         including shares issuable upon the exercise or conversion of such
         employee stock options or other equity securities) that would
         represent, together with all shares of Common Stock acquired by the
         Smith Family Group after the date of this Agreement, more than 6% of
         the total voting power of the Company represented by the votes entitled
         to be cast

<PAGE>
                                                                              11

         generally (other than in an election of directors) represented by the
         total number of shares of Common Stock then outstanding.

                  Notwithstanding the foregoing, the Smith Family Group shall
         not cease to be an "Exempt Person" as a result of the acquisition of
         shares of Class B Common Stock by the Company which, by reducing the
         number of shares outstanding, increases the proportionate number of
         shares beneficially owned by the Smith Family Group and acquired after
         the date of this Agreement to exceed shares representing, in the
         aggregate, 6% of the shares of Class B Common Stock then outstanding,
         unless the Smith Family Group thereafter acquires beneficial ownership
         of any additional shares of Class B Common Stock. In addition, the
         Smith Family Group shall not cease to be an "Exempt Person" as a result
         of the acquisition of shares of Common Stock by the Company which, by
         reducing the number of shares outstanding, increases the proportionate
         voting power of the Company represented by the shares beneficially
         owned by the Smith Family Group and acquired after the date of this
         Agreement to exceed shares representing, in the aggregate, 6% of the
         total voting power of the Company represented by the votes entitled to
         be cast generally (other than in an election of directors) by the
         holders of the Common Stock then outstanding, unless the Smith Family
         Group thereafter acquires beneficial ownership of any additional shares
         of Common Stock.

              (r) "Final Expiration Date" shall have the meaning set forth in
         Section 7 hereof.

              (s) "New York Stock Exchange" shall mean the New York Stock
         Exchange, Inc.

<PAGE>
                                                                              12

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

              (u) "Preferred Stock" shall mean, collectively, (i) the Series A
         Junior Participating Preferred Stock, par value $.01 per share, of the
         Company (the "Series A Preferred Stock"), (ii) the Series B Junior
         Participating Preferred Stock, par value $.01 per share, of the Company
         (the "Series B Preferred Stock") and (iii) the Series C Junior
         Participating Preferred Stock, par value $.01 per share, of the Company
         (the "Series C Preferred Stock"), in each case having the rights and
         preferences set forth in the Form of Certificate of Designations
         attached to this Agreement as Exhibit A-1, Exhibit A-2 and Exhibit A-3,
         respectively.

              (v) "Redemption Date" shall have the meaning set forth in Section
         7 hereof.

              (w) "Right Certificate" shall mean collectively or severally, as
         the context shall require, the Class A Right Certificate, the Class B
         Right Certificate and/or the Class C Right Certificate.

              (x) "Securities Act" shall mean the Securities Act of 1933, as
         amended

              (y) "Smith Family Group" shall mean (i) the parties to the
         Smith-Lurie/Marks Family Stockholders' Agreement, dated as of September
         1, 1999 (as amended, supplemented, or otherwise modified from time to
         time, provided that a primary purpose of any such amendment, supplement
         or modification is not to circumvent the purposes of this Agreement,
         the "Stockholders' Agreement"), any Person who is described in any of
         clauses (i) through (v) (other than clause (i)(C)) of Section 4 of the
         Stockholders' Agreement and Harcourt General, Inc. and its
         subsidiaries, so long as Harcourt General,

<PAGE>
                                                                              13

         Inc. is an Affiliate of any party to the Stockholders' Agreement
         (collectively, the "Smith Holders") or (ii) any other Person, to the
         extent such Person would be deemed to be the Beneficial Owner of Common
         Stock beneficially owned by a Smith Holder, solely by reason of such
         Person's status as an Affiliate or Associate of a Smith Holder or any
         other Person on the date of this Agreement.

              (z) "Stock Acquisition Date" shall mean the first date of public
         announcement (which for purposes of this definition, shall include,
         without limitation, a report filed pursuant to Section 13(d) of the
         Exchange Act) by the Company or an Acquiring Person that an Acquiring
         Person has become such or such earlier date as a majority of the Board
         of Directors shall become aware of the existence of an Acquiring
         Person.

              (aa) "Subsidiary" or "subsidiary" of any Person shall mean any
         corporation or other entity of which securities or other ownership
         interests having ordinary voting power sufficient to elect a majority
         of the board of directors or other persons performing similar functions
         are beneficially owned, directly or indirectly, by such Person, and any
         corporation or other entity that is otherwise controlled by such
         Person.

              Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable, upon ten (10) days' prior notice to the
Rights Agent. The Rights Agent shall have no duty to supervise, and shall in no
event be liable for, the acts or omissions of any such co-Rights Agent.

<PAGE>

                                                                              14

                  Section 3. Issue of Right Certificates. (a) Until the earlier
of (i) the tenth day after the Stock Acquisition Date or (ii) the tenth Business
Day (or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) after the date of
the commencement by any Person (other than an Exempt Person) of, or of the first
public announcement of the intention of such Person (other than an Exempt
Person) to commence, a tender or exchange offer the consummation of which would
result in any Person becoming the Beneficial Owner of (a) shares of Class B
Common Stock aggregating 15% or more of the Class B Common Stock then
outstanding or (b) shares of Common Stock representing, in the aggregate, 15% or
more of the total number of votes entitled to be cast generally (other than in
an election of directors) by the holders of Common Stock then outstanding
(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights; the earlier of such dates being herein referred to
as the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Stock
registered in the names of the holders thereof and not by separate Right
Certificates and (y) the Rights will be transferable only in connection with the
transfer of Common Stock. As soon as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will countersign and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, insured, postage-prepaid mail, (A) to each record holder
of Class A Common Stock as of the close of business on the Distribution Date
(other than any Acquiring Person or any Associate or Affiliate of an Acquiring
Person), at the address of such holder shown on the records of the Company, a
Class A Right Certificate, in substantially the form of Exhibit B-1 hereto (a
"Class A Right Certificate"), evidencing one Class A Right (subject to
adjustment as provided herein) for each share of Class A Common

<PAGE>
                                                                              15

Stock so held, (B) to each record holder of Class B Common Stock as of the close
of business on the Distribution Date (other than any Acquiring Person or any
Associate or Affiliate of an Acquiring Person), at the address of such holder
shown on the records of the Company, a Class B Right Certificate, in
substantially the form of Exhibit B-2 hereto (a "Class B Right Certificate"),
evidencing one Class B Right (subject to adjustment as provided herein) for each
share of Class B Common Stock so held and (C) to each record holder of Class C
Common Stock as of the close of business on the Distribution Date (other than
any Acquiring Person or any Associate or Affiliate of an Acquiring Person), at
the address of such holder shown on the records of the Company, a Class C Right
Certificate, in substantially the form of Exhibit B-3 hereto (a "Class C Right
Certificate"), evidencing one Class C Right (subject to adjustment as provided
herein) for each share of Class C Common Stock so held. As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.

                  (b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Shares of
Preferred Stock, in substantially the form of Exhibit C hereto (the "Summary of
Rights"), by first-class, postage-prepaid mail, to each record holder of Common
Stock as of the close of business on the Record Date (other than any Acquiring
Person or any Associate or Affiliate of any Acquiring Person), at the address of
such holder shown on the records of the Company. With respect to certificates
for Common Stock outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in the names of the
holders thereof together with the Summary of Rights. Until the Distribution Date
(or the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Stock outstanding on the
Record

<PAGE>
                                                                              16

Date, with or without a copy of the Summary of Rights, shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby.

                  (c) Certificates issued for Common Stock (including, without
limitation, upon transfer of outstanding Common Stock, disposition of Common
Stock out of treasury stock or issuance or reissuance of Common Stock out of
authorized but unissued shares) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:

                  This certificate also evidences and entitles the holder hereof
                  to certain rights as set forth in a Rights Agreement between
                  The Neiman Marcus Group, Inc. and Mellon Investor Services
                  LLC, as successor Rights Agent to BankBoston, N.A., dated as
                  of October 6, 1999, as the same may be amended from time to
                  time (the "Rights Agreement"), the terms of which are hereby
                  incorporated herein by reference and a copy of which is on
                  file at the principal executive offices of The Neiman Marcus
                  Group, 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. The Neiman Marcus Group, Inc. will mail to the
                  holder of this certificate a copy of the Rights Agreement
                  without charge after receipt of a written request therefor.
                  Under certain circumstances, as set forth in the Rights
                  Agreement, Rights owned by or transferred to any Person who
                  becomes an Acquiring Person (as defined in the Rights
                  Agreement) and certain transferees thereof will become null
                  and void and will no longer be transferable.

With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases or
otherwise acquires any Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated

<PAGE>

                                                                              17

with such Common Stock shall be deemed cancelled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Stock
which are no longer outstanding.

                  Notwithstanding this paragraph (c), the omission of a legend
shall not affect the enforceability of any part of this Agreement or the rights
of any holder of the Rights.

                  Section 4. Form of Right Certificates. The Class A Right
Certificates, the Class B Right Certificates and the Class C Right Certificates
(and the forms of election to purchase shares and of assignment to be printed on
the reverse thereof) shall be substantially in the form set forth in Exhibit
B-1, Exhibit B-2 and Exhibit B-3, respectively, hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (but which do not affect the
rights, duties or responsibilities of the Rights Agent) and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of the New York Stock Exchange or of any
other stock exchange or automated quotation system on which the Rights may from
time to time be listed, or to conform to usage. Subject to the provisions of
Sections 11, 13 and 22 hereof, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-thousandths of a share of Preferred
Stock as shall be set forth therein at the price per one one-thousandth of a
share of Preferred Stock set forth therein (the "Purchase Price"), but the
number of such one one-thousandths of a share of Preferred Stock and the
Purchase Price shall be subject to adjustment as provided herein.

<PAGE>
                                                                              18

                  Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by the Chairman of the
Board of Directors, the President, any of the Vice Presidents, the Treasurer or
the Controller of the Company, either manually or by facsimile signature, shall
have affixed thereto the Company's seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent, either manually or by facsimile signature,
and shall not be valid for any purpose unless countersigned. In case any officer
of the Company who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the Person who signed such Right
Certificates, had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company, by any Person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this 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 an office or agency designated for such purpose,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.

                  Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to the provisions of Sections

<PAGE>
                                                                              19

7(e), 11(a)(ii) and 14 hereof, at any time after the close of business on the
Distribution Date, and prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of one one-thousandths of a share of Preferred Stock as
the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the office or agency of the Rights Agent designated for such
purpose. Thereupon the Rights Agent shall countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Company may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.

                  (b) Subject to the provisions of Section 11(a)(ii) hereof, at
any time after the Distribution Date and prior to the close of business on the
earlier of the Redemption Date or the Final Expiration Date, upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
them, and reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights

<PAGE>
                                                                              20

Agent for delivery to the registered holder in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.

                  Section 7. Exercise of Rights, Purchase Price; Expiration Date
of Rights. (a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date, and thereafter the registered holder of
any Right Certificate may, subject to Section 11(a)(ii) hereof and except as
otherwise provided herein, exercise the Rights evidenced thereby in whole or in
part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the
office or agency of the Rights Agent designated for such purpose, together with
payment of the Purchase Price for each one one-thousandth of a share of
Preferred Stock as to which the Rights are exercised, at any time which is both
after the Distribution Date and prior to the earliest of (i) the close of
business on October 6, 2009 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (the "Redemption
Date") or (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof.

                  (b) The "Purchase Price" shall be initially (i)$ 100.00 for
each one one-thousandth of a share of Series A Preferred Stock, (ii) $100.00 for
each one one-thousandth of a share of Series B Preferred Stock and (iii) $100.00
for each one one-thousandth of a share of Series C Preferred Stock, in each case
purchasable upon the exercise of a Right. The Purchase Price and the number of
one one-thousandths of a share of Preferred Stock or other securities or
property to be acquired upon exercise of a Right shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof and shall be payable
in lawful money of the United States of America in accordance with paragraph (c)
of this Section 7.

<PAGE>
                                                                              21

                  (c) Except as otherwise provided herein, upon receipt of a
Right Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the number of one one-thousandths of a share of Preferred Stock to be
purchased and an amount equal to any applicable tax or governmental charge
required to be paid by the holder of such Right Certificate in accordance with
Section 9 hereof, in cash or by certified check, cashier's check or money order
payable to the order of the Company, the Rights Agent shall thereupon promptly
(i) (A) requisition from any transfer agent of the Preferred Stock certificates
for the number of one one-thousandths of a share of Preferred Stock to be
purchased (and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests), or (B) requisition from the depositary agent
depositary receipts representing interests in such number of one one-thousandths
of a share of Preferred Stock as are to be purchased (in which case certificates
for the Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) (and the Company hereby directs the
depositary agent to comply with such request), (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14 hereof, (iii) promptly after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when necessary to comply with this Agreement, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate.

(d) Except as otherwise provided herein, in case the registered holder of any
Right Certificate shall exercise less than all the Rights evidenced thereby, a
new Right Certificate evidencing Rights equivalent to the exercisable Rights
remaining unexercised shall be

<PAGE>
                                                                              22

issued by the Rights Agent to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of Section 14 hereof.

                  (e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of Rights upon the
occurrence of any purported transfer or exercise of Rights pursuant to Section 6
hereof or this Section 7 unless such registered holder shall have (i) completed
and signed the certificate contained in the form of assignment or election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such transfer or exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) thereof as the
Company shall reasonably request.

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

                  Section 9. Availability of Shares of Preferred Stock. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and

<PAGE>
                                                                              23

unissued shares of Preferred Stock or any shares of Preferred Stock held in its
treasury, the number of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding Rights.

                  (b) So long as the shares of Preferred Stock (and, following
the time that a Person becomes an Acquiring Person, shares of Common Stock and
other securities) issuable upon the exercise of Rights may be listed or admitted
to trading on the New York Stock Exchange or listed on any other national
securities exchange or quotation system, 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 or admitted to trading on the New York
Stock Exchange or listed on any other exchange or quotation system upon official
notice of issuance upon such exercise.

                  (c) From and after such time as the Rights become exercisable,
the Company shall use its best efforts, if then necessary to permit the issuance
of shares of Preferred Stock (and following the time that a Person first becomes
an Acquiring Person, shares of Common Stock and other securities) upon the
exercise of Rights, to register and qualify such shares of Preferred Stock (and
following the time that a Person first becomes an Acquiring Person, shares of
Common Stock and other securities) under the Securities Act and any applicable
state securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Final Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it

<PAGE>
                                                                              24

to become effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect (and shall provide the Rights Agent with copies of such
announcements). Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) 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 time that a Person becomes an Acquiring Person, shares of
Common Stock and other securities) delivered upon exercise of Rights shall, at
the time of delivery of the certificates therefor (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.

                  (e) The Company further covenants and agrees that it will pay
when due and payable any and all taxes and governmental charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Preferred Stock (or shares of Common Stock or other securities)
upon the exercise of Rights. The Company shall not, however, be required to pay
any tax or charge which may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Stock (or shares of Common
Stock or other securities) in a name other than that of, the registered holder
of the Right Certificate evidencing Rights surrendered for exercise or to issue
or deliver any certificates or depositary receipts for Preferred Stock (or
shares of Common Stock or other securities) upon the exercise of any Rights
until any

<PAGE>
                                                                              25

such tax or charge shall have been paid (any such tax or charge being payable by
that holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's reasonable satisfaction that no such tax is
due.

                  Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for Preferred Stock 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 represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder of
Preferred Stock for which the Rights shall be exercisable, including, without
limitation, the right to vote or to receive dividends or other distributions,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.

                  Section 11. Adjustment of Purchase Price, Number of Shares and
Number of Rights. The Purchase Price, the number of shares of Preferred Stock or
other securities or property purchasable upon exercise of each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.

                  (a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on any series of Preferred Stock
payable in shares of Preferred Stock, (B) subdivide any series of outstanding
Preferred Stock, (C) combine the shares of any outstanding series of Preferred
Stock into a smaller number of shares of Preferred Stock or (D) issue any shares
of its capital stock in a reclassification of any series of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the

<PAGE>
                                                                              26

Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the applicable Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date, the holder would have
owned upon such 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. So long as Class A Rights, Class B Rights
and Class C Rights are outstanding, the Corporation shall not effect any of the
actions set forth in Clauses (A), (B), (C) or (D) of this paragraph with respect
to either the Series A Preferred Stock, the Series B Preferred Stock or the
Series C Preferred Stock unless the Corporation shall also contemporaneously
effect a like transaction with respect to the other such series; provided,
however, that in the event that such a transaction is effected with respect to
one such series but no such shares of the other series are outstanding, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable upon such date, shall be
proportionately adjusted with respect to the holders of Rights exercisable for
shares of such series that are not outstanding as if such a dividend,
subdivision, combination or reclassification had been effected with respect to
the shares of such series.

<PAGE>
                                                                              27

                           (ii) Subject to Section 24 of this Agreement and
                  except as otherwise provided in this Section 11(a)(ii), in the
                  event any Person becomes an Acquiring Person, each holder of a
                  Right shall thereafter have the right to receive, upon
                  exercise thereof at a price equal to the then current
                  applicable Purchase Price multiplied by the number of one
                  one-thousandths of a share of Preferred Stock for which such
                  Right is then exercisable, in accordance with the terms of
                  this Agreement and in lieu of shares of Preferred Stock, such
                  number of shares of Class A Common Stock (in the case of a
                  Class A Right), Class B Common Stock (in the case of a Class B
                  Right) or Class C Common Stock (in the case of a Class C
                  Right) (or at the option of the Company, such number of one
                  one-thousandths of a share of Series A Preferred Stock (in the
                  case of a Class A Right), Series B Preferred Stock (in the
                  case of a Class B Right) or Series C Preferred Stock (in the
                  case of a Class C Right)) as shall equal the result obtained
                  by (x) multiplying the then current applicable Purchase Price
                  by the number of one one-thousandths of a share of Preferred
                  Stock for which a Right is then exercisable and dividing that
                  product by (y) 50% of the then current per share market price
                  of the Company's Class A Common Stock (in the case of a Class
                  A Right), Class B Common Stock (in the case of a Class B
                  Right) or Class C Common Stock (in the case of a Class C
                  Right) (determined pursuant to Section 11(d) hereof) on the
                  date of the occurrence of such event; provided, however, that
                  the applicable Purchase Price and the number of shares of
                  Common Stock so receivable upon exercise of a Right shall
                  thereafter be subject to further adjustment as appropriate in
                  accordance with Section 11(f) hereof. Notwithstanding anything
                  in this

<PAGE>
                                                                              28

                  Agreement to the contrary, however, from and after the time
                  (the "invalidation time") when any Person first becomes an
                  Acquiring Person, any Rights that are beneficially owned by
                  (x) any Acquiring Person (or any Affiliate or Associate of any
                  Acquiring Person), (y) a transferee of any Acquiring Person
                  (or any such Affiliate or Associate) who becomes a transferee
                  after the invalidation time or (z) a transferee of any
                  Acquiring Person (or any such Affiliate or Associate) who
                  became a transferee prior to or concurrently with the
                  invalidation time pursuant to either (I) a transfer from the
                  Acquiring Person to holders of its equity securities or to any
                  Person with whom it has any continuing agreement, arrangement
                  or understanding regarding the transferred Rights or (II) a
                  transfer which the Board of Directors has determined is part
                  of a plan, arrangement or understanding which has the purpose
                  or effect of avoiding the provisions of this paragraph, and
                  subsequent transferees of such Persons, shall be void without
                  any further action and any holder of such Rights shall
                  thereafter have no rights whatsoever with respect to such
                  Rights under any provision of this Agreement. The Company
                  shall use all reasonable efforts to ensure that the provisions
                  of this Section 11(a)(ii) are complied with, but shall have no
                  liability to any holder of Right Certificates or other Person
                  as a result of its failure to make any determinations with
                  respect to an Acquiring Person or its Affiliates, Associates
                  or transferees hereunder. From and after the invalidation
                  time, no Right Certificate shall be issued pursuant to Section
                  3 or Section 6 hereof that represents Rights that are or have
                  become void pursuant to the provisions of this paragraph, and
                  any Right Certificate delivered to the Rights Agent that
                  represents Rights that are or have

<PAGE>
                                                                              29

                  become void pursuant to the provisions of this paragraph shall
                  be cancelled. From and after the occurrence of an event
                  specified in Section 13(a) hereof, any Rights that theretofore
                  have not been exercised pursuant to this Section 11(a)(ii)
                  shall thereafter be exercisable only in accordance with
                  Section 13 and not pursuant to this Section 11(a)(ii).

                           (iii) The Company may at its option substitute for a
                  share of Common Stock issuable upon the exercise of Rights in
                  accordance with the foregoing subparagraph (ii) such number or
                  fractions of shares of the applicable series of Preferred
                  Stock having an aggregate current market value equal to the
                  current per share market price of a share of the applicable
                  class of Common Stock. In the event that there shall not be
                  sufficient shares of Common Stock of any class issued but not
                  outstanding or authorized but unissued to permit the exercise
                  in full of the Rights in accordance with the foregoing
                  subparagraph (ii), the Board of Directors shall, to the extent
                  permitted by applicable law and any material agreements then
                  in effect to which the Company is a party (A) determine the
                  excess of (1) the value of the shares of Common Stock issuable
                  upon the exercise of each Class A Right, each Class B Right
                  and each Class C Right in accordance with the foregoing
                  subparagraph (ii) (the "Current Values") over (2) the then
                  current applicable Purchase Price multiplied by the number of
                  one one-thousandths of shares of Preferred Stock for which
                  such Right was exercisable immediately prior to the time that
                  the Acquiring Person became such (such excess, the "Spread"),
                  and (B) with respect to each Right (other than Rights which
                  have become void pursuant to Section 11(a)(ii)), make adequate
                  provision to

<PAGE>
                                                                              30

                  substitute for the shares of Class A Common Stock, Class B
                  Common Stock or Class C Common Stock, as the case may be,
                  issuable in accordance with subparagraph (ii) upon exercise of
                  the Right and payment of the applicable Purchase Price, (1)
                  cash, (2) a reduction in the applicable Purchase Price, (3)
                  shares of Preferred Stock or other equity securities of the
                  Company (including, without limitation, shares or fractions of
                  shares of preferred stock which, by virtue of having dividend,
                  voting and liquidation rights substantially comparable to
                  those of the shares of Common Stock, are deemed in good faith
                  by the Board of Directors to have substantially the same value
                  as the shares of Class A Common Stock (in the case of a Class
                  A Right), Class B Common Stock (in the case of a Class B
                  Right) or Class C Common Stock (in the case of a Class C
                  Right) (such shares of Preferred Stock and shares or fractions
                  of shares of preferred stock are hereinafter referred to as
                  "Common Stock equivalents")), (4) debt securities of the
                  Company, (5) other assets or (6) any combination of the
                  foregoing, having a value which, when added to the value of
                  the shares of Common Stock actually issued upon exercise of
                  such Right, shall have an aggregate value equal to the Current
                  Value (less the amount of any reduction in the applicable
                  Purchase Price), where such aggregate value has been
                  determined by the Board of Directors upon the advice of a
                  nationally recognized investment banking firm selected in good
                  faith by the Board of Directors; provided, however, if the
                  Company shall not make adequate provision to deliver value
                  pursuant to clause (B) above within thirty (30) days following
                  the date that the Acquiring Person became such (the "Section
                  11(a)(ii) Trigger Date"), then the Company shall be obligated
                  to deliver, to the

<PAGE>
                                                                              31

                  extent permitted by applicable law and any material agreements
                  then in effect to which the Company is a party, upon the
                  surrender for exercise of a Right and without requiring
                  payment of the Purchase Price, shares of Class A Common Stock
                  (in the case of a Class A Right), Class B Common Stock (in the
                  case of a Class B Right) or Class C Common Stock (in the case
                  of a Class C Right) (to the extent available), and then, if
                  necessary, such number or fractions of shares of the
                  applicable series of Preferred Stock (to the extent available)
                  and then, if necessary, cash, which shares and/or cash have an
                  aggregate value equal to the Spread. If, upon the date any
                  Person becomes an Acquiring Person, the Board of Directors
                  shall determine in good faith that it is likely that
                  sufficient additional shares of Common Stock could be
                  authorized for issuance upon exercise in full of the Rights,
                  then, if the Board of Directors so elects, the thirty (30) day
                  period set forth above may be extended to the extent
                  necessary, but not more than ninety (90) days after the
                  Section 11(a)(ii) Trigger Date, in order that the Company may
                  seek stockholder approval for the authorization of such
                  additional shares (such thirty (30) day period, as it may be
                  extended, is herein called the "Substitution Period"). To the
                  extent that the Company determines that some action need be
                  taken pursuant to the second and/or third sentence of this
                  Section 11(a)(iii), the Company (x) shall provide, subject to
                  Section 11(a)(ii) hereof and the last sentence of this Section
                  11(a)(iii) hereof, that such action shall apply uniformly to
                  all outstanding Class A Rights, Class B Rights and Class C
                  Rights and (y) may suspend the exercisability of the Class A
                  Rights, the Class B Rights and the Class C Rights until the
                  expiration of the Substitution Period in order to seek any

<PAGE>
                                                                              32

                  authorization of additional shares and/or to decide the
                  appropriate form of distribution to be made pursuant to such
                  second sentence and to determine the value thereof. In the
                  event of any such suspension, the Company shall issue a public
                  announcement stating that the exercisability of the Class A
                  Rights, the Class B Rights and the Class C Rights has been
                  temporarily suspended, as well as a public announcement at
                  such time as the suspension is no longer in effect. For
                  purposes of this Section 11(a)(iii), the value of the shares
                  of Class A Common Stock (in the case of a Class A Right),
                  Class B Common Stock (in the case of a Class B Right) or Class
                  C Common Stock (in the case of a Class C Right) shall be the
                  current per share market price (as determined pursuant to
                  Section 11(d)(i)) on the Section 11(a)(ii) Trigger Date and
                  the per share or fractional value of any "Common Stock
                  equivalent" shall be deemed to equal the current per share
                  market price of the Class A Common Stock (in the case of a
                  Class A Right), Class B Common Stock (in the case of a Class B
                  Right) or Class C Common Stock (in the case of a Class B
                  Right). The Board of Directors of the Company may, but shall
                  not be required to, establish procedures to allocate the right
                  to receive (a) shares of Class A Common Stock upon the
                  exercise of the Class A Rights among holders of Class A
                  Rights, (b) shares of Class B Common Stock upon the exercise
                  of the Class B Rights among holders of Class B Rights and (c)
                  shares of Class C Common Stock upon the exercise of the Class
                  C Rights among holders of Class C Rights, in each case,
                  pursuant to this Section 11(a)(iii).

                  (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 (for a period expiring within

<PAGE>
                                                                              33

45 calendar days after such record date) to subscribe for or purchase shares of
the applicable series of Preferred Stock (or shares having the same rights,
privileges and preferences as the applicable series of Preferred Stock
("equivalent preferred shares")) or securities convertible into the applicable
series of Preferred Stock or equivalent preferred shares at a price per share of
Preferred Stock or equivalent preferred shares (or having a conversion price per
share, if a security convertible into shares of Preferred Stock or equivalent
preferred shares) less than the then current per share market price of the
applicable series of Preferred Stock (determined pursuant to Section 11(d)
hereof) on such record date, the applicable Purchase Price to be in effect after
such record date shall be determined by multiplying the applicable Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of such series of Preferred
Stock and equivalent preferred shares outstanding on such record date plus the
number of shares of such series of Preferred Stock and equivalent preferred
shares which the aggregate offering price of the total number of shares of such
series of Preferred Stock and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price, and the denominator
of which shall be the number of shares of such series of Preferred Stock and
equivalent preferred shares outstanding on such record date plus the number of
additional shares of such series of Preferred Stock and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); 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 or all of which shall be in a form other than cash, the
value of such

<PAGE>
                                                                              34

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

                  (c) In case the Company shall fix a record date for the making
of a distribution to all holders of any series of Preferred Stock (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Stock) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the applicable Purchase Price to be in effect after
such record date shall be determined by multiplying the applicable Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market price of the
applicable series of Preferred Stock (determined pursuant to Section 11(d)
hereof) on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one share of such series of Preferred Stock,
and the denominator of which shall be such current per share market price
(determined pursuant to Section 11(d) hereof) of such series of Preferred Stock;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be

<PAGE>
                                                                              35

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 applicable Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.

                  (d) (i) Except as otherwise provided herein, for the purpose
of any computation hereunder, the "current per share market price" of any
security (a "Security" for the purpose of this Section 11(d)(i)) on any date
shall be deemed to be the average of the daily closing prices per share of such
Security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to but not including such date; provided, however,
that in the event that the current per share market price of the Security is
determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security, and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported by the principal consolidated transaction reporting system with respect
to securities

<PAGE>
                                                                              36

listed or admitted to trading on the New York Stock Exchange or, if the Security
is not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use,
or, if on any such date the Security is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the Board of Directors
of the Company. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is not
listed or admitted to trading on any national securities exchange, a Business
Day.

                           (ii) For the purpose of any computation hereunder, if
                  any series of Preferred Stock is publicly traded, the "current
                  per share market price" of such series of Preferred Stock
                  shall be determined in accordance with the method set forth in
                  Section 11(d)(i). If any series of Preferred Stock is not
                  publicly traded but the corresponding series of Common Stock
                  is publicly traded, the "current per share market price" of
                  such series of Preferred Stock shall be conclusively deemed to
                  be the current per share market price of the corresponding
                  series of Common Stock as determined pursuant to Section
                  11(d)(i) multiplied by one thousand (appropriately adjusted to
                  reflect any stock split, stock dividend or similar transaction
                  occurring after the date hereof). If neither the Common Stock
                  nor the corresponding Preferred Stock of any series is
                  publicly traded, "current per share market price" shall mean
                  the fair value per share as determined in good

<PAGE>
                                                                              37

                  faith by the Board of Directors of the Company, whose
                  determination shall be described in a statement filed with the
                  Rights Agent.

                  (e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the applicable Purchase Price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest one
ten-thousandth of a share of Preferred Stock or share of Common Stock or other
share or security as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction which
requires such adjustment or (ii) the date of the expiration of the right to
exercise any Rights.

                  (f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Stock, thereafter the Purchase Price and the number of such other shares so
receivable upon exercise of a Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a),
11(b), 11(c), 11(e), 11(h), 11(i) and 11(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 one one-thousandths of a
share of Preferred Stock purchasable

<PAGE>
                                                                              38

from time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.

                  (h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a share of Preferred Stock (calculated to the nearest one
ten-thousandth of a share of Preferred Stock) of the applicable series obtained
by (i) multiplying (x) the number of one one-thousandths of a share covered by a
Right immediately prior to such adjustment by (y) the applicable Purchase Price
in effect immediately prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the applicable Purchase Price in effect
immediately after such adjustment of the Purchase Price.

                  (i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-thousandths of a share of the
applicable series of Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one one-thousandths 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 applicable Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the applicable 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

<PAGE>
                                                                              39

adjustment, and, if known at the time, the amount of the adjustment to be made
and shall promptly give the Rights Agent a copy of such announcement. This
record date may be the date on which the applicable Purchase Price is adjusted
or any day thereafter, but, if the Right Certificates have been issued, shall be
at least 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company may, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.

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

                  (k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the Preferred
Stock or other shares of capital stock issuable upon exercise of the Rights, the
Company shall take any corporate action which

<PAGE>
                                                                              40

may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Preferred Stock
or other such shares at such adjusted Purchase Price.

                  (l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer (and shall give prompt written
notice of such election to the Rights Agent) until the occurrence of such event
the issuing to the holder of any Right exercised after such record date of the
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the 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 for any series of Preferred Stock, in addition to those
adjustments expressly required by this Section 11, as and to the extent that it
in its sole discretion shall determine to be advisable in order that any
consolidation or subdivision of any series of Preferred Stock, issuance wholly
for cash of any shares of any series of Preferred Stock at less than the current
market price, issuance wholly for cash or any series of Preferred Stock or
securities which by their terms are convertible into or exchangeable for any
series of Preferred Stock, dividends on any series of Preferred Stock payable in
shares of Preferred Stock or issuance of rights, options or warrants referred to
hereinabove in Section

<PAGE>
                                                                              41

11(b), hereafter made by the Company to holders of its Preferred Stock shall not
be taxable to such stockholders.

                  (n) Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on any class of shares of Common Stock payable in Common Stock or (ii)
effect a subdivision, combination or consolidation of any class of Common Stock
(by reclassification or otherwise other than by payment of a dividend payable in
Common Stock) into a greater or lesser number of Common Stock, then in any such
case, the number of Rights associated with each share of Common Stock of such
class then outstanding, or issued or delivered thereafter, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock of such class following any such event shall equal
the result obtained by (A) in the case of the Class A Rights, multiplying the
number of Class A Rights associated with each share of Class A Common Stock
immediately prior to such event by a fraction the numerator of which shall be
the total number of shares of Class A Common Stock outstanding immediately prior
to the occurrence of the event and the denominator of which shall be the total
number of shares of Class A Common Stock outstanding immediately following the
occurrence of such event, (B) in the case of the Class B Rights, multiplying the
number of Class B Rights associated with each share of Class B Common Stock
immediately prior to such event by a fraction the numerator of which shall be
the total number of shares of Class B Common Stock outstanding immediately prior
to the occurrence of the event and the denominator of which shall be the total
number of shares of Class B Common Stock outstanding immediately following the
occurrence of such event and (C) in the case of the Class C Rights, multiplying
the number of Class C Rights associated with each share of Class C

<PAGE>
                                                                              42

Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Class C Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Class C Common Stock outstanding
immediately following the occurrence of such event . The adjustments provided
for in this Section 11(n) shall be made successively to any class of Common
Stock whenever such a dividend is declared or paid or such subdivision,
combination or consolidation is effected on such class of Common Stock.

                  (o) The Company agrees that, after the earlier of the
Distribution Date or 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 if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or eliminate the
benefits intended to be afforded by the Rights.

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

                  Whenever an adjustment is made as provided in Section 11
and/or 13 hereof, the Company shall promptly (a) prepare a certificate setting
forth such adjustment, and a brief statement of the facts and computations
accounting for such adjustment, (b) file with the Rights Agent and with each
transfer agent for the Common Stock or the Preferred Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25 hereof (if so required under Section
25 hereof). The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of any such adjustment unless and until it shall have received
such certificate.

<PAGE>
                                                                              43

                  Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earnings Power. (a) In the event, directly or indirectly, at any time
after any Person has become an Acquiring Person, (i) the Company shall merge
with and into any other Person, (ii) any Person shall consolidate with the
Company, or any Person shall merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Stock shall be changed
into or exchanged for stock or other securities of any other Person (or of the
Company) or cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person (other than the Company or one or more of
its wholly-owned Subsidiaries), then in each such case, proper provision shall
be made so that: (A) each holder of record of a Right (other than Rights which
have become void pursuant to Section 11(a)(ii)) shall thereafter have the right
to receive, upon the exercise thereof at a price equal to the then current
applicable Purchase Price multiplied by the number of one one-thousandths of a
share of Preferred Stock for which the applicable Right is then exercisable
(each as subsequently adjusted thereafter pursuant to Sections 11(a)(i), 11(b),
11(c), 11(h), 11(i) and 11(m)), in accordance with the terms of this Agreement
and in lieu of Preferred Stock, such number of validly issued, fully paid and
non-assessable and freely tradeable shares of Common Stock of the Principal
Party (as defined herein) not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result obtained
by (1) multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable (as subsequently adjusted thereafter pursuant to Sections 11(a)(i),
11(b), 11(c), 11(h),

<PAGE>
                                                                              44

11(i) and 11(m)) and (2) dividing that product by 50% of the then current per
share market price of the Common Stock of such Principal Party (determined
pursuant to Section 11(d)(i) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; provided, that the Purchase Price and
the number of shares of Common Stock of such Principal Party issuable upon
exercise of each Right shall be further adjusted as provided in Section 11(f) of
this Agreement to reflect any events occurring in respect of such Principal
Party after the date of such consolidation, merger, sale or transfer; (B) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (C) the term "Company" shall thereafter
be deemed to refer to such Principal Party; and (D) such Principal Party shall
take such steps (including, but not limited to, the reservation of a sufficient
number of its shares of Common Stock in accordance with Section 9 hereof) in
connection with such 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, in relation to the shares of its Common Stock thereafter
deliverable upon the exercise of the Rights; provided, that, upon the subsequent
occurrence of any consolidation, merger, sale or transfer of assets or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the applicable Purchase Price as provided in this Section 13(a), such
cash, shares, rights, warrants and other property which such holder would have
been entitled to receive had such holder, at the time of such transaction, owned
the Common Stock of the Principal Party receivable upon the exercise of a Right
pursuant to this Section 13(a), and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the

<PAGE>
                                                                              45

Rights in accordance with the terms hereof for such cash, shares, rights,
warrants and other property.

                  (b) "Principal Party" shall mean

                           (i) in the case of any transaction described in
                  clauses (i) or (ii) of the first sentence of Section 13(a)
                  hereof: (A) the Person that is the issuer of the securities
                  into which the shares of Common Stock are converted in such
                  merger or consolidation, or, if there is more than one such
                  issuer, the issuer of the shares of Common Stock of which have
                  the greatest aggregate market value of shares outstanding, or
                  (B) if no securities are so issued, (x) the Person that is the
                  other party to the merger, if such Person survives said
                  merger, or, if there is more than one such Person, the Person
                  the shares of Common Stock of which have the greatest
                  aggregate market value of shares outstanding or (y) if the
                  Person that is the other party to the merger does not survive
                  the merger, the Person that does survive the merger (including
                  the Company if it survives) or (z) the Person resulting from
                  the consolidation; and

                           (ii) in the case of any transaction described in
                  clause (iii) of the first sentence in Section 13(a) hereof,
                  the Person that is the party receiving the greatest portion of
                  the assets or earning power transferred pursuant to such
                  transaction or transactions, or, if each Person that is a
                  party to such transaction or transactions receives the same
                  portion of the assets or earning power so transferred or if
                  the Person receiving the greatest portion of the assets or
                  earning power cannot be determined, whichever of such Persons
                  as is the issuer of Common Stock having the greatest aggregate
                  market value of shares outstanding;

<PAGE>
                                                                              46

provided, however, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), if the Common Stock of such Person is not at such time or has
not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stock of all of which is and has been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of
Common Stock having the greatest aggregate market value of shares outstanding,
or (3) if 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 clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned by
the joint venture was a Subsidiary of both or all of such joint venturers, and
the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the
total of such interests.

                  (c) The Company shall not consummate any consolidation,
merger, sale or transfer referred to in Section 13(a) hereof unless prior
thereto the Company and the Principal Party involved therein shall have executed
and delivered to the Rights Agent an agreement confirming that the requirements
of Sections 13(a) and (b) hereof shall promptly be performed in accordance with
their terms and that such consolidation, merger, sale or transfer of assets
shall not result in a default by the Principal Party under this Agreement as the
same shall have been assumed by the Principal Party pursuant to Sections 13(a)
and (b) hereof and providing that, as soon as practicable after executing such
agreement pursuant to this Section 13, the Principal Party will:

<PAGE>
                                                                              47

                           (i) prepare and file a registration statement under
                  the Securities Act, if necessary, with respect to the Rights
                  and the securities purchasable upon exercise of the Rights on
                  an appropriate form, use its best efforts to cause such
                  registration statement to become effective as soon as
                  practicable after such filing and use its best efforts to
                  cause such registration statement to remain effective (with a
                  prospectus at all times meeting the requirements of the
                  Securities Act) until the Final Expiration Date, and similarly
                  comply with applicable state securities laws;

                           (i) use its best efforts, if the Common Stock of the
                  Principal Party shall be listed or admitted to trading on the
                  New York Stock Exchange or on another national securities
                  exchange, to list or admit to trading (or continue the listing
                  of) the Rights and the securities purchasable upon exercise of
                  the Rights on the New York Stock Exchange or such securities
                  exchange, or, if the Common Stock of the Principal Party shall
                  not be listed or admitted to trading on the New York Stock
                  Exchange or a national securities exchange, to cause the
                  Rights and the securities receivable upon exercise of the
                  Rights to be reported by such other system then in use;

                           (ii) deliver to holders of the Rights historical
                  financial statements for the Principal Party which comply in
                  all respects with the requirements for registration on Form 10
                  (or any successor form) under the Exchange Act; and

                           (iii) obtain waivers of any rights of first refusal
                  or preemptive rights in respect of the Common Stock of the
                  Principal Party subject to purchase upon exercise of
                  outstanding Rights.

<PAGE>
                                                                              48

                  (d) In case the Principal Party has provision in any of its
authorized securities or in its certificate of incorporation or by-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current market price
per share thereof (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock of such Principal Party at
less than such then current market price, or (ii) providing for any special
payment, tax or similar provision in connection with the issuance of the Common
Stock of such Principal Party pursuant to the provisions of Section 13, then, in
such event, the Company hereby agrees with each holder of Rights that it shall
not consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.

                  (e) The Company covenants and agrees that it shall not, at any
time after a Person first becomes an Acquiring Person, enter into any
transaction of the type contemplated by clauses (i), (ii) or (iii) of Section
13(a) hereof if (x) at the time of or immediately after such consolidation,
merger, sale, transfer or other transaction there are any rights, warrants or
other instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, (y) prior to, simultaneously with or immediately after
such consolidation, merger, sale, transfer of other

<PAGE>
                                                                              49

transaction, the stockholders of the Person who constitutes, or would
constitute, the Principal Party for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates or (z) the form or nature of organization of the
Principal Party would preclude or limit the exercisability of the Rights.

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

<PAGE>
                                                                              50

by the Board of Directors of the Company. If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on such
date as determined in good faith by the Board of Directors of the Company shall
be used.

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

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

<PAGE>
                                                                              51

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

<PAGE>
                                                                              52

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

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

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

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

                  Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to

<PAGE>
                                                                              53

give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in this
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Rights evidenced by such Right 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 other disbursements incurred in the
preparation, administration, delivery, execution and amendment 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, damage, judgment, fine, penalty, claim, demand, settlement,
cost or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent (each determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction) for any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including,
without limitation, the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly. The costs and expenses
incurred in enforcing this right of indemnification shall be paid by the Company
unless it its determined by a final, non-appealable order, judgment, decree or
ruling of a court of competent jurisdiction that the Rights Agent is not
entitled to indemnification due to the Rights Agent's gross negligence, bad
faith or willful misconduct. The provisions of this Section 18 and Section 20
below shall survive the termination of this Agreement, the exercise or
expiration of the Rights and the resignation or removal of the Rights Agent.

<PAGE>
                                                                              54

                  (b) The Rights Agent shall be authorized and protected and
shall incur no liability for, or in respect of any action taken suffered or
omitted by it in connection with, its acceptance and administration of this
Agreement in reliance upon any rights Certificate or certificate for any series
of Preferred Stock or any class of 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 advise of counsel as set forth in Section 20 hereof. The
Rights Agent shall not be deemed to have knowledge of any event of which it was
supposed to receive notice thereof hereunder, and the Rights Agent shall be
fully protected and shall incur no liability for failing to take any action in
connection therewith unless and until it has received such notice in writing.

                  Section 19. Merger or Consolidation or Change of Name of
Rights Agent. (a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, that such Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right

<PAGE>
                                                                              55

Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.

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

                  Section 20. Duties of Rights Agent. The Rights Agent
undertakes only the duties and obligations expressly imposed by this Agreement
(and no implied duties and obligations) upon the following terms and conditions,
by all of which the Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:

                  (a) The Rights Agent may consult with legal counsel (who may
         be legal counsel for the Company), and the advice or opinion of such
         counsel shall be full and complete authorization and protection to the
         Rights Agent, and the Rights Agent shall incur no liability for, or in
         respect of, any action taken, suffered or omitted by it in accordance
         with such advise or opinion.

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

<PAGE>
                                                                              56

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

                  (c) The Rights Agent shall be liable hereunder to the Company
         and any other Person only for its own gross negligence, bad faith or
         willful misconduct (each as determined by a final, non-appealable
         order, judgment, decree or ruling of a court of competent
         jurisdiction). Anything to the contrary notwithstanding, in no event
         shall the Rights Agent be liable for special, punitive, indirect,
         consequential or incidental loss or damage of any kind whatsoever
         (including, but not limited to lost profits), even if the Rights Agent
         has been advised of the likelihood of such loss or damage. Any
         liability of the Rights Agent under this Rights Agreement will be
         limited to the amount of fees paid by the Company to the Rights Agent.

                  (d) The Rights Agent shall not be liable for or by reason of
         any of the statements of fact or recitals contained in this Agreement
         or in the Right Certificates (except its countersignature thereof) or
         be required to verify the same, but all such statements and recitals
         are and shall be deemed to have been made by the Company only.

                  (e) The Rights Agent shall not be under any responsibility or
         have any liability in respect of the validity of this Agreement or the
         execution and delivery hereof

<PAGE>
                                                                              57

         (except the due execution hereof by the Rights Agent) or in respect of
         the validity or execution of any Right Certificate (except its
         countersignature thereof); nor shall it be responsible for any breach
         by the Company of any covenant or condition contained in this Agreement
         or in any Right Certificate; nor shall it be responsible for any change
         in the exercisability of the Rights (including the Rights becoming void
         pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of
         the Rights (including the manner, method or amount thereof) provided
         for in Sections 3, 11, 13, 23 and 24, or the ascertaining of the
         existence of facts that would require any such change or adjustment
         (except with respect to the exercise of Rights evidenced by Right
         Certificates after receipt of a certificate furnished pursuant to
         Section 12, describing such change or 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 Preferred Stock or
         other securities to be issued pursuant to this Agreement or any Right
         Certificate or as to whether any shares of Preferred Stock or other
         securities will, when 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 any one of the Chairman of the Board of Directors, the
         Chief Executive Officer, the Chief Operating Officer, the

<PAGE>
                                                                              58

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

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

<PAGE>
                                                                              59

                  (i) The Rights Agent may execute and exercise any of the
         rights or powers hereby vested in it or perform any duty hereunder
         either itself or by or through its attorneys or agents, and the Rights
         Agent shall not be answerable or accountable for any act, default,
         neglect or misconduct of any such attorneys or agents or for any loss
         to the Company or any other reason resulting from any such act,
         default, neglect or misconduct, absent gross negligence, bad faith or
         willful misconduct (each as determined by a final, non-appealable
         order, judgment, decree or ruling of a court of competent jurisdiction)
         in the selection and continued employment thereof.

                  (j) If, with respect to any Rights Certificate surrendered to
         the Rights Agent for exercise or transfer, the certificate contained in
         the form of assignment or the form of election to purchase set forth on
         the reverse thereof, as the case may be, has not been completed to
         certify the holder is not an Acquiring Person (or an Affiliate or
         Associate thereof), the Rights Agent shall not take any further action
         with respect to such requested exercise or transfer without first
         consulting with the Company.

                  Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of each class of Common Stock or each series of Preferred Stock
by registered or certified mail, and, following the Distribution Date, to the
holders of the Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of each class of Common Stock or each series of Preferred
Stock by registered or certified mail, and, following the Distribution Date, to
the holders of the Right Certificates by first-class mail. If the

<PAGE>
                                                                              60

Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a Person organized and doing
business under the laws of the United States or any State thereof, which is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million or (b) an Affiliate of a Person described in
clause (a). 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
any class of Common Stock or any series of Preferred Stock, and, following the
Distribution Date, mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.

<PAGE>
                                                                              61

                  Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such forms as may be approved by its Board of Directors to
reflect any adjustment or change in the applicable Purchase Price and the number
or kind or class of shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of any class of Common Stock
following the Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date, the Company may, with respect to shares of Common
Stock of any class so issued or sold pursuant to (i) the exercise of stock
options, (ii) under any employee plan or arrangement, (iii) upon the exercise,
conversion or exchange of securities notes or debentures issued by the Company
or (iv) a contractual obligation of the Company in each case existing prior to
the Distribution Date, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale.

                  Section 23. Redemption. (a) The Board of Directors of the
Company may, at any time prior to such time as any Person first becomes an
Acquiring Person, redeem all but not less than all the then outstanding Rights
at a redemption price of $.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (the redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish. The Company may, at its option, pay the Redemption
Price in cash, shares of Common Stock (based on the current market price of the
Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.

<PAGE>
                                                                              62

                  (b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23 (or at such later time as the Board of Directors may establish for the
effectiveness of such redemption), 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.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within 10 days after such action of the
Board of Directors ordering the redemption of the Rights (or such later time as
the Board of Directors may establish for the effectiveness of such redemption),
the Company shall give prompt written notice of such redemption to the Rights
Agent and shall mail a notice of redemption to all the holders of the then
outstanding Rights 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 shall 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 any Person first becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for shares of Common Stock (or, at the
Company's option, Preferred Stock in accordance with Section 11(a)(iii)) at an
exchange ratio of one share of Class A Common Stock per Class A Right (or one
one-thousandth of a share of Series A Preferred Stock), one share of Class B
Common Stock per Class B Right (or one

<PAGE>
                                                                              63

one-thousandth of a share of Series B Preferred Stock) and one share of Class C
Common Stock per Class C Right (or one one-thousandth of a share of Series C
Preferred Stock) (adjusted to reflect any stock split, stock dividend or similar
transaction with respect to the applicable class of Common Stock occurring after
the date hereof; such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Person (other
than an Exempt Person), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of (1) shares of Class B Common Stock
aggregating 50% or more of the shares of Class B Common Stock then outstanding
or (2) shares of Common Stock representing, in the aggregate, 50% or more of the
total number of votes entitled to be cast generally (other than in an election
of directors) by the holders of the Common Stock then outstanding. From and
after the occurrence of an event specified in Section 13(a) hereof, any Rights
that theretofore have not been exchanged pursuant to this Section 24(a) shall
thereafter be exercisable only in accordance with Section 13 and may not be
exchanged pursuant to this Section 24(a). The exchange of the Rights by the
Board of Directors may be made effective at such time, on such basis and with
such conditions as the Board of Directors in its sole discretion may establish.

                  (b) Immediately upon the effectiveness of 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 terminate and the only right
thereafter of holders 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 (with prompt written notice thereof to the Rights Agent);
provided, however, that the failure to

<PAGE>
                                                                              64

give, or any defect in, such notice shall not affect the validity of such
exchange. The Company shall promptly mail a notice of any such exchange to all
of the holders of the Rights so exchanged at their last addresses as they appear
upon the registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of exchange will state the method by which the
exchange of the shares of 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 of (a) Class A Rights shall be effected pro rata based on the
number of available shares of Class A Common Stock and the number of Class A
Rights (other than Class A Rights which have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of Class A Rights,
(b) Class B Rights shall be effected pro rata based on the number of available
shares of Class B Common Stock and the number of Class B Rights (other than
Class B Rights which have become void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Class B Rights and (c) Class C Rights
shall be effected pro rata based on the number of available shares of Class C
Common Stock and the number of Class C Rights (other than Class C Rights which
have become void pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Class C Rights.

                  (c) The Company may at its option substitute, and, in the
event that there shall not be sufficient shares of Class A Common Stock, Class B
Common Stock or Class C Common Stock, as the case may be, issued but not
outstanding or authorized but unissued to permit an exchange of Class A Rights,
Class B Rights or Class C Rights, as the case may be, for Class A Common Stock,
Class B Common Stock or Class C Common Stock as contemplated in accordance with
this Section 24, the Company may, in its discretion, take such action as may be

<PAGE>
                                                                              65

necessary to authorize additional shares of Class A Common Stock, Class B Common
Stock or Class C Common Stock for issuance upon exchange of the Class A Rights,
the Class B Rights or the Class C Rights. In the event that the Company shall
determine not to take such action or shall, after good faith effort, be unable
to take such action as may be necessary to authorize such additional shares of
Class A Common Stock, Class B Common Stock or Class C Common Stock, the Company
shall substitute, to the extent of such insufficiency, for each share of Class A
Common Stock, Class B Common Stock or Class C Common Stock that would otherwise
be issuable upon exchange of a Class A Right, Class B Right or Class C Right, a
number of shares of Series A Preferred Stock, Series B Preferred Stock, or
Series C Preferred Stock or fractions thereof (or equivalent preferred shares as
such term is defined in Section 11(b)) having an aggregate current per share
market price (determined pursuant to Section 11(d) hereof) equal to the current
per share market price of one share of Class A Common Stock, Class B Common
Stock or Class C Common Stock (determined pursuant to Section 11(d) hereof), as
the case may be, as of the date of issuance of such shares of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock, as the case may be,
or fractions thereof (or equivalent preferred shares).

                  (d) The Company shall not, in connection with any exchange
pursuant to this Section 24, 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 the
applicable class of Common Stock. For the purposes of this paragraph (d), the
current market value of a

<PAGE>
                                                                              66

whole share of Class A Common Stock, Class B Common Stock or Class C Common
Stock shall be the closing price of a share of Class A Common Stock, Class B
Common Stock and Class C Common Stock (as determined pursuant to the second
sentence of Section 11(d)(i) hereof), as applicable, for the Trading Day
immediately prior to but not including the date of exchange pursuant to this
Section 24.

                  Section 25. Notice of Certain Events. (a) In case the Company
shall at any time after the earlier of the Distribution Date or the Stock
Acquisition Date propose (i) to pay any dividend payable in stock of any class
to the holders of any series of its Preferred Stock or to make any other
distribution to the holders of any series of its Preferred Stock (other than a
regular quarterly cash dividend), (ii) to offer to the holders of any series of
its Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of any series of Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of any series of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding Preferred Stock),
(iv) to effect the liquidation, dissolution or winding up of the Company, or (v)
to declare or pay any dividend on any class of Common Stock payable in Common
Stock or to effect a subdivision, combination or consolidation of any class of
Common Stock (by reclassification or otherwise than by payment of dividends in
Common Stock), then, in each such case, the Company shall give to each holder of
a Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which such
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of such class or series of Common Stock
and/or Preferred Stock, if any such date is to be fixed, and such notice shall
be so given in the case of

<PAGE>
                                                                              67

any action covered by clause (i) or (ii) above at least 10 days prior to the
record date for determining holders of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the Common Stock and/or Preferred Stock, whichever shall be
the earlier.

                  (b) In case any event described in Section 11(a)(ii) or
Section 13 shall occur then the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate (or if occurring prior to the
Distribution Date, the holders of the Common Stock) in accordance with Section
26 hereof, a notice of the occurrence of such event, which notice shall describe
such event and the consequences of such event to holders of Rights under Section
11(a)(ii) and Section 13 hereof.

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

                                   The Neiman Marcus Group, Inc.
                                   1618 Main Street
                                   Dallas, Texas   75201
                                   Attention:  General Counsel
                                   Facsimile No.: 214-743-7611

Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage

<PAGE>
                                                                              68

prepaid, addressed (until another address is filed in writing with the Company)
or by facsimile transmission as follows:

                                   Mellon Investor Services LLC
                                   600 North Pearl, Suite 1010
                                   Dallas, TX 75201
                                   Attention: Relationship Manager
                                   Facsimile No.: 214-922-4466

                                   with a copy to:

                                   Mellon Investor Services LLC
                                   85 Challenger Road
                                   Ridgefield Park, New Jersey 07660
                                   Attention: General Counsel
                                   Facsimile No.: 201-296-4004

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

<PAGE>
                                                                              69

                  Section 27. Supplements and Amendments. Except as otherwise
provided for so long as the Rights are then redeemable, the Company may in its
sole and absolute discretion, and the Rights Agent shall if the Company so
directs but subject to the other provisions of this Section, supplement or amend
any provision of this Agreement in any respect without the approval of any
holders of the Rights. At any time when the Rights are no longer redeemable, no
such supplement or amendment shall be made if such supplement or amendment shall
adversely affect the interests of the holders of Rights as such (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no
such amendment may cause the Rights again to become redeemable or cause the
Agreement again to become amendable other than in accordance with this sentence.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price. 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, and provided that such supplement or amendment does not
change or increase the Rights Agent's rights, duties, liabilities or
obligations, the Rights Agent shall execute such supplement or amendment.

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

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

<PAGE>
                                                                              70

the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).

                  Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement or applicable to this Agreement is held by a court
of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

                  Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State; provided, however, that all
provisions regarding the rights, duties, liabilities and obligations of the
Rights Agent shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed entirely
within such State.

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

<PAGE>
                                                                              71

                  Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.

                  Section 34. Administration. The Board of Directors of the
Company shall have the exclusive power and authority to: (i) administer and
interpret the provisions of this Agreement, including, without limiting the
generality of the foregoing, to administer and interpret the provisions of this
Agreement relating to Exempt Persons to effectuate the purpose of such
provisions, and (ii) 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. All such actions, calculations, determinations
and interpretations which are done or made by the Board of Directors in good
faith shall be final, conclusive and binding on the Company, the Rights Agent,
the holders of the Rights and all other parties and shall not subject the Board
of Directors to any liability to the holders of the Rights.

             [The remainder of this page intentionally left blank.]

<PAGE>
                                                                              72

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

                               THE NEIMAN MARCUS GROUP, INC.

                               By: /s/ Nelson A. Bangs
                                   --------------------------------------
                               Name: Nelson A. Bangs
                               Title Senior Vice President and General Counsel

                               MELLON INVESTOR SERVICES LLC

                               By: /s/ Timothy D. Oliver
                                   --------------------------------------
                               Name: Timothy D. Oliver
                               Title Vice President

<PAGE>

                                                                     EXHIBIT A-1

                                      FORM

                                       OF

                           CERTIFICATE OF DESIGNATIONS

                                       OF

                  SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

                                       OF

                          THE NEIMAN MARCUS GROUP, INC.

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

                                   ----------

                  The Neiman Marcus Group, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (hereinafter
called the "Company"), hereby certifies that the following resolution was duly
adopted by the Board of Directors of the Company as required by Section 151 of
the General Corporation Law of the State of Delaware at a meeting duly called
and held on October 6, 1999:

                  RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of the Company (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Company's
Restated Certificate of Incorporation, as amended to date (hereinafter called
the "Certificate of Incorporation"), the Board of Directors hereby creates a
series of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of
the Company and hereby adopts the resolution establishing the designation,
number of shares, preferences, voting powers and other rights, and the
restrictions and limitations thereof, as follows:

                  Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 100,000. 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 Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Company
convertible into Series A Preferred Stock.

                                     A-1-1
<PAGE>

                  Section 2. Dividends and Distributions.

                  (A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Class A Common Stock,
par value $.01 per share, of the Company ("Class A Common Stock"), Class B
Common Stock, par value $.01 per share, of the Company ("Class B Common Stock")
and Class C Common Stock, par value $.01 per share, of the Company ("Class C
Common Stock" and, together with the Class A Common Stock and Class B Common
Stock, the "Common Stock") and of any other stock of the Company ranking junior
to the Series A Preferred Stock, and on a pari passu basis with the Series B
Preferred Stock and the Series C Preferred Stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for such 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 "Dividend Payment Date"), commencing on the first
Dividend Payment Date after the first issuance of a share or fraction of a share
of Series A Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Class A Common Stock, declared on the Class A Common Stock
since the immediately preceding Dividend Payment Date or, with respect to the
first Dividend Payment Date, since the first issuance of any share or fraction
of a share of Series A Preferred Stock. In the event the Company shall at any
time after October 18, 1999 declare or pay any dividend on the Class A Common
Stock payable in shares of Class A Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Class A Common Stock
(by reclassification or otherwise than by payment of a dividend in shares of
Class A Common Stock) into a greater or lesser number of shares of Class A
Common Stock, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Class A
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Class A Common Stock that were outstanding
immediately prior to such event.

                  (B) The Company shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Class A Common
Stock (other than a dividend payable in shares of Class A Common Stock);
provided, that, in the event no dividend or distribution shall have been
declared on the Class A Common Stock during the period between any Dividend
Payment Date and the next subsequent Dividend Payment Date, a dividend of $1 per
share on the Series A Preferred Stock shall nevertheless be payable, when, as
and if declared, on such subsequent Dividend Payment Date.

                  (C) Dividends shall begin to accrue and be cumulative, whether
or not earned or declared, on outstanding shares of Series A Preferred Stock
from the Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the
first Dividend Payment Date, in which case dividends on such shares shall

                                     A-1-2
<PAGE>

begin to accrue from the date of issue of such shares, or unless the date of
issue is a Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from such
Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.

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

                  (A) Subject to the provision for adjustment hereinafter set
forth and except as otherwise provided in the Certificate of Incorporation or
required by law, each share of Series A Preferred Stock shall entitle the holder
thereof to a number of votes equal to 1,000 times the number of votes which each
share of Class A Common Stock is entitled to vote, on all matters upon which the
holders of the Class A Common Stock of the Company are entitled to vote. In the
event the Company shall at any time after October 18, 1999 declare or pay any
dividend on the Class A Common Stock payable in shares of Class A Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Class A Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Class A Common Stock) into a greater or lesser number
of shares of Class A Common Stock, then in each such case the number of votes
per share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Class A Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Class A Common Stock that were outstanding immediately
prior to such event.

                   (B) Except as otherwise provided herein, in the Certificate
of Incorporation or in any other Certificate of Designations creating a series
of Preferred Stock or any similar stock, and except as otherwise required by
law, the holders of shares of Series A Preferred Stock and the holders of shares
of Class A Common Stock and any other capital stock of the Company having
general voting rights shall vote together as one class on all matters submitted
to a vote of stockholders of the Company.

                   (C) Except as set forth herein, or as otherwise provided by
law, holders of Series A 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 Class A 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 Preferred Stock as provided in Section 2
are in arrears, thereafter and until all

                                     A-1-3
<PAGE>

accrued and unpaid dividends and distributions, whether or not earned or
declared, on shares of Series A Preferred Stock outstanding shall have been paid
in full, the Company shall not:

                           (i) declare or pay dividends, or make any other
                  distributions, on any shares of stock ranking junior (as to
                  dividends) to the Series A Preferred Stock;

                           (ii) declare or pay dividends, or make any other
                  distributions, on any shares of stock ranking on a parity (as
                  to dividends) with the Series A Preferred Stock, except
                  dividends paid ratably on the Series A 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 Preferred Stock, provided that the Company may at
                  any time redeem, purchase or otherwise acquire shares of any
                  such junior stock in exchange for shares of any stock of the
                  Company ranking junior (as to dividends and upon dissolution,
                  liquidation or winding up) to the Series A Preferred Stock or
                  rights, warrants or options to acquire such junior stock;

                           (iv) redeem or purchase or otherwise acquire for
                  consideration any shares of Series A Preferred Stock, or any
                  shares of stock ranking on a parity (either as to dividends or
                  upon liquidation, dissolution or winding up) with the Series A
                  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.

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

                  Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof.

                  Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other stock of
the Company ranking junior, upon liquidation, dissolution or winding up, to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be

                                     A-1-4
<PAGE>

entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to
be distributed per share to holders of shares of Class A Common Stock, or (B) to
the holders of shares of stock ranking on a parity upon liquidation, dissolution
or winding up with the Series A Preferred Stock, except distributions made
ratably on the Series A Preferred Stock and all such parity stock in proportion
to the total amounts to which the holders of all such shares are entitled upon
such liquidation, dissolution or winding up. In the event the Company shall at
any time after October 18, 1999 declare or pay any dividend on the Class A
Common Stock payable in shares of Class A Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Class A Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Class A Common Stock) into a greater or lesser number of shares of Class A
Common Stock, then in each such case the aggregate amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under the proviso in clause (A) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Class A Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Class A Common Stock that were
outstanding immediately prior to such event.

                  Section 7. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Class A Common Stock are converted into, exchanged for or
changed into other stock or securities, cash and/or any other property, then in
any such case each share of Series A Preferred Stock shall at the same time be
similarly converted into, exchanged for or changed into an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 1,000
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Class A Common Stock is converted, exchanged or converted. In the event the
Company shall at any time after October 18, 1999 declare or pay any dividend on
the Class A Common Stock payable in shares of Class A 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 Class A Common Stock) into a greater or lesser number of shares of Class A
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the conversion, exchange or change of shares of Series
A Preferred Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Class A Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Class A Common Stock that were outstanding immediately prior
to such event.

                  Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable from any holder.

                  Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Company, pari passu with the
Series B and the Series C Preferred Stock, junior to all other series of
Preferred Stock and senior to all classes of Common Stock.

                  Section 10. Amendment. If any proposed amendment to the
Certificate of Incorporation (including this Certificate of Designations) would
alter, change or repeal any of the

                                     A-1-5
<PAGE>

preferences, powers or special rights given to the Series A Preferred Stock so
as to affect the Series A Preferred Stock adversely, then the holders of the
Series A Preferred Stock shall be entitled to vote separately as a class upon
such amendment, and the affirmative vote of two-thirds of the outstanding shares
of the Series A Preferred Stock, voting separately as a class, shall be
necessary for the adoption thereof, in addition to such other vote as may be
required by the General Corporation Law of the State of Delaware.

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

                                     A-1-6
<PAGE>

                  IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Company by its ______________________this __day of
_____, 1999.

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

                                     A-1-7
<PAGE>

                                                                     EXHIBIT A-2

                                      FORM

                                       OF

                           CERTIFICATE OF DESIGNATIONS

                                       OF

                  SERIES B JUNIOR PARTICIPATING PREFERRED STOCK

                                       OF

                          THE NEIMAN MARCUS GROUP, INC.

                         (Pursuant to Section 151 of the

                General Corporation Law of the State of Delaware)

                                   ----------

                  The Neiman Marcus Group, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (hereinafter
called the "Company"), hereby certifies that the following resolution was duly
adopted by the Board of Directors of the Company as required by Section 151 of
the General Corporation Law of the State of Delaware at a meeting duly called
and held on October 6, 1999:

                  RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of the Company (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Company's
Restated Certificate of Incorporation, as amended to date (hereinafter called
the "Certificate of Incorporation"), the Board of Directors hereby creates a
series of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of
the Company and hereby adopts the resolution establishing the designation,
number of shares, preferences, voting powers and other rights, and the
restrictions and limitations thereof, as follows:

                  Section 1. Designation and Amount. The shares of such series
shall be designated as "Series B Junior Participating Preferred Stock" (the
"Series B Preferred Stock") and the number of shares constituting the Series B
Preferred Stock shall be 100,000. 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 B Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Company
convertible into Series B Preferred Stock.

                  Section 2. Dividends and Distributions.

                                     A-2-1
<PAGE>

                  (A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series B Preferred Stock with respect to dividends, the holders of shares of
Series B Preferred Stock, in preference to the holders of Class A Common Stock,
par value $.01 per share, of the Company ("Class A Common Stock"), Class B
Common Stock, par value $.01 per share, of the Company ("Class B Common Stock")
and Class C Common Stock, par value $.01 per share, of the Company ("Class C
Common Stock" and, together with the Class A Common Stock and Class B Common
Stock, the "Common Stock") and of any other stock of the Company ranking junior
to the Series B Preferred Stock, and on a pari passu basis with the Series C
Preferred Stock and the Series A Preferred Stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for such 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 "Dividend Payment Date"), commencing on the first
Dividend Payment Date after the first issuance of a share or fraction of a share
of Series B Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Class B Common Stock, declared on the Class B Common Stock
since the immediately preceding Dividend Payment Date or, with respect to the
first Dividend Payment Date, since the first issuance of any share or fraction
of a share of Series B Preferred Stock. In the event the Company shall at any
time after October 18, 1999 declare or pay any dividend on the Class B Common
Stock payable in shares of Class B Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Class B Common Stock
(by reclassification or otherwise than by payment of a dividend in shares of
Class B Common Stock) into a greater or lesser number of shares of Class B
Common Stock, then in each such case the amount to which holders of shares of
Series B Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Class B
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Class B Common Stock that were outstanding
immediately prior to such event.

                  (B) The Company shall declare a dividend or distribution on
the Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Class B Common
Stock (other than a dividend payable in shares of Class B Common Stock);
provided, that, in the event no dividend or distribution shall have been
declared on the Class B Common Stock during the period between any Dividend
Payment Date and the next subsequent Dividend Payment Date, a dividend of $1 per
share on the Series B Preferred Stock shall nevertheless be payable, when, as
and if declared, on such subsequent Dividend Payment Date.

                  (C) Dividends shall begin to accrue and be cumulative, whether
or not earned or declared, on outstanding shares of Series B Preferred Stock
from the Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the
first Dividend Payment Date, in which case dividends on such shares shall begin
to accrue from the date of issue of such shares, or unless the date of issue is
a Dividend Payment Date or is a date after the record date for the determination
of holders of shares of

                                     A-2-2
<PAGE>

Series B Preferred Stock entitled to receive a quarterly dividend and before
such Dividend Payment Date, in either of which events such dividends shall begin
to accrue and be cumulative from such Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series B
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series B Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.

                  Section 3. Voting Rights. The holders of shares of Series B
Preferred Stock shall have the following voting rights;

                  (A) Subject to the provision for adjustment hereinafter set
forth and except as otherwise provided in the Certificate of Incorporation or
required by law, each share of Series B Preferred Stock shall entitle the holder
thereof to a number of votes equal to 1,000 times the number of votes which each
share of Class B Common Stock is entitled to vote, on all matters upon which the
holders of the Class B Common Stock of the Company are entitled to vote. In the
event the Company shall at any time after October 18, 1999 declare or pay any
dividend on the Class B Common Stock payable in shares of Class B Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Class B Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Class B Common Stock) into a greater or lesser number
of shares of Class B Common Stock, then in each such case the number of votes
per share to which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Class B Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Class B Common Stock that were outstanding immediately
prior to such event.

                  (B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock, and except as otherwise required by law,
the holders of shares of Series B Preferred Stock and the holders of shares of
Class B Common Stock and any other capital stock of the Company having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Company.

                  (C) Except as set forth herein, or as otherwise provided by
law, holders of Series B 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 Class B 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 B Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not earned or declared, on shares of Series B
Preferred Stock outstanding shall have been paid in full, the Company shall not:

                                     A-2-3
<PAGE>

                           (i) declare or pay dividends, or make any other
                  distributions, on any shares of stock ranking junior (as to
                  dividends) to the Series B Preferred Stock;

                           (ii) declare or pay dividends, or make any other
                  distributions, on any shares of stock ranking on a parity (as
                  to dividends) with the Series B Preferred Stock, except
                  dividends paid ratably on the Series B 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 B Preferred Stock, provided that the Company may at
                  any time redeem, purchase or otherwise acquire shares of any
                  such junior stock in exchange for shares of any stock of the
                  Company ranking junior (as to dividends and upon dissolution,
                  liquidation or winding up) to the Series B Preferred Stock or
                  rights, warrants or options to acquire such junior stock;

                           (iv) redeem or purchase or otherwise acquire for
                  consideration any shares of Series B Preferred Stock, or any
                  shares of stock ranking on a parity (either as to dividends or
                  upon liquidation, dissolution or winding up) with the Series B
                  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.

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

                  Section 5. Reacquired Shares. Any shares of Series B Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof.

                  Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other stock of
the Company ranking junior, upon liquidation, dissolution or winding up, to the
Series B Preferred Stock unless, prior thereto, the holders of shares of Series
B Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of shares of
Series B Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
shares of Class B Common Stock, or (B) to the holders of shares of stock ranking
on a parity upon liquidation, dissolution or winding up with the Series B
Preferred Stock, except

                                     A-2-4
<PAGE>

distributions made ratably on the Series B Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the event the
Company shall at any time after October 18, 1999 declare or pay any dividend on
the Class B Common Stock payable in shares of Class B Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Class B
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Class B Common Stock) into a greater or lesser number of shares of
Class B Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (A) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Class B Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Class B Common
Stock that were outstanding immediately prior to such event.

                  Section 7. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Class B Common Stock are converted into, exchanged for or
changed into other stock or securities, cash and/or any other property, then in
any such case each share of Series B Preferred Stock shall at the same time be
similarly converted into, exchanged for or changed into an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 1,000
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Class B Common Stock is converted, exchanged or converted. In the event the
Company shall at any time after October 18, 1999 declare or pay any dividend on
the Class B Common Stock payable in shares of Class B 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 Class B Common Stock) into a greater or lesser number of shares of Class B
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the conversion, exchange or change of shares of Series
B Preferred Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Class B Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Class B Common Stock that were outstanding immediately prior
to such event.

                  Section 8. No Redemption. The shares of Series B Preferred
Stock shall not be redeemable from any holder.

                  Section 9. Rank. The Series B Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Company, pari passu with the
Series C and the Series A Preferred Stock, junior to all other series of
Preferred Stock and senior to all classes of Common Stock.

                  Section 10. Amendment. If any proposed amendment to the
Certificate of Incorporation (including this Certificate of Designations) would
alter, change or repeal any of the preferences, powers or special rights given
to the Series B Preferred Stock so as to affect the Series B Preferred Stock
adversely, then the holders of the Series B Preferred Stock shall be entitled to
vote separately as a class upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of the Series B Preferred Stock, voting
separately as a class,

                                     A-2-5
<PAGE>

shall be necessary for the adoption thereof, in addition to such other vote as
may be required by the General Corporation Law of the State of Delaware.

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

                                     A-2-6
<PAGE>

                  IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Company by its _____________this __day of _____, 1999.

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

                                     A-2-7
<PAGE>

                                                                     EXHIBIT A-3

                                      FORM

                                       OF

                           CERTIFICATE OF DESIGNATIONS

                                       OF

                  SERIES C JUNIOR PARTICIPATING PREFERRED STOCK

                                       OF

                          THE NEIMAN MARCUS GROUP, INC.

                         (Pursuant to Section 151 of the

                General Corporation Law of the State of Delaware)

                                   ----------

                  The Neiman Marcus Group, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (hereinafter
called the "Company"), hereby certifies that the following resolution was duly
adopted by the Board of Directors of the Company as required by Section 151 of
the General Corporation Law of the State of Delaware at a meeting duly called
and held on October 6, 1999:

                  RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of the Company (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Company's
Restated Certificate of Incorporation, as amended to date (hereinafter called
the "Certificate of Incorporation"), the Board of Directors hereby creates a
series of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of
the Company and hereby adopts the resolution establishing the designation,
number of shares, preferences, voting powers and other rights, and the
restrictions and limitations thereof, as follows:

                  Section 1. Designation and Amount. The shares of such series
shall be designated as "Series C Junior Participating Preferred Stock" (the
"Series C Preferred Stock") and the number of shares constituting the Series C
Preferred Stock shall be 50,000. 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 C Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Company
convertible into Series C Preferred Stock.

                                     A-3-1
<PAGE>

                  Section 2. Dividends and Distributions.

                  (A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series C Preferred Stock with respect to dividends, the holders of shares of
Series C Preferred Stock, in preference to the holders of Class A Common Stock,
par value $.01 per share, of the Company ("Class A Common Stock"), Class B
Common Stock, par value $.01 per share, of the Company ("Class B Common Stock")
and Class C Common Stock, par value $.01 per share, of the Company ("Class C
Common Stock" and, together with the Class A Common Stock and Class B Common
Stock, the "Common Stock") and of any other stock of the Company ranking junior
to the Series C Preferred Stock, and on a pari passu basis with the Series A
Preferred Stock and the Series B Preferred Stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for such 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 "Dividend Payment Date"), commencing on the first
Dividend Payment Date after the first issuance of a share or fraction of a share
of Series C Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Class C Common Stock, declared on the Class C Common Stock
since the immediately preceding Dividend Payment Date or, with respect to the
first Dividend Payment Date, since the first issuance of any share or fraction
of a share of Series C Preferred Stock. In the event the Company shall at any
time after October 18, 1999 declare or pay any dividend on the Class C Common
Stock payable in shares of Class C Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Class C Common Stock
(by reclassification or otherwise than by payment of a dividend in shares of
Class C Common Stock) into a greater or lesser number of shares of Class C
Common Stock, then in each such case the amount to which holders of shares of
Series C Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Class C
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Class C Common Stock that were outstanding
immediately prior to such event.

                  (B) The Company shall declare a dividend or distribution on
the Series C Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Class C Common
Stock (other than a dividend payable in shares of Class C Common Stock);
provided, that, in the event no dividend or distribution shall have been
declared on the Class C Common Stock during the period between any Dividend
Payment Date and the next subsequent Dividend Payment Date, a dividend of $1 per
share on the Series C Preferred Stock shall nevertheless be payable, when, as
and if declared, on such subsequent Dividend Payment Date.

                  (C) Dividends shall begin to accrue and be cumulative, whether
or not earned or declared, on outstanding shares of Series C Preferred Stock
from the Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the
first Dividend Payment Date, in which case dividends on such shares shall

                                     A-3-2
<PAGE>

begin to accrue from the date of issue of such shares, or unless the date of
issue is a Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series C Preferred Stock entitled to
receive a quarterly dividend and before such Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from such
Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series C Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series C Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.

                  Section 3. Voting Rights. The holders of shares of Series C
Preferred Stock shall have the following voting rights;

                  (A) Subject to the provision for adjustment hereinafter set
forth and except as otherwise provided in the Certificate of Incorporation or
required by law, each share of Series C Preferred Stock shall entitle the holder
thereof to a number of votes equal to 1,000 times the number of votes which each
share of Class C Common Stock is entitled to vote, on all matters upon which the
holders of the Class C Common Stock of the Company are entitled to vote. In the
event the Company shall at any time after October 18, 1999 declare or pay any
dividend on the Class C Common Stock payable in shares of Class C Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Class C Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Class C Common Stock) into a greater or lesser number
of shares of Class C Common Stock, then in each such case the number of votes
per share to which holders of shares of Series C Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Class C Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Class C Common Stock that were outstanding immediately
prior to such event.

                  (B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock, and except as otherwise required by law,
the holders of shares of Series C Preferred Stock and the holders of shares of
Class C Common Stock and any other capital stock of the Company having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Company.

                  (C) Except as set forth herein, or as otherwise provided by
law, holders of Series C 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 Class C 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 C Preferred Stock as provided in Section 2
are in arrears, thereafter and until all

                                     A-3-3
<PAGE>

accrued and unpaid dividends and distributions, whether or not earned or
declared, on shares of Series C Preferred Stock outstanding shall have been paid
in full, the Company shall not:

                           (i) declare or pay dividends, or make any other
                  distributions, on any shares of stock ranking junior (as to
                  dividends) to the Series C Preferred Stock;

                           (ii) declare or pay dividends, or make any other
                  distributions, on any shares of stock ranking on a parity (as
                  to dividends) with the Series C Preferred Stock, except
                  dividends paid ratably on the Series C 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 C Preferred Stock, provided that the Company may at
                  any time redeem, purchase or otherwise acquire shares of any
                  such junior stock in exchange for shares of any stock of the
                  Company ranking junior (as to dividends and upon dissolution,
                  liquidation or winding up) to the Series C Preferred Stock or
                  rights, warrants or options to acquire such junior stock;

                           (iv) redeem or purchase or otherwise acquire for
                  consideration any shares of Series C Preferred Stock, or any
                  shares of stock ranking on a parity (either as to dividends or
                  upon liquidation, dissolution or winding up) with the Series C
                  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.

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

                  Section 5. Reacquired Shares. Any shares of Series C Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof.

                  Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other stock of
the Company ranking junior, upon liquidation, dissolution or winding up, to the
Series C Preferred Stock unless, prior thereto, the holders of shares of Series
C Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of shares of
Series C Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment

                                     A-3-4
<PAGE>

hereinafter set forth, equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of Class C Common Stock, or (B) to
the holders of shares of stock ranking on a parity upon liquidation, dissolution
or winding up with the Series C Preferred Stock, except distributions made
ratably on the Series C Preferred Stock and all such parity stock in proportion
to the total amounts to which the holders of all such shares are entitled upon
such liquidation, dissolution or winding up. In the event the Company shall at
any time after October 18, 1999 declare or pay any dividend on the Class C
Common Stock payable in shares of Class C Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Class C Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Class C Common Stock) into a greater or lesser number of shares of Class C
Common Stock, then in each such case the aggregate amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under the proviso in clause (A) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Class C Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Class C Common Stock that were
outstanding immediately prior to such event.

                  Section 7. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Class C Common Stock are converted into, exchanged for or
changed into other stock or securities, cash and/or any other property, then in
any such case each share of Series C Preferred Stock shall at the same time be
similarly converted into, exchanged for or changed into an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 1,000
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Class C Common Stock is converted, exchanged or converted. In the event the
Company shall at any time after October 18, 1999 declare or pay any dividend on
the Class C Common Stock payable in shares of Class C 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 Class C Common Stock) into a greater or lesser number of shares of Class C
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the conversion, exchange or change of shares of Series
C Preferred Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Class C Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Class C Common Stock that were outstanding immediately prior
to such event.

                  Section 8. No Redemption. The shares of Series C Preferred
Stock shall not be redeemable from any holder.

                  Section 9. Rank. The Series C Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Company, pari passu with the
Series A and the Series B Preferred Stock, junior to all other series of
Preferred Stock and senior to all classes of Common Stock.

                  Section 10. Amendment. If any proposed amendment to the
Certificate of Incorporation (including this Certificate of Designations) would
alter, change or repeal any of the preferences, powers or special rights given
to the Series C Preferred Stock so as to affect the

                                     A-3-5
<PAGE>

Series C Preferred Stock adversely, then the holders of the Series C Preferred
Stock shall be entitled to vote separately as a class upon such amendment, and
the affirmative vote of two-thirds of the outstanding shares of the Series C
Preferred Stock, voting separately as a class, shall be necessary for the
adoption thereof, in addition to such other vote as may be required by the
General Corporation Law of the State of Delaware.

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

                                     A-3-6
<PAGE>

                  IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Company by its _____________this __day of _____, 1999.

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

                                     A-3-7
<PAGE>

                                                                     EXHIBIT B-1

                        Form of Class A Right Certificate

Certificate No. R- ____

                  NOT EXERCISABLE AFTER OCTOBER 6, 2009 OR EARLIER IF
                  REDEMPTION OR EXCHANGE OCCURS. THE CLASS A RIGHTS ARE
                  SUBJECT TO REDEMPTION AT $.01 PER CLASS A RIGHT AND
                  TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
                  AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH
                  IN THE RIGHTS AGREEMENT, CLASS A RIGHTS OWNED BY OR
                  TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING
                  PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND
                  CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID
                  AND WILL NO LONGER BE TRANSFERABLE.

                            Class A Right Certificate

                          THE NEIMAN MARCUS GROUP, INC.

                  This certifies that ___________ or registered assigns, is the
registered owner of the number of Class A 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 October 6, 1999, as the same may be amended
from time to time (the "Rights Agreement"), between The Neiman Marcus Group,
Inc., a Delaware corporation (the "Company"), and BankBoston, N.A., a national
banking association, (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., New York City time, on October 6, 2009 at the
office or agency of the Rights Agent designated for such purpose, or of its
successor as Rights Agent, one one-thousandth of a fully paid non-assessable
share of Series A Junior Participating Preferred Stock, par value $.01 per share
(the "Series A Preferred Stock"), of the Company, at a purchase price of $100.00
per one one-thousandth of a share of Series A Preferred Stock (the "Purchase
Price"), upon presentation and surrender of this Class A Right Certificate with
the Form of Election to Purchase duly executed. The number of Class A Rights
evidenced by this Class A Right Certificate (and the number of one
one-thousandths of a share of Series A Preferred Stock which may be purchased
upon exercise hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of October 18, 1999, based on the Series A
Preferred Stock as constituted at such date. As provided in the Rights
Agreement, the Purchase Price, the number of one one-thousandths of a share of
Series A Preferred Stock (or other securities or property) which may be
purchased upon the exercise of the Class A Rights and the number of Class A
Rights evidenced by this Class A Right Certificate are subject to modification
and adjustment upon the happening of certain events.

                  Notwithstanding anything in the Rights Agreement to the
contrary, from and after the time (the "invalidation time") when any person
first becomes an Acquiring Person (as

                                     B-1-1
<PAGE>

defined in the Rights Agreement), the Class A Rights evidenced hereby
beneficially owned by (x) any Acquiring Person (or any Affiliate (as defined in
the Rights Agreement) or Associate (as defined in the Rights Agreement) of any
Acquiring Person), (y) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the invalidation time or
(z) a transferee of any Acquiring Person (or any such Affiliate or Associate)
who became a transferee prior to or concurrently with the invalidation time
pursuant to either (I) a transfer from the Acquiring Person to holders of its
equity securities or to any person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Class A Rights or (II) a
transfer which the Board of Directors of the Company has determined is part of a
plan, arrangement or understanding which has the purpose or effect of avoiding
the provisions of Section 11(a)(ii) of the Rights Agreement, and subsequent
transferees of such persons, shall be void without any further action and any
holder hereof shall thereafter have no rights whatsoever with respect to the
Class A Rights evidenced hereby under any provision of the Rights Agreement.

                  This Class A Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Class A Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office or agency of the
Rights Agent. The Company will mail to the holder of this Class A Right
Certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor.

                  This Class A Right Certificate, with or without other Class A
Right Certificates, upon surrender at the office or agency of the Rights Agent
designated for such purpose, may be exchanged for another Class A Right
Certificate or Class A Right Certificates of like tenor and date evidencing
Class A Rights entitling the holder to purchase a like aggregate number of
shares of Series A Preferred Stock as the Class A Rights evidenced by the Class
A Right Certificate or Class A Right Certificates surrendered shall have
entitled such holder to purchase. If this Class A Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Class A Right Certificate or Class A Right Certificates for the number
of whole Class A Rights not exercised.

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

                  No fractional shares of Series A Preferred Stock or Class A
Common Stock will be issued upon the exercise of any Class A Right or Class A
Rights evidenced hereby (other than fractions which are integral multiples of
one one-thousandth of a share of Series A 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.

                                     B-1-2
<PAGE>

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

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

                                     B-1-3
<PAGE>

                  WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _____________.

ATTEST:                                        THE NEIMAN MARCUS GROUP, INC.

By                                             By
   ----------------------------                   -----------------------------

Countersigned:

-----------------------,
as Rights Agent

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

                                     B-1-4
<PAGE>

                Form of Reverse Side of Class A Right Certificate

                               FORM OF ASSIGNMENT

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

                  FOR VALUE RECEIVED _________________________ hereby sells,
assigns and transfers unto ______________________________

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

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

Dated:
      ------------------

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

Signature Guaranteed:

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

--------------------------------------------------------------------------------
                                (To be completed)

                  The undersigned hereby certifies that the Class A Rights
evidenced by this Class A Right Certificate are not beneficially owned by, were
not acquired by the undersigned from, and are not being assigned to, an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).

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

                                     B-1-5
<PAGE>

          Form of Reverse Side of Class A Right Certificate - continued

                          FORM OF ELECTION TO PURCHASE

                 (To be executed if holder desires to exercise
          Class A Rights represented by the Class A Right Certificate)

To THE NEIMAN MARCUS GROUP, INC.

                  The undersigned hereby irrevocably elects to exercise
__________________ Class A Rights represented by this Class A Right Certificate
to purchase the shares of Series A Preferred Stock (or other securities or
property) issuable upon the exercise of such Class A Rights and requests that
certificates for such shares of Series A Preferred Stock (or such other
securities) be issued in the name of:

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

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

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

Please insert social security
or other identifying number

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

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

Dated:
        --------------------

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

(Signature must conform to holder specified on Class A Right Certificate)

                                     B-1-6
<PAGE>

Signature Guaranteed:

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

                                     B-1-7
<PAGE>

         Form of Reverse Side of Class A Right Certificate -- continued

                                (To be completed)
--------------------------------------------------------------------------------

                  The undersigned certifies that the Class A Rights evidenced by
this Class A Right Certificate are not beneficially owned by, and were not
acquired by the undersigned from, an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement)

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

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

                                     NOTICE

                  The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Class A Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.

                  In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.

                                     B-1-8
<PAGE>

                                                                     EXHIBIT B-2

                        Form of Class B Right Certificate

Certificate No. R- ____

                  NOT EXERCISABLE AFTER OCTOBER 6, 2009 OR EARLIER IF
                  REDEMPTION OR EXCHANGE OCCURS. THE CLASS B RIGHTS ARE
                  SUBJECT TO REDEMPTION AT $.01 PER CLASS B RIGHT AND
                  TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
                  AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH
                  IN THE RIGHTS AGREEMENT, CLASS B RIGHTS OWNED BY OR
                  TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING
                  PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND
                  CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID
                  AND WILL NO LONGER BE TRANSFERABLE.

                            Class B Right Certificate

                          THE NEIMAN MARCUS GROUP, INC.

                  This certifies that ___________ or registered assigns, is the
registered owner of the number of Class B 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 October 6, 1999, as the same may be amended
from time to time (the "Rights Agreement"), between The Neiman Marcus Group,
Inc., a Delaware corporation (the "Company"), and BankBoston, N.A., a national
banking association, (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., New York City time, on October 6, 2009 at the
office or agency of the Rights Agent designated for such purpose, or of its
successor as Rights Agent, one one-thousandth of a fully paid non-assessable
share of Series B Junior Participating Preferred Stock, par value $.01 per share
(the "Series B Preferred Stock"), of the Company, at a purchase price of $100.00
per one one-thousandth of a share of Series B Preferred Stock (the "Purchase
Price"), upon presentation and surrender of this Class B Right Certificate with
the Form of Election to Purchase duly executed. The number of Class B Rights
evidenced by this Class B Right Certificate (and the number of one
one-thousandths of a share of Series B Preferred Stock which may be purchased
upon exercise hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of October 18, 1999, based on the Series B
Preferred Stock as constituted at such date. As provided in the Rights
Agreement, the Purchase Price, the number of one one-thousandths of a share of
Series B Preferred Stock (or other securities or property) which may be
purchased upon the exercise of the Class B Rights and the number of Class B
Rights evidenced by this Class B Right Certificate are subject to modification
and adjustment upon the happening of certain events.

                  Notwithstanding anything in the Rights Agreement to the
contrary, from and after the time (the "invalidation time") when any person
first becomes an Acquiring Person (as

                                     B-2-1
<PAGE>

defined in the Rights Agreement), the Class B Rights evidenced hereby
beneficially owned by (x) any Acquiring Person (or any Affiliate (as defined in
the Rights Agreement) or Associate (as defined in the Rights Agreement) of any
Acquiring Person), (y) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the invalidation time or
(z) a transferee of any Acquiring Person (or any such Affiliate or Associate)
who became a transferee prior to or concurrently with the invalidation time
pursuant to either (I) a transfer from the Acquiring Person to holders of its
equity securities or to any person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Class B Rights or (II) a
transfer which the Board of Directors of the Company has determined is part of a
plan, arrangement or understanding which has the purpose or effect of avoiding
the provisions of Section 11(a)(ii) of the Rights Agreement, and subsequent
transferees of such persons, shall be void without any further action and any
holder hereof shall thereafter have no rights whatsoever with respect to the
Class B Rights evidenced hereby under any provision of the Rights Agreement.

                  This Class B Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Class B Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office or agency of the
Rights Agent. The Company will mail to the holder of this Class B Right
Certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor.

                  This Class B Right Certificate, with or without other Class B
Right Certificates, upon surrender at the office or agency of the Rights Agent
designated for such purpose, may be exchanged for another Class B Right
Certificate or Class B Right Certificates of like tenor and date evidencing
Class B Rights entitling the holder to purchase a like aggregate number of
shares of Series B Preferred Stock as the Class B Rights evidenced by the Class
B Right Certificate or Class B Right Certificates surrendered shall have
entitled such holder to purchase. If this Class B Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Class B Right Certificate or Class B Right Certificates for the number
of whole Class B Rights not exercised.

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

                  No fractional shares of Series B Preferred Stock or Class B
Common Stock will be issued upon the exercise of any Class B Right or Class B
Rights evidenced hereby (other than fractions which are integral multiples of
one one-thousandth of a share of Series B 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.

                                     B-2-2
<PAGE>

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

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

                                     B-2-3
<PAGE>

                  WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _____________.

ATTEST:                                      THE NEIMAN MARCUS GROUP, INC.

By                                           By
   -------------------------------              --------------------------------

Countersigned:

-----------------------,
as Rights Agent

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

                                     B-2-4
<PAGE>

                Form of Reverse Side of Class B Right Certificate

                               FORM OF ASSIGNMENT

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

                  FOR VALUE RECEIVED _________________________ hereby sells,
assigns and transfers unto ___________________________

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

--------------------------------------------------------------------------------
Class B Rights represented by this Class B Right Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ___________________ Attorney, to transfer said Class A Rights on the
books of the within-named Company, with full power of substitution.

Dated:
       -----------------

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

Signature Guaranteed:

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

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

                                (To be completed)

                  The undersigned hereby certifies that the Class B Rights
evidenced by this Class B Right Certificate are not beneficially owned by, were
not acquired by the undersigned from, and are not being assigned to, an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).

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

                                     B-2-5
<PAGE>

          Form of Reverse Side of Class B Right Certificate - continued

                          FORM OF ELECTION TO PURCHASE

                  (To be executed if holder desires to exercise

          Class B Rights represented by the Class B Right Certificate)

To THE NEIMAN MARCUS GROUP, INC.

                  The undersigned hereby irrevocably elects to exercise
__________________ Class B Rights represented by this Class B Right Certificate
to purchase the shares of Series B Preferred Stock (or other securities or
property) issuable upon the exercise of such Class B Rights and requests that
certificates for such shares of Series B Preferred Stock (or such other
securities) be issued in the name of:

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

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

Please insert social security
or other identifying number

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

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

Dated:
       -----------------

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

(Signature must conform to holder specified on Class B Right Certificate)

                                     B-2-6
<PAGE>

Signature Guaranteed:

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

                                     B-2-7
<PAGE>

         Form of Reverse Side of Class B Right Certificate -- continued

                                (To be completed)
--------------------------------------------------------------------------------

                  The undersigned certifies that the Class B Rights evidenced by
this Class B Right Certificate are not beneficially owned by, and were not
acquired by the undersigned from, an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement)

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

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

                                     NOTICE

                  The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Class B Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.

                  In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.

                                     B-2-8
<PAGE>

                                                                     EXHIBIT B-3

                        Form of Class C Right Certificate

Certificate No. R- ____

                  NOT EXERCISABLE AFTER OCTOBER 6, 2009 OR EARLIER IF
                  REDEMPTION OR EXCHANGE OCCURS. THE CLASS C RIGHTS ARE
                  SUBJECT TO REDEMPTION AT $.01 PER CLASS C RIGHT AND
                  TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
                  AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH
                  IN THE RIGHTS AGREEMENT, CLASS C RIGHTS OWNED BY OR
                  TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING
                  PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND
                  CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID
                  AND WILL NO LONGER BE TRANSFERABLE.

                            Class C Right Certificate

                          THE NEIMAN MARCUS GROUP, INC.

                  This certifies that ___________ or registered assigns, is the
registered owner of the number of Class C 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 October 6, 1999, as the same may be amended
from time to time (the "Rights Agreement"), between The Neiman Marcus Group,
Inc., a Delaware corporation (the "Company"), and BankBoston, N.A., a national
banking association, (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., New York City time, on October 6, 2009 at the
office or agency of the Rights Agent designated for such purpose, or of its
successor as Rights Agent, one one-thousandth of a fully paid non-assessable
share of Series C Junior Participating Preferred Stock, par value $.01 per share
(the "Series C Preferred Stock"), of the Company, at a purchase price of $100.00
per one one-thousandth of a share of Series C Preferred Stock (the "Purchase
Price"), upon presentation and surrender of this Class C Right Certificate with
the Form of Election to Purchase duly executed. The number of Class C Rights
evidenced by this Class C Right Certificate (and the number of one
one-thousandths of a share of Series C Preferred Stock which may be purchased
upon exercise hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of October 18, 1999, based on the Series C
Preferred Stock as constituted at such date. As provided in the Rights
Agreement, the Purchase Price, the number of one one-thousandths of a share of
Series C Preferred Stock (or other securities or property) which may be
purchased upon the exercise of the Class C Rights and the number of Class C
Rights evidenced by this Class C Right Certificate are subject to modification
and adjustment upon the happening of certain events.

                  Notwithstanding anything in the Rights Agreement to the
contrary, from and after the time (the "invalidation time") when any person
first becomes an Acquiring Person (as

                                     B-3-1
<PAGE>

defined in the Rights Agreement), the Class C Rights evidenced hereby
beneficially owned by (x) any Acquiring Person (or any Affiliate (as defined in
the Rights Agreement) or Associate (as defined in the Rights Agreement) of any
Acquiring Person), (y) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the invalidation time or
(z) a transferee of any Acquiring Person (or any such Affiliate or Associate)
who became a transferee prior to or concurrently with the invalidation time
pursuant to either (I) a transfer from the Acquiring Person to holders of its
equity securities or to any person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Class C Rights or (II) a
transfer which the Board of Directors of the Company has determined is part of a
plan, arrangement or understanding which has the purpose or effect of avoiding
the provisions of Section 11(a)(ii) of the Rights Agreement, and subsequent
transferees of such persons, shall be void without any further action and any
holder hereof shall thereafter have no rights whatsoever with respect to the
Class C Rights evidenced hereby under any provision of the Rights Agreement.

                  This Class C Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Class C Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office or agency of the
Rights Agent. The Company will mail to the holder of this Class C Right
Certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor.

                  This Class C Right Certificate, with or without other Class C
Right Certificates, upon surrender at the office or agency of the Rights Agent
designated for such purpose, may be exchanged for another Class C Right
Certificate or Class C Right Certificates of like tenor and date evidencing
Class C Rights entitling the holder to purchase a like aggregate number of
shares of Series C Preferred Stock as the Class C Rights evidenced by the Class
C Right Certificate or Class C Right Certificates surrendered shall have
entitled such holder to purchase. If this Class C Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Class C Right Certificate or Class C Right Certificates for the number
of whole Class C Rights not exercised.

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

                  No fractional shares of Series C Preferred Stock or Class C
Common Stock will be issued upon the exercise of any Class C Right or Class C
Rights evidenced hereby (other than fractions which are integral multiples of
one one-thousandth of a share of Series C 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.

                                     B-3-2
<PAGE>

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

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

                                     B-3-3
<PAGE>

                  WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _____________.

ATTEST:                                    THE NEIMAN MARCUS GROUP, INC.

By                                         By
   --------------------------                 ------------------------------

Countersigned:

-----------------------------,
as Rights Agent

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

                                     B-3-4
<PAGE>

                Form of Reverse Side of Class C Right Certificate

                               FORM OF ASSIGNMENT

                (To be executed by the registered holder if such

            holder desires to transfer the Class C Right Certificate)

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

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

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

Dated:
       -----------------

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

Signature Guaranteed:

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

                                    (To be completed)

                  The undersigned hereby certifies that the Class C Rights
evidenced by this Class C Right Certificate are not beneficially owned by, were
not acquired by the undersigned from, and are not being assigned to, an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).

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

                                     B-3-5
<PAGE>

          Form of Reverse Side of Class C Right Certificate - continued

                          FORM OF ELECTION TO PURCHASE

                  (To be executed if holder desires to exercise
          Class C Rights represented by the Class C Right Certificate)

To THE NEIMAN MARCUS GROUP, INC.

                  The undersigned hereby irrevocably elects to exercise
__________________ Class C Rights represented by this Class C Right Certificate
to purchase the shares of Series C Preferred Stock (or other securities or
property) issuable upon the exercise of such Class C Rights and requests that
certificates for such shares of Series C Preferred Stock (or such other
securities) be issued in the name of:

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

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

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

Please insert social security
or other identifying number

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

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

Dated:
        --------------------

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

(Signature must conform to holder specified on Class C Right Certificate)

                                     B-3-6
<PAGE>

Signature Guaranteed:

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

                                     B-3-7
<PAGE>

         Form of Reverse Side of Class C Right Certificate -- continued

                                (To be completed)
--------------------------------------------------------------------------------

                  The undersigned certifies that the Class C Rights evidenced by
this Class C Right Certificate are not beneficially owned by, and were not
acquired by the undersigned from, an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement)

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

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

                                     NOTICE

                  The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Class C Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.

                  In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.

                                     B-3-8
<PAGE>

                                                                       EXHIBIT C

         UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
         RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING
         PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES
         THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

                          SUMMARY OF RIGHTS TO PURCHASE
                            Shares of Preferred Stock

                  On October 6, 1999, the Board of Directors of The Neiman
Marcus Group, Inc. (the "Company") declared a dividend of (i) one preferred
stock purchase right (a "Class A Right") for each outstanding share of Class A
Common Stock, par value $.01 per share, of the Company (the "Class A Common
Stock") to stockholders of record as of the close of business on October 18,
1999 (the "Record Date"), each Class A Right representing the right to purchase
one one-thousandth of a share of Series A Junior Participating Preferred Stock,
par value $.01 per share, of the Company (the "Series A Preferred Stock") and
(ii) one preferred stock purchase right (a "Class B Right" and, collectively
with the Class A Rights, the "Rights") for each outstanding share of Class B
Common Stock, par value $.01 per share, of the Company (the "Class B Common
Stock" and, together with the Class A Common Stock, the "Common Stock") to
stockholders of record as of the Record Date, each Class B Right representing
the right to purchase one one-thousandth of a share of Series B Junior
Participating Preferred Stock, par value $.01 per share, of the Company (the
"Series B Preferred Stock" and, collectively with the Series A Preferred Stock,
the "Preferred Stock"). In the event that shares of Class C Common Stock, par
value $.01 per share, of the Company (the "Class C Common Stock") are issued,
they will be issued together with preferred stock purchase rights (the "Class C
Rights") to acquire shares of Series C Junior Participating Preferred Stock, par
value $.01 per share, of the Company ("Series C Preferred Stock"). The
description and terms of the Rights are set forth in a Rights Agreement, dated
as of October 6, 1999, as the same may be amended from time to time (the "Rights
Agreement"), between the Company and BankBoston, N.A., as Rights Agent (the
"Rights Agent").

                  Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person"), other than an Exempt Person (as defined below), has
acquired beneficial ownership of (a) 15% or more of the outstanding shares of
Class B Common Stock or (b) shares of Common Stock representing, in the
aggregate, 15% or more of the total number of votes entitled to be cast
generally (other than in an election of directors) by the holders of the Common
Stock then outstanding or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of (a) 15% or more of the outstanding shares of
Class B Common Stock or (b) shares of Common Stock representing, in the
aggregate, 15% or more of the total number of votes entitled to be cast
generally (other than in an election of directors) by the holders of the Common
Stock

                                      C-1
<PAGE>

then outstanding (the earlier of such dates 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 certificate
together with a copy of this Summary of Rights; provided, however, that if the
Board of Directors of the Company determines in good faith that a person who
would otherwise be an "Acquiring Person" has become such inadvertently and
without any intention of changing or influencing control of the Company, and
such person, as promptly as practicable divested or divests itself of beneficial
ownership of a sufficient number of shares of Common Stock so that such person
would no longer be an Acquiring Person, then such person shall not be deemed to
be or to have become an "Acquiring Person". No person will become an "Acquiring
Person" as the result of an acquisition of shares 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; provided, however, that if a
person shall become an "Acquiring Person" by reason of such share acquisitions
by the Company and thereafter become the beneficial owner of any additional
shares of Class B Common Stock, in the case of clause (a) of the definition of
"Acquiring Person" above, or Common Stock, in the case of clause (b) of the
definition of "Acquiring Person" above, then such person shall be deemed to be
an "Acquiring Person" unless upon the consummation of the acquisition of such
additional shares of Class B Common Stock or Common Stock, as the case may be,
such person does not own (a) 15% or more of the outstanding shares of Class B
Common Stock or (b) shares of Common Stock representing, in the aggregate, 15%
or more of the total number of votes entitled to be cast generally (other than
in an election of directors) by the holders of the Common Stock then
outstanding.

                  "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary (as such term is defined in the Rights Agreement) of the Company,
(iii) any employee benefit plan of the Company or of any Subsidiary of the
Company, (iv) any entity or trustee holding Common Stock for or pursuant to the
terms of any such plan or for the purpose of funding any such plan or funding
other employee benefits for employees of the Company or of any Subsidiary of the
Company, (v) Harcourt General, Inc., a Delaware corporation, but only for the
period beginning on the Record Date and ending at 12:01 a.m. on October 23, 1999
or (vi) the "Smith Family Group" (as such term is defined in the Rights
Agreement and which, in general, includes Richard A. Smith, Chairman of the
Company, Robert A. Smith and Brian J. Knez, Co-Chief Executive Officers of the
Company and certain members of their families and certain related entities) with
respect to the beneficial ownership of shares of Common Stock on the Record Date
and for so long as the Smith Family Group does not, subject to certain
exceptions, acquire after the Record Date beneficial ownership of either an
additional 6% or more of the Class B Common Stock outstanding or shares of
Common Stock representing an additional 6% or more of the total voting power of
the Company represented by the shares of Common Stock outstanding.

                  The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Stock. 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 issuances of 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 shares of Common Stock
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights, will also constitute the transfer of the

                                      C-2
<PAGE>

Rights associated with the shares of Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Class A Rights (the "Class A Right Certificates")
and Class B Rights (the "Class B Rights Certificates") will be mailed to holders
of record of the Class A Common Stock and Class B Common Stock, respectively, as
of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.

                  The Rights are not exercisable until the Distribution Date.
The Rights will expire on October 6, 2009 (the "Final Expiration Date"), unless
the Final Expiration Date is extended or unless the Rights are earlier redeemed
or exchanged by the Company, in each case as described below.

                  The Purchase Price payable, and the number of shares of the
applicable series 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 applicable series of Preferred Stock,
(ii) upon the grant to holders of the applicable series of Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred Stock at a
price, or securities convertible into Preferred Stock with a conversion price,
less than the then-current market price of the applicable series of Preferred
Stock or (iii) upon the distribution to holders of the applicable series of
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends or dividends payable in Preferred Stock) or of
subscription rights or warrants (other than those referred to above).

                  The number of outstanding Rights are also subject to
adjustment in the event of a stock split of the applicable class of Common Stock
or a stock dividend on the applicable class of Common Stock payable in shares of
Common Stock or subdivisions, consolidations or combinations of the applicable
class of Common Stock occurring, in any such case, prior to the Distribution
Date.

                  Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each share of Preferred Stock will be entitled,
when, as and if declared, to a minimum preferential quarterly dividend payment
of $1.00 per share but will be entitled to an aggregate dividend of 1,000 times
the dividend declared per share of the applicable class of Common Stock. In the
event of liquidation, the holders of the Preferred Stock will be entitled to a
minimum preferential liquidation payment of $1,000 per share (plus any accrued
but unpaid dividends) but will be entitled to an aggregate payment of 1,000
times the payment made per share of the applicable class of Common Stock. Each
share of Preferred Stock will have 1,000 times the number of votes each share of
the applicable class of Common Stock has on matters such class is entitled to
vote on, which shall be voted together with the applicable class of Common
Stock. Finally, in the event of any merger, consolidation or other transaction
in which shares of Common Stock are converted or exchanged, each share of the
applicable series of Preferred Stock will be entitled to receive 1,000 times the
amount received per share of the applicable class of Common Stock. These rights
are protected by customary antidilution provisions.

                                      C-3
<PAGE>

                  Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-thousandth interest in a
share of Preferred Stock purchasable upon exercise of each Class A Right and
Class B Right, respectively, should approximate the value of one share of Class
A Common Stock and Class B Common Stock, respectively.

                  In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, proper provision will be made so
that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person or any affiliate or associate of the Acquiring Person or
certain other transferees (which will thereupon become void), will thereafter
have the right to receive upon exercise of a Right at the then current exercise
price of the Right, that number of shares of Class A Common Stock (in the case
of a Class A Right) or Class B Common Stock (in the case of a Class B Right), or
that number of one one-thousandths of a share of the applicable series of
Preferred Stock, having a market value of two times the exercise price of the
Right.

                  In the event that, after a person or group has become an
Acquiring Person, the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
(other than Rights beneficially owned by an Acquiring Person or any affiliate or
associate of the Acquiring Person or certain other transferees which will have
become void) will thereafter have the right to receive, upon the exercise
thereof at the then current exercise price of the Right, that number of shares
of common stock of the person with whom the Company has engaged in the foregoing
transaction (or its parent), which number of shares at the time of such
transaction will have a market value of two times the exercise price of the
Right.

                  At any time after any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of 50% or more of
the outstanding shares of Class B Common Stock, the acquisition by such person
or group of shares of Common Stock representing, in the aggregate, 50% or more
of the total number of votes entitled to be cast generally (other than in an
election of directors) by the holders of the Common Stock then outstanding or
the occurrence of an event described in the prior paragraph, the Board of
Directors of the Company may exchange the Rights (other than Rights owned by
such person or group which will have become void), in whole or in part, at an
exchange ratio of one share of Class A Common Stock (in the case of a Class A
Right) or Class B Common Stock (in the case of a Class B Right), or one
one-thousandth 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 Class A Right or Class B Right, as the case may be (subject to
adjustment).

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

                                      C-4
<PAGE>

                  At any time prior to the time an Acquiring Person becomes
such, the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.

                  For so long as the Rights are then redeemable, the Company
may, except with respect to the Redemption Price, amend the Rights in any
manner. After the Rights are no longer redeemable, the Company may, except with
respect to the Redemption Price, amend the Rights in any manner that does not
adversely affect the interests of holders of the Rights.

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

                  A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated October 15, 1999. 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, as the same may be amended from time to time, which is hereby
incorporated herein by reference.

                                      C-5

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