EXHIBIT 4.1

                             SUBSCRIPTION AGREEMENT

     THIS SUBSCRIPTION AGREEMENT (the "Agreement") is made as of this 6th day of
March 2003,  by and between  FACTORY 2-U  STORES,  a Delaware  corporation  (the
"Company"), and _____________ (the "Investor").

                              W I T N E S S E T H:

     WHEREAS,  the Investor desires to subscribe for,  purchase and acquire from
the  Company and the Company  desires to sell and issue to the  Investor  ______
shares (the "Shares") of the Company's  Common Stock,  par value $0.01 per share
(the  "Common  Stock"),  upon  the  terms  and  conditions  and  subject  to the
provisions hereinafter set forth.

     NOW,  THEREFORE,  for and in consideration of the mutual premises contained
herein  and  for  other  good  and  valuable  consideration,   the  receipt  and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows:

     1.   PURCHASE AND SALE OF THE SHARES.  Subject to the terms and  conditions
of this  Agreement,  the  Investor  subscribes  for and agrees to  purchase  and
acquire  from the  Company  and the  Company  agrees  to sell  and  issue to the
Investor the Shares,  in the manner set forth in SECTION 2 hereof, at a purchase
price of ______ per Share,  yielding an aggregate  purchase  price of __________
(the "Purchase Price").

     2.   TERMS  OF  PURCHASE  AND  SALE  OF  THE  SHARES.  The  closing  of the
transactions  contemplated  hereby (the "Closing") shall take place at such time
and place as the  Investor  and the Company may agree upon;  provided,  however,
that in no event  shall the  Closing  take  place  later  than  March 31,  2003.
Contemporaneously  with the  delivery  of this  Agreement,  the  Investor  shall
deliver to the  Company  the  Purchase  Price by wire  transfer  of  immediately
available funds pursuant to wire transfer  instructions given to the Investor by
the  Company.  At the  Closing,  the  Company  shall  deliver to the  Investor a
certificate, registered in the name of the Investor, representing the Shares.

     3.   REPRESENTATIONS  AND WARRANTIES OF THE COMPANY. In order to induce the
Investor to enter into this Agreement,  the Company  represents and warrants the
following:

          (A)  AUTHORITY.  The Company is a corporation duly organized,  validly
     existing, and in good standing under the laws of the State of Delaware, and
     has all  requisite  right,  power,  and  authority to execute,  deliver and
     perform this Agreement.

          (B)  ENFORCEABILITY.  The execution, delivery, and performance of this
     Agreement  by the  Company  have  been  duly  authorized  by all  requisite
     corporate  action.  This  Agreement has been duly executed and delivered by
     the Company, and, upon its execution by the Investor,  shall constitute the

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     legal,  valid,  and  binding  obligation  of the  Company,  enforceable  in
     accordance with its terms,  except to the extent that its enforceability is
     limited by bankruptcy,  insolvency,  reorganization, or other laws relating
     to or affecting  the  enforcement  of  creditors'  rights  generally and by
     general principles of equity.

          (C)  NO VIOLATIONS.  The execution,  delivery, and performance of this
     Agreement  by the Company do not and will not violate or conflict  with any
     provision of the Company's Restated  Certificate of Incorporation or Bylaws
     and do not and will not,  with or without the passage of time or the giving
     of  notice,  result in the breach of, or  constitute  a default,  cause the
     acceleration of performance, or require any consent under, or result in the
     creation of any lien,  charge or encumbrance upon any property or assets of
     the Company pursuant to, any material  instrument or agreement to which the
     Company  is a party or by which the  Company or its  properties  are bound,
     except such consents as have been obtained as of the date hereof.

          (D)  CAPITALIZATION.  The  authorized  capital  stock  of the  Company
     consists of:  35,000,000  shares of Common Stock, of which  13,473,400 were
     issued  and  outstanding  as of  February  21,  2003,  7,500,000  shares of
     preferred stock, $0.01 par value, none of which were issued and outstanding
     on February 21, 2003.  As of January 31, 2003,  the Company has (i) granted
     options to  purchase  1,421,807  shares of Common  Stock,  including  4,520
     performance-based  options, and (ii) issued currently  exercisable warrants
     to purchase 82,690 shares of Common Stock, with an exercise price of $19.91
     per share.  Upon  issuance in accordance  with the terms of this  Agreement
     against  payment of the Purchase Price therefor the Shares will be duly and
     validly issued,  fully paid, and nonassessable  with no personal  liability
     attaching to the ownership  thereof and free and clear of all liens imposed
     by  or  through  the   Company,   and,   assuming   the   accuracy  of  the
     representations  and  warranties  of  the  Investor,   will  be  issued  in
     accordance  with a valid exemption from the  registration or  qualification
     provisions  of the  Securities  Act of 1933,  as amended  (the  "Securities
     Act"), and any applicable state securities laws (the "State Acts").

          (E)  EXCHANGE ACT FILING.  All reports and  statements  required to be
     filed by the Company with the Securities and Exchange  Commission under the
     Securities  Exchange Act of 1934, as amended (the "Exchange  Act"), and the
     rules  and  regulations  thereunder,  due at or  prior  to the date of this
     Agreement  have  been  made.  Such  filings,  together  with all  documents
     incorporated  by  reference  therein,  are  referred  to as  "Exchange  Act
     Documents."  Each  Exchange  Act  Document,  as amended,  conformed  in all
     material respects to the requirements of the Exchange Act and the rules and
     regulations  thereunder,  and no Exchange Act Document,  as amended, at the
     time each such  document  was filed,  included  any untrue  statement  of a
     material  fact or omitted to state any material  fact required to be stated
     therein  or  necessary  to make  the  statements  therein,  in light of the
     circumstances under which they were made, not misleading.

          (F)  COMPANY FINANCIAL  STATEMENTS.  The audited financial statements,
     together  with the  related  notes of the  Company at  February 2, 2002 and

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     February 3, 2001,  and for the years then ended,  included in the Company's
     Annual  Report of Form 10-K for the year ended  February  2, 2002,  and the
     unaudited financial  statements of the Company at November 2, 2002, and for
     the  nine  months  then  ended,   (collectively,   the  "Company  Financial
     Statements")  included in the Company's  Quarterly  Report on Form 10-Q for
     the quarter ended  November 2, 2002,  respectively,  fairly  present in all
     material respects, on the basis stated therein and on the date thereof, the
     financial position of the Company at the respective dates therein specified
     and its results of  operations  and cash flows for the  periods  then ended
     (subject to, in the case of unaudited  financial  statements,  normal audit
     adjustments).  To the knowledge of the Company, such statements and related
     notes have been prepared in accordance with generally  accepted  accounting
     principles  in the United  States  applied on a consistent  basis except as
     expressly noted therein.

          (G)  NO MATERIAL LIABILITIES.  Except as contemplated by the Company's
     press  release  dated  February 26, 2003 or as described on Schedule  3(g),
     since  November  2,  2002,  the  Company  has  not  incurred  any  material
     liabilities or  obligations,  direct or contingent,  except in the ordinary
     course of business and except for  liabilities or obligations  reflected or
     reserved  against on the Company's  balance sheet as November 2, 2002,  and
     there has not been any material adverse change,  or to the actual knowledge
     of the Company,  any development  involving a prospective  material adverse
     change, in the condition (financial or otherwise),  business, prospects, or
     results  of  operations  of the  Company  or any  change in the  capital or
     increase  in the  long-term  debt  of the  Company,  nor  has  the  Company
     declared,  paid,  or made any dividend or  distribution  of any kind on its
     capital stock.

          (H)  NO DISPUTES AGAINST COMPANY.  Except as disclosed in the Exchange
     Act  Documents  there is no material  pending or, to the  knowledge  of the
     Company,  threatened (a) action, suit, claim, proceeding,  or investigation
     against  the  Company,  at law or in equity,  or before or by any  Federal,
     state,  municipal,  or other governmental  department,  commission,  board,
     bureau,  agency or  instrumentality,  domestic or foreign,  (b) arbitration
     proceeding  against  the  Company,  (c)  governmental  inquiry  against the
     Company,  or (d) any action or suit by or on behalf of the Company  pending
     or threatened against others.

     4.   REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. In order to induce the
Company to enter into this Agreement,  the Investor  represents and warrants the
following:

          (A)  AUTHORITY.  The  Investor has all  requisite  right,  power,  and
     authority to execute, deliver, and perform this Agreement.

          (B)  ENFORCEABILITY.  The execution, delivery, and performance of this
     Agreement  by the  Investor  have been  duly  authorized  by all  requisite
     partnership  or corporate  action,  as the case may be. This  Agreement has
     been duly executed and  delivered by the Investor,  and, upon its execution
     by the Company,  shall constitute the legal,  valid, and binding obligation
     of the Investor,  enforceable in accordance  with its terms,  except to the
     extent  that its  enforceability  is  limited  by  bankruptcy,  insolvency,

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     reorganization,  or other laws relating to or affecting the  enforcement of
     creditors' rights generally and by general principles of equity.

          (C)  NO VIOLATIONS.  The execution,  delivery, and performance of this
     Agreement by the Investor do not and will not,  with or without the passage
     of time or the giving of notice,  result in the breach of, or  constitute a
     default,  cause the  acceleration  of  performance,  or require any consent
     under,  or result in the creation of any lien,  charge or encumbrance  upon
     any property or assets of the Investor pursuant to, any material instrument
     or  agreement  to which the Investor is a party or by which the Investor or
     its properties may be bound or affected, and, do not or will not violate or
     conflict  with any  provision of the articles of  incorporation  or bylaws,
     partnership  agreement,  operating agreement,  trust agreement,  or similar
     organizational or governing document of the Investor, as applicable.

          (D)  KNOWLEDGE OF INVESTMENT AND ITS RISKS. The Investor has knowledge
     and  experience  in  financial  and  business  matters  as to be capable of
     evaluating the merits and risks of Investor's investment in the Shares. The
     Investor  understands  that an investment in the Company  represents a high
     degree of risk and there is no  assurance  that the  Company's  business or
     operations  will be successful.  The Investor has considered  carefully the
     risks attendant to an investment in the Company, and that, as a consequence
     of such risks, the Investor could lose Investor's  entire investment in the
     Company.

          (E)  INVESTMENT  INTENT.  The Investor hereby  represents and warrants
     that (i) the Shares are being  acquired for  investment  for the Investor's
     own  account,  and not as a  nominee  or  agent  and not with a view to the
     resale or distribution  of all or any part of the Shares,  and the Investor
     has no present  intention  of selling,  granting any  participation  in, or
     otherwise  distributing  any  of  the  Shares  within  the  meaning  of the
     Securities  Act  and  (ii)  the  Investor  does  not  have  any  contracts,
     understandings,  agreements,  or arrangements with any person and/or entity
     to sell,  transfer,  or grant  participations to such person and/or entity,
     with respect to any of the Shares.

          (F)  ACCREDITED INVESTOR.  The Investor is an "Accredited Investor" as
     that term is  defined by Rule 501 of  Regulation  D  promulgated  under the
     Securities Act.

          (G)  DISCLOSURE. The Investor has reviewed information provided by the
     Company in connection with the decision to purchase the Shares,  consisting
     of the  Company's  publicly  available  filings  with  the  Securities  and
     Exchange Commission and the information  contained therein. The Company has
     provided  the  Investor  with all the  information  that the  Investor  has
     requested  in  connection  with the  decision to purchase  the Shares.  The
     Investor further represents that the Investor has had an opportunity to ask
     questions  and receive  answers from the Company  regarding  the  business,
     properties,  prospects,  and  financial  condition of the  Company.  To the
     Investor's knowledge, the Company has not disclosed any material non-public
     information  to the Investor.  All such questions have been answered to the
     full satisfaction of the Investor.

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          (H)  NO  REGISTRATION.  The Investor  understands that Investor may be
     required to bear the economic risk of Investor's  investment in the Company
     for an indefinite period of time. The Investor further understands that (i)
     neither the offering nor the sale of the Shares has been  registered  under
     the Securities Act or any applicable State Acts in reliance upon exemptions
     from the  registration  requirements  of such laws, (ii) the Shares must be
     held by he, she or it indefinitely  unless the sale or transfer  thereof is
     subsequently  registered  under the Securities Act and any applicable State
     Acts, or an exemption  from such  registration  requirements  is available,
     (iii) except as set forth in the Registration  Rights Agreement between the
     Company and the  Investor,  the Company is under no  obligation to register
     any of the Shares on the  Investor's  behalf or to assist the  Investor  in
     complying with any exemption from  registration,  and (iv) the Company will
     rely upon the  representations  and warranties made by the Investor in this
     Subscription  Agreement  in order to  establish  such  exemptions  from the
     registration  requirements  of the Securities Act and any applicable  State
     Acts.

          (I)  TRANSFER RESTRICTIONS.  The Investor will not transfer any of the
     Shares unless such transfer is registered or exempt from registration under
     the Securities Act and such State Acts, and, if requested by the Company in
     the case of an exempt transaction, the Investor has furnished an opinion of
     counsel  reasonably  satisfactory  to the Company that such  transfer is so
     exempt.  The  Investor  understands  and agrees  that (i) the  certificates
     evidencing  the  Shares  will  bear  appropriate  legends  indicating  such
     transfer  restrictions  placed upon the Shares, (ii) the Company shall have
     no obligation to honor  transfers of any of the Shares in violation of such
     transfer restrictions,  and (iii) the Company shall be entitled to instruct
     any transfer agent or agents for the securities of the Company to refuse to
     honor such transfers.

          (J)  PRINCIPAL  ADDRESS.  The Investor's  principal  residence,  if an
     individual,  or principal  executive  office, if an entity, is set forth on
     the signature page of this Subscription Agreement.

     5.   FURTHER ASSURANCES. The parties will, upon reasonable request, execute
and deliver all such further  assignments,  endorsements  and other documents as
may be necessary in order to perfect the purchase by the Investor of the Shares.

     6.   REGISTRATION RIGHTS AGREEMENT;  POWER OF ATTORNEY. The Investor agrees
to be  bound  by the  terms  of and  hereby  executes  the  Registration  Rights
Agreement among the Company and the purchasers of the Shares (the  "Registration
Rights Agreement").

     7.   ENTIRE  AGREEMENT;  NO ORAL MODIFICATION.  This Agreement contains the
entire  agreement  among the parties  hereto with respect to the subject  matter
hereof and  supersedes  all prior  agreements  and  understandings  with respect
thereto and may not be amended or modified except in a writing signed by both of
the parties hereto.

     8.   BINDING EFFECT; BENEFITS. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their  respective  heirs,  successors
and  assigns;  however,  nothing in this  Agreement,  expressed  or implied,  is

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intended to confer on any other person other than the parties  hereto,  or their
respective heirs,  successors or assigns, any rights,  remedies,  obligations or
liabilities under or by reason of this Agreement.

     9.   COUNTERPARTS.  This  Agreement  may  be  executed  in  any  number  of
counterparts,  each of which shall be deemed to be an original  and all of which
together shall be deemed to be one and the same instrument.

     10.  GOVERNING LAW. This Agreement  shall be governed by, and construed and
enforced in  accordance  with,  the laws of the United States of America and the
State of Delaware,  both  substantive  and  remedial.  Any  judicial  proceeding
brought  against either of the parties to this agreement or any dispute  arising
out of this  Agreement or any matter related hereto may be brought in the courts
of the State of Texas or in the United  States  District  Court for the Southern
District of Texas and, by its  execution  and delivery of this  agreement,  each
party to this Agreement accepts the jurisdiction of such courts.

     11.  PREVAILING PARTIES. In any action or proceeding brought to enforce any
provision of this Agreement,  or where any provision  hereof is validly asserted
as a  defense,  the  prevailing  party  shall be  entitled  to  receive  and the
nonprevailing party shall pay upon demand reasonable attorneys' fees in addition
to any other remedy.

     12.  HEADINGS.  The section  headings  herein are included for  convenience
only and are not to be deemed a part of this Agreement.

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date first written above.

                                         FACTORY 2-U STORES, INC.,
                                         a Delaware corporation


                                         By:
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                                         Name:
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                                         Its:
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                                         INVESTOR

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