EXECUTION COPY









                               LEVI STRAUSS & CO.

                         11 5/8% Senior Notes due 2008


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


                                 EURO INDENTURE



                          Dated as of January 18 ,2001


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





                                 CITIBANK, N.A.,

                                     Trustee


   =========================================================================


<PAGE>



                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----

                                ARTICLE I

Definitions and Incorporation by Reference
------------------------------------------

SECTION 1.01.                   Definitions                                   1
SECTION 1.02.                   Other Definitions                            41
SECTION 1.03.                   Incorporation by Reference of Trust
                                   Indenture Act                             41
SECTION 1.04.                   Rules of Construction                        42


                                ARTICLE II

                                The Securities
----------------------------------------------

SECTION 2.01.                   Amount of Securities; Issuable
                                   in Series                                 42
SECTION 2.02.                   Form and Dating                              44
SECTION 2.03.                   Execution and Authentication                 44
SECTION 2.04.                   Registrar and Paying Agent                   45
SECTION 2.05.                   Paying Agent To Hold Money in Trust          46
SECTION 2.06.                   Securityholder Lists                         46
SECTION 2.07.                   Replacement Securities                       47
SECTION 2.08.                   Outstanding Securities                       47
SECTION 2.09.                   Temporary Securities                         47
SECTION 2.10.                   Cancellation                                 48
SECTION 2.11.                   Defaulted Interest                           48
SECTION 2.12.                   CUSIP Numbers                                48


                                ARTICLE III

                                Redemption
                                ----------

SECTION 3.01.                   Notices to Trustee                           49
SECTION 3.02.                   Selection of Securities
                                   To Be Redeemed                            49
SECTION 3.03.                   Notice of Redemption                         49
SECTION 3.04.                   Effect of Notice of Redemption               50
SECTION 3.05.                   Deposit of Redemption Price                  50
SECTION 3.06.                   Securities Redeemed in Part                  51


<PAGE>

                                                                               2

                                ARTICLE IV

                                Covenants
-----------------------------------------

SECTION 4.01.                   Covenant Suspension                          51
SECTION 4.02.                   Payment of Securities                        52
SECTION 4.03.                   SEC Reports                                  52
SECTION 4.04.                   Limitation on Debt                           52
SECTION 4.05.                   Limitation on Restricted Payments            55
SECTION 4.06.                   Limitation on Liens                          58
SECTION 4.07.                   Limitation on Asset Sales                    58
SECTION 4.08.                   Limitation on Restrictions on
                                   Distributions from Restricted
                                   Subsidiaries                              62
SECTION 4.09.                   Limitation on Transactions with
                                   Affiliates                                64
SECTION 4.10.                   Designation of Restricted and
                                   Unrestricted Subsidiaries                 65
SECTION 4.11.                   Limitation on Sale and Leaseback
                                   Transactions                              67
SECTION 4.12.                   Change of Control                            67
SECTION 4.13.                   Further Instruments and Acts                 69


                                ARTICLE V

                                Successor Company
-------------------------------------------------

SECTION 5.01.                   When Company May Merge or
                                   Transfer Assets                           69


                                ARTICLE VI

                            Defaults and Remedies 71
----------------------------------------------------

SECTION 6.01.                   Events of Default                            71
SECTION 6.02.                   Acceleration                                 74
SECTION 6.03.                   Other Remedies                               74
SECTION 6.04.                   Waiver of Past Defaults                      74
SECTION 6.05.                   Control by Majority                          74
SECTION 6.06.                   Limitation on Suits                          75
SECTION 6.07.                   Rights of Holders to Receive
                                   Payment                                   75
SECTION 6.08.                   Collection Suit by Trustee                   75
SECTION 6.09.                   Trustee May File Proofs of Claim             76
SECTION 6.10.                   Priorities                                   76
SECTION 6.11.                   Undertaking for Costs                        76
SECTION 6.12.                   Waiver of Stay or Extension Laws             77

<PAGE>

                                                                               3


                                ARTICLE VII

                                Trustee
                                -------

SECTION 7.01.                   Duties of Trustee                            77
SECTION 7.02.                   Rights of Trustee                            79
SECTION 7.03.                   Individual Rights of Trustee                 80
SECTION 7.04.                   Trustee's Disclaimer                         80
SECTION 7.05.                   Notice of Defaults                           80
SECTION 7.06.                   Reports by Trustee to Holders                80
SECTION 7.07.                   Compensation and Indemnity                   81
SECTION 7.08.                   Replacement of Trustee                       82
SECTION 7.09.                   Successor Trustee by Merger                  83
SECTION 7.10.                   Eligibility; Disqualification                83
SECTION 7.11.                   Preferential Collection of Claims
                                   Against Company                           84


                                ARTICLE VIII

                       Discharge of Indenture; Defeasance
                       ----------------------------------

SECTION 8.01.                   Discharge of Liability on
                                   Securities; Defeasance                    84
SECTION 8.02.                   Conditions to Defeasance                     85
SECTION 8.03.                   Application of Trust Money                   86
SECTION 8.04.                   Repayment to Company                         87
SECTION 8.05.                   Indemnity for Government
                                   Obligations                               87
SECTION 8.06.                   Reinstatement                                87


                                ARTICLE IX

                                Amendments
------------------------------------------

SECTION 9.01.                   Without Consent of Holders                   87
SECTION 9.02.                   With Consent of Holders                      88
SECTION 9.03.                   Compliance with Trust Indenture Act          89
SECTION 9.04.                   Revocation and Effect of Consents
                                   and Waivers                               89
SECTION 9.05.                   Notation on or Exchange of
                                   Securities                                90
SECTION 9.06.                   Trustee To Sign Amendments                   90
SECTION 9.07.                   Payment for Consent                          91


<PAGE>

                                                                               4



                                ARTICLE X

                                  Miscellaneous
-----------------------------------------------

SECTION 10.01.                  Trust Indenture Act Controls                 91
SECTION 10.02.                  Notices                                      91
SECTION 10.03.                  Communication by Holders with
                                   Other Holders                             92
SECTION 10.04.                  Certificate and Opinion as to
                                   Conditions Precedent                      92
SECTION 10.05.                  Statements Required in Certificate
                                   or Opinion                                92
SECTION 10.06.                  When Securities Disregarded                  93
SECTION 10.07.                  Rules by Trustee, Paying Agent and
                                   Registrar                                 93
SECTION 10.08.                  Legal Holidays                               93
SECTION 10.09.                  Governing Law                                93
SECTION 10.10.                  No Recourse Against Others                   94
SECTION 10.11.                  Successors                                   94
SECTION 10.12.                  Multiple Originals                           94
SECTION 10.13.                  Table of Contents; Headings                  94


Appendix A - Provisions Relating to Initial Securities
             and Exchange Securities
Exhibit 1 to Appendix A
          -  Form of Initial Security
Exhibit A -  Form of Exchange Security
Exhibit B -  Form of Transferee Letter of Representation



<PAGE>



                              CROSS-REFERENCE TABLE


TIA                                             Indenture
Section                                          Section
-------                                          -------

310(a)(1)                                         7.10
   (a)(2)                                         7.10
   (a)(3)                                         N.A.
   (a)(4)                                         N.A.
   (b)                                            7.08;
                                                  7.10
   (c)                                            N.A.
311(a)                                            7.11
   (b)                                            7.11
   (c)                                            N.A.
312(a)                                            2.06
   (b)                                            N.A.
   (c)                                            N.A.
313(a)                                            7.06
   (b)(1)                                         N.A.
   (b)(2)                                         7.06
   (c)                                            N.A.
   (d)                                            7.06
314(a)                                            4.02;
                                                  4.10;
                                                  N.A.
   (b)                                            N.A.
   (c)(1)                                         N.A.
   (c)(2)                                         N.A.
   (c)(3)                                         N.A.
   (d)                                            N.A.
   (e)                                            N.A.
   (f)                                            4.10
315(a)                                            7.01
   (b)                                            7.05;
                                                  N.A.
   (c)                                            7.01
   (d)                                            7.01
   (e)                                            6.11
316(a)
   (last
sentence)                                         N.A.
   (a)(1)(A)                                      6.05
   (a)(1)(B)                                      6.04
   (a)(2)                                         N.A.
   (b)                                            6.07
317(a)(1)                                         6.08
   (a)(2)                                         6.09
   (b)                                            2.05
318(a)                                            N.A.

                    N.A. Means Not Applicable.

------------------
Note:  This Cross-Reference Table shall not, for any
purposes, be deemed to be part of this Indenture.



<PAGE>


                                    INDENTURE dated as of January 18, 2001,






                                       between  LEVI STRAUSS & CO.,  a  Delaware
                                       corporation (the "Company") and CITIBANK,
                                       N.A., a national banking association duly
                                       organized and existing under the laws  of
                                       the U.S.A., as Trustee (the "Trustee").


                  Each  party  agrees as  follows  for the  benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's euro
denominated  11 5/8% Senior Notes due 2008, to be issued,  from time to time, in
one or more series as in this Indenture provided (the "Initial Securities") and,
if and when issued pursuant to a registered or private  exchange for the Initial
Securities,  the  Company's  11  5/8%  Senior  Notes  due  2008  (the  "Exchange
Securities" and, together with the Initial Securities, the "Securities"):


                                             ARTICLE I

                   Definitions and Incorporation by Reference
                   ------------------------------------------
                  SECTION 1.01.  Definitions.
                                 ------------

                  "Additional Assets" means:

                  (a)  any  Property   (other  than  cash,   cash   equivalents,
         securities  and inventory) to be owned by the Company or any Restricted
         Subsidiary and used in a Related Business; or

                  (b)  Capital  Stock  of a Person  that  becomes  a  Restricted
         Subsidiary as a result of the  acquisition of that Capital Stock by the
         Company or another Restricted Subsidiary from any Person other than the
         Company or an Affiliate of the Company; provided, however, that, in the
         case of this clause (b), the Restricted Subsidiary is primarily engaged
         in a Related Business.

                  "Affiliate" of any specified Person means:

                  (a) any other Person  directly or  indirectly  controlling  or
         controlled  by or under  direct or indirect  common  control  with that
         specified Person, or

                  (b) any other  Person  who is a  director  or  officer of that
         specified Person.



<PAGE>

                                                                               2


                  For the purposes of this definition,  "control" when used with
respect to any Person means the power to direct the  management  and policies of
that Person,  directly or  indirectly,  whether  through the ownership of voting
securities,   by  contract  or  otherwise;   and  the  terms  "controlling"  and
"controlled" have meanings correlative to the foregoing. For purposes of Section
4.09  and  Section  4.07  and  the  definition  of  "Additional   Assets"  only,
"Affiliate"  shall also mean any Beneficial Owner of shares  representing 10% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of
the Company or of rights or warrants to purchase  that Voting Stock  (whether or
not  currently  exercisable)  and any  Person who would be an  Affiliate  of any
Beneficial Owner pursuant to the first sentence hereof.

                  "Asset  Sale"  means any sale,  lease,  transfer,  issuance or
other disposition (or series of related sales, leases,  transfers,  issuances or
dispositions)  by  the  Company  or any  Restricted  Subsidiary,  including  any
disposition by means of a merger,  consolidation  or similar  transaction  (each
referred to for the purposes of this definition as a "disposition"), of

                  (a) any shares of  Capital  Stock of a  Restricted  Subsidiary
         (other than directors' qualifying shares),

                  (b) all or  substantially  all the assets of any  division  or
         line of business of the Company or any Restricted Subsidiary,

                  (c) in  the  case  of any  disposition  by  the  Company  or a
         Restricted Subsidiary to any Person, any other assets of the Company or
         any Restricted Subsidiary outside of the ordinary course of business of
         the Company or such Restricted Subsidiary, or

                  (d) in  the  case  of any  disposition  by  the  Company  to a
         Restricted  Subsidiary of the Company, any other assets of the Company,
         other than  dispositions  in the  ordinary  course of  business  of raw
         materials to a Restricted  Subsidiary to be used in the  manufacture of
         finished goods, of finished goods to a Restricted Subsidiary for resale
         by the Restricted Subsidiary or its designee or of work in process to a
         Restricted Subsidiary,



<PAGE>

                                                                               3



other than, in the case of clause (a), (b), (c) or (d) above,

                  (1) any disposition by a Restricted  Subsidiary to the Company
         or  by  the  Company  or  a  Restricted   Subsidiary  to  a  Restricted
         Subsidiary,

                  (2) any disposition that constitutes a Permitted Investment or
         Restricted Payment permitted by Section 4.05,

                  (3) any  disposition  effected  in  compliance  with the first
         paragraph in Section 5.01,

                  (4) a sale of accounts  receivables  and related assets of the
         type specified in the definition of "Qualified Receivables Transaction"
         to a Receivables Entity,

                  (5) a transfer of accounts  receivables  and related assets of
         the  type  specified  in  the  definition  of  "Qualified   Receivables
         Transaction"  (or  a  fractional   undivided  interest  therein)  by  a
         Receivables   Entity  in  connection   with  a  Qualified   Receivables
         Transaction, and

                  (6) a transfer of accounts receivable of the type specified in
         the definition of "Credit  Facility" that is permitted under clause (b)
         of the second paragraph of Section 4.04.

                  Notwithstanding  the foregoing,  if at any time, the aggregate
Fair Market Value of assets disposed of by the Company to its Subsidiaries since
the Issue Date, other than (a) Permitted  Investments  comprised of cash or cash
equivalents,  (b) dispositions pursuant to paragraphs (4), (5) and (6) above and
(c)  dispositions by the Company to a Restricted  Subsidiary of raw materials to
be used in the  manufacture of finished  goods, of finished goods and of work in
process,  exceeds 10% of Consolidated Tangible Assets, all asset dispositions in
excess thereof shall be treated as Asset Sales subject to the  restrictions  set
forth in Section 4.07. For purposes of this paragraph, the aggregate Fair Market
Value of assets so  transferred at any time shall be calculated by using the sum
of the  Fair  Market  Value  of each  asset  disposition  as of the  date of its
disposition.



<PAGE>

                                                                               4


                  "Attributable  Debt"  in  respect  of  a  Sale  and  Leaseback
Transaction means, at any date of determination,

                  (a) if the Sale and Leaseback  Transaction  is a Capital Lease
         Obligation,  the amount of Debt  represented  thereby  according to the
         definition of "Capital Lease Obligation", and

                  (b) in all other instances, the greater of:

                           (1) the Fair Market Value of the  Property subject to
                  the Sale and Leaseback Transaction, and


                           (2) the present  value  (discounted  at the  interest
                  rate  borne by the  Securities,  compounded  annually)  of the
                  total obligations of the lessee for rental payments during the
                  remaining term of the lease included in the Sale and Leaseback
                  Transaction (including any period for which the lease has been
                  extended).

                  "Average Life" means,  as of any date of  determination,  with
respect to any Debt or Preferred Stock, the quotient obtained by dividing:

                  (a) the sum of the product of the numbers of years (rounded to
         the nearest  one-twelfth of one year) from the date of determination to
         the dates of each successive  scheduled  principal payment of that Debt
         or redemption or similar  payment with respect to that Preferred  Stock
         multiplied by the amount of the payment by

                  (b) the sum of all payments of this kind.

                  "Beneficial Owner" means a beneficial owner as defined in Rule
13d-3 under the Exchange Act, except that:

                  (a) a Person will be deemed to be the Beneficial  Owner of all
         shares that the Person has the right to acquire,  whether that right is
         exercisable immediately or only after the passage of time,

                  (b) for purposes of clause (a) of the definition of "Change of
         Control",  Permitted Holders will be deemed to be the Beneficial Owners
         of any Voting Stock of a corporation  or other legal entity held by any
         other  corporation  or  other  legal  entity  so long as the  Permitted
         Holders  Beneficially Own,  directly or indirectly,  in the aggregate a
         majority of the total



<PAGE>

                                                                               5


         voting  power of the Voting Stock of  that corporation  or other  legal
         entity, and

                  (c) for purposes of clause (b) of the definition of "Change of
         Control",  any  "person"  or  "group"  (as those  terms are  defined in
         Sections  13(d)  and  14(d)  of  the  Exchange  Act  or  any  successor
         provisions to either of the foregoing),  including any group acting for
         the purpose of  acquiring,  holding,  voting or disposing of securities
         within the meaning of Rule  13d-5(b)(1)  under the Exchange Act,  other
         than any one or more of the  Permitted  Holders,  shall be deemed to be
         the  Beneficial  Owners of any Voting Stock of a  corporation  or other
         legal entity held by any other corporation or legal entity ("the parent
         corporation"),  so long as that  person  or  group  Beneficially  Owns,
         directly or indirectly, in the aggregate a majority of the total voting
         power of the Voting Stock of that parent corporation.

The term "Beneficially Own" shall have a corresponding meaning.

                  "Board  of  Directors"  means the  Board of  Directors  of the
Company  (or,  in  the  case  of  Section  4.09(2),  the  applicable  Restricted
Subsidiary)  or any committee  thereof duly  authorized to act on behalf of such
Board.

                  "Board  Resolution" means a copy of a resolution  certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification.

                  "Business Day" means each day that is not a Legal Holiday.

                  "Capital Lease Obligations" means any obligation under a lease
that  is  required  to  be  capitalized  for  financial  reporting  purposes  in
accordance  with GAAP;  and the amount of Debt  represented  by that  obligation
shall be the capitalized amount of the obligations determined in accordance with
GAAP; and the Stated  Maturity  thereof shall be the date of the last payment of
rent or any other amount due under that lease prior to the first date upon which
that lease may be terminated  by the lessee  without  payment of a penalty.  For
purposes of Section 4.06, a Capital Lease  Obligation shall be deemed secured by
a Lien on the Property being leased.



<PAGE>

                                                                               6



                  "Capital Stock" means, with respect to any Person,  any shares
or other  equivalents  (however  designated) of any class of corporate  stock or
partnership interests or any other participations,  rights, warrants, options or
other  interests in the nature of an equity  interest in that Person,  including
Preferred  Stock,  but excluding any debt security  convertible or  exchangeable
into that equity interest.

                  "Capital  Stock  Sale  Proceeds"   means  the  aggregate  cash
proceeds  received  by the  Company  from the  issuance or sale (other than to a
Subsidiary  of  the  Company  or an  employee  stock  ownership  plan  or  trust
established by the Company or the Subsidiary for the benefit of their employees)
by the Company of its Capital  Stock (other than  Disqualified  Stock) after the
Issue Date, net of attorneys' fees,  accountants' fees,  initial  purchasers' or
placement agents' fees,  discounts or commissions and brokerage,  consultant and
other fees actually  incurred in connection with the issuance or sale and net of
taxes paid or payable as a result thereof.

                  "Change  of  Control"  means  the  occurrence  of  any  of the
following events:

                  (a) prior to the first Public Equity  Offering that results in
         a Public  Market,  the  Permitted  Holders  cease to be the  Beneficial
         Owners, directly or indirectly, of a majority of the total voting power
         of the Voting Stock of the Company, whether as a result of the issuance
         of securities of the Company, any merger, consolidation, liquidation or
         dissolution  of  the  Company,  any  direct  or  indirect  transfer  of
         securities by the Permitted Holders or otherwise; or

                  (b) on or after the first Public Equity  Offering that results
         in a Public Market,  if any "person" or "group" (as such terms are used
         in  Sections  13(d)  and  14(d) of the  Exchange  Act or any  successor
         provisions to either of the foregoing),  including any group acting for
         the purpose of  acquiring,  holding,  voting or disposing of securities
         within the meaning of Rule  13d-5(b)(1)  under the Exchange Act,  other
         than any one or more of the Permitted  Holders,  becomes the Beneficial
         Owner, directly or indirectly, of 35% or more of the total voting power
         of the  Voting  Stock  of the  Company;  provided,  however,  that  the
         Permitted Holders are the Beneficial Owners, directly or indirectly, in
         the  aggregate of a lesser  percentage of the total voting power of the
         Voting  Stock of the  Company  than that  other  person  or group;  and
         provided further, that the



<PAGE>

                                                                               7


         provisions of this clause (b) will not apply to Voting Trustees serving
         in that capacity under the Voting Trust Arrangement; or

                  (c) the sale, transfer, assignment, lease, conveyance or other
         disposition,  directly or indirectly,  of all or substantially  all the
         assets of the Company and the Restricted Subsidiaries,  considered as a
         whole (other than a  disposition  of assets as an entirety or virtually
         as an entirety to a Wholly Owned  Restricted  Subsidiary or one or more
         Permitted  Holders)  shall  have  occurred,   or  the  Company  merges,
         consolidates  or amalgamates  with or into any other Person (other than
         one or more  Permitted  Holders) or any other Person (other than one or
         more Permitted  Holders)  merges,  consolidates or amalgamates  with or
         into the Company,  in any event  pursuant to a transaction in which the
         outstanding  Voting  Stock  of the  Company  is  reclassified  into  or
         exchanged  for  cash,   securities  or  other   Property,   other  than
         transaction where:

                           (1) the  outstanding Voting  Stock of the Company  is
                  reclassified  into  or exchanged for other Voting Stock of the
                  Company or  for  Voting Stock of  the surviving corporation or
                  transferee, and

                           (2) the Holders of  the  Voting  Stock of the Company
                  immediately   prior  to  the  transaction  own,   directly  or
                  indirectly,  not less than a majority  of the Voting  Stock of
                  the  Company  or  the  surviving   corporation  or  transferee
                  immediately  after the  transaction and in  substantially  the
                  same proportion as before the transaction; or

                  (d) during any period of two  consecutive  years,  individuals
         who at the beginning of that period  constituted the Board of Directors
         (together with any new directors  whose election or appointment by such
         Board or whose  nomination  for  election  by the  shareholders  of the
         Company was  approved by a vote of not less than  three-fourths  of the
         directors  then  still in  office  who  were  either  directors  at the
         beginning of that period or whose  election or nomination  for election
         was previously so approved or by a vote of the Voting Trustees pursuant
         to the terms of the Voting Trust  Arrangement)  cease for any reason to
         constitute a majority of the Board of Directors then in office; or



<PAGE>

                                                                               8


                  (e) the  shareholders  of the Company  shall have approved any
         plan of liquidation or dissolution of the Company.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Commodity Price Protection  Agreement" means, in respect of a
Person,  any  forward  contract,  commodity  swap  agreement,  commodity  option
agreement or other  similar  agreement or  arrangement  designed to protect that
Person against fluctuations in commodity prices.

                  "Company"  means  the  party  named as such in this  Indenture
until a successor replaces it pursuant to the applicable  provisions hereof and,
thereafter,  means the successor  and, for purposes of any  provision  contained
herein and required by the TIA, each other obligor on the indenture securities.

                  "Consolidated  Current  Liabilities"  means, as of any date of
determination,  the  aggregate  amount of  liabilities  of the  Company  and its
consolidated Restricted Subsidiaries which may properly be classified as current
liabilities (including taxes accrued as estimated), after eliminating:

                  (a)  all  intercompany  items  between  the  Company  and  any
         Restricted Subsidiary or between Restricted Subsidiaries, and

                  (b) all current maturities of long-term Debt.

                  "Consolidated  Fixed Charges" means, for any period, the total
interest  expense (net of interest  income) of the Company and its  consolidated
Restricted Subsidiaries, plus, to the extent not included in such total interest
expense,   and  to  the  extent  Incurred  by  the  Company  or  its  Restricted
Subsidiaries,

                  (a) interest expense  attributable to leases constituting part
         of a Sale and Leaseback Transaction and to Capital Lease Obligations,

                  (b)  amortization  of debt  discount and debt  issuance  cost,
         including commitment fees,

                  (c) capitalized interest,

                  (d) non-cash interest expense,



<PAGE>

                                                                               9


                  (e)  commissions,  discounts  and other fees and charges  owed
         with respect to letters of credit and bankers' acceptance financing,

                  (f)  net  costs   associated  with  Interest  Rate  Agreements
         (including amortization of fees),

                  (g) Disqualified Stock Dividends,

                  (h) Preferred Stock Dividends,

                  (i)  interest  Incurred  in  connection  with  Investments  in
         discontinued operations,

                  (j)  interest  accruing on any Debt of any other Person to the
         extent  that  Debt  is  Guaranteed  by the  Company  or any  Restricted
         Subsidiary, and

                  (k) the cash  contributions  to any employee  stock  ownership
         plan or similar trust to the extent those contributions are used by the
         plan or trust to pay  interest  or fees to any Person  (other  than the
         Company) in connection with Debt Incurred by the plan or trust.

                  Notwithstanding  anything to the  contrary  contained  herein,
commissions,  discounts, yield and other fees and charges Incurred in connection
with any transaction (including,  without limitation,  any Qualified Receivables
Transaction)  pursuant to which the Company or any Subsidiary of the Company may
sell, convey or otherwise  transfer or grant a security interest in any accounts
receivable  or  related  assets  of the  type  specified  in the  definition  of
"Qualified  Receivables  Transaction"  shall be included in  Consolidated  Fixed
Charges.

                  "Consolidated  Fixed Charges  Coverage Ratio" means, as of any
date of determination, the ratio of:

                  (a) the  aggregate  amount of EBITDA for the most  recent four
         consecutive  fiscal  quarters  ending  at least  45 days  prior to such
         determination date to

                  (b) Consolidated Fixed Charges for those four fiscal quarters;

provided, however, that:
--------  -------

                           (1) if

                                    (A) since  the  beginning of that period the
                           Company or any Restricted Subsidiary has



<PAGE>

                                                                              10


                           Incurred any  Debt that remains outstanding or Repaid
                           any Debt, or

                                    (B) the transaction  giving rise to the need
                           to calculate the Consolidated  Fixed Charges Coverage
                           Ratio involves an Incurrence or Repayment of Debt,

         Consolidated  Fixed Charges for that period shall be  calculated  after
         giving  effect on a pro forma basis to that  Incurrence or Repayment as
         if the Debt was  Incurred  or Repaid  on the first day of that  period,
         provided  that, in the event of any Repayment of Debt,  EBITDA for that
         period  shall  be  calculated  as if the  Company  or  such  Restricted
         Subsidiary had not earned any interest  income  actually  earned during
         such period in respect of the funds used to Repay such Debt, and

                           (2) if

                                    (A) since the  beginning  of that period the
                           Company or any Restricted  Subsidiary shall have made
                           any  Asset  Sale  or  an  Investment  (by  merger  or
                           otherwise)  in  any  Restricted  Subsidiary  (or  any
                           Person which becomes a Restricted  Subsidiary)  or an
                           acquisition  of  Property  which  constitutes  all or
                           substantially all of an operating unit of a business,

                                    (B) the transaction  giving rise to the need
                           to calculate the Consolidated  Fixed Charges Coverage
                           Ratio   involves   an  Asset  Sale,   Investment   or
                           acquisition, or

                                    (C) since the  beginning  of that period any
                           Person   (that   subsequently   became  a  Restricted
                           Subsidiary  or was merged with or into the Company or
                           any Restricted Subsidiary since the beginning of that
                           period)   shall   have  made  such  an  Asset   Sale,
                           Investment or acquisition,

EBITDA for that period shall be calculated  after giving pro forma effect to the
Asset  Sale,  Investment  or  acquisition  as if the Asset Sale,  Investment  or
acquisition occurred on the first day of that period.

                  If any Debt bears a  floating  rate of  interest  and is being
given pro forma effect, the interest expense on that Debt shall be calculated as
if the base interest rate



<PAGE>

                                                                              11


in effect for the  floating  rate of interest on the date of  determination  had
been the  applicable  base  interest  rate for the entire  period  (taking  into
account any Interest Rate  Agreement  applicable to that Debt if the  applicable
Interest  Rate  Agreement has a remaining  term in excess of 12 months).  In the
event the Capital Stock of any Restricted  Subsidiary is sold during the period,
the Company  shall be deemed,  for purposes of clause (1) above,  to have Repaid
during  that  period the Debt of that  Restricted  Subsidiary  to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for that
Debt after the sale.

                  "Consolidated  Net  Income"  means,  for any  period,  the net
income  (loss)  of the  Company  and its  consolidated  Subsidiaries;  provided,
                                                                       --------
however, that there shall not be included in such Consolidated Net Income:
-------

                  (a) any net  income  (loss)  of any  Person  (other  than  the
         Company) if that Person is not a Restricted Subsidiary, except that:

                           (1) subject to the exclusion  contained in clause (d)
                  below,  the  Company's  equity  in the net  income of any such
                  Person for that period shall be included in such  Consolidated
                  Net Income up to the aggregate  amount of cash  distributed by
                  that Person  during that period to the Company or a Restricted
                  Subsidiary as a dividend or other  distribution  (subject,  in
                  the case of a dividend or other  distribution  to a Restricted
                  Subsidiary, to the limitations contained in clause (c) below),
                  and

                           (2) the Company's equity in a net loss of that Person
                  other than an Unrestricted Subsidiary for the specified period
                  shall be included in determining such Consolidated Net Income,

                  (b) for purposes of Section 4.05 only,  any net income  (loss)
         of any  Person  acquired  by  the  Company  or any of its  consolidated
         Subsidiaries in a pooling of interests transaction for any period prior
         to the date of the acquisition,

                  (c) any net income (loss) of any Restricted  Subsidiary if the
         Restricted   Subsidiary  is  subject  to   restrictions,   directly  or
         indirectly, on the payment of



<PAGE>

                                                                              12


                  dividends  or  the  making  of   distributions,   directly  or
                  indirectly, to the Company, except that:

                           (1) subject to the exclusion  contained in clause (d)
                  below,   the  Company's  equity  in  the  net  income  of  the
                  Restricted  Subsidiary  for the period  shall be  included  in
                  Consolidated  Net Income up to the aggregate amount that would
                  have  been  permitted  at  the  date  of  determination  to be
                  dividended to the Company or another Restricted  Subsidiary by
                  that Restricted  Subsidiary  without prior approval by a third
                  party (that has not been  obtained),  pursuant to the terms of
                  its  charter  and  all  agreements,   instruments,  judgments,
                  decrees,  orders,  statutes,  rules and government regulations
                  applicable to that Restricted  Subsidiary or its shareholders,
                  during  that  period  as  a  dividend  or  other  distribution
                  (subject,  in the case of a dividend or other  distribution to
                  another Restricted Subsidiary,  to the limitation contained in
                  this clause), and

                           (2)  the  Company's  equity  in a  net  loss  of  the
                  Restricted  Subsidiary  for such  period  shall be included in
                  determining such Consolidated Net Income,

                  (d) any gain  (but not loss)  realized  upon the sale or other
         disposition  of any Property of the Company or any of its  consolidated
         Subsidiaries (including pursuant to any Sale and Leaseback Transaction)
         that is not sold or  otherwise  disposed of in the  ordinary  course of
         business,

                  (e) any extraordinary gain or loss,

                  (f)  the   cumulative   effect  of  a  change  in   accounting
         principles,

                  (g) any  unrealized  gains or  losses  of the  Company  or its
         consolidated Subsidiaries on any Hedging Obligations, and

                  (h) any non-cash  compensation  expense realized for grants of
         performance  shares,   stock  options  or  other  rights  to  officers,
         directors  and employees of the Company or any  Restricted  Subsidiary,
         provided that those shares,  options or other rights can be redeemed at
         the option of the holder only for Capital  Stock of the Company  (other
         than Disqualified Stock).



<PAGE>

                                                                              13


Notwithstanding the foregoing, for purposes of Section 4.05 only, there shall be
excluded  from  Consolidated  Net Income any  dividends,  repayments of loans or
advances or other  transfers  of assets from  Unrestricted  Subsidiaries  to the
Company or a Restricted  Subsidiary to the extent the  dividends,  repayments or
transfers  increase  the  amount of  Restricted  Payments  permitted  under that
covenant pursuant to clause (c)(4) thereof.

                  "Consolidated  Net Tangible  Assets" means,  as of any date of
determination,  the sum of the  amounts  that  would  appear  on a  consolidated
balance sheet of the Company and its consolidated Restricted Subsidiaries as the
total  assets  (less  accumulated  depreciation,  amortization,  allowances  for
doubtful  receivables,  other applicable  reserves and other properly deductible
items) of the Company and its  Restricted  Subsidiaries,  after giving effect to
purchase   accounting  and  after  deducting  therefrom   Consolidated   Current
Liabilities  and,  to the extent  otherwise  included,  the  amounts of (without
duplication):

                  (a) the  excess of cost over  fair  market  value of assets or
         businesses acquired;

                  (b) any  revaluation or other write-up in book value of assets
         subsequent  to the  last  day  of the  fiscal  quarter  of the  Company
         immediately  preceding  the  Issue  Date as a result of a change in the
         method of valuation in accordance with GAAP;

                  (c)   unamortized   debt   discount  and  expenses  and  other
         unamortized deferred charges, goodwill,  patents,  trademarks,  service
         marks, trade names, copyrights, licenses, organization or developmental
         expenses and other intangible items;

                  (d) minority  interests in consolidated  Subsidiaries  held by
         Persons other than the Company or any Restricted Subsidiary;

                  (e) treasury stock;

                  (f) cash or  securities  set aside  and held in a  sinking  or
         other analogous fund established for the purpose of redemption or other
         retirement  of  Capital  Stock to the  extent  such  obligation  is not
         reflected in Consolidated Current Liabilities; and

                  (g) Investments in and assets of Unrestricted Subsidiaries.



<PAGE>

                                                                              14


                  "Consolidated  Tangible  Assets"  means,  as of  any  date  of
determination,  the sum of the amounts of  Consolidated  Net Tangible Assets and
Consolidated Current Liabilities as of such date.

                  "Credit  Facilities" means, with respect to the Company or any
Restricted  Subsidiary,   one  or  more  debt  or  commercial  paper  facilities
(including  related   Guarantees)  with  banks,   investment  banks,   insurance
companies,  mutual funds or other institutional  lenders (including our Existing
Bank Credit  Facilities),  providing  for revolving  credit  loans,  term loans,
receivables or inventory financing (including through the sale of receivables or
inventory to  institutional  lenders or to special  purpose,  bankruptcy  remote
entities formed to borrow from  institutional  lenders against those receivables
or inventory) or trade or standby letters of credit,  in each case together with
any Refinancings thereof by a lender or syndicate of lenders;  provided that, in
the case of a transaction in which any accounts receivable are sold, conveyed or
otherwise  transferred  by the  Company  or any of its  subsidiaries  to another
Person other than a Receivables  Entity,  then that transaction must satisfy the
following three conditions:

                  (a)  if  the  transaction  involves  a  transfer  of  accounts
         receivable  with Fair  Market  Value  equal to or  greater  than  $25.0
         million,  the Board of Directors  shall have  determined  in good faith
         that the transaction is economically fair and reasonable to the Company
         or the  Subsidiary  that sold,  conveyed or  transferred  the  accounts
         receivable,

                  (b) the sale, conveyance or transfer of accounts receivable by
         the Company or the Subsidiary is made at Fair Market Value and

                  (c) the financing  terms,  covenants,  termination  events and
         other  provisions  of  the  transaction   shall  be  market  terms  (as
         determined in good faith by the Board of Directors if Board approval is
         required under clause (a)).

                  "Currency Exchange Protection  Agreement" means, in respect of
a Person,  any foreign  exchange  contract,  currency swap  agreement,  currency
option or other similar agreement or arrangement designed to protect that Person
against fluctuations in currency exchange rates.



<PAGE>

                                                                              15


                  "Debt"  means,  with  respect  to any  Person  on any  date of
determination (without duplication):

                  (a) the principal of and premium (if any) in respect of:

                           (1) debt of the Person for money borrowed, and

                           (2) debt  evidenced  by notes,  debentures,  bonds or
                  other similar  instruments for the payment of which the Person
                  is responsible or liable;

                  (b)  all  Capital  Lease  Obligations  of the  Person  and all
         Attributable Debt in respect of Sale and Leaseback Transactions entered
         into by the Person;

                  (c) all  obligations  of the  Person  issued or assumed as the
         deferred  purchase price of Property,  all conditional sale obligations
         of the  Person  and all  obligations  of the  Person  under  any  title
         retention  agreement (but excluding  trade accounts  payable arising in
         the ordinary course of business);

                  (d) all obligations of the Person for the reimbursement of any
         obligor on any letter of credit,  banker's acceptance or similar credit
         transaction  (other than  obligations with respect to letters of credit
         securing  obligations (other than obligations  described in (a) through
         (c) above)  entered  into in the  ordinary  course of  business  of the
         Person to the extent those  letters of credit are not drawn upon or, if
         and to the extent drawn upon,  the drawing is  reimbursed no later than
         the third Business Day following  receipt by the Person of a demand for
         reimbursement following payment on the letter of credit);

                  (e) the amount of all  obligations  of the Person with respect
         to the  Repayment  of any  Disqualified  Stock or, with  respect to any
         Subsidiary of the Person,  any Preferred Stock (but excluding,  in each
         case, any accrued dividends);

                  (f) all  obligations  of the type  referred  to in clauses (a)
         through (e) of other Persons and all dividends of other Persons for the
         payment of which,  in either case, the Person is responsible or liable,
         directly or indirectly, as obligor,  guarantor or otherwise,  including
         by means of any Guarantee;



<PAGE>

                                                                              16


                  (g) all  obligations  of the type  referred  to in clauses (a)
         through (f) of other Persons secured by any Lien on any Property of the
         Person (whether or not such  obligation is assumed by the Person),  the
         amount of such obligation being deemed to be the lesser of the value of
         that Property or the amount of the obligation so secured; and

                  (h) to the extent not otherwise  included in this  definition,
         Hedging Obligations of such Person.

The amount of Debt of any Person at any date shall be the outstanding balance at
that date of all  unconditional  obligations as described  above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent  obligations at that date. The amount of Debt represented by a
Hedging Obligation shall be equal to:

                  (1) zero if the Hedging  Obligation has been Incurred pursuant
         to clause (e), (f) or (g) of the second paragraph of Section 4.04, or

                  (2) if the  Hedging  Obligation  is not  Incurred  pursuant to
         clauses (e), (f) or (g) of the second  paragraph of Section 4.04,  then
         105% of the aggregate net amount, if any, that would then be payable by
         the Company and any Restricted  Subsidiary on a per counter-party basis
         pursuant   to   Section    6(e)   of   the   ISDA   Master    Agreement
         (Multicurrency-Cross Border) in the form published by the International
         Swaps and Derivatives  Association in 1992 (the "ISDA Form"), as if the
         date of determination  were a date that constitutes or is substantially
         equivalent to an Early  Termination  Date, as defined in the ISDA Form,
         with respect to all  transactions  governed by the ISDA Form,  plus the
         equivalent amount under the terms of any other Hedging Obligations that
         are not  Incurred  pursuant  to clauses  (e),  (f) or (g) of the second
         paragraph  of Section  4.04,  each such amount to be  estimated in good
         faith by the Company.

                  "Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.

                  "Disqualified  Stock" means,  with respect to any Person,  any
Capital  Stock that by its terms (or by the terms of any security  into which it
is convertible or for which it



<PAGE>

                                                                              17


is  exchangeable,  in  either  case at the  option  of the  holder  thereof)  or
otherwise:

                  (a) matures or is mandatorily redeemable pursuant to a sinking
         fund obligation or otherwise,

                  (b) is or  may  become  redeemable  or  repurchaseable  at the
         option of the holder thereof, in whole or in part, or

                  (c) is convertible or exchangeable at the option of the holder
         thereof for Debt or Disqualified  Stock, on or prior to, in the case of
         clause (a), (b) or (c), the first anniversary of the Stated Maturity of
         the Securities.

                  "Disqualified   Stock  Dividends"  means  all  dividends  with
respect to Disqualified Stock of the Company held by Persons other than a Wholly
Owned  Restricted  Subsidiary.  The amount of any dividend of this kind shall be
equal to the quotient of the dividend divided by the difference  between one and
the maximum  statutory  federal  income tax rate  (expressed as a decimal number
between 1 and 0) then applicable to the Company.

                  "Dollar  Notes" means  the Company's 11 5/8% Senior  Notes due
2008  denominated in U.S.  dollars and issued pursuant to an indenture dated the
date hereof between the Company and Citibank, N.A. as trustee.

                  "EBITDA"  means,  for any period,  an amount equal to, for the
Company and its consolidated Restricted Subsidiaries:

                  (a) the sum of Consolidated  Net Income for that period,  plus
         the following to the extent reducing  Consolidated  Net Income for that
         period:

                           (1) the  provision  for  taxes  based  on  income  or
                  profits or utilized in computing net loss,

                           (2) Consolidated Fixed Charges,

                           (3) depreciation,

                           (4) amortization of intangibles,

                           (5) any other non-cash items (other than any non-cash
                  item to the extent that it represents an accrual of or reserve
                  for cash expenditures in any future period), and



<PAGE>

                                                                              18


                           (6) any one-time, non-recurring expenses relating to,
                  or arising from, any closures of  manufacturing  facilities on
                  or after  the Issue  Date,  in each  case  incurred  within 12
                  months after such closure, minus

                  (b) all non-cash items increasing  Consolidated Net Income for
         that period  (other than any such  non-cash  item to the extent that it
         will result in the receipt of cash payments in any future period).

Notwithstanding  the  foregoing  clause  (a),  the  provision  for taxes and the
depreciation,  amortization and non-cash items of a Restricted  Subsidiary shall
be added to Consolidated Net Income to compute EBITDA only to the extent (and in
the same  proportion)  that the net  income of that  Restricted  Subsidiary  was
included  in  calculating  Consolidated  Net Income and only if a  corresponding
amount would be permitted at the date of  determination  to be dividended to the
Company by that Restricted  Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments,   decrees,  orders,  statutes,  rules  and  governmental  regulations
applicable to that Restricted Subsidiary or its shareholders.

                  "Equipment   Financing   Transaction"  means  any  arrangement
 (together with any Refinancings  thereof) with any Person pursuant to which the
 Company or any Restricted Subsidiary Incurs Debt secured by a Lien on equipment
 or equipment related property of the Company or any Restricted Subsidiary.

                  "Event of Default" has the meaning set forth in Section 6.01

                  "Exchange Act" means the Securities Exchange Act of 1934.

                  "Existing Bank Credit Facilities" means:

                  (a) the Bridge Credit Agreement, dated as of January 31, 2000,
         among the  Company,  Bank of  America,  N.A. as  administrative  agent,
         collateral agent and lender,  The Bank of Nova Scotia,  Citicorp U.S.A.
         Incorporated,  Morgan  Guaranty Trust Company of New York and Bank One,
         N.A., as amended as of July 31, 2000 and September 29, 2000,

                  (b) the Amended and  Restated  1999 180 Day Credit  Agreement,
         dated as of January 31, 2000, among the Company,  Bank of America, N.A.
         as administrative agent,



<PAGE>

                                                                              19


         collateral agent and lender,  The Bank of Nova Scotia,  Citicorp U.S.A.
         Incorporated  and Morgan Guaranty Trust Company of New York, as amended
         as of July 31, 2000, September 29, 2000 and October 13, 2000,

                  (c) the Amended and  Restated  1997 364 Day Credit  Agreement,
         dated as of January 31, 2000, among the Company,  Bank of America, N.A.
         as administrative agent,  collateral agent and lender, The Bank of Nova
         Scotia, Citicorp U.S.A. Incorporated,  Morgan Guaranty Trust Company of
         New York, Commerzbank AG, Credit Lyonnais, Bank One, N.A., The Sumitomo
         Bank,  Ltd., ABN AMRO Bank N.V.,  Banca  Commerciale  Italiana,  Banque
         Nationale de Paris,  Criplo-Cassa di Risparmio delle Provincie Lombarde
         S.p.A.,  Societe Generale,  Mellon Bank National Association,  KBC Bank
         N.V.,  UniCredito  Italiano S.p.A.,  Deutsche Bank  Aktiengesellschaft,
         Wachovia Bank N.A.,  Bankers Trust Company and First  Hawaiian Bank, as
         amended as of July 31, 2000, September 29, 2000 and October 13, 2000.

                  (d) the 1997 Second  Amended and  Restated  Credit  Agreement,
         dated as of January 31, 2000, among the Company,  Bank of America, N.A.
         as administrative agent,  collateral agent and lender, The Bank of Nova
         Scotia, Citicorp U.S.A. Incorporated,  Morgan Guaranty Trust Company of
         New York,  Commerzbank AG, Credit  Lyonnais,  The Chase Manhattan Bank,
         Bank One,  N.A., The Sumitomo  Bank,  Ltd.,  ABN AMRO Bank N.V.,  Banca
         Commerciale  Italiana,  Banque  Nationale  de Paris,  Cariplo-Cassa  di
         Risparmio delle Provincie Lombarde S.p.A., CIBC Inc., The Royal Bank of
         Canada, The Sanwa Bank, Limited,  The  Toronto-Dominion  Bank, KBC Bank
         N.V., PNC Bank N.A., Societe Generale,  BankBoston N.A., The Industrial
         Bank of Japan,  Limited,  Mellon Bank National  Association,  The Tokai
         Bank  Limited,  The Bank of  Tokyo-Mitsubishi  Limited,  Union  Bank of
         California,  N.A.  Banca Monte dei Paschi di Siena  S.p.A.,  UniCredito
         Italiano  S.p.A.,  Deutsche  Bank  Aktiengesellschaft,  San  Paolo  IMI
         S.p.A., Cooperative Centrale  Raiffeisent--Boerenleenbank B.A., UBS AG,
         Wachovia Bank N.A.,  Bankers Trust Company and First  Hawaiian Bank, as
         amended as of July 31, 2000, September 29, 2000 and October 13, 2000.

                  "Existing   Policies"  means  (1)  the  Company's  estate  tax
repurchase  policy under which the Company  repurchases  a portion of a deceased
stockholder's  shares to generate  funds for payment of estate taxes and (2) the
Company's  valuation  policy under which the Company obtains an annual valuation
of the Company's Voting Trust Certificates,  as both policies exist at the Issue
Date or as they may exist from time to



<PAGE>

                                                                              20


time,  provided that if either of these policies is materially amended after the
Issue Date in a manner less favorable to the Company than the policy as existing
on the  Issue  Date,  then that  amended  policy  shall be  deemed  not to be an
Existing Policy.

                  "Fair Market Value" means,  with respect to any Property,  the
price that could be negotiated in an arm's-length  free market  transaction, for
cash,  between a willing  seller and a willing  buyer,  neither of whom is under
undue  pressure or  compulsion  to complete  the  transaction.  For  purposes of
Section  4.05 and Section 4.07 and the  definitions  of  "Qualified  Receivables
Transaction"  and "Credit  Facilities",  Fair Market Value shall be  determined,
except as otherwise provided,

                  (a) if the  Property  has a Fair Market Value equal to or less
         than $25.0 million, by any Officer of the Company, or

                  (b) if the Property has a Fair Market Value in excess of $25.0
         million,  by a majority of the Board of  Directors  and  evidenced by a
         Board Resolution,  dated within 12 months of the relevant  transaction,
         delivered to the Trustee.

                  "Foreign   Restricted  Subsidiary"   means    any   Restricted
Subsidiary which is not organized under the laws of the United States of America
or any State thereof or the District of Columbia.

                  "GAAP"  means  United  States  generally  accepted  accounting
 principles as in effect from time to time, including those set forth:

                  (a) in  the  opinions  and  pronouncements  of the  Accounting
         Principles  Board  of  the  American   Institute  of  Certified  Public
         Accountants,

                  (b) in the  statements  and  pronouncements  of the  Financial
         Accounting Standards Board,

                  (c) in other  statements  by another  entity as  approved by a
         significant segment of the accounting profession, and

                  (d) the rules and regulations of the Commission  governing the
         inclusion  of  financial  statements  (including  pro  forma  financial
         statements)  in  periodic  reports  required  to be filed  pursuant  to
         Section 13 of the Exchange Act, including opinions and pronouncements



<PAGE>

                                                                              21


         in staff accounting  bulletins and similar written  statements from the
         accounting staff of the Commission.

                  "Guarantee" means any obligation,  contingent or otherwise, of
any Person directly or indirectly  guaranteeing any Debt of any other Person and
any obligation, direct or indirect, contingent or otherwise, of that Person:

                  (a) to  purchase  or pay (or  advance or supply  funds for the
         purchase or payment of) the Debt of such other Person (whether  arising
         by virtue of partnership  arrangements,  or by agreements to keep-well,
         to purchase assets, goods, securities or services, to take-or-pay or to
         maintain financial statement conditions or otherwise), or

                  (b)  entered  into for the  purpose of  assuring  in any other
         manner the  obligee  against  loss in respect  thereof  (in whole or in
         part);

provided, however, that the term "Guarantee" shall not include:
--------  -------

                  (1)  endorsements  for  collection  or deposit in the ordinary
         course of business, or

                  (2) a  contractual  commitment  by one  Person  to  invest  in
         another Person for so long as the Investment is reasonably  expected to
         constitute a Permitted  Investment  under clause (a), (b) or (i) of the
         definition of "Permitted Investment".

The  term  "Guarantee"  used as a verb  has a  corresponding  meaning.  The term
"Guarantor" shall mean any Person Guaranteeing any obligation.

                  "Hedging  Obligation"  of any Person means any  obligation  of
that  Person  pursuant  to  any  Interest  Rate  Agreement,   Currency  Exchange
Protection Agreement,  Commodity Price Protection Agreement or any other similar
agreement or arrangement.

                  "Holder"  or  "Securityholder"  means the Person in whose name
the Security is registered on the Security register described in Section 2.04.

                  "Incur" means, with respect to any Debt or other obligation of
any  Person,  to  create,  issue,  incur (by  merger,  conversion,  exchange  or
otherwise),  extend, assume,  Guarantee or become liable in respect of that Debt
or other obligation or the recording, as required pursuant to GAAP or



<PAGE>

                                                                              22


otherwise,  of any Debt or  obligation  on the balance sheet of that Person (and
"Incurrence" and "Incurred"  shall have meanings  correlative to the foregoing);
provided,  however,  that a change in GAAP that results in an obligation of that
--------   -------
Person  that exists at such time,  and is not  theretofore  classified  as Debt,
becoming Debt shall not be deemed an Incurrence of that Debt;  provided further,
                                                               ----------------
however, that any Debt or other obligations of a Person existing at the time the
-------
Person becomes a Subsidiary  (whether by merger,  consolidation,  acquisition or
otherwise)  shall be deemed to be  Incurred  by that  Subsidiary  at the time it
becomes a Subsidiary; and provided further, however, that solely for purposes of
                          ----------------  -------
determining  compliance  with Section  4.04,  amortization  of debt  discount or
premium shall not be deemed to be the  Incurrence of Debt,  provided that in the
case of Debt sold at a discount or at a premium, the amount of the Debt Incurred
shall at all times be the aggregate principal amount at Stated Maturity.

                  "Indenture"  means this  Indenture as amended or  supplemented
from time to time.

                  "Independent  Financial  Advisor" means an investment  banking
firm of national  standing or any third party  appraiser  of national  standing,
provided that the firm or appraiser is not an Affiliate of the Company.

                  "Interest Rate Agreement" means, for any Person,  any interest
rate swap agreement,  interest rate option agreement or other similar  agreement
or arrangement designed to protect against fluctuations in interest rates.

                  "Investment"  by any Person means any direct or indirect  loan
(other than  advances to  customers  and  suppliers  in the  ordinary  course of
business  that are recorded as accounts  receivable on the balance sheet of that
Person),  advance or other extension of credit or capital contribution (by means
of  transfers  of cash or other  Property to others or payments  for Property or
services for the account or use of others,  or otherwise) to, or Incurrence of a
Guarantee of any  obligation  of, or purchase or  acquisition  of Capital Stock,
bonds, notes,  debentures or other securities or evidence of Debt issued by, any
other Person.  For purposes of Section 4.05,  Section 4.10 and the definition of
"Restricted Payment", Investment shall include the portion (proportionate to the
Company's equity interest in the Subsidiary) of the Fair Market Value of the net
assets of any  Subsidiary  of the  Company  at the time that the  Subsidiary  is
designated  an  Unrestricted   Subsidiary;   provided,   however,  that  upon  a
                                             --------    -------
redesignation of that Subsidiary as a Restricted  Subsidiary,  the Company shall
be



<PAGE>

                                                                              23


deemed to continue to have a permanent Investment in an Unrestricted  Subsidiary
of an amount (if positive) equal to:

                  (a) the Company's Investment in that Subsidiary at the time of
         such redesignation, less

                  (b)  the  portion   (proportionate  to  the  Company's  equity
         interest in such Subsidiary) of the Fair Market Value of the net assets
         of that  Subsidiary at the time of such  redesignation.  In determining
         the amount of any  Investment  made by transfer of any  Property  other
         than cash, the Property shall be valued at its Fair Market Value at the
         time of the Investment.

                  "Investment  Grade  Rating"  means a rating equal to or higher
than Baa3 (or the equivalent) by Moody's and BBB- (or the equivalent) by S&P.

                  "Issue Date" means the first date on which the  Securities are
initially issued.

                  "Issue Date Dollar  Notes"  means  Dollar  Notes issued on the
first date on which the Dollar Notes are initially issued.

                  "Lien" means, with respect to any Property of any Person,  any
mortgage  or  deed  of  trust,  pledge,   hypothecation,   assignment,   deposit
arrangement,  security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability),  encumbrance, preference,
priority or other security agreement or preferential  arrangement of any kind or
nature  whatsoever  on or with respect to that Property  (including  any Capital
Lease  Obligation,  conditional  sale or other title retention  agreement having
substantially  the same economic  effect as any of the foregoing or any Sale and
Leaseback Transaction).

                  "Moody's"  means  Moody's  Investors  Service,   Inc.  or  any
successor to the rating agency business thereof.

                  "Net  Available  Cash" from any Asset Sale means cash payments
received  therefrom  (including  any cash  payments  received by way of deferred
payment of principal pursuant to a note or installment  receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the



<PAGE>

                                                                              24


acquiring Person of Debt or other  obligations  relating to the Property that is
the subject of that Asset Sale or received in any other non-cash  form), in each
case net of:

                  (a) all legal,  title and recording tax expenses,  commissions
         and other fees (including,  without limitation,  brokers' or investment
         bankers'  commissions or fees) and expenses incurred,  and all Federal,
         state, provincial,  foreign and local taxes required to be accrued as a
         liability under GAAP, as a consequence of the Asset Sale,

                  (b) all  payments  made on any  Debt  that is  secured  by any
         Property subject to the Asset Sale, in accordance with the terms of any
         Lien upon or other security  agreement of any kind with respect to that
         Property, or which must by its terms, or in order to obtain a necessary
         consent to the Asset Sale, or by  applicable  law, be repaid out of the
         proceeds from the Asset Sale,

                  (c) all  distributions  and other payments required to be made
         to minority  interest  holders in  Subsidiaries  or joint ventures as a
         result of the Asset Sale, and

                  (d) the  deduction  of  appropriate  amounts  provided  by the
         seller as a reserve,  in accordance with GAAP,  against any liabilities
         associated with the Property disposed in the Asset Sale and retained by
         the Company or any Restricted Subsidiary after the Asset Sale.

                  "Officer"  means the Chief Executive  Officer,  the President,
the Chief  Financial  Officer,  the Treasurer or the Assistant  Treasurer of the
Company.

                  "Officers'  Certificate"  means a  certificate  signed  by two
Officers of the Company,  at least one of whom shall be the principal  executive
officer or  principal  financial  officer of the Company,  and  delivered to the
Trustee.

                  "Opinion  of  Counsel"  means a  written  opinion  from  legal
counsel who is acceptable  to the Trustee.  The counsel may be an employee of or
counsel to the Company or the Trustee.

                  "Permitted  Holders"  means the holders of Voting  Stock as of
the Issue  Date,  together  with any  Voting  Trustee  and any  Person  who is a
"Permitted  Transferee"  of  the  holders,  as  that  term  is  defined  in  the
Stockholders  Agreement  dated as of April 15, 1996  between the Company and the
stockholders of the Company party thereto as that



<PAGE>

                                                                              25


Stockholders  Agreement was in effect on the Issue Date, except that transferees
pursuant to Section 2.2(a)(x) of that Stockholders Agreement shall not be deemed
to be Permitted Transferees for purposes of the Indenture.

                  "Permitted  Investment" means any Investment by the Company or
a Restricted Subsidiary in:

                  (a) any  Restricted  Subsidiary or any Person that will,  upon
         the making of such Investment, become a Restricted Subsidiary, provided
         that the primary  business of the  Restricted  Subsidiary  is a Related
         Business;

                  (b) any Person if as a result of the Investment that Person is
         merged or  consolidated  with or into,  or  transfers or conveys all or
         substantially  all  its  Property  to,  the  Company  or  a  Restricted
         Subsidiary,  provided that the Person's  primary  business is a Related
         Business;

                  (c) Temporary Cash Investments;

                  (d)   receivables   owing  to  the  Company  or  a  Restricted
         Subsidiary,  if created or acquired in the ordinary  course of business
         and payable or  dischargeable in accordance with customary trade terms;
         provided,   however,   that  those  trade   terms  may   include   such
         --------    -------
         concessionary  trade terms as the Company or the Restricted  Subsidiary
         deems reasonable under the circumstances;

                  (e) payroll, travel and similar advances to cover matters that
         are expected at the time of those advances  ultimately to be treated as
         expenses  for  accounting  purposes  and that are made in the  ordinary
         course of business;

                  (f) loans  and  advances  to  employees  made in the  ordinary
         course of business consistent with past practices of the Company or the
         applicable  Restricted  Subsidiary,  as the case may be,  provided that
         those loans and  advances  do not exceed  $5.0  million at any one time
         outstanding;

                  (g)  stock,   obligations  or  other  securities  received  in
         settlement  of debts  created in the  ordinary  course of business  and
         owing to the Company or a Restricted  Subsidiary or in  satisfaction of
         judgments;



<PAGE>

                                                                              26


                  (h) any  Person to the extent the  Investment  represents  the
         non-cash  portion of the  consideration  received in connection with an
         Asset Sale consummated in compliance with Section 4.07;

                  (i) a  Receivables  Entity or any  Investment by a Receivables
         Entity in any other Person in connection  with a Qualified  Receivables
         Transaction,  including Investments of funds held in accounts permitted
         or required by the  arrangements  governing that Qualified  Receivables
         Transaction or any related  Indebtedness;  provided that any Investment
         in a  Receivables  Entity  is in the  form of a  Purchase  Money  Note,
         contribution of additional receivables or an equity interest;

                  (j)  customers  or  suppliers  of  the  Company  or any of its
         subsidiaries  in the form of  extensions  of  credit  or  transfers  of
         property,  to the extent otherwise  constituting an Investment,  and in
         the  ordinary  course of business and any  Investments  received in the
         ordinary  course of business in  satisfaction  or partial  satisfaction
         thereof;

                  (k) any Person if the Investments are outstanding on the Issue
         Date and not otherwise described in clauses (a) through (j) above; and

                  (l) any Person made for Fair  Market  Value that do not exceed
         $100.0 million outstanding at any one time in the aggregate.

         "Permitted Liens" means:

                  (a) Liens  (including,  without  limitation  and to the extent
         constituting a Lien,  negative  pledges) to secure Debt permitted to be
         Incurred  under  clause (b) of the second  paragraph  of Section  4.04,
         regardless of whether the Company and the Restricted  Subsidiaries  are
         actually subject to the covenant  contained in Section 4.04 at the time
         the Lien is Incurred;

                  (b) Liens  (including,  without  limitation  and to the extent
         constituting a Lien,  negative  pledges) to secure Debt permitted to be
         Incurred  under  clause (h) of the second  paragraph  of Section  4.04,
         regardless of whether the Company and the Restricted  Subsidiaries  are
         actually subject to the covenant  contained in Section 4.04 at the time
         the Lien is  Incurred,  provided  that  any  Lien of this  kind may not
         extend to any  Property  of the Company or any  Restricted  Subsidiary,
         other than the Property acquired, constructed or leased



<PAGE>

                                                                              27


         with the proceeds of  that Debt  and  any improvements or accessions to
         that Property;

                  (c) Liens for taxes,  assessments or  governmental  charges or
         levies on the Property of the Company or any  Restricted  Subsidiary if
         the same shall not at the time be delinquent or thereafter  can be paid
         without  penalty,   or  are  being  contested  in  good  faith  and  by
         appropriate  proceedings promptly instituted and diligently  concluded,
         provided that any reserve or other appropriate  provision that shall be
         required in conformity with GAAP shall have been made therefor;

                  (d) Liens imposed by law,  such as  carriers',  warehousemen's
         and mechanics'  Liens and other similar  Liens,  on the Property of the
         Company or any Restricted  Subsidiary arising in the ordinary course of
         business and securing  payment of obligations that are not more than 60
         days past due or are being  contested in good faith and by  appropriate
         proceedings;

                  (e) Liens on the  Property  of the  Company or any  Restricted
         Subsidiary  Incurred  in the  ordinary  course  of  business  to secure
         performance  of  obligations  with respect to  statutory or  regulatory
         requirements,  performance or  return-of-money  bonds,  surety bonds or
         other  obligations of a like nature and Incurred in a manner consistent
         with industry practice, including banker's liens and rights of set-off,
         in each case which are not Incurred in connection with the borrowing of
         money,  the  obtaining  of  advances  or credit or the  payment  of the
         deferred  purchase  price of Property and which do not in the aggregate
         impair in any material  respect the use of Property in the operation of
         the business of the Company and the Restricted  Subsidiaries taken as a
         whole;

                  (f)  Liens  on  Property  at  the  time  the  Company  or  any
         Restricted Subsidiary acquired the Property,  including any acquisition
         by means of a merger or  consolidation  with or into the Company or any
         Restricted  Subsidiary;  provided,  however, that any Lien of this kind
                                  --------   -------
         may not extend to any other  Property of the Company or any  Restricted
         Subsidiary;  provided further,  however,  that the Liens shall not have
                      ----------------   -------
         been Incurred in  anticipation of or in connection with the transaction
         or series of  transactions  pursuant to which the Property was acquired
         by the Company or any Restricted Subsidiary;



<PAGE>

                                                                              28


                  (g) Liens on the  Property of a Person at the time that Person
         becomes a Restricted  Subsidiary;  provided,  however, that any Lien of
                                            --------   -------
         this kind may not extend to any other  Property  of the  Company or any
         other  Restricted  Subsidiary  that is not a direct  Subsidiary of that
         Person;  provided further,  however,  that the Lien was not Incurred in
                  ----------------   -------
         anticipation  of or in  connection  with the  transaction  or series of
         transactions   pursuant  to  which  the  Person   became  a  Restricted
         Subsidiary;

                  (h)  pledges or  deposits  by the  Company  or any  Restricted
         Subsidiary under worker's  compensation  laws,  unemployment  insurance
         laws or similar legislation,  or good faith deposits in connection with
         bids, tenders, contracts (other than for the payment of Debt) or leases
         to which the Company or any  Restricted  Subsidiary  or any  Restricted
         Subsidiary  is  party,  or  deposits  to  secure  public  or  statutory
         obligations  of the Company or any Restricted  Subsidiary,  or deposits
         for the payment of rent, in each case  Incurred in the ordinary  course
         of business;

                  (i) Liens  (including,  without  limitation  and to the extent
         constituting  Liens,  negative  pledges),  assignments  and  pledges of
         rights to receive  premiums,  interest or loss  payments  or  otherwise
         arising  in  connection  with  worker's   compensation  loss  portfolio
         transfer  insurance   transactions  or  any  insurance  or  reinsurance
         agreements  pertaining  to  losses  covered  by  insurance,  and  Liens
         (including,  without limitation and to the extent  constituting  Liens,
         negative  pledges)  in favor of insurers  or  reinsurers  on pledges or
         deposits by the Company or any Restricted  Subsidiary  under  workmen's
         compensation laws, unemployment insurance laws or similar legislation;

                  (j) utility  easements,  building  restrictions and such other
         encumbrances  or  charges  against  real  Property  as are of a  nature
         generally existing with respect to properties of a similar character;

                  (k) Liens  arising  out of  judgments  or awards  against  the
         Company or a Restricted Subsidiary with respect to which the Company or
         the Restricted  Subsidiary  shall then be proceeding  with an appeal or
         other proceeding for review;

                  (l) Liens in favor of surety bonds or letters of credit issued
         pursuant  to the  request of and for the  account  of the  Company or a
         Restricted Subsidiary in



<PAGE>

                                                                              29


         the ordinary course of  its business,  provided that these  letters  of
         credit do not constitute Debt;

                  (m)  leases  or  subleases  of real  property  granted  by the
         Company or a Restricted  Subsidiary to any other Person in the ordinary
         course of business  and not  materially  impairing  the use of the real
         property  in the  operation  of the  business  of  the  Company  or the
         Restricted Subsidiary;

                  (n) Liens  (including,  without  limitation  and to the extent
         constituting Liens,  negative pledges) on intellectual property arising
         from intellectual property licenses entered into in the ordinary course
         of business;

                  (o) Liens or negative pledges attaching to or related to joint
         ventures engaged in a Related Business,  restricting Liens on interests
         in those joint ventures;

                  (p) Liens  existing on the Issue Date not otherwise  described
         in clauses (a) through (o) above;

                  (q) Liens not  otherwise  described in clauses (a) through (p)
         above on the Property of any  Restricted  Subsidiary to secure any Debt
         permitted  to be  Incurred  by the  Restricted  Subsidiary  pursuant to
         Section 4.04;

                  (r) Liens on the  Property  of the  Company or any  Restricted
         Subsidiary to secure any Refinancing,  in whole or in part, of any Debt
         secured by Liens  referred to in clause (b),  (e), (f), (g), (k) or (l)
         above;  provided,  however, that any Lien of this kind shall be limited
                 --------   -------
         to all or part of the same  Property  that  secured the  original  Lien
         (together  with  improvements  and accessions to such Property) and the
         aggregate  principal  amount of Debt that is  secured by the Lien shall
         not be increased to an amount greater than the sum of:

                           (1) the outstanding principal amount, or, if greater,
                  the committed  amount,  of the Debt secured by Liens described
                  under clause (b), (e), (f), (g), (k) or (l) above, as the case
                  may be, at the time the original Lien became a Permitted  Lien
                  under the indenture, and

                           (2) an amount necessary to pay any fees and expenses,
                  including premiums and defeasance costs,



<PAGE>

                                                                              30


                  incurred  by  the  Company or  the  Restricted  Subsidiary  in
                  connection with the Refinancing;

                  (s) Liens not  otherwise  permitted by clauses (a) through (r)
         above that are Liens  permitted by the Existing Bank Credit  Facilities
         as they exist on the Issue Date; and

                  (t) Liens not  otherwise  permitted by clauses (a) through (s)
         above  encumbering  assets having an aggregate Fair Market Value not in
         excess of 5.0% of Consolidated Net Tangible Assets, as determined based
         on the  consolidated  balance sheet of the Company as of the end of the
         most recent  fiscal  quarter  ending at least 45 days prior to the date
         the Lien shall be Incurred.

                  "Permitted  Refinancing  Debt" means any Debt that  Refinances
any other Debt, including any successive Refinancings, so long as:

                  (a) the new Debt is in an  aggregate  principal  amount (or if
         Incurred with original issue discount, an aggregate issue price) not in
         excess of the sum of:

                           (1) the  aggregate  principal  amount (or if Incurred
                  with original issue  discount,  the aggregate  accreted value)
                  then outstanding of the Debt being Refinanced, and

                           (2) an amount necessary to pay any fees and expenses,
                  including  premiums  and  defeasance  costs,  related  to  the
                  Refinancing,

                  (b) the  Average  Life of the new Debt is equal to or  greater
         than the Average Life of the Debt being Refinanced,

                  (c) the Stated Maturity of the new Debt is no earlier than the
         Stated Maturity of the Debt being Refinanced, and

                  (d) the new Debt  shall not be senior in right of  payment  to
         the Debt that is being Refinanced;

provided, however, that Permitted Refinancing Debt shall not include:
--------  -------

                  (x) Debt of a Subsidiary that Refinances Debt of the Company
         or


<PAGE>

                                                                              31


                  (y)  Debt  of the  Company  or a  Restricted  Subsidiary  that
         Refinances Debt of an Unrestricted Subsidiary.

                  "Person" means any individual, corporation, company (including
any limited liability company), association,  partnership, joint venture, trust,
unincorporated  organization,  government or any agency or political subdivision
thereof or any other entity.

                  "Preferred Stock" means any Capital Stock of a Person, however
designated,  which entitles the holder  thereof to a preference  with respect to
the payment of dividends, or as to the distribution of assets upon any voluntary
or involuntary  liquidation  or  dissolution of that Person,  over shares of any
other class of Capital Stock issued by that Person.

                  "Preferred  Stock  Dividends" means all dividends with respect
to Preferred  Stock of  Restricted  Subsidiaries  held by Persons other than the
Company or a Wholly Owned Restricted  Subsidiary.  The amount of any dividend of
this  kind  shall  be equal  to the  quotient  of the  dividend  divided  by the
difference  between one and the maximum statutory federal income rate (expressed
as a  decimal  number  between  1 and 0) then  applicable  to the  issuer of the
Preferred Stock.

                  "principal" of any Debt (including the  Securities)  means the
principal amount of such Debt plus the premium, if any, on such Debt.

                  "pro forma"  means,  with respect to any  calculation  made or
required to be made  pursuant to the terms hereof,  a  calculation  performed in
accordance  with Article 11 of Regulation S-X  promulgated  under the Securities
Act, as interpreted in good faith by the Board of Directors  after  consultation
with the independent certified public accountants of the Company, or otherwise a
calculation made in good faith by the Board of Directors after consultation with
the independent certified public accountants of the Company, as the case may be.

                  "Property" means, with respect to any Person,  any interest of
that Person in any kind of property or asset,  whether real,  personal or mixed,
or tangible or intangible,  including Capital Stock in, and other securities of,
any other  Person.  For  purposes of any  calculation  required  pursuant to the
indenture, the value of any Property shall be its Fair Market Value.

                  "Public Equity Offering" means an underwritten public offering
of common stock of the Company pursuant to



<PAGE>

                                                                              32


an effective registration statement under the Securities Act.

                  "Public Market" means any time after:

                           (a) a Public Equity Offering has been consummated,and

                           (b) at least 15% of the total issued and  outstanding
                  common stock of the Company has been  distributed  by means of
                  an effective registration statement under the Securities Act.

                  "Purchase Money Debt" means Debt:

                           (a)  consisting  of the  deferred  purchase  price of
                  property, conditional sale obligations,  obligations under any
                  title retention  agreement,  other purchase money  obligations
                  and  obligations in respect of industrial  revenue  bonds,  in
                  each case where the  maturity  of the Debt does not exceed the
                  anticipated useful life of the Property being financed, and

                           (b) Incurred to finance the acquisition, construction
                  or  lease  by  the Company or a Restricted Subsidiary  of  the
                  Property, including additions and improvements thereto;

provided,  however,  that  the  Debt is  Incurred  within  180  days  after  the
--------   -------
acquisition,  construction or lease of the Property by the Company or Restricted
Subsidiary.

                  "Qualified  Receivables  Transaction" means any transaction or
 series of  transactions  that may be entered  into by the Company or any of its
 Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell,
 convey or otherwise transfer to:

                  (a) a  Receivables  Entity (in the case of a  transfer  by the
         Company or any of its Subsidiaries) and

                  (b)  any  other  Person  (in  the  case  of  a  transfer  by a
         Receivables Entity),

 or may grant a security  interest  in, any  accounts  receivable  (whether  now
 existing or arising in the  future) of the Company or any of its  Subsidiaries,
 and any assets related thereto including,  without  limitation,  all collateral
 securing those accounts  receivable,  all contracts and all Guarantees or other
 obligations in respect of those accounts



<PAGE>

                                                                              33


receivable,  proceeds of those  accounts  receivable  and other assets which are
customarily   transferred  or  in  respect  of  which  security   interests  are
customarily  granted  in  connection  with  asset  securitization   transactions
involving accounts receivable; provided that:

                  (1)  if  the  transaction  involves  a  transfer  of  accounts
         receivable  with Fair  Market  Value  equal to or  greater  than  $25.0
         million,  the Board of Directors  shall have  determined  in good faith
         that the Qualified  Receivables  Transaction is  economically  fair and
         reasonable to the Company and the Receivables Entity,

                  (2) all sales of accounts  receivable and related assets to or
         by the Receivables Entity are made at Fair Market Value and

                  (3) the financing  terms,  covenants,  termination  events and
         other  provisions  thereof shall be market terms (as determined in good
         faith by the Board of Directors).

                  The grant of a security interest in any accounts receivable of
the  Company  or  any  of its  Restricted  Subsidiaries  to  secure  the  Credit
Facilities shall not be deemed a Qualified Receivables Transaction.

                  "Rating Agencies" mean Moody's and S&P.

                  "Real Estate Financing Transaction" means any arrangement with
any Person  pursuant to which the Company or any  Restricted  Subsidiary  Incurs
Debt  secured  by a Lien on  real  property  of the  Company  or any  Restricted
Subsidiary and related personal property together with any Refinancings thereof.

                  "Receivables Entity" means a Wholly Owned
Subsidiary of the Company (or another Person formed for the purposes of engaging
in a Qualified Receivables  Transaction with the Company in which the Company or
any  Subsidiary of the Company  makes an Investment  and to which the Company or
any Subsidiary of the Company transfers accounts  receivable and related assets)
which  engages in no activities  other than in connection  with the financing of
accounts  receivable of the Company and its  Subsidiaries,  all proceeds thereof
and all rights  (contractual  or other),  collateral  and other assets  relating
thereto, and any business or activities  incidental or related to that business,
and (with respect to any  Receivables  Entity formed after the Issue Date) which
is



<PAGE>

                                                                              34


designated by the Board of Directors (as provided below) as a Receivables Entity
and

                  (a) no portion of the  Indebtedness  or any other  obligations
         (contingent or otherwise) of which

                           (1) is Guaranteed by the Company or any Subsidiary of
                  the Company  (excluding  Guarantees of obligations (other than
                  the principal of, and interest on,  Indebtedness)  pursuant to
                  Standard Securitization Undertakings),

                           (2) is  recourse  to  or obligates the Company or any
                  Subsidiary of the Company in  any  way other than  pursuant to
                  Standard Securitization Undertakings or

                           (3)  subjects any property or asset of the Company or
                  any  Subsidiary  of  the  Company,   directly  or  indirectly,
                  contingently or otherwise,  to the satisfaction thereof, other
                  than pursuant to Standard Securitization Undertakings;

                  (b) with which  neither the Company nor any  Subsidiary of the
         Company  has  any  material   contract,   agreement,   arrangement   or
         understanding other than on terms which the Company reasonably believes
         to be no less  favorable  to the Company or the  Subsidiary  than those
         that might be obtained at the time from Persons that are not Affiliates
         of the Company and

                  (c) to which  neither the Company  nor any  Subsidiary  of the
         Company  has any  obligation  to  maintain  or  preserve  the  entity's
         financial  condition or cause the entity to achieve  certain  levels of
         operating  results  other  than  pursuant  to  Standard  Securitization
         Undertakings.

                  Any  designation of this kind by the Board of Directors  shall
be evidenced  to the Trustee by filing with the Trustee a certified  copy of the
resolution  of the Board of Directors  giving effect to the  designation  and an
Officers'  Certificate   certifying  that  the  designation  complied  with  the
foregoing conditions.

                  "Refinance"  means,  in  respect  of any Debt,  to  refinance,
 extend, renew, refund, repay, prepay, repurchase, redeem, defease or retire, or
 to issue other Debt, in exchange or replacement for, that Debt.



<PAGE>

                                                                              35


                  "Refinanced"   and   "Refinancing"   shall  have   correlative
meanings.

                  "Related   Business"  means  any  business  that  is  related,
ancillary or  complementary  to the businesses of the Company and the Restricted
Subsidiaries on the Issue Date.

                  "Repay"  means,  in  respect  of any Debt,  to repay,  prepay,
repurchase,  redeem,  legally defease or otherwise retire that Debt. "Repayment"
and "Repaid" shall have correlative  meanings.  For purposes of Section 4.07 and
Section 4.04 and the definition of "Consolidated  Fixed Charges Coverage Ratio",
Debt shall be considered to have been Repaid only to the extent the related loan
commitment, if any, shall have been permanently reduced in connection therewith.

                  "Restricted Payment" means:

                  (a) any  dividend  or  distribution  (whether  made  in  cash,
         securities  or other  Property)  declared or paid on or with respect to
         any shares of Capital Stock of the Company or any Restricted Subsidiary
         (including any payment in connection  with any merger or  consolidation
         with or into the Company or any Restricted Subsidiary),  except for any
         dividend or  distribution  that is made to the Company or the parent of
         the  Restricted  Subsidiary  or any  dividend or  distribution  payable
         solely in shares of Capital  Stock (other than  Disqualified  Stock) of
         the Company;

                  (b)  the  purchase,  repurchase,  redemption,  acquisition  or
         retirement  for  value  of any  Capital  Stock  of the  Company  or any
         Restricted  Subsidiary  (other  than from the  Company or a  Restricted
         Subsidiary) or any  securities  exchangeable  for or  convertible  into
         Capital Stock of the Company or any  Restricted  Subsidiary,  including
         the  exercise of any option to exchange  any Capital  Stock (other than
         for or into  Capital  Stock  of the  Company  that is not  Disqualified
         Stock);

                  (c)  the  purchase,  repurchase,  redemption,  acquisition  or
         retirement  for value,  prior to the date for any  scheduled  maturity,
         sinking  fund or  amortization  or other  installment  payment,  of any
         Subordinated  Obligation (other than the purchase,  repurchase or other
         acquisition of any Subordinated Obligation purchased in anticipation of
         satisfying a scheduled maturity, sinking fund or amortization or



<PAGE>

                                                                              36


         other  installment obligation,  in each case due within one year of the
         date of acquisition);

                  (d) any Investment  (other than Permitted  Investments) in any
         Person; or

                  (e) the issuance,  sale or other  disposition of Capital Stock
         of any  Restricted  Subsidiary  to a Person  other than the  Company or
         another  Restricted  Subsidiary  if the  result  thereof  is  that  the
         Restricted  Subsidiary  shall cease to be a Restricted  Subsidiary,  in
         which event the amount of the  "Restricted  Payment"  shall be the Fair
         Market  Value  of  the  remaining  interest,  if  any,  in  the  former
         Restricted  Subsidiary  held by the  Company  and the other  Restricted
         Subsidiaries.

                  "Restricted  Subsidiary"  means any  Subsidiary of the Company
other than an Unrestricted Subsidiary.

                  "S&P" means Standard & Poor's Ratings Service or any successor
to the rating agency business thereof.

                  "Sale and Leaseback  Transaction" means any direct or indirect
arrangement  relating to Property  now owned or hereafter  acquired  whereby the
Company or a Restricted Subsidiary transfers that Property to another Person and
the Company or a Restricted Subsidiary leases it from that other Person together
with any Refinancings thereof.

                  "SEC" means the Securities and Exchange Commission.

                  "Securities Act" means the Securities Act of 1933.

                  "Significant  Subsidiary" means any Subsidiary that would be a
"Significant  Subsidiary"  of the Company  within the meaning of Rule 1-02 under
Regulation S-X promulgated by the Commission.

                  "Standard Securitization  Undertakings" means representations,
warranties,  covenants  and  indemnities  entered  into  by the  Company  or any
Subsidiary  of  the  Company  which  are  customary  in an  accounts  receivable
securitization transaction involving a comparable company.

                  "Stated  Maturity"  means,  with respect to any security,  the
date  specified  in the  security  as the  fixed  date on which the  payment  of
principal  of the  security  is  due  and  payable,  including  pursuant  to any
mandatory  redemption  provision (but excluding any provision  providing for the
repurchase of the security at the option of the



<PAGE>

                                                                              37


holder thereof upon the happening of any  contingency  beyond the control of the
issuer unless that contingency has occurred).

                  "Subordinated  Obligation"  means  any  Debt  of  the  Company
(whether  outstanding  on  the  Issue  Date  or  thereafter  Incurred)  that  is
subordinate  or junior  in right of  payment  to the  Securities  pursuant  to a
written agreement to that effect.

                  "Subsidiary" means, in respect of any Person, any corporation,
company  (including any limited liability  company),  association,  partnership,
joint venture or other  business  entity of which a majority of the total voting
power of the  Voting  Stock is at the time  owned  or  controlled,  directly  or
indirectly, by:

                  (a) that Person,

                  (b) that Person and one or more  Subsidiaries  of that Person,
         or

                  (c) one or more Subsidiaries of that Person.

                  "Temporary Cash Investments" means any of the following:

                  (a) Investments in U.S. Government Obligations maturing within
         365 days of the date of acquisition thereof;

                  (b)   Investments   in   time   deposit   accounts,   banker's
         acceptances, certificates of deposit and money market deposits maturing
         within 180 days of the date of acquisition  thereof issued by a bank or
         trust company  organized under the laws of the United States of America
         or any state thereof  having  capital,  surplus and  undivided  profits
         aggregating  in excess of $500 million or issued by a  commercial  bank
         organized  under the laws of any other  country that is a member of the
         Organization  for Economic  Cooperation  and  Development  having total
         assets in excess of $500 million (or its foreign currency equivalent at
         the time),  and in any case whose long-term debt is rated "A-3" or "A-"
         or higher according to Moody's or S&P (or a similar  equivalent  rating
         by at least one "nationally recognized statistical rating organization"
         (as defined in Rule 436 under the Securities Act));



<PAGE>

                                                                              38


                  (c)  repurchase  obligations  with a term of not more  than 30
         days for  underlying  securities  of the types  described in clause (a)
         entered into with:

                           (1) a  bank  meeting  the qualifications described in
                  clause (b) above, or

                           (2)  any   primary   government   securities   dealer
                  reporting  to the  Market  Reports  Division  of  the  Federal
                  Reserve Bank of New York;

                  (d)  Investments in commercial  paper,  maturing not more than
         270 days after the date of acquisition,  issued by a corporation (other
         than an Affiliate of the Company)  organized and in existence under the
         laws of the United  States of America  or any other  country  that is a
         member of the  Organization  for Economic  Cooperation and Development,
         and in any case with a rating  at the time as of which  any  Investment
         therein is made of "P-1" (or higher)  according to Moody's  or"A-1" (or
         higher)  according to S&P (or a similar  equivalent  rating by at least
         one "nationally recognized statistical rating organization" (as defined
         in Rule 436 under the Securities Act); and

                  (e)  direct  obligations  (or  certificates   representing  an
         ownership  interest  in such  obligations)  of any state of the  United
         States of America (including any agency or instrumentality thereof) for
         the payment of which the full faith and credit of such state is pledged
         and  which are not  callable  or  redeemable  at the  issuer's  option,
         provided that:

                           (1) the long-term debt of the state is rated "A-3" or
                  "A-" or  higher  according  to  Moody's  or S&P (or a  similar
                  equivalent  rating  by at  least  one  "nationally  recognized
                  statistical rating organization" (as defined in Rule 436 under
                  the Securities Act)), and

                           (2) the obligations  mature  within  180  days of the
                  date of acquisition thereof.

                  "TIA" means the Trust Indenture Act of 1939 (15 U.S.C.  ss.ss.
                                                                  ------
77aaa-77bbbb)  as in effect on the date of this  Indenture;  provided,  however,
                                                             --------   -------
that, in the event the TIA is amended  after such date,  "Trust  Indenture  Act"
means, to the extent required by any such amendments, the Trust Indenture Act of
1939 as so amended.



<PAGE>

                                                                              39


                  "Trustee"  means  the  party  named as such in this  Indenture
until a successor replaces it and, thereafter, means the successor.

                  "Trust  Officer" means any officer within the Corporate  Trust
Administration department of the Trustee (or any successor group of the trustee)
with direct  responsibility  for the  administration  of this Indenture and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred  because of his knowledge of and  familiarity  with
the particular subject.

                  "Uniform   Commercial   Code"  means  the  New  York   Uniform
Commercial Code as in effect from time to time.

                  "Unrestricted Subsidiary" means:

                  (a) any Subsidiary of the Company that is designated after the
         Issue Date as an  Unrestricted  Subsidiary  as  permitted  or  required
         pursuant  to  Section  4.10  and is not  thereafter  redesignated  as a
         Restricted Subsidiary as permitted pursuant thereto; and

                  (b) any Subsidiary of an Unrestricted Subsidiary.

                  "U.S.  Dollar  Equivalent"  means with respect to any monetary
amount in a currency  other  than U.S.  dollars,  at any time for  determination
thereof, the amount of U.S. dollars obtained by converting such foreign currency
involved in such computation into U.S. dollars at the spot rate for the purchase
of U.S.  dollars with the applicable  foreign  currency as published in THE WALL
STREET  JOURNAL in the  "Exchange  Rates"  column  under the  heading  "Currency
Trading"  on the  date  two  Business  Days  prior  to  such  determination.  In
determining the aggregate  principal amount (on a U.S. Dollar  Equivalent basis)
of  Securities  outstanding,  such  amount  will be treated  as the U.S.  Dollar
Equivalent determined as of the date of issuance of such Securities.

                  "U.S.  Government  Obligations"  means direct  obligations (or
certificates  representing  an ownership  interest in such  obligations)  of the
United States of America (including any agency or  instrumentality  thereof) for
the  payment of which the full faith and credit of the United  States of America
is pledged and which are not callable or redeemable at the issuer's option.

                  "Voting Stock"  of  any  Person  means  all classes of Capital
Stock or other interests (including partnership



<PAGE>

                                                                              40


interests,  and in the case of the Company,  Voting Trust  Certificates) of that
Person then outstanding and normally  entitled (without regard to the occurrence
of any  contingency) to vote in the election of directors,  managers or trustees
thereof.

                  "Voting Trust Arrangement" means the  Voting Trust Arrangement
entered  into as of April 15, 1996 by and among  Robert D. Haas;  Peter E. Haas,
Sr.; Peter E. Haas,  Jr.; and F. Warren  Hellman as the Voting  Trustees and the
stockholders of the Company who are parties thereto.

                  "Voting Trust  Certificates"  means those certificates  issued
pursuant to the Voting Trust Arrangement.

                  "Voting  Trustees" means the persons entitled to act as voting
trustees under the Voting Trust Arrangement.

                  "Wholly Owned  Restricted  Subsidiary"  means,  at any time, a
Restricted   Subsidiary  all  the  Voting  Stock  of  which  (except  directors'
qualifying shares) is at that time owned, directly or indirectly, by the Company
and its other Wholly Owned Subsidiaries.



<PAGE>

                                                                              41


                  SECTION 1.02. Other Definitions.
                                ------------------


                                                                Defined in
                        Term                                     Section
                        ----                                     -------
"Affiliate Transaction"                                            4.09
"Bankruptcy Law"                                                   6.01
"Change of Control Offer"                                          4.12
"Change of Control Payment Date"                                   4.12
"Change of Control Purchase Price"                                 4.12
"covenant defeasance option"                                       8.01
"Custodian"                                                        6.01
"Event of Default"                                                 6.01
"Exchange Security"                                             Appendix A
"Global Security"                                               Appendix A
"legal defeasance option"                                          8.01
"Legal Holiday"                                                    10.08
"Offer Amount"                                                     4.07
"Offer Period"                                                     4.07
"Original Securities"                                              2.01
"Paying Agent"                                                     2.04
"Prepayment Offer"                                                 4.07
"Registered Exchange Offer"                                     Appendix A
"Registrar"                                                        2.04
"Shelf Registration statement"                                  Appendix A
"Surviving Person"                                                 5.01

                  SECTION 1.03.  Incorporation  by  Reference of Trust Indenture
                                 -----------------------------------------------
Act. This Indenture is subject to the mandatory provisions of the TIA, which are
---
incorporated  by reference in and made a part of this  Indenture.  The following
TIA terms have the following meanings:

                  "Commission" means the SEC.

                  "indenture securities" means the Securities.

                  "indenture security holder" means a Securityholder.

                  "indenture to be qualified" means this Indenture.

                  "indenture  trustee"  or  "institutional  trustee"  means  the
Trustee.



<PAGE>

                                                                              42


                  "obligor" on the  indenture  securities  means the Company and
any other obligor on the indenture securities.

                  All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.

                  SECTION 1.04.  Rules  of  Construction.   Unless  the  context
                                 ------------------------
 otherwise requires:

                  (1) a term has the meaning assigned to it;

                  (2) an accounting  term not otherwise  defined has the meaning
         assigned to it in accordance with GAAP;

                  (3) "or" is not exclusive;

                  (4) "including" means including without limitation;

                  (5) words in the singular  include the plural and words in the
         plural include the singular;

                  (6) unsecured  Debt shall not be deemed to be  subordinate  or
         junior to  secured  Debt  merely by virtue of its  nature as  unsecured
         Debt;

                  (7) the principal  amount of any noninterest  bearing or other
         discount  security at any date shall be the  principal  amount  thereof
         that would be shown on a balance  sheet of the  issuer  dated such date
         prepared in accordance with GAAP; and

                  (8) the principal  amount of any Preferred  Stock shall be the
         greater of (i) the maximum liquidation value of such Preferred Stock or
         (ii) the maximum  mandatory  redemption or mandatory  repurchase  price
         with respect to such Preferred Stock.


                                   ARTICLE II

                                 The Securities
                                 --------------

                  SECTION 2.01.  Amount of Securities;  Issuable in Series.  The
                                 ------------------------------------------
aggregate  principal  amount of Securities (on a U.S. Dollar  Equivalent  basis)
which may be  authenticated  and  delivered  under this  Indenture is (x) $850.0
million less (y) the  aggregate  principal  amount of any Dollar Notes issued by
the Company. All Securities shall be identical in



<PAGE>

                                                                              43


all respects other than issue prices and issuance  dates.  The Securities may be
issued in one or more series; provided, however, that any Securities issued with
                              --------  -------
original  issue  discount  ("OID") for Federal  income tax purposes shall not be
issued  as part of the same  series as any  Securities  that are  issued  with a
different  amount of OID or are not issued with OID. All  Securities  of any one
series shall be substantially identical except as to denomination.

                  Subject  to  Section  2.03,  the  Trustee  shall  authenticate
Securities for original issue on the  Issue  Date  in  the  aggregate  principal
amount of 125,000,000 euro dollars (the "Original Securities").  With respect to
any securities issued after the Issue Date (except for Securities  authenticated
and delivered upon  registration  of transfer of, or in exchange for, or in lieu
of, Original Securities pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix
A), there shall be  established  in or pursuant to a resolution  of the Board of
Directors,  and subject to Section 2.03, set forth,  or determined in the manner
provided in an Officers'  Certificate,  or established in one or more indentures
supplemental hereto, prior to the issuance of such Securities:

                  (1) whether such  Securities  shall be issued as part of a new
         or  existing  series of  Securities  and the  title of such  Securities
         (which shall  distinguish  the Securities of the series from Securities
         of any other series);

                  (2) the aggregate principal amount of such Securities that may
         be authenticated and delivered under this Indenture,  which shall be in
         an aggregate  principal amount (on a U.S. Dollar  Equivalent basis) not
         to exceed (x) $350.0 million less (y) the aggregate principal amount of
         any Dollar  Notes  issued by the Company that are not Issue Date Dollar
         Notes  (except  for   Securities   authenticated   and  delivered  upon
         registration  of transfer of, or in exchange  for, or in lieu of, other
         Securities of the same series  pursuant to Section 2.07,  2.08, 2.09 or
         3.06 or Appendix A and except for Securities which, pursuant to Section
         2.03,  are  deemed  never  to have  been  authenticated  and  delivered
         hereunder);

                  (3) the issue  price  and  issuance  date of such  Securities,
         including the date from which interest on such Securities shall accrue;

                  (4) if applicable,  that such Securities  shall be issuable in
         whole or in part in the form of one or more



<PAGE>

                                                                              44


         Global  Securities and, in such case, the respective  depositories  for
         such Global Securities, the form of any legend or legends that shall be
         borne by any such Global Security in addition to or in lieu of that set
         forth in Exhibit 1 to Appendix A and any  circumstances  in addition to
         or in lieu of those set forth in Section 2.3 of Appendix A in which any
         such  Global  Security  may  be  exchanged  in  whole  or in  part  for
         Securities  registered,  and any  transfer of such  Global  Security in
         whole or in part  may be  registered,  in the name or names of  Persons
         other  than  the  depository  for such  Global  Security  or a  nominee
         thereof; and

                  (5) if applicable, that such Securities shall not be issued in
         the form of  Initial  Securities  subject to  Appendix  A, but shall be
         issued in the form of Exchange Securities as set forth in Exhibit A.

                  If any of the terms of any  series are  established  by action
taken  pursuant  to a  resolution  of the  Board  of  Directors,  a  copy  of an
appropriate  record of such action shall be  certified  by the  Secretary or any
Assistant  Secretary of the Company and  delivered to the Trustee at or prior to
the delivery of the Officers'  Certificate or the trust  indenture  supplemental
hereto setting forth the terms of the series.

                  SECTION  2.02.  Form and  Dating.  Provisions  relating to the
                                  -----------------
Initial  Securities of each series and the Exchange  Securities are set forth in
Appendix  A, which is hereby  incorporated  in and  expressly  made part of this
Indenture.  The Initial Securities of each series and the Trustee's  certificate
of authentication  shall be substantially in the form of Exhibit 1 to Appendix A
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange  Securities and the Trustee's  certificate of  authentication  shall be
substantially  in the form of  Exhibit A,  which is hereby  incorporated  in and
expressly made a part of this Indenture.  The Securities of each series may have
notations,  legends  or  endorsements  required  by law,  stock  exchange  rule,
agreements to which the Company is subject, if any, or usage,  provided that any
such notation,  legend or endorsement is in a form reasonably  acceptable to the
Company. Each Security shall be dated the date of its authentication.  The terms
of the  Securities  of each  series  set forth in  Exhibit 1 to  Appendix  A and
Exhibit A are part of the terms of this Indenture.

                  SECTION 2.03.  Execution  and  Authentication.   Two  Officers
                                 -------------------------------
shall sign the Securities for the Company by manual or facsimile signature.  The
Company's seal shall be



<PAGE>

                                                                              45


impressed,  affixed,  imprinted or  reproduced on the  Securities  and may be in
facsimile form.

                  If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee  authenticates  the  Security,  the Security
shall be valid nevertheless.

                  At any time and from  time to time  after  the  execution  and
delivery of this  Indenture,  the Company may deliver  Securities  of any series
executed  by the  Company to the Trustee  for  authentication,  together  with a
written  order of the Company in the form of an  Officers'  Certificate  for the
authentication  and delivery of such  Securities,  and the Trustee in accordance
with such  written  order of the Company  shall  authenticate  and deliver  such
Securities.

                  A Security shall not be valid until an authorized signatory of
the Trustee  manually signs the certificate of  authentication  on the Security.
The  signature  shall  be  conclusive   evidence  that  the  Security  has  been
authenticated under this Indenture.

                  The Trustee hereby appoints,  Citibank, N.A., London Office of
5 Carmelite Street, London, EC4Y OPA as authenticating agent to authenticate the
Securities  (the   "Authentication   Agent").   The  Authentication   Agent  may
authenticate  the  Securities  whenever the Trustee may do so. Each reference in
this Indenture to authentication  by the Trustee includes  authentication by the
Authentication  Agent.  The  Authentication  Agent  has the same  rights  as any
Registrar, Paying Agent or agent for service of notices and demands.

                  SECTION 2.04.  Registrar  and Paying Agent.  The Company shall
                                 ----------------------------
 maintain an office or agency where Securities may be presented for registration
 of transfer or for  exchange  (the  "Registrar")  and an office or agency where
 Securities  may be presented  for payment (the "Paying  Agent").  The Registrar
 shall keep a register of the Securities and of their transfer and exchange. The
 Company may have one or more  co-registrars  and one or more additional  paying
 agents.  The term "Paying  Agent"  includes any  additional  paying agent.  The
 obligations  of the Paying  Agent and the  Registrar  shall be several  and not
 joint.

                  The Company shall enter into an  appropriate agency  agreement
with any Registrar,  Paying Agent or co-registrar not a party to this Indenture,
which shall  incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The



<PAGE>

                                                                              46


Company  shall notify the Trustee of the name and address of any such agent.  If
the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act
as such and shall be entitled to appropriate  compensation  therefor pursuant to
Section 7.07. The Company or any of its domestically  incorporated  Wholly Owned
Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer agent.

                  The Company initially  appoints the London Office of Citibank,
N.A. as Registrar and Paying Agent in connection with the Securities.

                  SECTION  2.05.  Paying Agent To Hold Money in Trust.  Prior to
                                  ------------------------------------
each due date of the principal  and interest on any Security,  the Company shall
deposit  with the Paying Agent  immediately  available  and freely  transferable
funds in euro to pay such  principal  and  interest  when so becoming  due.  The
Company  shall  require  each Paying  Agent (other than the Trustee) to agree in
writing  that  the  Paying  Agent  shall  hold  in  trust  for  the  benefit  of
Securityholders  or the  Trustee  all  money  held by the  Paying  Agent for the
payment of  principal  of or interest  on the  Securities  and shall  notify the
Trustee of any  default by the Company in making any such  payment.  The Company
shall,  prior to 12 noon (London  Time) on the second  Business Day  immediately
preceding  the payment  date under this  Section 2.05 send to the Paying Agent a
confirmation that payment will be made and the details of the bank through which
the issuer is to make the payment due pursuant to this Section 2.05.  Unless the
Paying Agent has received payment from the Company, it shall not be obliged, but
may, make payment  pursuant to this Section 2.05. If the Paying Agent makes such
payment on behalf of the Company under this Section  2.05,  the Company shall be
liable on demand by the Paying Agent to the Paying Agent the amount so paid.  If
the  Company  or a  Wholly  Owned  Subsidiary  acts as  Paying  Agent,  it shall
segregate  the money held by it as Paying Agent and hold it as a separate  trust
fund.  The Company at any time may require a Paying  Agent to pay all money held
by it to the Trustee and to account for any funds disbursed by the Paying Agent.
Upon  complying  with this  Section,  the  Paying  Agent  shall  have no further
liability for the money delivered to the Trustee.

                  SECTION 2.06. Securityholder Lists. The Trustee shall preserve
                                ---------------------
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of  Securityholders.  If the Trustee is not the
Registrar,  the Company shall  furnish to the Trustee,  in writing at least five
Business Days before each  interest  payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date



<PAGE>

                                                                              47


as  the  Trustee  may   reasonably   require  of  the  names  and  addresses  of
Securityholders.

                  SECTION 2.07. Replacement Securities.  If a mutilated Security
                                -----------------------
is surrendered to the Registrar or if the Holder of a Security  claims that such
Security has been lost,  destroyed or wrongfully  taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform  Commercial  Code are met and the Holder  satisfies
any other reasonable  requirements of the Trustee. If required by the Trustee or
the Company,  such Holder  shall  furnish an indemnity  bond  sufficient  in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.

                  Every replacement Security is an additional  obligation of the
Company.

                  SECTION 2.08. Outstanding  Securities.  Securities outstanding
                                ------------------------
at any time are all  Securities  authenticated  by the Trustee  except for those
canceled by it, those  delivered to it for  cancellation  and those described in
this Section as not  outstanding.  A Security  does not cease to be  outstanding
because the Company or an Affiliate of the Company holds the Security.

                  If a Security is replaced pursuant to
Section  2.07,  it ceases to be  outstanding  unless the Trustee and the Company
receive proof  satisfactory to them that the replaced Security is held by a bona
fide purchaser.

                  If  the  Paying  Agent  segregates  and  holds  in  trust,  in
accordance  with this  Indenture,  on a redemption  date or maturity  date money
sufficient to pay all  principal and interest  payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing,  as the case
may be, then on and after that date such Securities (or portions  thereof) cease
to be outstanding and interest on them ceases to accrue.

                  SECTION   2.09.   Temporary   Securities.   Until   definitive
                                    -----------------------
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate  temporary Securities.  Temporary Securities shall be substantially
in the form of definitive  Securities but may have  variations  that the Company
considers appropriate for temporary Securities.  Without unreasonable delay, the
Company shall



<PAGE>

                                                                              48


prepare and the Trustee shall  authenticate  definitive  Securities  and deliver
them in exchange for temporary Securities.

                  SECTION  2.10.  Cancellation.  The  Company  at any  time  may
                                  -------------
deliver  Securities to the Registrar for cancellation.  The agents shall forward
to the  Registrar  any  Securities  surrendered  to  them  for  registration  of
transfer,  exchange  or  payment.  Unless the  Trustee  and the  Company  direct
otherwise,  the  Registrar  and no one else  shall  cancel  and  dispose  of all
Securities  surrendered  for  registration  of  transfer,  exchange,  payment or
cancellation in its customary  manner.  The Company may not issue new Securities
to replace  Securities  it has  redeemed,  paid or  delivered to the Trustee for
cancellation.

                  SECTION 2.11. Defaulted Interest. If the Company defaults in a
                                -------------------
payment of  interest on the  Securities,  the  Company  shall pay the  defaulted
interest (plus interest on such defaulted  interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the persons who are
Securityholders  on a subsequent  special  record date. The Company shall fix or
cause  to be  fixed  any  such  special  record  date  and  payment  date to the
reasonable  satisfaction  of  the  Trustee  and  shall  promptly  mail  to  each
Securityholder  a notice that states the special  record date,  the payment date
and the amount of defaulted interest to be paid.

                  SECTION  2.12.  CUSIP  Numbers.  The  Company in  issuing  the
                                  ---------------
Securities  may use "CUSIP",  "ISIN" or "Common Code" numbers (if then generally
in use) and,  if so, the Trustee  shall use  "CUSIP",  "ISIN" and "Common  Code"
numbers in notices of redemption as a convenience to Holders; provided, --------
however, that neither the Company nor the Trustee shall have any responsibility
--------
for any defect in the  "CUSIP",  "ISIN" or "Common  Code" number that appears on
any Security, check, advice of payment or redemption notice, and any such notice
may state that no  representation  is made as to the correctness of such numbers
either  as  printed  on  the  Securities  or as  contained  in any  notice  of a
redemption  and that  reliance  may be placed  only on the other  identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.  The Company shall promptly notify
the Trustee of any change in such numbers.



<PAGE>

                                                                              49


                                   ARTICLE III

                                   Redemption
                                   ----------

                  SECTION  3.01.  Notices to Trustee.  If the Company  elects to
                                  -------------------
 redeem  Securities  pursuant to paragraph 5 of the Securities,  it shall notify
 the Trustee (with a copy to the Registrar) in writing of the  redemption  date,
 the principal  amount of Securities to be redeemed and that such  redemption is
 being made pursuant to paragraph 5 of the Securities.

                  The Company shall give each notice to the Trustee provided for
 in this Section at least 45 days before the redemption  date unless the Trustee
 consents to a shorter period.  Such notice shall be accompanied by an Officers'
 Certificate  and an Opinion of Counsel from the Company to the effect that such
 redemption will comply with the conditions herein.

                  SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
                                ---------------------------------------
than  all the  Securities  are to  be  redeemed,  the  Trustee shall select  the
Securities  to be redeemed pro rata or by lot or by a method that  complies with
applicable  legal and  securities  exchange  requirements,  if any, and that the
Trustee  considers fair and appropriate and in accordance with methods generally
used at the time of  selection  by  fiduciaries  in similar  circumstances.  The
Trustee shall make the selection  from  outstanding  Securities  not  previously
called for  redemption.  The Trustee may select for  redemption  portions of the
principal of Securities that have denominations  larger than 1,000 euro dollars.
Securities and portions of them the Trustee selects shall be in amounts of 1,000
euro  dollars or a whole  multiple  of 1,000 euro  dollars.  Provisions  of this
Indenture that apply to Securities  called for redemption also apply to portions
of  Securities  called for  redemption.  The  Trustee  shall  notify the Company
promptly of the Securities or portions of Securities to be redeemed.

                  SECTION 3.03.  Notice of Redemption.  At least 30 days but not
                                 ---------------------
more than 60 days before a date for redemption of Securities,  the Company shall
mail a notice of redemption by first-class  mail to each Holder of Securities to
be redeemed and to the Paying Agent and Registrar.

                  The notice shall  identify the  Securities  to be redeemed and
shall state:

                  (1) the redemption date;

                  (2) the redemption price;



<PAGE>

                                                                              50


                  (3) the name and address of the Paying Agent;

                  (4) that Securities  called for redemption must be surrendered
         to the Paying Agent to collect the redemption price;

                  (5) if fewer  than all the  outstanding  Securities  are to be
         redeemed,  the  identification  and principal amounts of the particular
         Securities to be redeemed;

                  (6)  that,   unless  the  Company   defaults  in  making  such
         redemption payment,  interest on Securities (or portion thereof) called
         for redemption ceases to accrue on and after the redemption date; and

                  (7) that no  representation  is made as to the  correctness or
         accuracy of the CUSIP,  ISIN or Common Code number,  if any,  listed in
         such notice or printed on the Securities.

                  At the Company's request, the Trustee shall give the notice of
redemption in the Company's  name and at the Company's  expense.  In such event,
the Company  shall  provide the Trustee  with the  information  required by this
Section at least 45 days before the redemption date.

                  SECTION 3.04.  Effect of Notice of Redemption.  Once notice of
                                 -------------------------------
redemption is mailed, Securities called for redemption become due and payable on
the  redemption  date and at the  redemption  price  stated in the notice.  Upon
surrender to the Paying Agent,  such Securities  shall be paid at the redemption
price  stated in the  notice,  plus  accrued  interest  to the  redemption  date
(subject  to the  right of  Holders  of record on the  relevant  record  date to
receive interest due on the related interest payment date that is on or prior to
the date of  redemption).  Failure to give notice or any defect in the notice to
any Holder shall not affect the validity of the notice to any other Holder.

                  SECTION  3.05.  Deposit  of  Redemption  Price.  Prior  to the
                                  -------------------------------
redemption  date,  the Company  shall  deposit with the Paying Agent (or, if the
Company or a Wholly Owned  Subsidiary is the Paying Agent,  shall  segregate and
hold in trust)  money  sufficient  to pay the  redemption  price of and  accrued
interest  (subject to the right of Holders of record on the relevant record date
to receive interest due on the related interest payment date that is on or prior
to the date of  redemption)  on all Securities to be redeemed on that date other
than  Securities or portions of Securities  called for redemption that have been
delivered by the Company to the Registrar for cancellation.



<PAGE>

                                                                              51


                  SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
                                ----------------------------
Security  that is redeemed in part,  the Company  shall  execute and the Trustee
shall  authenticate  for the Holder (at the  Company's  expense) a new  Security
equal in principal amount to the unredeemed portion of the Security surrendered.


                                   ARTICLE IV

                                    Covenants
                                    ---------

                  SECTION 4.01.  Covenant Suspension.  During any period of time
                                 --------------------
that:

                  (a) the  Securities  have  Investment  Grade Ratings from both
         Rating Agencies and

                  (b) no  Default  or  Event  of  Default  has  occurred  and is
         continuing  under  the  Indenture,   the  Company  and  the  Restricted
         Subsidiaries  will not be  subject  to the  following  Sections  of the
         Indenture:  Section  4.04,  Section 4.05,  Section 4.07,  Section 4.08,
         clause  (x) of the third  paragraph  (and as  referred  to in the first
         paragraph)  of Section 4.10,  and clause (e) of the first  paragraph of
         Article 5.

(collectively, the "Suspended Covenants"). In the event that the Company and the
Restricted  Subsidiaries  are not  subject to the  Suspended  Covenants  for any
period of time as a result of the preceding sentence and,  subsequently,  one or
both of the  Rating  Agencies  withdraws  its  rating or  downgrades  the rating
assigned to the  Securities  below the  required  Investment  Grade  Rating or a
Default or Event of Default occurs and is  continuing,  then the Company and the
Restricted  Subsidiaries  will  thereafter  again be  subject  to the  Suspended
Covenants for all periods after that withdrawal,  downgrade, Default or Event of
Default and,  furthermore,  compliance  with the provisions of Section 4.05 with
respect to Restricted Payments made after the time of the withdrawal, downgrade,
Default or Event of Default will be calculated  in accordance  with the terms of
that  covenant  as though  that  covenant  had been in effect  during the entire
period of time from the Issue  Date,  provided  that there will not be deemed to
have occurred a Default or Event of Default with respect to that covenant during
the time that the Company and the  Restricted  Subsidiaries  were not subject to
the Suspended Covenants (or after that time based solely on events that occurred
during that time).



<PAGE>

                                                                              52


                  SECTION  4.02.  Payment  of  Securities.   The  Company  shall
                                  ------------------------
 promptly pay the  principal of and interest on the  Securities on the dates and
 in the manner provided in the Securities and in this  Indenture.  Principal and
 interest  shall be considered  paid on the date due if on such date the Trustee
 or the Paying Agent holds in accordance with this Indenture money sufficient to
 pay all principal and interest then due.

                  The Company  shall pay  interest on overdue  principal  at the
 rate specified therefor in the Securities, and it shall pay interest on overdue
 installments  of  interest  at the rate borne by the  Securities  to the extent
 lawful.

                  SECTION 4.03.  SEC Reports.  Notwithstanding  that the Company
                                 ------------
may not be subject to the reporting  requirements  of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the Commission and provide the Trustee
and Holders of Securities  with annual  reports and  information,  documents and
other  reports as are specified in Sections 13 and 15(d) of the Exchange Act and
applicable to a U.S. corporation subject to those Sections, and the information,
documents and reports to be so filed and provided at the times specified for the
filing of the information, documents and reports under those Sections; provided,
                                                                       --------
however,  that the Company  shall not be so obligated  to file the  information,
-------
documents  and reports with the  Commission  if the  Commission  does not permit
those  filings.  The Company shall also comply with the other  provisions of TIA
ss. 314(a).  Delivery of such reports,  information and documents to the Trustee
is for  informational  purposes only and the Trustee's receipt of such shall not
constitute   constructive  notice  of  any  information   contained  therein  or
determinable  from  information  contained  therein,   including  the  Company's
compliance  with any of its  covenants  hereunder  (as to which the  Trustee  is
entitled to rely exclusively on Officer's Certificates).

                  SECTION 4.04.  Limitation on Debt.  The Company shall not, and
                                 -------------------
 shall not permit any Restricted  Subsidiary to, Incur,  directly or indirectly,
 any Debt  unless,  after  giving  effect  to the  application  of the  proceeds
 thereof,  no Default or Event of Default  would occur as a  consequence  of the
 Incurrence or be continuing following the Incurrence and either:

                  (1) the Debt is Debt of the Company and after giving effect to
         the Incurrence of the Debt and the application of the proceeds thereof,
         the  Consolidated  Fixed Charges  Coverage  Ratio would be greater than
         2.00



<PAGE>

                                                                              53


         to 1.00 if the Debt is Incurred from the Issue Date through January 15,
         2004, and 2.50 to 1.00 if the Debt is Incurred thereafter, or

                  (2) the Debt is Permitted Debt.

                  The term "Permitted Debt" is defined to include the following:

                  (a) Debt of the Company evidenced by the Original Securities;

                  (b) Debt of the Company or a Restricted  Subsidiary  under any
         Credit Facilities,  Incurred by the Company or a Restricted  Subsidiary
         pursuant to a Real Estate Financing  Transaction,  a Sale and Leaseback
         Transaction  or an Equipment  Financing  Transaction,  or Incurred by a
         Receivables Entity in a Qualified  Receivables  Transaction that is not
         recourse  to the  Company  or any other  Restricted  Subsidiary  of the
         Company  (except for Standard  Securitization  Undertakings),  provided
         that the aggregate principal amount of all Debt of this kind at any one
         time outstanding shall not exceed the greater of:

                           (1) $1.6 billion,  which amount shall be  permanently
                  reduced by the amount of Net Available Cash used to Repay Debt
                  under the Credit Facilities pursuant to Section 4.07 and

                           (2) the sum of the amounts equal to:

                                    (A) 50% of the book value of  the  inventory
                           of the Company and the Restricted Subsidiaries and

                                    (B) 85% of the book  value  of the  accounts
                           receivable   of  the  Company   and  the   Restricted
                           Subsidiaries,  in the case of each of clauses (A) and
                           (B) as of the  most  recently  ended  quarter  of the
                           Company for which financial statements of the Company
                           have been provided to the Holders of Securities;

                  (c) Debt of the  Company  owing to and held by any  Restricted
         Subsidiary and Debt of a Restricted Subsidiary owing to and held by the
         Company or any Restricted Subsidiary;  provided,  however, that (1) any
                                                --------   -------
         subsequent  issue or  transfer  of  Capital  Stock or other  event that
         results in any Restricted Subsidiary ceasing



<PAGE>

                                                                              54


         to be a Restricted  Subsidiary or any subsequent  transfer of that Debt
         (except to the Company or a Restricted  Subsidiary) shall be deemed, in
         each case,  to  constitute  the  Incurrence  of that Debt by the issuer
         thereof,  and (2) if the Company is the  obligor on that  Indebtedness,
         the Indebtedness is expressly subordinated to the prior payment in full
         in cash of all obligations with respect to the Securities;

                  (d) Debt of a Restricted Subsidiary outstanding on the date on
         which  that  Restricted  Subsidiary  was  acquired  by the  Company  or
         otherwise became a Restricted  Subsidiary  (other than Debt Incurred as
         consideration  in, or to  provide  all or any  portion  of the funds or
         credit  support  utilized to consummate,  the  transaction or series of
         transactions  pursuant  to which that  Restricted  Subsidiary  became a
         Subsidiary  of the Company or was  otherwise  acquired by the Company),
         provided that at the time that  Restricted  Subsidiary  was acquired by
         the  Company or  otherwise  became a  Restricted  Subsidiary  and after
         giving effect to the  Incurrence  of that Debt,  the Company would have
         been able to Incur $1.00 of  additional  Debt pursuant to clause (1) of
         the first paragraph of this covenant;

                  (e) Debt under  Interest Rate  Agreements  entered into by the
         Company or a Restricted Subsidiary for the purpose of limiting interest
         rate risk in the ordinary  course of the  financial  management  of the
         Company or that Restricted Subsidiary and not for speculative purposes,
         provided that the  obligations  under those  agreements  are related to
         payment  obligations on Debt  otherwise  permitted by the terms of this
         covenant;

                  (f) Debt under Currency Exchange Protection Agreements entered
         into by the  Company  or a  Restricted  Subsidiary  for the  purpose of
         limiting  currency exchange rate risks directly related to transactions
         entered  into by the  Company  or  that  Restricted  Subsidiary  in the
         ordinary course of business and not for speculative purposes;

                  (g) Debt under Commodity Price Protection  Agreements  entered
         into by the Company or a Restricted  Subsidiary in the ordinary  course
         of  the  financial   management  of  the  Company  or  that  Restricted
         Subsidiary and not for speculative purposes;

                  (h) Debt Incurred in respect of Capital Lease  Obligations and
         Purchase Money Debt,  provided that the aggregate  principal  amount of
         all Debt of this kind



<PAGE>

                                                                              55


         does  not  exceed  the Fair  Market  Value,  on the date of  Incurrence
         thereof, of the Property acquired,  constructed or leased, and provided
         further, that the aggregate principal amount outstanding of all Debt of
         this kind at any one time, together with all Permitted Refinancing Debt
         Incurred and outstanding in respect of these Capital Lease  Obligations
         and Purchase Money Debt, does not exceed $50.0 million;

                  (i) Debt outstanding on the Issue Date not otherwise described
         in clauses (a) through (h) above;

                  (j)  Debt of the  Company  or a  Restricted  Subsidiary  in an
         aggregate  principal  amount  outstanding at any one time not to exceed
         $100.0 million; and

                  (k)  Permitted  Refinancing  Debt  Incurred in respect of Debt
         Incurred pursuant to clause (1) of the first paragraph of this covenant
         and clauses (a), (d), (h) and (i) above.

                  SECTION 4.05.  Limitation on Restricted Payments.  The Company
                                 ----------------------------------
shall not make, and shall not permit any Restricted Subsidiary to make, directly
or indirectly, any Restricted Payment if at the time of, and after giving effect
to, the proposed Restricted Payment,

                  (a) a Default or Event of Default  shall have  occurred and be
         continuing,

                  (b) the Company  could not Incur at least $1.00 of  additional
         Debt pursuant to clause (1) of the first paragraph of Section 4.04 or

                  (c) the aggregate  amount of that  Restricted  Payment and all
         other  Restricted  Payments  declared or made since the Issue Date (the
         amount of any  Restricted  Payment,  if made other than in cash,  to be
         based upon Fair Market  Value)  would exceed an amount equal to the sum
         of:

                           (1) 50% of the aggregate amount of
                  Consolidated  Net Income accrued during the period (treated as
                  one  accounting  period)  from  the  beginning  of the  fiscal
                  quarter  during  which the Issue Date occurs to the end of the
                  most recent  fiscal  quarter  ending at least 45 days prior to
                  the date of the Restricted Payment (or if the aggregate amount
                  of Consolidated Net Income for such period shall be a deficit,
                  minus 100% of such deficit), plus



<PAGE>

                                                                              56


                           (2) Capital Stock Sale Proceeds, plus

                           (3) the sum of:

                                (A) the  aggregate  net cash  proceeds  received
                           by the Company or any Restricted  Subsidiary from the
                           issuance or sale after the Issue Date of  convertible
                           or exchangeable  Debt that has been converted into or
                           exchanged for Capital Stock (other than  Disqualified
                           Stock) of the Company, and

                                (B) the aggregate amount by which Debt of the
                           Company or any  Restricted  Subsidiary  is reduced on
                           the Company's  consolidated balance sheet on or after
                           the Issue Date upon the conversion or exchange of any
                           Debt  issued  or sold on or prior to the  Issue  Date
                           that is convertible or exchangeable for Capital Stock
                           (other  than  Disqualified  Stock)  of  the  Company,
                           excluding, in the case of clause (A) or (B):

                                        (x) any Debt issued or sold to the
                                    Company or a Subsidiary of the Company or an
                                    employee  stock   ownership  plan  or  trust
                                    established by the Company or any Subsidiary
                                    for the benefit of their employees, and

                                        (y)  the  aggregate amount  of any  cash
                                    or other Property distributed by the Company
                                    or any Restricted  Subsidiary  upon any such
                                    conversion or exchange, plus

                           (4) an amount equal to the sum of:

                                (A) the  net  reduction  in  Investments  in any
                           Person   other  than  the  Company  or  a  Restricted
                           Subsidiary  resulting from  dividends,  repayments of
                           loans or advances or other transfers of Property,  in
                           each case to the Company or any Restricted Subsidiary
                           from that Person, less the cost of the disposition of
                           those Investments, and

                                (B) the lesser of the net book value or the Fair
                           Market Value of the Company's  equity  interest in an
                           Unrestricted  Subsidiary at the time the Unrestricted
                           Subsidiary is



<PAGE>

                                                                              57


                           designated   a   Restricted   Subsidiary;   provided,
                                                                       --------
                           however,  that the foregoing sum shall not exceed, in
                           -------
                           the case of any  Person,  the  amount of  Investments
                           previously made (and treated as a Restricted Payment)
                           by the Company or any  Restricted  Subsidiary in that
                           Person.

Notwithstanding the foregoing limitation, the Company may:

                  (a) pay  dividends on its Capital  Stock within 60 days of the
         declaration  thereof if, on said declaration  date, the dividends could
         have been paid in compliance  with the  Indenture;  provided,  however,
                                                             --------   -------
         that at the time of the payment of the  dividend,  no other  Default or
         Event of  Default  shall have  occurred  and be  continuing  (or result
         therefrom);  provided  further,  however,  that the  dividend  shall be
                      -----------------   -------
         included in the calculation of the amount of Restricted Payments;

                  (b) purchase,  repurchase, redeem, legally defease, acquire or
         retire  for  value  Capital  Stock  of  the  Company  or   Subordinated
         Obligations   in  exchange   for,  or  out  of  the   proceeds  of  the
         substantially  concurrent  sale of, Capital Stock of the Company (other
         than Disqualified  Stock and other than Capital Stock issued or sold to
         a  Subsidiary  of the Company or an employee  stock  ownership  plan or
         trust  established  by the Company or any Subsidiary for the benefit of
         their employees); provided, however, that
                           --------  -------

                           (1)  the  purchase,  repurchase,   redemption,  legal
                  defeasance, acquisition or retirement shall be excluded in the
                  calculation of the amount of Restricted Payments and

                           (2) the Capital Stock Sale Proceeds from the exchange
                  or sale shall be  excluded  from the  calculation  pursuant to
                  clause (c)(2) above;

                  (c) purchase,  repurchase, redeem, legally defease, acquire or
         retire for value any  Subordinated  Obligations in exchange for, or out
         of the  proceeds of the  substantially  concurrent  sale of,  Permitted
         Refinancing Debt;  provided,  however,  that the purchase,  repurchase,
                            --------   -------
         redemption,  legal  defeasance,  acquisition  or  retirement  shall  be
         excluded in the calculation of the amount of Restricted Payments;

                  (d) pay  scheduled  dividends  (not  constituting  a return on
         capital) on Disqualified Stock of the Company issued pursuant to and in
         compliance with Section 4.04;



<PAGE>

                                                                              58


                  (e) permit a Restricted  Subsidiary that is not a Wholly Owned
         Subsidiary  to  pay  dividends  to   shareholders  of  that  Restricted
         Subsidiary  that are not the parent of that Restricted  Subsidiary,  so
         long as the Company or a  Restricted  Subsidiary  that is the parent of
         that Restricted Subsidiary receives dividends on a pro rata basis or on
         a basis that  results in the  receipt  by the  Company or a  Restricted
         Subsidiary  that  is  the  parent  of  that  Restricted  Subsidiary  of
         dividends or  distributions of greater value than it would receive on a
         pro rata basis; and

                  (f) until January 31, 2002 or the earlier  termination  of all
         of  the  Existing  Bank  Credit  Facilities,  permit  the  making  of a
         Restricted  Payment (as defined in the Existing Bank Credit Facilities,
         without  giving  effect to any waiver or  amendment  thereto  after the
         Issue Date) or the transfer of assets from any Subsidiary to its parent
         (in  each  case,  to the  extent  such a  payment  or  transfer  is not
         permitted to be restricted or limited under Section 7.18 of each of the
         Existing Bank Credit Facilities, without giving effect to any waiver or
         amendment thereto after the Issue Date).

                  SECTION 4.06.  Limitation on Liens. The Company shall not, and
                                 --------------------
shall not permit any Restricted Subsidiary to, directly or indirectly,  Incur or
suffer to exist,  any Lien (other than Permitted Liens) upon any of its Property
(including Capital Stock of a Restricted Subsidiary), whether owned at the Issue
Date or thereafter  acquired,  or any interest  therein or any income or profits
therefrom,  unless  it has made or will make  effective  provision  whereby  the
Securities  will be secured by that Lien  equally and ratably with (or prior to)
all other Debt of the Company or any Restricted Subsidiary secured by that Lien.

                  SECTION 4.07.  Limitation on Asset Sales.   (a)   The  Company
                                 --------------------------
shall not,  and shall not permit  any  Restricted  Subsidiary  to,  directly  or
indirectly, consummate any Asset Sale unless:

                  (i)  the  Company  or  the  Restricted   Subsidiary   receives
         consideration  at the time of the Asset Sale at least equal to the Fair
         Market Value of the Property subject to such Asset Sale;

                  (ii) at least 75% of the consideration paid to the  Company or
         the Restricted  Subsidiary in connection with such Asset Sale is in the
         form of cash or cash equivalents or the assumption by the purchaser of



<PAGE>

                                                                              59


         liabilities  of the Company or any  Restricted  Subsidiary  (other than
         liabilities that are by their terms  subordinated to the Securities) as
         a result of which the Company and the  Restricted  Subsidiaries  are no
         longer obligated with respect to such liabilities,  provided,  however,
                                                             --------   -------
         that in the case of a transaction  involving a sale of any distribution
         center by the Company or a Restricted  Subsidiary and the establishment
         of  an  outsourcing   arrangement   in  which  the  purchaser   assumes
         distribution   responsibilities   on  behalf  of  the  Company  or  the
         Restricted Subsidiary, any credits or other consideration the purchaser
         grants  to the  Company  or the  Restricted  Subsidiary  as part of the
         purchase  price of the  distribution  center,  which  credits  or other
         consideration  effectively  offset future payments due from the Company
         or  the  Restricted   Subsidiary  to  the  purchaser  as  part  of  the
         outsourcing arrangement,  will be considered to be cash equivalents for
         purposes of this clause (ii); and

                  (iii) the  Company  delivers an Officers'  Certificate  to the
         Trustee  certifying  that such  Asset Sale complies with  the foregoing
         clauses (i) and (ii).

                  (b) The Net Available Cash (or any portion thereof) from Asset
Sales may be applied by the Company or a  Restricted  Subsidiary,  to the extent
the Company or such Restricted Subsidiary elects (or is required by the terms of
any Debt):

                  (i) to Repay  Debt under the  Credit  Facilities,  or to Repay
         Debt of the  Company  or any  Restricted  Subsidiary  secured by a Lien
         pursuant  to  Section  4.06 on the  assets  subject  to that Asset Sale
         (excluding,  in any such  case,  any  Debt  owed to the  Company  or an
         Affiliate of the Company); or

                  (ii) to reinvest in Additional  Assets  (including by means of
         an Investment in Additional Assets by a Restricted  Subsidiary with Net
         Available   Cash   received  by  the  Company  or  another   Restricted
         Subsidiary),  provided,  however,  that the Net Available  Cash (or any
                       --------   -------
         portion  thereof)  from Asset Sales from the Company to any  Subsidiary
         must be reinvested in Additional Assets of the Company.

                  (c) Any Net  Available  Cash from an Asset Sale not applied in
accordance  with the  preceding  paragraph  within 360 days from the date of the
receipt of such Net Available Cash shall constitute "Excess Proceeds".



<PAGE>

                                                                              60


                  When the aggregate  amount of Excess  Proceeds not  previously
subject to a Prepayment  Offer (as defined below) exceeds $10.0 million  (taking
into account income earned on those Excess  Proceeds,  if any), the Company will
be required to make an offer to purchase the Securities (the "Prepayment Offer")
which offer shall be in the amount of the Allocable  Excess  Proceeds,  on a pro
rata basis according to principal  amount,  at a purchase price equal to 100% of
the principal amount thereof,  plus accrued and unpaid interest,  if any, to the
purchase date (subject to the right of Holders of record on the relevant  record
date  to  receive  interest  due on the  relevant  interest  payment  date),  in
accordance   with  the   procedures   (including   prorating  in  the  event  of
oversubscription) set forth in this Indenture. To the extent that any portion of
the amount of Net  Available  Cash remains after  compliance  with the preceding
sentence  and  provided  that all  Holders  of  Securities  have been  given the
opportunity  to tender their  Securities  for purchase in  accordance  with this
Indenture,  the  Company or such  Restricted  Subsidiary  may use the  remaining
amount for any  purpose  permitted  by this  Indenture  and the amount of Excess
Proceeds will be reset to zero.

                  The term "Allocable Excess Proceeds" will mean the product of:

                  (a) the Excess Proceeds and

                  (b) a fraction,

                           (1) the numerator of which is the aggregate principal
                  amount  of  the  Securities  outstanding  on the  date  of the
                  Prepayment Offer, and

                           (2)  the  denominator  of  which  is  the  sum of the
                  aggregate  principal  amount of the Securities  outstanding on
                  the date of the Prepayment  Offer and the aggregate  principal
                  amount of other Debt of the Company outstanding on the date of
                  the  Prepayment  Offer  that is pari passu in right of payment
                                                  ---- -----
                  with the  Securities  and subject to terms and  conditions  in
                  respect of Asset Sales similar in all material respects to the
                  covenant described hereunder and requiring the Company to make
                  an offer to purchase such Debt at substantially  the same time
                  as the Prepayment Offer.

                  (d)(1)   Within  five  Business  Days  after  the  Company  is
         obligated  to make a Prepayment  Offer as  described  in the  preceding
         paragraph,  the Company  shall send a written  notice,  by  first-class
         mail, to the Holders of



<PAGE>

                                                                              61


         Securities,  accompanied by  information  regarding the Company and its
         Subsidiaries  as the  Company in good faith  believes  will  enable the
         Holders to make an informed  decision  with respect to that  Prepayment
         Offer. The notice shall state,  among other things,  the purchase price
         and  the  purchase  date,  which  shall  be,  subject  to any  contrary
         requirements  of applicable law, a Business Day no earlier than 30 days
         nor later than 60 days from the date the notice is mailed.

                  (2) Not later  than the date upon  which  written  notice of a
         Prepayment  Offer is  delivered to the Trustee as provided  above,  the
         Company shall deliver to the Trustee an Officers' Certificate as to (i)
         the amount of the  Prepayment  Offer  (the  "Offer  Amount"),  (ii) the
         allocation of the Net Available  Cash from the Asset Sales  pursuant to
         which such  Prepayment  Offer is being made and (iii) the compliance of
         such  allocation with the provisions of Section  4.07(b).  On or before
         the Purchase Date, the Company shall also irrevocably  deposit with the
         Trustee or with the Paying  Agent (or, if the Company or a Wholly Owned
         Subsidiary is the Paying Agent,  shall  segregate and hold in trust) in
         Temporary Cash  Investments  (other than in those  enumerated in clause
         (b) of the definition of Temporary Cash  Investments),  maturing on the
         last day prior to the Purchase  Date or on the  Purchase  Date if funds
         are immediately  available by open of business,  an amount equal to the
         Offer Amount to be held for payment in accordance  with the  provisions
         of this  Section.  Upon the  expiration  of the  period  for  which the
         Prepayment Offer remains open (the "Offer  Period"),  the Company shall
         deliver to the  Trustee for  cancellation  the  Securities  or portions
         thereof that have been  properly  tendered to and are to be accepted by
         the Company.  The Trustee or the Paying  Agent  shall,  on the Purchase
         Date, mail or deliver payment to each tendering Holder in the amount of
         the purchase price.  In the event that the aggregate  purchase price of
         the Securities delivered by the Company to the Trustee is less than the
         Offer Amount,  the Trustee or the Paying Agent shall deliver the excess
         to the Company immediately after the expiration of the Offer Period for
         application in accordance with this Section.

                  (3)  Holders  electing to have a Security  purchased  shall be
         required to  surrender  the  Security,  with an  appropriate  form duly
         completed,  to the Company or its agent at the address specified in the
         notice at least three Business Days prior to the Purchase Date. Holders
         shall be entitled to withdraw their election if



<PAGE>

                                                                              62


          the  Trustee or the Company  receives not later than one Business  Day
          prior to the Purchase Date, a telegram, telex,  facsimile transmission
          or letter setting forth the name of the Holder, the  principal  amount
          of the Security that was delivered  for  purchase  by the Holder and a
          statement  that such Holder is  withdrawing  its election to have such
          Security  purchased.  If at the  expiration  of the Offer  Period  the
          aggregate  principal  amount  of  Securities  surrendered  by  Holders
          exceeds the Offer Amount,  the Company shall select the  Securities to
          be  purchased  on pro  rata  basis  for  all  Securities,  (with  such
          adjustments  as may be deemed  appropriate by the Company so that only
          Securities  in  denominations  of  1,000  euro  dollars,  or  integral
          multiples thereof,  shall be purchased).  Holders whose Securities are
          purchased  only in part  shall  be  issued  new  Securities  equal  in
          principal  amount  to  the  unpurchased   portion  of  the  Securities
          surrendered.

                  (4) At the time the Company delivers Securities to the Trustee
         that are to be accepted for purchase, the Company shall also deliver an
         Officers'  Certificate  stating that such Securities are to be accepted
         by the  Company  pursuant to and in  accordance  with the terms of this
         Section.  A Security shall be deemed to have been accepted for purchase
         at the time the Trustee or the Paying  Agent mails or delivers  payment
         therefor to the surrendering Holder.

                  (5) The Company will comply,  to the extent  applicable,  with
 the  requirements of Section 14(e) of the Exchange Act and any other securities
 laws or regulations in connection with the repurchase of Securities pursuant to
 the covenant  described  hereunder.  To the extent that the  provisions  of any
 securities  laws  or  regulations  conflict  with  provisions  of the  covenant
 described  hereunder,  the Company will comply with the  applicable  securities
 laws and  regulations  and will not be deemed to have breached its  obligations
 under the covenant described hereunder by virtue thereof.

                  SECTION 4.08. Limitation on Restrictions on Distributions from
                                ------------------------------------------------
Restricted  Subsidiaries.  The  Company  shall  not,  and shall not  permit  any
-------------------------
Restricted  Subsidiary to, directly or indirectly,  create or otherwise cause or
suffer  to exist  any  consensual  restriction  on the  right of any  Restricted
Subsidiary to:

                  (a) pay  dividends,  in cash or  otherwise,  or make any other
         distributions on or in respect of its Capital



<PAGE>

                                                                              63


         Stock, or pay any Debt or other obligation owed,  to the Company or any
         other Restricted Subsidiary,

                  (b) make any loans or  advances  to the  Company  or any other
         Restricted Subsidiary or

                  (c)  transfer  any of its Property to the Company or any other
         Restricted Subsidiary. The foregoing limitations will not apply:

                           (1) with  respect to  clauses  (a),  (b) and (c),  to
                  restrictions:

                           (A) in effect on the Issue Date,

                           (B) relating to Debt of a Restricted  Subsidiary  and
                  existing at the time it became a Restricted Subsidiary if such
                  restriction   was  not  created  in  connection   with  or  in
                  anticipation  of the  transaction  or series  of  transactions
                  pursuant  to  which  that  Restricted   Subsidiary   became  a
                  Restricted Subsidiary or was acquired by the Company,

                           (C) that result from the Refinancing of Debt Incurred
                  pursuant to an agreement  referred to in clause  (1)(A) or (B)
                  above  or  in  clause  (2)(A)  or  (B)  below,  provided  that
                  restriction  is no less favorable to the Holders of Securities
                  than  those  under  the  agreement   evidencing  the  Debt  so
                  Refinanced, or

                           (D)  resulting  from the  Incurrence of any Permitted
                  Debt  described  in  clause  (b) of the  second  paragraph  of
                  Section  4.04,  provided  that  the  restriction  is  no  less
                  favorable to the Holders of Securities  than the  restrictions
                  of the same type contained in the Indenture, and

                  (2) with respect to clause (c) only, to restrictions:

                           (A) relating to Debt that is permitted to be Incurred
                  and  secured  without  also  securing  the notes  pursuant  to
                  Section  4.04 and  Section  4.06  that  limit the right of the
                  debtor to dispose of the Property securing that Debt,



<PAGE>

                                                                              64


                           (B) encumbering Property at the time the Property was
                  acquired by the Company or any Restricted Subsidiary,  so long
                  as the restriction  relates solely to the Property so acquired
                  and was not created in connection  with or in  anticipation of
                  the acquisition,

                           (C) resulting from customary  provisions  restricting
                  subletting or assignment of leases or customary  provisions in
                  other agreements (including, without limitation,  intellectual
                  property  licenses  entered  into in the  ordinary  course  of
                  business) that restrict assignment of the agreements or rights
                  thereunder, or

                           (D) which are  customary  restrictions  contained  in
                  asset  sale  agreements  limiting  the  transfer  of  Property
                  pending the closing of the sale.

                  SECTION 4.09. Limitation on Transactions with Affiliates.  The
                                -------------------------------------------
Company shall not, and shall not permit any Restricted  Subsidiary to,  directly
or  indirectly,  conduct  any  business  or enter  into or  suffer  to exist any
transaction or series of transactions  (including the purchase,  sale, transfer,
assignment,  lease,  conveyance  or exchange of any Property or the rendering of
any  service)  with,  or for the  benefit of, any  Affiliate  of the Company (an
"Affiliate Transaction"), unless:

                  (a) the terms of such Affiliate Transaction are:

                           (1) set forth in writing, and

                           (2)  no  less   favorable  to  the  Company  or  that
                  Restricted  Subsidiary,  as the case may be,  than  those that
                  could be obtained  in a  comparable  arm's-length  transaction
                  with a Person that is not an Affiliate of the Company, and

                  (b) if the Affiliate  Transaction  involves aggregate payments
         or value in excess of $10.0 million,  the Board of Directors (including
         a majority  of the  disinterested  members  of the Board of  Directors)
         approves the  Affiliate  Transaction  and, in its good faith  judgment,
         believes that the Affiliate  Transaction  complies with clauses  (a)(1)
         and (2) of this paragraph as evidenced by a Board  Resolution  promptly
         delivered to the trustee.



<PAGE>

                                                                              65


                  Notwithstanding the foregoing  limitation,  the Company or any
Restricted Subsidiary may enter into or suffer to exist the following:

                  (a) any  transaction  or series of  transactions  between  the
         Company and one or more Restricted  Subsidiaries or between two or more
         Restricted  Subsidiaries in the ordinary  course of business,  provided
         that no more than 5% of the total  voting power of the Voting Stock (on
         a fully diluted basis) of any such Restricted Subsidiary is owned by an
         Affiliate of the Company (other than a Restricted Subsidiary);

                  (b) any  Restricted  Payment  permitted to be made pursuant to
         Section 4.05 or any Permitted Investment;

                  (c)  the  payment  of  compensation  (including  amounts  paid
         pursuant  to  employee  benefit  plans) for the  personal  services  of
         officers,  directors  and  employees  of  the  Company  or  any  of the
         Restricted  Subsidiaries,  so long  as,  in the  case of  officers  and
         directors, the Board of Directors in good faith shall have approved the
         terms thereof and deemed the services  theretofore  or thereafter to be
         performed for the compensation to be fair consideration therefor;

                  (d) loans  and  advances  to  employees  made in the  ordinary
         course  of  business  and  consistent  with the past  practices  of the
         Company or that  Restricted  Subsidiary,  as the case may be,  provided
         that  those  loans and  advances  do not  exceed  $5.0  million  in the
         aggregate at any one time outstanding;

                  (e)  any   transaction   effected   as  part  of  a  Qualified
         Receivables  Transaction or any  transaction  involving the transfer of
         accounts  receivable of the type specified in the definition of "Credit
         Facility"  and  permitted  under clause (b) of the second  paragraph of
         Section 4.04; and

                  (f) the  Existing  Policies  or any  transaction  contemplated
         thereby.

                  SECTION  4.10.  Designation  of  Restricted  and  Unrestricted
                                  ----------------------------------------------
Subsidiaries. The Board of Directors may designate any Subsidiary of the Company
-------------
to be an Unrestricted Subsidiary if:

                  (a)  the  Subsidiary  to be so  designated  does  not  own any
         Capital Stock or Debt of, or own or hold any



<PAGE>

                                                                              66


         Lien  on  any  Property  of,  the  Company  or  any  other   Restricted
         Subsidiary, and

                  (b) any of the following:

                           (1) the  Subsidiary  to  be so  designated  has total
                  assets of $1,000 or less,

                           (2) if the Subsidiary has consolidated assets greater
                  than $1,000,  then the  designation  would be permitted  under
                  Section 4.05, or

                           (3) the designation is effective immediately upon the
                  entity becoming a Subsidiary of the Company.

Unless so designated as an  Unrestricted  Subsidiary,  any Person that becomes a
Subsidiary  of the  Company  will  be  classified  as a  Restricted  Subsidiary;
provided,  however,  that the  Subsidiary  shall not be  designated a Restricted
--------   -------
Subsidiary and shall be automatically  classified as an Unrestricted  Subsidiary
if either of the  requirements  set forth in  clauses  (x) and (y) of the second
immediately  following  paragraph  will not be satisfied  after giving pro forma
effect to the classification or if the Person is a Subsidiary of an Unrestricted
Subsidiary.

                  Except as  provided  in the first  sentence  of the  preceding
paragraph,  no Restricted  Subsidiary  may be  redesignated  as an  Unrestricted
Subsidiary. In addition, neither the Company nor any Restricted Subsidiary shall
at any time be directly or indirectly liable for any Debt that provides that the
holder  thereof  may (with  the  passage  of time or  notice or both)  declare a
default  thereon or cause the payment thereof to be accelerated or payable prior
to its Stated  Maturity  upon the  occurrence  of a default  with respect to any
Debt, Lien or other obligation of any  Unrestricted  Subsidiary in existence and
classified  as an  Unrestricted  Subsidiary  at  the  time  the  Company  or the
Restricted  Subsidiary  is  liable  for that Debt  (including  any right to take
enforcement action against that Unrestricted Subsidiary).

                  The  Board  of  Directors  may   designate  any   Unrestricted
Subsidiary to be a Restricted  Subsidiary if, immediately after giving pro forma
effect to the designation,

                  (x) the Company could Incur at least $1.00 of additional  Debt
         pursuant to clause (1) of the first paragraph of Section 4.04, and



<PAGE>

                                                                              67


                  (y) no Default or Event of Default  shall have occurred and be
continuing or would result therefrom.

                  Any designation or  redesignation of this kind by the Board of
Directors  will be  evidenced  to the Trustee by filing with the Trustee a Board
Resolution  giving effect to the designation or  redesignation  and an Officers'
Certificate that:

                  (a) certifies that the designation or  redesignation  complies
         with the foregoing provisions, and

                  (b)  gives  the   effective   date  of  the   designation   or
         redesignation,  and the filing with the Trustee to occur within 45 days
         after  the end of the  fiscal  quarter  of the  Company  in  which  the
         designation or  redesignation is made (or, in the case of a designation
         or  redesignation  made during the last fiscal quarter of the Company's
         fiscal year, within 90 days after the end of that fiscal year).

                  SECTION 4.11.  Limitation on Sale and Leaseback  Transactions.
                                 -----------------------------------------------
The Company shall not, and shall not permit any Restricted  Subsidiary to, enter
into any Sale and Leaseback Transaction with respect to any Property unless:

                  (a)  the  Company  or  that  Restricted  Subsidiary  would  be
         entitled to:

                           (1) Incur Debt in an amount equal to the Attributable
                  Debt  with  respect  to that  Sale and  Leaseback  Transaction
                  pursuant to Section 4.04, and

                           (2)  create  a Lien  on the  Property  securing  that
                  Attributable   Debt  without  also  securing  the   Securities
                  pursuant to Section 4.06, and

                  (b)  the  Sale  and  Leaseback   Transaction  is  effected  in
         compliance with Section 4.07.

                  SECTION 4.12. Change of Control.  (a) Upon the occurrence of a
                                ------------------
Change of Control, each Holder of Securities shall have the right to require the
Company to repurchase  all or any part of such Holder's  Securities  pursuant to
the offer  described  below (the "Change of Control  Offer") at a purchase price
(the "Change of Control Purchase Price") equal to 101.0% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the purchase date (subject
to the right of Holders of record on the relevant



<PAGE>

                                                                              68


record date to receive interest due on the relevant interest payment date).

                  (b)  Within  30 days  following  any  Change of  Control,  the
Company  shall (i) cause a notice of the Change of  Control  Offer to be sent at
least once to the Dow Jones News Service or similar business news service in the
United States and (ii) send, by first-class mail, with a copy to the Trustee, to
each Holder of Securities,  at such Holder's  address  appearing in the Security
Register,  a notice  stating:  (A) that a Change of Control  Offer is being made
pursuant to this Section 4.12 and that all  Securities  timely  tendered will be
accepted for payment;  (B) the Change of Control Purchase Price and the purchase
date, which shall be, subject to any contrary  requirements of applicable law, a
Business  Day no earlier  than 30 days nor later than 60 days from the date such
notice is mailed (the "Change of Control Payment Date");  (C) the  circumstances
and relevant facts regarding the Change of Control  (including  information with
respect  to pro forma  historical  income,  cash flow and  capitalization  after
giving effect to the Change of Control);  and (D) the procedures that Holders of
Securities must follow in order to tender their Securities (or portions thereof)
for payment and the procedures  that Holders of Securities  must follow in order
to withdraw an election to tender Securities (or portions thereof) for payment.

                  (c)  Holders  electing to have a Security  purchased  shall be
required to surrender the Security,  with an appropriate form duly completed, to
the Company or its agent at the address  specified  in the notice at least three
Business  Days prior to the Change of Control  Payment  Date.  Holders  shall be
entitled to withdraw their  election if the Trustee or the Company  receives not
later  than one  Business  Day prior to the Change of Control  Payment  Date,  a
telegram,  telex, facsimile transmission or letter setting forth the name of the
Holder,  the principal amount of the Security that was delivered for purchase by
the Holder and a statement that such Holder is withdrawing  its election to have
such Security purchased.

                  (d) On or prior to the Change of  Control  Payment  Date,  the
Company shall irrevocably deposit with the Trustee or with the Paying Agent (or,
if the Company or any of its Wholly Owned  Subsidiaries  is acting as the Paying
Agent,  segregate  and hold in trust) in cash an amount  equal to the  Change of
Control Purchase Price payable to the Holders entitled  thereto,  to be held for
payment in accordance  with the  provisions  of this  Section.  On the Change of
Control Payment Date, the Company shall deliver to the Trustee the Securities or
portions thereof that have been properly



<PAGE>

                                                                              69


tendered to and are to be accepted  by the Company for  payment.  The Trustee or
the Paying Agent shall,  on the Change of Control  Payment Date, mail or deliver
payment to each tendering Holder of the Change of Control Purchase Price. In the
event  that the  aggregate  Change of  Control  Purchase  Price is less than the
amount  delivered by the Company to the Trustee or the Paying Agent, the Trustee
or the Paying Agent, as the case may be, shall deliver the excess to the Company
immediately after the Change of Control Payment Date.

                  (e) The Company will comply,  to the extent  applicable,  with
the  requirements of Section 14(e) of the Exchange Act and any other  securities
laws or  regulations in connection  with the purchase of Securities  pursuant to
this  Section.  To the extent  that the  provisions  of any  securities  laws or
regulations  conflict  with the  provisions  of this  Section,  the Company will
comply  with the  applicable  securities  laws and  regulations  and will not be
deemed to have breached its obligations under this Section by virtue thereof.

                  SECTION 4.13.  Further  Instruments  and Acts. Upon request of
                                 -------------------------------
the Trustee,  the Company shall execute and deliver such further instruments and
do such further acts as may be reasonably  necessary or proper to carry out more
effectively the purpose of this Indenture.


                                    ARTICLE V

                                Successor Company
                                -----------------

                  SECTION 5.01.  (a) When Company May Merge or Transfer  Assets.
                                     -------------------------------------------
The Company shall not merge,  consolidate  or amalgamate  with or into any other
Person  (other than a merger of a Wholly Owned  Restricted  Subsidiary  into the
Company) or sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially  all its Property in any one transaction or series of transactions
unless:

                  (a) the Company shall be the surviving  Person (the "Surviving
         Person") or the Surviving  Person (if other than the Company) formed by
         that  merger,  consolidation  or  amalgamation  or to which  that sale,
         transfer, assignment, lease, conveyance or disposition is made shall be
         a  corporation  organized  and  existing  under the laws of the  United
         States of America, any State thereof or the District of Columbia;



<PAGE>

                                                                              70


                  (b) the Surviving Person (if other than the Company) expressly
         assumes, by supplemental indenture in form satisfactory to the Trustee,
         executed and delivered to the Trustee by that Surviving Person, the due
         and punctual  payment of the  principal  of, and  premium,  if any, and
         interest on, all the Securities,  according to their tenor, and the due
         and  punctual  performance  and  observance  of all the  covenants  and
         conditions of the Indenture to be performed by the Company;

                  (c)  in the  case  of a  sale,  transfer,  assignment,  lease,
         conveyance  or  other  disposition  of all  or  substantially  all  the
         Property of the Company,  that Property shall have been  transferred as
         an entirety or virtually as an entirety to one Person;

                  (d)  immediately  before  and  after  giving  effect  to  that
         transaction  or  series  of  transactions  on a pro  forma  basis  (and
         treating,  for  purposes of this  clause (d) and clause (e) below,  any
         Debt that becomes,  or is anticipated  to become,  an obligation of the
         Surviving  Person  or any  Restricted  Subsidiary  as a result  of that
         transaction  or series of  transactions  as having been Incurred by the
         Surviving  Person  or the  Restricted  Subsidiary  at the  time of that
         transaction or series of transactions),  no Default or Event of Default
         shall have occurred and be continuing;

                  (e)  immediately  after giving effect to that  transaction  or
         series  of  transactions  on a pro  forma  basis,  the  Company  or the
         Surviving  Person,  as the case may be, would be able to Incur at least
         $1.00 of  additional  Debt under  clause (1) of the first  paragraph of
         Section  4.04,  provided,  however,  that this  clause (e) shall not be
                         --------   -------
         applicable to the Company merging,  consolidating or amalgamating  with
         or  into  an   Affiliate   incorporated   solely  for  the  purpose  of
         reincorporating  the Company in another  State of the United  States so
         long  as  the  amount  of  Debt  of  the  Company  and  the  Restricted
         Subsidiaries is not increased thereby;

                  (f) the Company shall  deliver,  or cause to be delivered,  to
         the  Trustee,  in form and  substance  reasonably  satisfactory  to the
         Trustee,  an  Officers'  Certificate  and an Opinion of  Counsel,  each
         stating that the transaction and the supplemental indenture, if any, in
         respect  thereto  comply  with this  covenant  and that all  conditions
         precedent  herein  provided for relating to the  transaction  have been
         satisfied; and



<PAGE>

                                                                              71


                  (g) the Company shall have delivered to the Trustee an Opinion
         of Counsel to the effect that the Holders  will not  recognize  income,
         gain or loss  for  Federal  income  tax  purposes  as a  result  of the
         transaction  and will be  subject  to  Federal  income  tax on the same
         amounts,  in the same  manner  and at the same times as would have been
         the case if that transaction had not occurred.

                  The Surviving Person shall succeed to, and be substituted for,
and may exercise every right and power of the Company under the  Indenture,  but
the predecessor Company in the case of:

                  (a)  a  sale,  transfer,   assignment,   conveyance  or  other
         disposition  (unless that sale,  transfer,  assignment,  conveyance  or
         other disposition is of all the assets of the Company as an entirety or
         virtually as an entirety), or

                  (b) a lease,  shall not be released from any obligation to pay
         the principal of, premium, if any, and interest on, the Securities.


                                   ARTICLE VI

                              Defaults and Remedies
                              ---------------------

                  SECTION 6.01. Events of Default. The following events shall be
                                ------------------
 "Events of Default":

                  (1) the  Company  defaults  in any  payment of interest on any
         Security  when the  same  becomes  due and  payable,  and such  default
         continues for a period of 30 days;

                  (2) the Company  defaults in the payment of the  principal  of
         any  Security  when the same  becomes  due and  payable  at its  Stated
         Maturity, upon acceleration,  redemption, optional redemption, required
         repurchase or otherwise;

                  (3) the Company fails to comply with Article 5;

                  (4) the Company fails to comply with any covenant or agreement
         in the  Securities or in this  Indenture  (other than a failure that is
         the subject of the  foregoing  clause (1), (2) or (3)) and such failure
         continues for 30 days after  written  notice is given to the Company as
         specified below;



<PAGE>

                                                                              72


                  (5) a default under any Debt by the Company or any  Restricted
         Subsidiary  that results in  acceleration of the maturity of that Debt,
         or failure to pay any such Debt at  maturity,  in an  aggregate  amount
         greater than $25.0  million or its foreign  currency  equivalent at the
         time;

                  (6) the Company or any Significant  Subsidiary  pursuant to or
         within the meaning of any Bankruptcy Law:

                           (A) commences a voluntary case;

                           (B)  consents  to the  entry of an order  for  relief
                  against it in an involuntary case;

                           (C) consents to the  appointment of a Custodian of it
                  or for any substantial part of its property; or

                           (D) makes a general assignment for the benefit of its
                  creditors;

         or  takes  any  comparable  action  under any foreign  laws relating to
         insolvency;

                  (7) a court  of  competent  jurisdiction  enters  an  order or
         decree under any Bankruptcy Law that:

                           (A)  is  for  relief   against  the  Company  or  any
                  Significant Subsidiary in an involuntary case;

                           (B)  appoints  a  Custodian  of  the  Company  or any
                  Significant  Subsidiary  or for  any  substantial  part of its
                  property; or

                           (C)  orders  the  winding  up or  liquidation  of the
                  Company or any Significant Subsidiary; or

                           (D) grants any similar relief under any foreign laws;

         and  in  each  such  case  the  order or decree remains unstayed and in
         effect for 30 days; or

                  (8) any judgment or  judgments  for the payment of money in an
         aggregate  amount in excess of $25.0 million,  or its foreign  currency
         equivalent at the time,  that shall be rendered  against the Company or
         any  Restricted  Subsidiary  and  shall  not be  waived,  satisfied  or
         discharged for any period of 30 consecutive



<PAGE>

                                                                              73


         days during which a stay of enforcement shall not be in effect.

                  The foregoing will constitute  Events of Default  whatever the
reason for any such Event of Default and whether it is voluntary or  involuntary
or is effected by operation of law or pursuant to any judgment,  decree or order
of any  court  or any  order,  rule  or  regulation  of  any  administrative  or
governmental body.

                  The term  "Bankruptcy Law" means Title 11, United States Code,
or any  similar  Federal  or  state  law for the  relief  of  debtors.  The term
"Custodian"  means any receiver,  trustee,  assignee,  liquidator,  custodian or
similar official under any Bankruptcy Law.

                  A Default  under  clause (4) is not an Event of Default  until
 the Trustee or the Holders of at least 25% in aggregate principal amount of the
 Securities then outstanding  notify the Company (and in the case of such notice
 by Holders,  the  Trustee)  of the  Default and the Company  does not cure that
 Default within the time specified after receipt of such notice. The notice must
 specify the Default, demand that it be remedied and state that such notice is a
 "Notice of Default".

                  The Company shall deliver to the Trustee, within 30 days after
 the occurrence thereof,  written notice in the form of an Officers' Certificate
 of any Event of  Default  and any event  that with the  giving of notice or the
 lapse of time would become an Event of Default,  its status and what action the
 Company is taking or proposes to take with respect thereto.

                  SECTION  6.02.  Acceleration.  If an  Event  of  Default  with
                                  -------------
respect to any of the  Securities  (other than an Event of Default  specified in
Section  6.01(6) or (7) with respect to the Company)  shall have occurred and be
continuing,  the  Trustee  or the  registered  Holders  of not less  than 25% in
aggregate  principal amount of the Securities then outstanding may, by notice to
the  Company  and the  Trustee,  declare to be  immediately  due and payable the
principal amount of all the applicable Securities then outstanding, plus accrued
but unpaid interest to the date of acceleration.  Upon such a declaration,  such
principal  and  interest  shall be due and payable  immediately.  If an Event of
Default  specified in Section 6.01(6) or (7) with respect to the Company occurs,
the principal of and accrued and unpaid interest on all the Securities  shall be
due and payable  immediately without any declaration or other act by the Trustee
or the Holder of the Securities. After any such



<PAGE>

                                                                              74


acceleration  but before a judgment or decree based on  acceleration is obtained
by the Trustee,  the Holders of a majority in aggregate  principal amount of the
outstanding  Securities by notice to the Trustee and the Company may rescind any
declaration  of  acceleration  if the  rescission  would not  conflict  with any
judgment  or decree and if all  existing  Events of  Default  have been cured or
waived  except  nonpayment  of principal or interest  that has become due solely
because of the  acceleration.  No such  rescission  shall affect any  subsequent
Default or impair any right consequent thereto.

                  SECTION 6.03.  Other  Remedies.  If an Event of Default occurs
                                 ----------------
and is  continuing,  the Trustee may pursue any available  remedy to collect the
payment of principal or interest on the Securities or to enforce the performance
of any provision of the Securities or this Indenture.

                  The  Trustee  may  maintain a  proceeding  even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default.  No remedy is
exclusive of any other remedy. All available remedies are cumulative.

                  SECTION  6.04.  Waiver  of Past  Defaults.  The  Holders  of a
                                  --------------------------
 majority in aggregate  principal  amount of the Securities then  outstanding by
 notice to the Trustee may waive an existing Default and its consequences except
 (i) a Default in the payment of the  principal  of or interest on a Security or
 (ii) a Default in respect of a  provision  that under  Section  9.02  cannot be
 amended without the consent of each Securityholder  affected. When a Default is
 waived,  it is deemed cured,  but no such waiver shall extend to any subsequent
 or other Default or impair any consequent right.

                  SECTION 6.05.  Control by Majority.  The Holders of a majority
                                 --------------------
in aggregate  principal amount of the Securities then outstanding may direct the
time,  method and place of conducting any proceeding for any remedy available to
the Trustee or of  exercising  any trust or power  conferred on the Trustee with
respect  to the  Securities.  However,  the  Trustee  may  refuse to follow  any
direction that conflicts with law or this Indenture or, subject to Section 7.01,
that the  Trustee  determines  is  unduly  prejudicial  to the  rights  of other
Securityholders  or would involve the Trustee in personal  liability;  provided,
                                                                       --------
however, that the Trustee may take any other action deemed proper by the Trustee
-------
that is



<PAGE>

                                                                              75


not inconsistent with such direction.  Prior to taking any action hereunder, the
Trustee shall be entitled to reasonable  indemnification  against all losses and
expenses caused by taking or not taking such action.

                  SECTION 6.06.  Limitation on Suits.  A Securityholder  may not
                                 --------------------
pursue any remedy with respect to this Indenture or the Securities unless:

                  (1) such  Holder shall  have  previously  given to the Trustee
         written notice of a continuing Event of Default;

                  (2) the Holders of at least 25% in aggregate  principal amount
         of the Securities then  outstanding  shall have made a written request,
         and such Holder or Holders shall have offered reasonable indemnity,  to
         the Trustee to pursue such proceeding as trustee; and

                  (3) the Trustee has failed to institute  such  proceeding  and
         has not  received  from the Holders of at least a majority in aggregate
         principal amount of the Securities outstanding a direction inconsistent
         with such request, within 60 days after such notice, request and offer.

                  The  foregoing  limitations  on the  pursuit of  remedies by a
Securityholder  shall not apply to a suit  instituted  by a Holder of Securities
for the  enforcement  of payment of the  principal  of, and premium,  if any, or
interest on such Security on or after the  applicable due date specified in such
Security. A Securityholder may not use this Indenture to prejudice the rights of
another  Securityholder  or to obtain a  preference  or  priority  over  another
Securityholder.

                  SECTION   6.07.   Rights  of  Holders   to  Receive   Payment.
                                    --------------------------------------------
Notwithstanding  any other provision of this Indenture,  the right of any Holder
to receive  payment of principal of and interest on the Securities  held by such
Holder, on or after the respective due dates expressed in the Securities,  or to
bring suit for the  enforcement of any such payment on or after such  respective
dates, shall not be impaired or affected without the consent of such Holder.

                  SECTION  6.08.  Collection  Suit by  Trustee.  If an  Event of
                                  -----------------------------
 Default  specified  in Section  6.01(1) or (2)  occurs and is  continuing,  the
 Trustee may recover judgment in its own name and as trustee of an express trust
 against the Company for the whole amount then due and owing (together



<PAGE>

                                                                              76


with  interest  on any unpaid  interest  to the extent  lawful)  and the amounts
provided for in Section 7.07.

                  SECTION  6.09.  Trustee May File Proofs of Claim.  The Trustee
                                  ---------------------------------
may file such proofs of claim and other  papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the  Securityholders
allowed in any judicial  proceedings  relative to the Company,  its creditors or
its property and, unless prohibited by law or applicable  regulations,  may vote
on behalf of the  Holders in any  election of a trustee in  bankruptcy  or other
Person  performing  similar  functions,  and any  Custodian in any such judicial
proceeding  is hereby  authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee  shall consent to the making of such payments
directly  to the  Holders,  to pay to the  Trustee  any  amount  due it for  the
reasonable  compensation,  expenses,  disbursements and advances of the Trustee,
its agents and its counsel,  and any other amounts due the Trustee under Section
7.07.

                  SECTION 6.10.  Priorities.  If  the Trustee collects any money
                                 -----------
or property  pursuant to this  Article 6, it shall pay out the money or property
in the following order:

                  FIRST:  to the  Trustee,  to  the  Authentication  Agent,  the
         Registrar and the Paying Agent for amounts due under Section 7.07;

                  SECOND: to  Securityholders  for amounts due and unpaid on the
         Securities for principal and interest,  ratably,  without preference or
         priority of any kind,  according  to the amounts due and payable on the
         Securities for principal and interest, respectively; and

                  THIRD:  to the Company.

                  The Trustee  may fix a record  date and  payment  date for any
payment to  Securityholders  pursuant to this  Section.  At least 15 days before
such record date, the Company shall mail to each  Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.

                  SECTION  6.11.  Undertaking  for  Costs.  In any  suit for the
                                  ------------------------
 enforcement  of any right or remedy under this Indenture or in any suit against
 the  Trustee,  Authentication  Agent,  Registrar or Paying Agent for any action
 taken or omitted by it as Trustee, Authentication Agent, Registrar or



<PAGE>

                                                                              77


Paying Agent, as applicable, a court in its discretion may require the filing by
any party  litigant in the suit of an  undertaking to pay the costs of the suit,
and  the  court  in  its  discretion  may  assess  reasonable  costs,  including
reasonable attorneys' fees and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder  pursuant  to Section  6.07 or a suit by Holders of more than 10% in
aggregate principal amount of the Securities.

                  SECTION 6.12.  Waiver of Stay or Extension  Laws.  The Company
                                 ----------------------------------
(to the extent it may  lawfully  do so) shall not at any time  insist  upon,  or
plead,  or in any manner  whatsoever  claim or take the benefit or advantage of,
any stay or extension  law  wherever  enacted,  now or at any time  hereafter in
force,  that may affect the covenants or the performance of this Indenture;  and
the Company (to the extent that it may lawfully do so) hereby  expressly  waives
all benefit or advantage of any such law, and shall not hinder,  delay or impede
the execution of any power herein  granted to the Trustee,  but shall suffer and
permit the execution of every such power as though no such law had been enacted.


                                   ARTICLE VII

                                     Trustee
                                     -------

                  SECTION  7.01.  Duties of Trustee.  (a) If an Event of Default
                                  ------------------
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this  Indenture and use the same degree of care and skill in its
exercise as a prudent  Person would exercise or use under the  circumstances  in
the conduct of such Person's own affairs.

                  (b)  Except during the continuance of an Event of Default:

                  (1) the  Trustee  undertakes  to perform  such duties and only
         such  duties as are  specifically  set forth in this  Indenture  and no
         implied  covenants  or  obligations  shall be read into this  Indenture
         against the Trustee; and

                  (2) in the  absence of bad faith on its part,  the Trustee may
         conclusively   rely,  as  to  the  truth  of  the  statements  and  the
         correctness of the opinions  expressed  therein,  upon  certificates or
         opinions



<PAGE>

                                                                              78


         furnished to the Trustee and  conforming  to the  requirements  of this
         Indenture.  However,  the Trustee  shall examine the  certificates  and
         opinions to determine  whether or not they conform to the  requirements
         of this Indenture but need not confirm or  investigate  the accuracy of
         any mathematical calculations or other facts stated therein.

                  (c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:

                  (1) this  paragraph does not limit the effect of paragraph (b)
         of this Section;

                  (2) the Trustee  shall not be liable for any error of judgment
         made in good  faith by a Trust  Officer  unless it is  proved  that the
         Trustee was negligent in ascertaining the pertinent facts; and

                  (3) the Trustee shall not be liable with respect to any action
         it takes or omits to take in good faith in accordance  with a direction
         received by it pursuant to Section 6.05.

                  (d) Every  provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.

                  (e) The Trustee  shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.

                  (f) Money held in trust by the Trustee need not be  segregated
from other funds except to the extent required by law.

                  (g) No provision of this  Indenture  shall require the Trustee
to expend or risk its own funds or otherwise  incur  financial  liability in the
performance  of any of its duties  hereunder  or in the  exercise  of any of its
rights or powers.

                  (h) Every provision of this Indenture  relating to the conduct
or affecting  the  liability of or affording  protection to the Trustee shall be
subject to the  provisions of this Section and to the  provisions of the TIA and
the provisions of this Article VII shall apply to the Trustee, Registrar, Paying
Agent and Common Depository.



<PAGE>

                                                                              79


                  (i) The  Trustee  shall  not be  deemed  to have  notice  of a
Default  or an Event of Default  unless (a) the  Trustee  has  received  written
notice  thereof from the Company or any Holder or (b) a Trust Officer shall have
actual knowledge thereof.

                  SECTION  7.02.   Rights  of  Trustee.   (a)  The  Trustee  may
                                   --------------------
conclusively  rely on any document  (whether in its original or facsimile  form)
believed by it to be genuine and to have been signed or  presented by the proper
person.  The  Trustee  need not  investigate  any fact or  matter  stated in the
document.  The Trustee may, however, in its discretion make such further inquiry
or  investigation  into  such  facts or  matters  as it may see fit and,  if the
Trustee shall determine to make such further inquiry or investigation,  it shall
be  entitled  to  examine  the  books,  records  and  premises  of the  Company,
personally or by agent or attorney at the expense of the Company and shall incur
no  liability or  additional  liability of any kind by reason of such inquiry or
investigation.

                  (b) Before the Trustee acts or refrains  from  acting,  it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in  reliance on
the Officers' Certificate or Opinion of Counsel.

                  (c) The  Trustee  may act  through  agents  and  shall  not be
responsible  for the  misconduct or negligence of any agent  appointed  with due
care.

                  (d) The Trustee shall not be liable for any action it takes or
omits to take in good  faith that it  believes  to be  authorized  or within its
rights  or  powers;  provided,  however,  that the  Trustee's  conduct  does not
                     --------   -------
constitute wilful misconduct or negligence.

                  (e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters  relating to this
Indenture  and the  Securities  shall be full  and  complete  authorization  and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance  with the advice or opinion of such
counsel.

                  (f)  The  permissive  rights  of  the  Trustee  to  do  things
enumerated  in  this  Indenture  shall  not be  construed  as a duty  unless  so
specified herein.

                  (g)  The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this



<PAGE>

                                                                              80


Indenture  at the request or  direction  of any of the Holders  pursuant to this
Indenture,  unless such Holders  shall have  offered to the Trustee  security or
indemnity   satisfactory  to  the  Trustee  against  the  costs,   expenses  and
liabilities  which might be incurred by it in  compliance  with such  request or
direction.

                  SECTION 7.03. Individual Rights of Trustee. The Trustee in its
                                -----------------------------
individual  or any other  capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its  Affiliates  with the same rights
it  would  have  if  it  were  not  Trustee.  Any  Paying  Agent,  Registrar  or
co-registrar may do the same with like rights.  However, the Trustee must comply
with Sections 7.10 and 7.11.

                  SECTION 7.04. Trustee's  Disclaimer.  The Trustee shall not be
                                ----------------------
responsible  for and makes no  representation  as to the  validity,  priority or
adequacy of this Indenture or the  Securities,  it shall not be accountable  for
the  Company's  use of the  proceeds  from the  Securities,  and it shall not be
responsible  for  any  statement  of the  Company  in this  Indenture  or in any
document  issued  in  connection  with  the  sale  of the  Securities  or in the
Securities other than the Trustee's certificate of authentication.

                  SECTION  7.05.  Notice of  Defaults.  If a Default or Event of
                                  --------------------
 Default occurs and is continuing and if it is known to the Trustee, the Trustee
 shall  mail to each  Securityholder  notice of the  Default or Event of Default
 within 90 days after it is known to a Trust Officer or written  notice of it is
 received by the Trustee. Except in the case of a Default or Event of Default in
 payment of principal of or interest on any  Security,  the Trustee may withhold
 the notice if and so long as a  committee  of its Trust  Officers in good faith
 determines that withholding the notice is in the interests of Securityholders.

                  SECTION  7.06.  Reports by Trustee to Holders.  As promptly as
                                  ------------------------------
practicable  after each December 31 beginning with December 31, 2000, and in any
event  prior  to  March  31 in  each  year,  the  Trustee  shall  mail  to  each
Securityholder  a brief report  dated as of December 31 each year that  complies
with TIA ss.  313(a),  if and to the extent  required  by such  subsection.  The
Trustee shall also comply with TIA ss. 313(b).

                  A  copy  of  each  report  at  the  time  of  its  mailing  to
Securityholders  shall be filed with the SEC and each stock exchange (if any) on
which the  Securities  are listed.  The Company  agrees to notify  promptly  the
Trustee whenever



<PAGE>

                                                                              81


the Securities become listed on any stock exchange and of any delisting thereof.

                  SECTION 7.07.  Compensation  and Indemnity.  The Company shall
                                 ----------------------------
 pay to the Trustee from time to time reasonable  compensation for its services.
 The Trustee's compensation shall not be limited by any law on compensation of a
 trustee of an express  trust.  The Company  shall  reimburse  the Trustee  upon
 request  for all  reasonable  out-of-pocket  expenses  incurred  or made by it,
 including  costs  of  collection,  in  addition  to the  compensation  for  its
 services. Such expenses shall include the reasonable compensation and expenses,
 disbursements  and advances of the Trustee's agents,  counsel,  accountants and
 experts.  The Company  shall  indemnify  the Trustee  against any and all loss,
 liability or expense (including  reasonable  attorneys' fees) incurred by it in
 connection  with  the  acceptance  and  administration  of this  trust  and the
 performance of its duties hereunder except to the extent that the Company shall
 have been actually  prejudiced  as a result of such failure.  The Trustee shall
 notify  the  Company  promptly  of any claim  for which it may seek  indemnity.
 Failure by the Trustee to so notify the  Company  shall not relieve the Company
 of its  obligations  hereunder.  The  Company  shall  defend  the claim and the
 Trustee  may have  separate  counsel  and the  Company  shall  pay the fees and
 expenses  of such  counsel.  The  Company  need not  reimburse  any  expense or
 indemnify  against  any loss,  liability  or expense  incurred  by the  Trustee
 through the  Trustee's  own wilful  misconduct,  negligence  or bad faith.  The
 Company  need  not pay for any  settlement  made  by the  Trustee  without  the
 Company's  consent,  such  consent  not  to  be  unreasonably   withheld.   All
 indemnifications  and releases from liability  granted hereunder to the Trustee
 shall extend to its officers,  directors,  employees,  agents,  successors  and
 assigns.

                  To secure the Company's  payment  obligations in this Section,
 the Trustee shall have a lien prior to the  Securities on all money or property
 held or collected by the Trustee  other than money or property held in trust to
 pay principal of and interest on particular Securities.

                  The  Company's  payment  obligations  pursuant to this Section
 shall  survive the  resignation  or removal of the Trustee and the discharge of
 this  Indenture.  When the Trustee  incurs  expenses  after the occurrence of a
 Default  specified in Section  6.01(6) or (7) with respect to the Company,  the
 expenses  are  intended  to  constitute  expenses of  administration  under the
 Bankruptcy Law.



<PAGE>

                                                                              82


                  SECTION 7.08.  Replacement of Trustee.  The Trustee may resign
                                 -----------------------
at any time by so notifying the Company.  The Holders of a majority in aggregate
principal amount of the Securities then outstanding may remove the Trustee by so
notifying  the Trustee and may appoint a successor  Trustee.  The Company  shall
remove the Trustee if:

                  (1) the Trustee fails to comply with Section 7.10;

                  (2) the Trustee is adjudged bankrupt or insolvent;

                  (3) a receiver or other  public  officer  takes  charge of the
         Trustee or its property; or

                  (4) the Trustee otherwise becomes incapable of acting.

                  If the  Trustee  resigns,  is removed by the Company or by the
Holders of a majority  in  aggregate  principal  amount of the  Securities  then
outstanding  and such  Holders do not  reasonably  promptly  appoint a successor
Trustee,  or if a vacancy  exists in the office of Trustee  for any reason  (the
Trustee in such event being  referred to herein as the  retiring  Trustee),  the
Company shall promptly appoint a successor Trustee.

                  A successor Trustee shall deliver a written  acceptance of its
appointment  to  the  retiring  Trustee  and  to  the  Company.   Thereupon  the
resignation or removal of the retiring Trustee shall become  effective,  and the
successor  Trustee  shall have all the rights,  powers and duties of the Trustee
under  this  Indenture.  The  successor  Trustee  shall  mail  a  notice  of its
succession to Securityholders.  The retiring Trustee shall promptly transfer all
property  held by it as Trustee to the  successor  Trustee,  subject to the lien
provided for in Section 7.07.

                  If a successor  Trustee  does not take  office  within 60 days
after the retiring  Trustee resigns or is removed,  the retiring  Trustee or the
Holders of 10% in aggregate  principal amount of the Securities then outstanding
may  petition  any court of  competent  jurisdiction  for the  appointment  of a
successor Trustee.

                  If  the  Trustee  fails  to  comply  with  Section  7.10,  any
Securityholder  who has been a bona fide  Holder of a Security  for at least six
months may petition any court of competent  jurisdiction  for the removal of the
Trustee and the appointment of a successor Trustee.



<PAGE>

                                                                              83


                  Notwithstanding  the  replacement  of the Trustee  pursuant to
this Section,  the Company's  obligations  under Section 7.07 shall continue for
the benefit of the retiring Trustee.

                  If the  Registrar  or Paying  Agent  resigns,  and a successor
Registrar or Paying Agent is not  appointed by the Company  within 60 days after
the retiring Registrar or Paying Agent resigns, the retiring Registrar or Paying
Agent shall have the right to appoint a successor  Registrar or Paying Agent, as
applicable,  which  Registrar  or Paying Agent shall be approved by the Company,
such approval not to be unreasonably withheld.

                  SECTION  7.09.  Successor  Trustee by Merger.  If the  Trustee
                                  -----------------------------
consolidates  with,  merges or converts into, or transfers all or  substantially
all its corporate  trust business or assets to,  another  corporation or banking
association,  the  resulting,  surviving or  transferee  corporation  or banking
association without any further act shall be the successor Trustee.

                  In case at the time such  successor or  successors  by merger,
conversion or  consolidation  to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities  shall have been  authenticated  but not
delivered,  any such  successor  to the  Trustee  may adopt the  certificate  of
authentication  of any  predecessor  trustee,  and deliver  such  Securities  so
authenticated;  and in case at that  time any of the  Securities  shall not have
been  authenticated,  any such  successor to the Trustee may  authenticate  such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture  provided
that the certificate of the Trustee shall have.

                  SECTION 7.10. Eligibility; Disqualification. The Trustee shall
                                ------------------------------
at all times satisfy the requirements of TIA ss. 310(a).  The Trustee shall have
(or, in the case of a corporation included in a bank holding company system, the
related bank holding  company  shall have) a combined  capital and surplus of at
least  $50,000,000  as set forth in its (or its related bank holding  company's)
most recent published annual report of condition.  The Trustee shall comply with
TIA ss. 310(b), subject to the penultimate paragraph thereof; provided, however,
                                                              --------  -------
that  there  shall be  excluded  from the  operation  of TIA ss.  310(b)(1)  any
indenture or indentures under which other securities or certificates of interest
or participation in other securities of the Company are



<PAGE>

                                                                              84


outstanding if the requirements for such exclusion set forth in TIA ss.310(b)(1)
are met.

                  SECTION  7.11.   Preferential  Collection  of  Claims  Against
Company.  The Trustee shall comply with TIA ss.  311(a),  excluding any creditor
relationship  listed in TIA ss.  311(b).  A  Trustee  who has  resigned  or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.


                                  ARTICLE VIII

                       Discharge of Indenture; Defeasance
                       ----------------------------------

                  SECTION 8.01.   Discharge   of   Liability   on    Securities;
                                  ----------------------------------------------
Defeasance.  (a) When (i) the Company  delivers  to the Trustee all  outstanding
-----------
Securities  (other  than  Securities  replaced  pursuant  to  Section  2.07) for
cancellation  or (ii) all  outstanding  Securities  have become due and payable,
whether at  maturity  or as a result of the  mailing  of a notice of  redemption
pursuant to Article III and the Company  irrevocably  deposits  with the Trustee
funds  sufficient  to  pay  at  maturity  or  upon  redemption  all  outstanding
Securities,  including  interest  thereon to  maturity or such  redemption  date
(other than Securities replaced pursuant to Section 2.07), and if in either case
the Company  pays all other sums payable  hereunder  by the  Company,  then this
Indenture shall, subject to Section 8.01(c),  cease to be of further effect. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on demand
of the Company accompanied by an Officers' Certificate and an Opinion of Counsel
and at the cost and expense of the Company.

                  (b) Subject to Sections  8.01(c) and 8.02,  the Company at any
time may  terminate (i) all of its  obligations  under the  Securities  and this
Indenture  ("legal  defeasance  option") or (ii) its obligations  under Sections
4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, and 4.12 and the operation
of Sections 6.01(5),  6.01(6), 6.01(7) and 6.01(8) (but, in the case of Sections
6.01(6)  and  (7),  with  respect  only  to  Significant  Subsidiaries)  and the
limitations contained in clause (e) of Article 5 ("covenant defeasance option").
The Company may exercise its legal defeasance option  notwithstanding  its prior
exercise of its covenant defeasance option.

                  If the Company exercises its legal defeasance option,  payment
of the Securities may not be accelerated  because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities



<PAGE>

                                                                              85


may not be  accelerated  because of an Event of Default  specified  in  Sections
6.01(4)  (with  respect  to  the  covenants  of  Article  IV  identified  in the
immediately preceding  paragraph),  6.01(5),  6.01(6),  6.01(7) or 6.01(8) (with
respect only to  Significant  Subsidiaries  in the case of Sections  6.01(6) and
6.01(7)) or because of the failure of the Company to comply with the limitations
contained in clause (e) of Article 5.

                  Upon  satisfaction of the conditions set forth herein and upon
request of the Company,  the Trustee shall  acknowledge in writing the discharge
of those obligations that the Company terminates.

                  (c)  Notwithstanding  clauses (a) and (b) above, the Company's
obligations in Sections 2.04,  2.05, 2.06, 2.07, 7.07, 7.08, 8.05 and 8.06 shall
survive until the Securities have been paid in full.  Thereafter,  the Company's
obligations  in  Sections  7.07 and 8.05  shall  survive  such  satisfaction  or
discharge.

                  SECTION  8.02.  Conditions  to  Defeasance.  The  Company  may
                                  ---------------------------
exercise its legal defeasance option or its covenant defeasance option only if:

                  (1) the Company irrevocably deposits in trust with the Trustee
         money or U.S.  Government  Obligations  for the payment of principal of
         and interest on the Securities to maturity or  redemption,  as the case
         may be;

                  (2) the Company  delivers to the Trustee a certificate  from a
         nationally recognized firm of independent  accountants expressing their
         opinion  that the  payments  of  principal  and  interest  when due and
         without reinvestment on the deposited U.S. Government  Obligations plus
         any deposited money without  investment will provide cash at such times
         and in such amounts as will be sufficient to pay principal and interest
         when due on all the Securities to maturity or  redemption,  as the case
         may be;

                  (3) 123 days pass  after the  deposit  is made and  during the
         123-day  period no Default  specified in Section  6.01(6) or (7) occurs
         with respect to the Company or any other Person making the deposit that
         is continuing at the end of the period;

                  (4) the deposit does not  constitute a default under any other
         agreement or instrument binding on the Company;



<PAGE>

                                                                              86


                  (5) the Company  delivers to the Trustee an Opinion of Counsel
         to the  effect  that the  trust  resulting  from the  deposit  does not
         constitute,  or is qualified as, a regulated  investment  company under
         the Investment Company Act of 1940;

                  (6) in the case of the legal  defeasance  option,  the Company
         shall have delivered to the Trustee an Opinion of Counsel  stating that
         (i) the Company has received  from, or there has been published by, the
         Internal  Revenue  Service  a  ruling,  or (ii)  since the date of this
         Indenture there has been a change in the applicable  Federal income tax
         law, in either case to the effect that,  and based thereon such Opinion
         of Counsel shall confirm that, the  Securityholders  will not recognize
         income,  gain or loss for  Federal  income tax  purposes as a result of
         such  defeasance  and will be subject to Federal income tax on the same
         amounts,  in the same  manner  and at the same times as would have been
         the case if such defeasance had not occurred;

                  (7) in the case of the covenant defeasance option, the Company
         shall have delivered to the Trustee an Opinion of Counsel to the effect
         that the  Security-holders  will not recognize income, gain or loss for
         Federal income tax purposes as a result of such covenant defeasance and
         will be subject to Federal income tax on the same amounts,  in the same
         manner  and at the  same  times  as  would  have  been the case if such
         covenant defeasance had not occurred; and

                  (8)  the  Company   delivers  to  the  Trustee  an   Officers'
         Certificate and an Opinion of Counsel, each stating that all conditions
         precedent  to  the  defeasance  and  discharge  of  the  Securities  as
         contemplated by this Article VIII have been complied with.

                  Before or after a deposit,  the Company may make  arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.

                  SECTION 8.03.  Application  of Trust Money.  The Trustee shall
                                 ----------------------------
 hold in trust money or U.S. Government  Obligations  deposited with it pursuant
 to this Article  VIII.  It shall apply the  deposited  money and the money from
 U.S.  Government  Obligations  through the Paying Agent and in accordance  with
 this Indenture to the payment of principal of and interest on the Securities.



<PAGE>

                                                                              87


                  SECTION 8.04. Repayment to Company. The Trustee and the Paying
                                ---------------------
Agent shall  promptly  turn over to the Company upon request any excess money or
securities held by them at any time.

                  Subject to any applicable  abandoned property law, the Trustee
and the Paying  Agent  shall pay to the Company  upon  request any money held by
them for the payment of principal or interest  that  remains  unclaimed  for two
years, and, thereafter,  Securityholders  entitled to the money must look to the
Company for payment as general creditors.

                  SECTION 8.05.  Indemnity  for  Government  Obligations.    The
                                 ----------------------------------------
Company shall pay and shall  indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S.  Government  Obligations or
the principal and interest received on such U.S. Government Obligations.

                  SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
                                --------------
 unable to apply any money or U.S.  Government  Obligations  in accordance  with
 this Article VIII by reason of any legal  proceeding  or by reason of any order
 or judgment of any court or governmental  authority  enjoining,  restraining or
 otherwise  prohibiting such application,  the Company's  obligations under this
 Indenture  and the  Securities  shall be revived  and  reinstated  as though no
 deposit  had  occurred  pursuant  to this  Article  VIII until such time as the
 Trustee or Paying Agent is permitted to apply all such money or U.S. Government
 Obligations in accordance with this Article VIII; provided,  however,  that, if
                                                   --------   -------
 the Company has made any payment of interest on or principal of any  Securities
 because  of  the  reinstatement  of  its  obligations,  the  Company  shall  be
 subrogated  to the rights of the  Holders of such  Securities  to receive  such
 payment from the money or U.S.  Government  Obligations  held by the Trustee or
 Paying Agent.


                                   ARTICLE IX

                                   Amendments
                                   ----------

                  SECTION 9.01.  Without Consent of Holders. The Company and the
                                 ---------------------------
Trustee may amend this Indenture or the Securities  without notice to or consent
of any Securityholder:

                  (1) to cure any ambiguity, omission, defect or inconsistency;



<PAGE>

                                                                              88


                  (2) to comply with Article V;

                  (3) to provide for uncertificated Securities in addition to or
         in  place  of  certificated  Securities;  provided,  however,  that the
         uncertificated Securities are issued in registered form for purposes of
         Section 163(f) of the Code or in a manner such that the  uncertificated
         Securities are described in Section 163(f)(2)(B) of the Code;

                  (4) to add Guarantees with respect to the Securities;

                  (5) to secure the  Securities,  to add to the covenants of the
         Company  for the benefit of the  Holders or to  surrender  any right or
         power herein conferred upon the Company;

                  (6) to comply with any  requirements  of the SEC in connection
         with qualifying,  or maintaining the  qualification  of, this Indenture
         under the TIA;

                  (7) to make any  change  that does not  adversely  affect  the
         rights of any Securityholder; or

                  (8) to provide for the issuance of  additional  Securities  in
         accordance with the Indenture.

                  After an amendment under this Section becomes  effective,  the
Company  shall  mail  to   Securityholders  a  notice  briefly  describing  such
amendment. The failure to give such notice to all Securityholders, or any defect
therein,  shall not impair or affect the  validity  of an  amendment  under this
Section.

                  SECTION  9.02.  With  Consent of Holders.  The Company and the
                                  -------------------------
Trustee  may  amend  this  Indenture  or the  Securities  without  notice to any
Securityholder  but  with  the  written  consent  of the  Holders  of at least a
majority  in  aggregate  principal  amount of the  Securities  then  outstanding
(including consents obtained in connection with a tender offer or exchange offer
for the  Securities).  However,  without  the  consent  of  each  Securityholder
affected thereby, an amendment may not:

                  (1) reduce the amount of Securities whose Holders must consent
         to an amendment;

                  (2)  reduce  the rate of or  extend  the time for  payment  of
         interest on any Security;



<PAGE>

                                                                              89


                  (3) reduce the  principal of or extend the Stated  Maturity of
         any Security;

                  (4)  impair  the right of any  Holder to  receive  payment  of
         principal of and interest on such  Holder's  Securities on or after the
         due dates  therefor or to  institute  suit for the  enforcement  of any
         payment on or with respect to such Holder's Securities;

                  (5)  reduce  the  amount   payable  upon  the   redemption  or
         repurchase  of any Security  under Article III or Section 4.07 or 4.12,
         change the time at which any  Security  may be redeemed  in  accordance
         with  Article  III,  or, at any time after a Change of Control or Asset
         Sale has occurred, change the time at which any Change of Control Offer
         or  Prepayment  Offer must be made or at which the  Securities  must be
         repurchased  pursuant  to such  Change of Control  Offer or  Prepayment
         Offer;

                  (6) make any Security  payable in money other than that stated
         in the Security;

                  (7) release any security  interest  that may have been granted
         in  favor  of the  Holders  other  than  pursuant  to the  terms of the
         agreement granting that security interest;

                  (8) make any  change  in  Section  6.04 or 6.07 or the  second
         sentence of this Section; or

                  (9) subordinate the Securities to any other  obligation of the
         Company

                  It shall not be necessary for the consent of the Holders under
this Section to approve the particular  form of any proposed  amendment,  but it
shall be sufficient if such consent approves the substance thereof.

                  After an amendment under this Section becomes  effective,  the
Company  shall  mail  to   Securityholders  a  notice  briefly  describing  such
amendment. The failure to give such notice to all Securityholders, or any defect
therein,  shall not impair or affect the  validity  of an  amendment  under this
Section.

                  SECTION 9.03.  Compliance  with  Trust  Indenture  Act.  Every
                                 ----------------------------------------
amendment to this Indenture or the Securities  shall comply with the TIA as then
in effect.

                  SECTION 9.04.  Revocation and Effect of Consents and  Waivers.
                                 -----------------------------------------------
A consent to an amendment or a waiver by a



<PAGE>

                                                                              90


Holder of a Security shall bind the Holder and every  subsequent  Holder of that
Security  or  portion  of the  Security  that  evidences  the  same  debt as the
consenting  Holder's Security,  even if notation of the consent or waiver is not
made on the Security.  However,  any such Holder or subsequent Holder may revoke
the consent or waiver as to such Holder's Security or portion of the Security if
the Trustee  receives the notice of revocation  before the date the amendment or
waiver becomes  effective.  After an amendment or waiver becomes  effective,  it
shall bind every  Securityholder.  An amendment or waiver becomes effective upon
the execution of such amendment or waiver by the Trustee.

                  The Company may,  but shall not be obligated  to, fix a record
date for the purpose of determining the  Securityholders  entitled to give their
consent or take any other action  described above or required or permitted to be
taken   pursuant  to  this   Indenture.   If  a  record  date  is  fixed,   then
notwithstanding  the  immediately  preceding  paragraph,  those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those  Persons,  shall be entitled to give such consent or to revoke any consent
previously  given or to take  any  such  action,  whether  or not  such  Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.

                  SECTION  9.05.  Notation on or Exchange of  Securities.  If an
                                  ---------------------------------------
 amendment  changes the terms of a Security,  the Trustee may require the Holder
 of the Security to deliver such Security to the Trustee.  The Trustee may place
 an appropriate  notation on the Security regarding the changed terms and return
 such  Security to the Holder.  Alternatively,  if the Company or the Trustee so
 determines,  the  Company in  exchange  for the  Security  shall  issue and the
 Trustee shall  authenticate  a new Security  that  reflects the changed  terms.
 Failure to make the  appropriate  notation or to issue a new Security shall not
 affect the validity of such amendment.

                  SECTION 9.06.  Trustee To Sign  Amendments.  The Trustee shall
                                 ----------------------------
 sign any amendment authorized pursuant to this Article IX if the amendment does
 not  adversely  affect the rights,  duties,  liabilities  or  immunities of the
 Trustee.  If it does,  the  Trustee  may but need not sign it. In signing  such
 amendment  the  Trustee  shall be  entitled  to  receive  indemnity  reasonably
 satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
 protected in relying upon, an Officers' Certificate and an



<PAGE>

                                                                              91


Opinion of Counsel  stating that such  amendment is  authorized  or permitted by
this Indenture.

                  SECTION 9.07. Payment for Consent. Neither the Company nor any
                                --------------------
Affiliate of the Company shall, directly or indirectly,  pay or cause to be paid
any consideration,  whether by way of interest, fee or otherwise,  to any Holder
for or as an inducement to any consent,  waiver or amendment of any of the terms
or provisions of this Indenture or the Securities  unless such  consideration is
offered to be paid to all Holders  that so  consent,  waive or agree to amend in
the time frame set forth in  solicitation  documents  relating to such  consent,
waiver or agreement.


                                    ARTICLE X

                                  Miscellaneous
                                  -------------

                  SECTION 10.01. Trust Indenture Act Controls.  If any provision
                                 -----------------------------
of this Indenture limits,  qualifies or conflicts with another provision that is
required to be included in this  Indenture by the TIA,  the  required  provision
shall control.

                  SECTION 10.02.  Notices.  Any notice or communication shall be
                                  --------
 in writing and  delivered  in person or mailed by  first-class  mail or sent by
 facsimile (with a hard copy delivered in person or by mail promptly thereafter)
 and addressed as follows:

                                    if to the Company:

                                    Levi Strauss & Co.
                                    Levi's Plaza
                                    1155 Battery Street
                                    San Francisco, CA 94111
                                    Facsimile: (415) 501-7650

                                    Attention of:  Legal Department


                                    if to the Trustee:

                                    Citibank, N.A.,
                                    111 Wall Street, 14th Floor
                                    New York, NY 10005

                                    Attention of: Citibank Agency and Trust
                                                  Services



<PAGE>

                                                                              92

                  The  Company  or  the  Trustee  by  notice  to the  other  may
designate   additional  or  different   addresses  for  subsequent   notices  or
communications.

                  Any notice or communication mailed to a  Securityholder  shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the  registration  books of the Registrar and shall be sufficiently  given if so
mailed within the time prescribed.

                  Failure to mail a notice or  communication to a Securityholder
or any  defect in it shall not  affect  its  sufficiency  with  respect to other
Securityholders.  If a notice or  communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.

                  SECTION  10.03.  Communication  by Holders with Other Holders.
                                   ---------------------------------------------
Securityholders   may  communicate   pursuant  to  TIA  ss.  312(b)  with  other
Securityholders  with  respect  to their  rights  under  this  Indenture  or the
Securities.  The Company,  the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).

                  SECTION  10.04.  Certificate  and  Opinion  as  to  Conditions
                                   ---------------------------------------------
Precedent. Upon any request or application by the Company to the Trustee to take
----------
or refrain  from  taking any action  under this  Indenture,  the  Company  shall
furnish to the Trustee:

                  (1) an Officers'  Certificate in form and substance reasonably
         satisfactory  to  the  Trustee  stating  that,  in the  opinion  of the
         signers,  all  conditions  precedent,  if  any,  provided  for in  this
         Indenture relating to the proposed action have been complied with; and

                  (2) an Opinion of  Counsel  in form and  substance  reasonably
         satisfactory  to the  Trustee  stating  that,  in the  opinion  of such
         counsel, all such conditions precedent have been complied with.

                  SECTION 10.05.  Statements Required in Certificate or Opinion.
                                  ----------------------------------------------
Each  certificate  or opinion  with  respect to  compliance  with a covenant  or
condition provided for in this Indenture shall include:

                  (1) a statement that the individual making such certificate or
         opinion has read such covenant or condition;



<PAGE>

                                                                              93


                  (2) a  brief  statement  as to the  nature  and  scope  of the
         examination  or  investigation  upon which the  statements  or opinions
         contained in such certificate or opinion are based;

                  (3) a statement  that, in the opinion of such  individual,  he
         has made such  examination or  investigation  as is necessary to enable
         him to express an informed  opinion as to whether or not such  covenant
         or condition has been complied with; and

                  (4) a  statement  as to whether or not, in the opinion of such
         individual, such covenant or condition has been complied with.

                  SECTION 10.06.  When  Securities  Disregarded.  In determining
                                  ------------------------------
whether  the  Holders  of the  required  principal  amount  of  Securities  have
concurred in any direction,  waiver or consent,  Securities owned by the Company
or by any Person  directly or indirectly  controlling  or controlled by or under
direct or indirect  common  control with the Company  shall be  disregarded  and
deemed not to be  outstanding,  except  that,  for the  purpose  of  determining
whether the Trustee shall be protected in relying on any such direction,  waiver
or consent,  only  Securities  that the  Trustee  knows are so owned shall be so
disregarded.  Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.

                  SECTION 10.07.  Rules by Trustee,  Paying Agent and Registrar.
                                  ----------------------------------------------
The  Trustee  may  make  reasonable   rules  for  action  by  or  a  meeting  of
Securityholders.  The  Registrar and the Paying Agent or  co-registrar  may make
reasonable rules for their functions.

                  SECTION  10.08.  Legal  Holidays.   A  "Legal  Holiday"  is  a
                                   ----------------
Saturday, a Sunday or a day on which banking institutions are not required to be
open in the State of New York.  If a payment  date is a Legal  Holiday,  payment
shall be made on the next  succeeding  day that is not a Legal  Holiday,  and no
interest shall accrue for the intervening  period. If a regular record date is a
Legal Holiday, the record date shall not be affected.

                  SECTION   10.09.   Governing   Law.  THIS  INDENTURE  AND  THE
                            -------------------------
SECURITIES  SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT  GIVING  EFFECT TO  APPLICABLE  PRINCIPLES  OF
CONFLICTS  OF LAW TO THE  EXTENT  THAT THE  APPLICATION  OF THE LAWS OF  ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.



<PAGE>

                                                                              94


                  SECTION  10.10.  No  Recourse   Against  Others.  A  director,
                                   -------------------------------
officer,  employee or  stockholder,  as such,  of the Company shall not have any
liability  for any  obligations  of the  Company  under the  Securities  or this
Indenture  or for any  claim  based  on,  in  respect  of or by  reason  of such
obligations  or their  creation.  By accepting a Security,  each  Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.

                  SECTION  10.11.  Successors.  All agreements of the Company in
                                   -----------
this Indenture and the Securities  shall bind its successors.  All agreements of
the Trustee in this Indenture shall bind its successors.

                  SECTION 10.12.  Multiple Originals.  The parties may sign  any
                                  -------------------
number of copies of this Indenture.  Each signed copy shall be an original,  but
all of them together represent the same agreement.  One signed copy is enough to
prove this Indenture.

                  SECTION  10.13.  Table of  Contents;  Headings.  The  table of
                                   ------------------------------
contents,  cross-reference  sheet and  headings of the  Articles and Sections of
this  Indenture have been inserted for  convenience  of reference  only, are not
intended to be  considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.



<PAGE>

                                                                              95


                  IN WITNESS  WHEREOF,  the parties  have caused this  Indenture
to be duly executed as of the date first written above.


                                          LEVI STRAUSS & CO.,


                                          by

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


                                          CITIBANK, N.A.,


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



                                          CITIBANK, N.A., LONDON, as
                                          Registrar and Paying Agent

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



<PAGE>


                                                                      APPENDIX A





                    PROVISIONS RELATING TO INITIAL SECURITIES
                    -----------------------------------------
                             AND EXCHANGE SECURITIES
                             -----------------------



         1. Definitions
            -----------

         1.1      Definitions
                  -----------

                  For the purposes of this Appendix A the following  terms shall
have the meanings indicated below:

                  "Clearstream" means Clearstream Banking, S.A.,  formerly known
as Cedel Bank, S.A., or any successor securities clearing agency.

                  "Common Depository" means Citibank, N.A., London.

                  "Definitive Security" means a certificated Initial Security or
Exchange  Security  or Private  Exchange  Security  bearing,  if  required,  the
restricted securities legend set forth in Section 2.3(d).

                  "Depository"  means Clearstream,  Euroclear,  their respective
nominees and their respective successors.

                  "Distributed   Compliance   Period",   with   respect  to  any
Securities,  means the period of 40 consecutive  days beginning on and including
the later of (i) the day on which such  Securities  are first offered to persons
other than distributors (as defined in Regulation S under the Securities Act) in
reliance  on  Regulation  S and  (ii)  the  Issue  Date  with  respect  to  such
Securities.

                  "Dollar Notes" means the  Company's 11 5/8%  Senior Notes  due
2008  denominated in U.S.  dollars and issued pursuant to an indenture dated the
date hereof between the Company and Citibank, N.A. as trustee.

                  "Euroclear" means Euroclear Bank as operator of the  Euroclear
System or any successor securities clearing agency.

                  "Exchange  Securities" means the 11 5/8% Senior Notes due 2008
to be issued pursuant to the Indenture in connection with a Registered  Exchange
Offer pursuant to the Registration Agreement.

                  "IAI"  means  an   institutional   "accredited   investor"  as
described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.


<PAGE>

                                                                               2


                  "Initial  Purchasers" means Salomon Smith Barney Inc., Banc of
America  Securities  LLC, Scotia Capital (USA) Inc.,  Chase  Securities Inc. and
Banc One Capital Markets, Inc.

                  "Initial  Securities" means the 11 5/8% Senior Notes due 2008,
to be issued from time to time,  in one or more  series as provided  for in this
Indenture.

                  "Issue Date Dollar  Notes"  means  Dollar  Notes issued on the
first date on which the Dollar Notes are initially issued.

                  "Original   Securities"   means  Initial   Securities  in  the
aggregate  principal  amount of 125.0 million euro dollars issued on January 18,
2001.

                  "Private Exchange" means the offer by the Company, pursuant to
Section 2 of the  Registration  Agreement dated January 18, 2001, or pursuant to
any similar provision of any other Registration  Agreement, to issue and deliver
to certain  purchasers,  in  exchange  for the Initial  Securities  held by such
purchasers as part of their initial  distribution,  a like  aggregate  principal
amount of Private Exchange Securities.

                  "Private  Exchange  Securities" means the 11 5/8% Senior Notes
due 2008 to be issued  pursuant to this  Indenture in connection  with a Private
Exchange pursuant to a Registration Agreement.

                  "Purchase   Agreement"  means  the  Purchase  Agreement  dated
January 12, 2001, among the Company and the Initial  Purchasers  relating to the
Original  Securities,  or any similar  agreement  relating to any future sale of
Initial Securities by the Company.

                  "QIB" means a  "qualified  institutional  buyer" as defined in
Rule 144A.

                  "Registered  Exchange  Offer"  means the offer by the Company,
pursuant to a Registration  Agreement, to certain Holders of Initial Securities,
to issue and deliver to such Holders, in exchange for the Initial Securities,  a
like aggregate  principal  amount of Exchange  Securities  registered  under the
Securities Act.

                  "Registration   Agreement"  means  the   Registration   Rights
Agreement dated January 18, 2001,  among the Company and the Initial  Purchasers
relating to the Original



<PAGE>

                                                                               3


Securities,  or  any  similar  agreement  relating  to  any  additional  Initial
Securities.

                  "Rule 144A  Securities"  means all Initial  Securities offered
and sold to QIBs in reliance on Rule 144A.

                  "Securities"  means the Initial  Securities  and the  Exchange
Securities, treated as a single class.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Shelf Registration  Statement" means a registration statement
issued  by the  Company  in  connection  with  the  offer  and  sale of  Initial
Securities  or  Private  Exchange   Securities   pursuant  to  the  Registration
Agreement.

                  "Transfer Restricted  Securities" means Definitive  Securities
and any other  Securities that bear or are required to bear the legend set forth
in Section 2.3(d) hereto.

                  "U.S.  Dollar  Equivalent"  means with respect to any monetary
amount in a currency  other  than U.S.  dollars,  at any time for  determination
thereof, the amount of U.S. dollars obtained by converting such foreign currency
involved in such computation into U.S. dollars at the spot rate for the purchase
of U.S.  dollars with the applicable  foreign  currency as published in THE WALL
STREET  JOURNAL in the  "Exchange  Rates"  column  under the  heading  "Currency
Trading"  on the  date  two  Business  Days  prior  to  such  determination.  In
determining the aggregate  principal amount (on a U.S. Dollar  Equivalent basis)
of  Securities  outstanding,  such  amount  will be treated  as the U.S.  Dollar
Equivalent determined as of the date of issuance of such Securities.

         1.2      Other Definitions
                  -----------------

                                         Defined in
                                         ----------
         Term                             Section:
         ----                             -------

"Agent Members"  .......................... 2.1(b)
"Global  Security"  ....................... 2.1(a)
"IAI Global  Security"  ................... 2.1(a)
"Regulation S"  ........................... 2.1
"Rule 144A"  .............................. 2.1
"Rule 144A Global  Security"  ............. 2.1(a)
"Regulation S Global Security" ............ 2.1(a)



<PAGE>

                                                                               4


         2.       The Securities
                  --------------
         2.1      Form and Dating
                  ---------------

                  The  Initial  Securities  will  be  offered  and  sold  by the
Company,  from time to time,  pursuant to one or more Purchase  Agreements.  The
Initial  Securities  will be resold  initially  only to QIBs in reliance on Rule
144A under the  Securities  Act ("Rule  144A") and in reliance on  Regulation  S
under the Securities Act ("Regulation S"). Initial  Securities may thereafter be
transferred to, among others,  QIBs,  purchasers in reliance on Regulation S and
IAIs under Rule 501(a)(1),  (2), (3) or (7) under the Securities Act, subject to
the restrictions on transfer set forth herein.

                  (a) Global  Securities.  Initial  Securities  initially resold
                      -------------------
pursuant  to Rule  144A  shall be  issued  initially  in the form of one or more
permanent global Securities in definitive,  fully registered form (collectively,
the "Rule 144A Global Security"),  Initial Securities  initially resold pursuant
to  Regulation  S shall be issued  initially  in the form of one or more  global
securities  (collectively,  the "Regulation S Global  Security") and, subject to
Section 2.4 hereof,  Initial  Securities  transferred  subsequent to the initial
resale  thereof  to IAIs  shall be issued  initially  in the form of one or more
permanent global securities in definitive,  fully registered form (collectively,
the "IAI Global  Security"),  in each case without interest coupons and with the
global securities legend and restricted securities legend set forth in Exhibit 1
hereto,  which shall be  deposited  on behalf of the  purchasers  of the Initial
Securities represented thereby with the Common Depository, and registered in the
name of the  Depository  or a nominee of the  Depository,  duly  executed by the
Company and authenticated by the Trustee as provided in this Indenture. The Rule
144A Global  Security,  IAI Global Security and Regulation S Global Security are
collectively  referred to herein as "Global Securities." The aggregate principal
amount of the Global  Securities may from time to time be increased or decreased
by  adjustments  made on the  records of the  Trustee  and the  Depository  or a
nominee of the Depository as hereinafter provided.

                  (b)  Book-Entry  Provisions.  This Section  2.1(b) shall apply
                       -----------------------
 only to a Global Security deposited with or on behalf of the Depository.

                  The Company shall execute and the Trustee shall, in accordance
 with this Section 2.1(b) and pursuant to an order of the Company,  authenticate
 and  deliver  initially  one or  more  Global  Securities  that  (a)  shall  be
 registered  in the name of the  Depository  for such Global  Security or Global
 Securities



<PAGE>

                                                                               5


or the nominee of such  Depository  and (b) shall be delivered by the Trustee to
such  Depository or pursuant to such  Depository's  instructions  or held by the
Trustee as Common Depository.

                  Members  of,  participants  in, or  account  holders  in,  the
Depository  ("Agent  Members")  shall have no rights under this  Indenture  with
respect to any Global  Security held on their behalf by the Depository or by the
Trustee as Common  Depository or under such Global Security,  and the Depository
may be treated by the  Company,  the Trustee and any agent of the Company or the
Trustee  as the  absolute  owner  of  such  Global  Security  for  all  purposes
whatsoever.  Notwithstanding  the  foregoing,  nothing  herein shall prevent the
Company,  the  Trustee or any agent of the  Company or the  Trustee  from giving
effect to any written certification,  proxy or other authorization  furnished by
the Depository or impair,  as between the Depository and its Agent Members,  the
operation of customary practices of the Depository governing the exercise of the
rights of a holder of a beneficial interest in any Global Security.

                  (c)  Definitive Securities.  Except as provided in Section 2.3
                       ----------------------
or 2.4, owners of beneficial interests in Global Securities will not be entitled
to receive physical delivery of Definitive Securities.

                  2.2   Authentication.   The  Trustee  shall  authenticate  and
                        ---------------
deliver:  (1) Original  Securities for original issue in an aggregate  principal
amount of 125.0 million euro dollars, (2) additional Initial Securities,  if and
when  issued,  in an aggregate  principal  amount (on a U.S.  Dollar  Equivalent
basis) of up  to(x)$350.0  million less (y) the  aggregate  principal  amount of
Dollar Notes issued by the Company that are not Issue Date Dollar Notes, and (3)
the  Exchange  Securities  or Private  Exchange  Securities  for issue only in a
Registered Exchange Offer or a Private Exchange,  respectively,  pursuant to the
Registration  Agreement,  for a like principal  amount of Initial  Securities or
Private Exchange Securities, as applicable,  upon a written order of the Company
signed by two Officers or by an Officer and either an Assistant  Treasurer or an
Assistant  Secretary of the Company.  Such order shall specify the amount of the
Securities  to be  authenticated  and the date on which  the  original  issue of
Securities is to be  authenticated  and whether the Securities are to be Initial
Securities or Exchange Securities.  The aggregate principal amount of Securities
outstanding at any time (on a U.S. Dollar  Equivalent  basis) may not exceed (x)
$850.0 million less (y) the aggregate principal amount of Dollar Notes issued by
the Company, except as provided in Section 2.08 of this Indenture.



<PAGE>

                                                                               6


                  2.3  Transfer and Exchange.   (a)  Transfer  and  Exchange  of
                       ----------------------        ---------------------------
Definitive Securities. When Definitive Securities are presented to the Registrar
----------------------
or a co-registrar with a request:

                  (x) to register the transfer of such Definitive Securities; or

                  (y) to  exchange  such  Definitive  Securities  for  an  equal
         principal   amount  of  Definitive   Securities  of  other   authorized
         denominations,

the Registrar or  co-registrar  shall register the transfer or make the exchange
as  requested  if its  reasonable  requirements  for such  transaction  are met;
provided,  however, that the Definitive  Securities  surrendered for transfer or
--------   -------
exchange:

                  (i)  shall  be  duly  endorsed  or  accompanied  by a  written
         instrument of transfer in form  reasonably  satisfactory to the Company
         and the Registrar or co-registrar,  duly executed by the Holder thereof
         or his attorney duly authorized in writing; and

                  (ii)  if  such   Definitive   Securities   bear  a  restricted
         securities legend,  they are being transferred or exchanged pursuant to
         an  effective  registration  statement  under  the  Securities  Act  or
         pursuant to clause (A), (B) or (C) below,  and are  accompanied  by the
         following additional information and documents, as applicable:

                           (A) if such Definitive Securities are being delivered
                  to the Registrar by a Holder for  registration  in the name of
                  such  Holder,  without  transfer,  a  certification  from such
                  Holder to that effect; or

                           (B) if   such   Definitive   Securities   are   being
                  transferred to the Company, a certification to that effect; or

                           (C)  if  such   Definitive   Securities   are   being
                  transferred  pursuant to an  exemption  from  registration  in
                  accordance  with  Rule 144  under the  Securities  Act,  (i) a
                  certification  to  that  effect  and  (ii) if the  Company  so
                  requests,  an opinion of counsel or other evidence  reasonably
                  satisfactory to it as to the compliance with the  restrictions
                  set forth in the legend set forth in Section 2.3(d)(i).



<PAGE>

                                                                               7


                  (b)   Transfer    and    Exchange   of   Global    Securities.
                        --------------------------------------------------------

                  (i)  The  transfer  and  exchange  of  Global   Securities  or
         beneficial  interests  therein shall be effected through the Registrar,
         in accordance with this Indenture (including applicable restrictions on
         transfer set forth herein, if any) and the procedures of the Depository
         therefor.  A transferor of a beneficial  interest in a Global  Security
         shall deliver a written order given in accordance  with the Registrar's
         procedures containing  information regarding the participant account of
         the Depository to be credited with a beneficial  interest in the Global
         Security and such  account  shall be credited in  accordance  with such
         instructions with a beneficial  interest in the Global Security and the
         account of the Person making the transfer shall be debited by an amount
         equal  to  the  beneficial   interest  in  the  Global  Security  being
         transferred.  In the case of a transfer of a  beneficial  interest in a
         Global  Security to an IAI, the transferee must furnish a signed letter
         to the Trustee containing certain representations and agreements in the
         form of Exhibit C hereto.

                  (ii) If the  proposed  transfer is a transfer of a  beneficial
         interest  in one Global  Security to a  beneficial  interest in another
         Global  Security,  the  transferee or  transferor,  as the case may be,
         shall furnish to the  Registrar  such  certificates  required to ensure
         such transfer  complies with Rule 144A or Regulation S, as the case may
         be, and the  Registrar  shall reflect on its books and records the date
         and an increase in the principal amount of the Global Security to which
         such interest is being  transferred in an amount equal to the principal
         amount of the interest to be so  transferred,  and the Registrar  shall
         reflect on its books and records the date and a corresponding  decrease
         in the principal amount of the Global Security from which such interest
         is being transferred.

                  (iii)  Notwithstanding any other provisions of this Appendix A
         (other than the provisions set forth in Section 2.4), a Global Security
         may not be transferred as a whole except by the Depository to a nominee
         of the  Depository or by a nominee of the  Depository to the Depository
         or another  nominee of the  Depository or by the Depository or any such
         nominee  to a  successor  Depository  or a  nominee  of such  successor
         Depository.

                  (iv) In the event  that a Global  Security  is  exchanged  for
         Definitive Securities pursuant to Section 2.4 prior to the consummation
         of a Registered



<PAGE>

                                                                               8


         Exchange Offer or the effectiveness of a Shelf  Registration  Statement
         with respect to such Securities,  such Securities may be exchanged only
         in accordance with such procedures as are substantially consistent with
         the  provisions  of  this  Section  2.3  (including  the  certification
         requirements  set  forth  on  the  reverse  of the  Initial  Securities
         intended  to  ensure  that  such  transfers   comply  with  Rule  144A,
         Regulation S or such other applicable exemption from registration under
         the  Securities  Act, as the case may be) and such other  procedures as
         may from time to time be adopted by the Company.

                  (c) Legend.
                      -------

                  (i) Except as  permitted  by the  following  paragraphs  (ii),
         (iii) and (iv), each certificate  evidencing the Global  Securities and
         the  Definitive  Securities  (and all  Securities  issued  in  exchange
         therefor  or  in   substitution   thereof)   shall  bear  a  legend  in
         substantially the following form:

         "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
         AMENDED (THE "SECURITIES  ACT"). THE HOLDER HEREOF,  BY PURCHASING THIS
         NOTE,  AGREES FOR THE BENEFIT OF THE COMPANY  THAT THIS NOTE MAY NOT BE
         RESOLD,  PLEDGED  OR  OTHERWISE  TRANSFERRED  (X)  PRIOR TO THE  SECOND
         ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO)
         OR (Y) BY ANY HOLDER THAT WAS AN  AFFILIATE  OF THE COMPANY AT ANY TIME
         DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER,  IN EITHER
         CASE  OTHER  THAN  (1) TO THE  COMPANY,  (2) SO LONG  AS  THIS  NOTE IS
         ELIGIBLE  FOR RESALE  PURSUANT  TO RULE 144A UNDER THE  SECURITIES  ACT
         ("RULE  144A"),  TO A PERSON WHOM THE SELLER  REASONABLY  BELIEVES IS A
         QUALIFIED   INSTITUTIONAL   BUYER  WITHIN  THE  MEANING  OF  RULE  144A
         PURCHASING  FOR  ITS OWN  ACCOUNT  OR FOR THE  ACCOUNT  OF A  QUALIFIED
         INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE,  PLEDGE OR
         OTHER  TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY
         THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
         REVERSE OF THIS NOTE),  (3) IN AN OFFSHORE  TRANSACTION  IN  ACCORDANCE
         WITH  REGULATION S UNDER THE  SECURITIES  ACT (AS  INDICATED BY THE BOX
         CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE
         OF THIS NOTE), (4) TO AN INSTITUTION  THAT IS AN "ACCREDITED  INVESTOR"
         AS DEFINED IN RULE 501(a)(1),  (2), (3) OR (7) UNDER THE SECURITIES ACT
         (AS INDICATED BY THE BOX CHECKED BY THE  TRANSFEROR ON THE  CERTIFICATE
         OF TRANSFER ON THE  REVERSE OF THIS NOTE) THAT IS  ACQUIRING  THIS NOTE
         FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE



<PAGE>

                                                                               9


         WHICH MAY BE OBTAINED  FROM THE COMPANY OR THE TRUSTEE IS  DELIVERED BY
         THE TRANSFEREE TO THE COMPANY AND TRUSTEE, (5) PURSUANT TO AN EXEMPTION
         FROM  REGISTRATION  UNDER THE  SECURITIES  ACT PROVIDED BY RULE 144 (IF
         APPLICABLE)  UNDER THE SECURITIES  ACT, OR (6) PURSUANT TO AN EFFECTIVE
         REGISTRATION  STATEMENT  UNDER  THE  SECURITIES  ACT,  IN EACH  CASE IN
         ACCORDANCE  WITH ANY  APPLICABLE  SECURITIES  LAWS OF ANY  STATE OF THE
         UNITED STATES. AN INSTITUTIONAL  ACCREDITED  INVESTOR HOLDING THIS NOTE
         AGREES  THAT IT WILL  FURNISH  TO THE  COMPANY  AND  THE  TRUSTEE  SUCH
         CERTIFICATES  AND OTHER  INFORMATION AS THEY MAY REASONABLY  REQUIRE TO
         CONFIRM  THAT  ANY  TRANSFER  BY IT OF  THIS  NOTE  COMPLIES  WITH  THE
         FOREGOING  RESTRICTIONS.  THE HOLDER HEREOF,  BY PURCHASING  THIS NOTE,
         REPRESENTS  AND AGREES FOR THE BENEFIT OF THE COMPANY  THAT IT IS (1) A
         QUALIFIED  INSTITUTIONAL  BUYER  WITHIN THE MEANING OF RULE 144A OR (2)
         PURCHASING FROM A PERSON NOT PARTICIPATING IN THE INITIAL  DISTRIBUTION
         OF  THIS  SECURITY  (OR  ANY  PREDECESSOR  SECURITY),  THAT  IT  IS  AN
         INSTITUTION  THAT  IS AN  "ACCREDITED  INVESTOR"  AS  DEFINED  IN  RULE
         501(a)(1),  (2),  (3) OR (7)  UNDER THE  SECURITIES  ACT AND THAT IT IS
         HOLDING THIS NOTE FOR INVESTMENT  PURPOSES AND NOT FOR  DISTRIBUTION OR
         (3) A NON-U.S.  PERSON  OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
         (OR AN ACCOUNT  SATISFYING THE  REQUIREMENTS OF PARAGRAPH  (k)(2)(i) OF
         RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT."

Each Definitive Security will also bear the following additional legend:

                  "IN CONNECTION  WITH ANY TRANSFER,  THE HOLDER WILL DELIVER TO
                  THE REGISTRAR AND TRANSFER AGENT SUCH  CERTIFICATES  AND OTHER
                  INFORMATION AS SUCH TRANSFER  AGENT MAY REASONABLY  REQUIRE TO
                  CONFIRM  THAT  THE  TRANSFER   COMPLIES   WITH  THE  FOREGOING
                  RESTRICTIONS."

                  (ii)  Upon  any  sale or  transfer  of a  Transfer  Restricted
         Security (including any Transfer  Restricted Security  represented by a
         Global Security) pursuant to Rule 144 under the Securities Act:

                           (A) in the case of any Transfer  Restricted  Security
                  that is a Definitive Security,  the Registrar shall permit the
                  Holder thereof to exchange such Transfer  Restricted  Security
                  for a Security  that does not bear the legends set forth above
                  and rescind any  restriction  on the transfer of such Transfer
                  Restricted Security; and

                           (B)  in the case of  any Transfer Restricted Security
                  that is represented by a Global Security,



<PAGE>

                                                                              10


                  the Registrar shall permit the Holder thereof to exchange such
                  Transfer Restricted Security for a Security that does not bear
                  the legends set forth above and rescind any restriction on the
                  transfer of such Transfer Restricted Security,

in either case,  if the Holder  certifies in writing to the  Registrar  that its
request for such  exchange was made in reliance on Rule 144 (such  certification
to be in the form set forth on the reverse of the Initial Security).

                  (iii) After a transfer of any  Initial  Securities  or Private
         Exchange  Securities,  as the case may be,  during  the  period  of the
         effectiveness  of a Shelf  Registration  Statement with respect to such
         Initial  Securities or Private  Exchange  Securities,  all requirements
         pertaining  to  restricted  legends on such  Initial  Security  or such
         Private  Exchange  Security will cease to apply and an Initial Security
         or  Private  Exchange  Security,  as the case may be,  in  global  form
         without  restricted  legends will be available to the transferee of the
         beneficial  interests of such Initial  Securities  or Private  Exchange
         Securities.  Upon the occurrence of any of the circumstances  described
         in this paragraph, the Company will deliver an Officers' Certificate to
         the  Trustee  instructing  the  Trustee  to  issue  Securities  without
         restricted legends.

                  (iv) Upon the consummation of a Registered Exchange Offer with
         respect to the Initial Securities  pursuant to which certain Holders of
         such Initial Securities are offered Exchange Securities in exchange for
         their Initial  Securities,  Exchange  Securities in global form without
         the  restricted  legends  will be  available  to Holders or  beneficial
         owners that exchange such Initial  Securities (or beneficial  interests
         therein) in such Registered  Exchange Offer. Upon the occurrence of any
         of the  circumstances  described  in this  paragraph,  the Company will
         deliver an Officers' Certificate to the Trustee instructing the Trustee
         to issue Securities without restricted legends.

                  (d) Cancelation or Adjustment of Global Security. At such time
                      ---------------------------------------------
as all beneficial  interests in a Global Security have either been exchanged for
Definitive Securities,  redeemed,  repurchased or canceled, such Global Security
shall be returned by the Depository to the Registrar for cancelation or retained
and  canceled  by the  Trustee.  At any time prior to such  cancelation,  if any
beneficial interest in a Global Security is exchanged for Definitive Securities,
redeemed, repurchased or canceled, the principal amount of Securities



<PAGE>

                                                                              11


represented by such Global Security shall be reduced and an adjustment  shall be
made  on the  books  and  records  of the  Trustee  (if it is  then  the  Common
Depository for such Global  Security) with respect to such Global  Security,  by
the Trustee or the Common Depository, to reflect such reduction.

                  (e)  Obligations  with Respect to Transfers  and  Exchanges of
                       ---------------------------------------------------------
         Securities.
         -----------

                  (i) To permit  registrations  of transfers and exchanges,  the
         Company  shall execute and the Trustee  shall  authenticate  Definitive
         Securities and Global  Securities at the Registrar's or  co-registrar's
         request.

                  (ii) No service charge shall be made for any  registration  of
         transfer or  exchange,  but the  Company  may require  payment of a sum
         sufficient  to  cover  any  transfer  tax,   assessments,   or  similar
         governmental  charge  payable in connection  therewith  (other than any
         such transfer taxes, assessments or similar governmental charge payable
         upon exchange or transfer  pursuant to Sections 3.06,  4.08 and 9.05 of
         this Indenture).

                  (iii) The Registrar or  co-registrar  shall not be required to
         register  the  transfer  of or exchange  of any  Security  for a period
         beginning  15 days before the mailing of a notice of  redemption  or an
         offer to repurchase  Securities  or 15 days before an interest  payment
         date.

                  (iv)  Prior  to  the  due  presentation  for  registration  of
         transfer of any Security,  the Company,  the Trustee, the Paying Agent,
         the  Registrar  or any  co-registrar  may deem and treat the  person in
         whose name a  Security  is  registered  as the  absolute  owner of such
         Security  for the  purpose of  receiving  payment of  principal  of and
         interest  on  such  Security  and for all  other  purposes  whatsoever,
         whether or not such Security is overdue,  and none of the Company,  the
         Trustee,  the Paying Agent, the Registrar or any co-registrar  shall be
         affected by notice to the contrary.

                  (v) All  Securities  issued  upon  any  transfer  or  exchange
         pursuant to the terms of this  Indenture  shall  evidence the same debt
         and shall be entitled to the same benefits  under this Indenture as the
         Securities surrendered upon such transfer or exchange.



<PAGE>

                                                                              12


                  (f)  No Obligation of the Trustee.

                  (i) The Trustee shall have no  responsibility or obligation to
         any beneficial owner of a Global  Security,  a member of, a participant
         in, or  account  holder in the  Depository  or any  other  Person  with
         respect to the accuracy of the records of the Depository or its nominee
         or of any participant,  member or account holder thereof,  with respect
         to any  ownership  interest in the  Securities  or with  respect to the
         delivery to any participant,  member, account holder,  beneficial owner
         or other Person (other than the  Depository)  of any notice  (including
         any notice of redemption or  repurchase)  or the payment of any amount,
         under  or  with   respect  to  such   Securities.   All   notices   and
         communications  to be given to the Holders and all  payments to be made
         to  Holders  under  the  Securities  shall be given or made only to the
         registered Holders (which shall be the Depository or its nominee in the
         case of a Global  Security).  The  rights of  beneficial  owners in any
         Global Security shall be exercised only through the Depository  subject
         to the applicable  rules and procedures of the Depository.  The Trustee
         may rely and  shall be fully  protected  in  relying  upon  information
         furnished by the Depository with respect to its members,  participants,
         account holders and any beneficial owners.

                  (ii) The Trustee  shall have no obligation or duty to monitor,
         determine or inquire as to compliance with any restrictions on transfer
         imposed under this  Indenture or under  applicable  law with respect to
         any transfer of any interest in any Security  (including  any transfers
         between or among Depository  participants,  members, account holders or
         beneficial  owners  in any  Global  Security)  other  than  to  require
         delivery of such  certificates  and other  documentation or evidence as
         are expressly  required by, and to do so if and when expressly required
         by, the terms of this  Indenture,  and to examine the same to determine
         substantial compliance as to form with the express requirements hereof.

                  2.4  Definitive Securities
                       ---------------------

                  (a) A Global  Security  deposited  with the Depository or with
the Trustee as Common Depository pursuant to Section 2.1 shall be transferred to
the  beneficial  owners  thereof  in the  form of  Definitive  Securities  in an
aggregate  principal  amount  equal  to the  principal  amount  of  such  Global
Security,  in exchange for such Global Security,  only if such transfer complies
with  Section  2.3  and (i)  the  Depository  notifies  the  Company  that it is
unwilling or unable to continue as a Depository for such Global Security and the



<PAGE>

                                                                              13


Company  is  unable  to locate a  qualified  successor  within 90 days or (ii) a
Default or an Event of  Default  has  occurred  and is  continuing  or (iii) the
Company, in its sole discretion,  notifies the Trustee in writing that it elects
to cause the issuance of Definitive Securities under this Indenture.

                  (b) Any Global Security that is transferable to the beneficial
owners  thereof  pursuant  to this  Section  2.4  shall  be  surrendered  by the
Depository to the Registrar, to be so transferred, in whole or from time to time
in part, without charge,  and the Trustee shall  authenticate and deliver,  upon
such  transfer  of each  portion of such  Global  Security,  an equal  aggregate
principal   amount  of  Definitive   Securities  of  authorized   denominations.
Definitive  Securities  issued in exchange for any portion of a Global  Security
transferred  pursuant  to this  Section  shall be  executed,  authenticated  and
delivered only in denominations of 1,000 euro dollars and any integral  multiple
thereof  and  registered  in such  names as the  Depository  shall  direct.  Any
Definitive Security delivered in exchange for an interest in the Global Security
shall,  except as  otherwise  provided by Section  2.3(d),  bear the  restricted
securities legend set forth in Exhibit 1 hereto.

                  (c) The  registered  Holder  of a Global  Security  may  grant
proxies and otherwise authorize any Person,  including Agent Members and Persons
that may hold interests through Agent Members,  to take any action that a Holder
is entitled to take under this Indenture or the Securities.

                  (d)  In  the  event  of the  occurrence  of any of the  events
specified in Section  2.4(a)(i),  (ii) or (iii),  the Company will promptly make
available  to the  Trustee a  reasonable  supply  of  Definitive  Securities  in
definitive, fully registered form without interest coupons.



<PAGE>



                                                                       EXHIBIT 1
                                                                   to APPENDIX A




                       [FORM OF FACE OF INITIAL SECURITY]

                           [Global Securities Legend]

                  UNLESS  THIS   CERTIFICATE   IS  PRESENTED  BY  AN  AUTHORIZED
REPRESENTATIVE  OF THE EUROCLEAR  CLEARANCE SYSTEM  ("EUROCLEAR") OR CLEARSTREAM
BANKING,  SOCIETE  ANONYME  ("CLEARSTREAM"),  TO THE  COMPANY  OR ITS  AGENT FOR
REGISTRATION OF TRANSFER,  EXCHANGE OR PAYMENT,  AND ANY  CERTIFICATE  ISSUED IS
REGISTERED  IN THE NAME OF  CITIVIC  NOMINEES  LIMITED  OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED  REPRESENTATIVE  OF CLEARSTREAM OR EUROCLEAR,  AS THE
CASE MAY BE (AND ANY  PAYMENT IS MADE TO CITIVIC  NOMINEES  LIMITED,  OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED  REPRESENTATIVE  OF CLEARSTREAM OR
EUROCLEAR,  AS THE CASE MAY BE),  ANY  TRANSFER,  PLEDGE OR OTHER USE HEREOF FOR
VALUE OR  OTHERWISE BY OR TO ANY PERSON IS WRONGFUL  INASMUCH AS THE  REGISTERED
OWNER HEREOF, CITIVIC NOMINEES LIMITED, HAS AN INTEREST HEREIN.

                  TRANSFERS  OF  THIS  GLOBAL   SECURITY  SHALL  BE  LIMITED  TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CLEARSTREAM OR EUROCLEAR, AS
THE CASE MAY BE, OR TO A  SUCCESSOR  THEREOF  OR SUCH  SUCCESSOR'S  NOMINEE  AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE  RESTRICTIONS  SET FORTH IN THE INDENTURE  REFERRED TO ON
THE REVERSE HEREOF.


                         [Restricted Securities Legend]

                  THIS NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF
 1933, AS AMENDED (THE "SECURITIES  ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
 NOTE,  AGREES FOR THE BENEFIT OF THE COMPANY  THAT THIS NOTE MAY NOT BE RESOLD,
 PLEDGED OR OTHERWISE  TRANSFERRED  (X) PRIOR TO THE SECOND  ANNIVERSARY  OF THE
 ISSUANCE HEREOF (OR ANY PREDECESSOR  SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
 WAS AN AFFILIATE  OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS  PRECEDING
 THE DATE OF SUCH TRANSFER,  IN EITHER CASE, OTHER THAN (1) TO THE COMPANY,  (2)
 SO LONG AS THIS NOTE IS  ELIGIBLE  FOR RESALE  PURSUANT  TO RULE 144A UNDER THE
 SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
 A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR
 ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED  INSTITUTIONAL  BUYER TO WHOM
 NOTICE IS GIVEN  THAT THE  RESALE,  PLEDGE OR OTHER  TRANSFER  IS BEING MADE IN
 RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
 CERTIFICATE  OF  TRANSFER  ON THE  REVERSE OF THIS  NOTE),  (3) IN AN  OFFSHORE
 TRANSACTION  IN  ACCORDANCE  WITH  REGULATION  S UNDER THE  SECURITIES  ACT (AS
 INDICATED BY THE BOX CHECKED BY THE  TRANSFEROR ON THE  CERTIFICATE OF TRANSFER
 ON THE REVERSE



<PAGE>

                                                                               2


OF THIS NOTE), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY THE
BOX CHECKED BY THE  TRANSFEROR ON THE  CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY)  THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT  PURPOSES AND NOT
FOR  DISTRIBUTION,  AND A CERTIFICATE  WHICH MAY BE OBTAINED FROM THE COMPANY OR
THE TRUSTEE IS  DELIVERED  BY THE  TRANSFEREE  TO THE  COMPANY  AND  TRUSTEE,(5)
PURSUANT TO AN EXEMPTION FROM REGISTRATION  UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 (IF  APPLICABLE)  UNDER  THE  SECURITIES  ACT,  OR (6)  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT,  IN EACH CASE IN
ACCORDANCE  WITH ANY  APPLICABLE  SECURITIES  LAWS OF ANY  STATE  OF THE  UNITED
STATES.  AN INSTITUTIONAL  ACCREDITED  INVESTOR HOLDING THIS NOTE AGREES THAT IT
WILL  FURNISH  TO THE  COMPANY  AND THE  TRUSTEE  SUCH  CERTIFICATES  AND  OTHER
INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF
THIS NOTE  COMPLIES  WITH THE  FOREGOING  RESTRICTIONS.  THE HOLDER  HEREOF,  BY
PURCHASING THIS NOTE,  REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT
IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2)
PURCHASING FROM A PERSON NOT  PARTICIPATING IN THE INITIAL  DISTRIBUTION OF THIS
SECURITY (OR ANY  PREDECESSOR  SECURITY),  THAT IT IS AN INSTITUTION  THAT IS AN
"ACCREDITED  INVESTOR" AS DEFINED IN RULE  501(a)(1),  (2), (3) OR (7) UNDER THE
SECURITIES ACT AND THAT IT IS HOLDING THIS NOTE FOR INVESTMENT  PURPOSES AND NOT
FOR  DISTRIBUTION OR (3) A NON-U.S.  PERSON OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH  (k)(2)(i) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.


                         [Definitive Securities Legend]

IN CONNECTION  WITH ANY  TRANSFER,  THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH  CERTIFICATES  AND OTHER  INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY  REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.



<PAGE>


                       [FORM OF FACE OF INITIAL SECURITY]



 No.                    [up to](3)[English Pound Symbol Appears Here]
                                                                      ---------

                               11 5/8% Senior Note due 2008

                                                CUSIP No. [52736R AH 5](1)
                                                          [U52799 AD 2](2)
                                                ISIN No. [XS0123432725](1)
                                                         [XS0123430604](2)
                                                Common Code No.[012343272](1)
                                                               [012343060](2)


LEVI STRAUSS & CO., a Delaware corporation, promises to pay to [Citivic Nominees
Limited](3),  or registered assigns, the principal sum [of                Euros]
(3) [as set forth on the Schedule of Increases or Decreases annexed hereto](3)on
January 15, 2008.

                  Interest Payment Dates: January 15 and July 15.

                  Record Dates: January 1 and July 1.



















----------------------
   (1) Insert for Rule 144A Global Note.

   (2) Insert for Reg. S Global Note.

   (3) Insert for Definitive Securities.



<PAGE>

                                                                               2


                  Additional  provisions  of this  Security are set forth on the
other side of this Security.


                  IN WITNESS WHEREOF, the parties have caused this instrument to
be duly executed.


                                          LEVI STRAUSS & CO.,


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


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




TRUSTEE'S CERTIFICATE OF
         AUTHENTICATION

 Dated:  January 18, 2001

 CITIBANK, N.A.,
         as Trustee, certifies
         that this is one of
         the Securities referred
         to in the Indenture.



by:
   -----------------------------
   Authorized Signatory



<PAGE>

                                                                               3


                   [FORM OF REVERSE SIDE OF INITIAL SECURITY]

                          11 5/8% Senior Note due 2008


 1.  Interest
     --------

                  (a)  LEVI  STRAUSS  &  CO.,  a  Delaware   corporation   (such
corporation,  and its  successors  and assigns under the  Indenture  hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will  pay  interest  semiannually  on  January  15 and  July  15 of  each  year,
commencing  July 15, 2001.  Interest on the Securities will accrue from the most
recent date to which  interest  has been paid or, if no interest  has been paid,
from January 18, 2001. Interest shall be computed on the basis of a 360-day year
of twelve 30-day months.  The Company shall pay interest on overdue principal at
the rate borne by the Securities plus 1% per annum, and it shall pay interest on
overdue  installments  of  interest at the rate borne by the  Securities  to the
extent lawful.

                  (b) Special Interest.  The holder of this Security is entitled
                      -----------------
 to the benefits of a  Registration  Rights  Agreement,  dated as of January 18,
 2001,  among the Company and the  Purchasers  named therein (the  "Registration
 Agreement").  Capitalized  terms  used in this  paragraph  (b) but not  defined
 herein have the meanings assigned to them in the Registration Agreement. In the
 event that (i) neither the Exchange Offer Registration  Statement nor the Shelf
 Registration  Statement  has been filed with the  Commission on or prior to the
 60th day following the date of the original  issuance of the  Securities,  (ii)
 the Exchange Offer Registration Statement has not been declared effective on or
 prior to the 120th  day  following  the date of the  original  issuance  of the
 Securities,  (iii) neither the Registered  Exchange Offer has been  consummated
 nor the Shelf Registration Statement has been declared effective on or prior to
 the 150th day following the date of the original issuance of the Securities, or
 (iv) after the Shelf Registration  Statement has been declared effective,  such
 Registration   Statement  thereafter  ceases  to  be  effective  or  usable  in
 connection  with  resales  of the  Securities  at any time that the  Company is
 obligated to maintain the  effectiveness  thereof  pursuant to the Registration
 Agreement  (each such event referred to in clauses (i) through (iv) above being
 referred  to  herein  as a  "Registration  Default"),  interest  (the  "Special
 Interest") shall accrue (in addition to stated interest on the Securities) from
 and including the date on which the first such Registration Default shall occur
 to but excluding the date on which all Registration Defaults have



<PAGE>

                                                                               4


been cured,  at a rate per annum equal to 0.25% of the  principal  amount of the
Securities;  provided, however, that such rate per annum shall increase by 0.25%
per annum  from and  including  the 91st day after the first  such  Registration
Default  (and  each  successive  91st  day  thereafter)  unless  and  until  all
Registration  Defaults have been cured;  provided further,  however,  that in no
event shall the Special  Interest accrue at a rate in excess of 1.00% per annum.
The  Special  Interest  will be payable  in cash  semiannually  in arrears  each
January 15 and July 15.

 2.  Method of Payment
     -----------------

                  The  Company  will  pay  interest  on the  Securities  (except
defaulted  interest) to the Persons who are registered  Holders of Securities at
the close of  business on the January 1 or July 1 next  preceding  the  interest
payment date even if  Securities  are  canceled  after the record date and on or
before the interest payment date. Holders must surrender  Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in euro or any successor money of the European Union that at the time of payment
is legal tender for payment of public and private debts.  Payments in respect of
the Securities  represented by a Global Security (including  principal,  premium
and interest)  will be made by wire transfer of immediately  available  funds to
the accounts specified by the Euroclear Clearance System or Clearstream Banking,
S.A.  The Company  will make all  payments in respect of a  Definitive  Security
(including  principal,  premium  and  interest),  by  mailing  a  check  to  the
registered address of each Holder thereof;  provided,  however, that payments on
the Securities  may also be made, in the case of a Holder of at least  1,000,000
euro dollars  aggregate  principal  amount of Securities,  by wire transfer to a
euro  account  maintained  by the  payee  with a bank in a  member  state of the
European  Union if such Holder elects payment by wire transfer by giving written
notice to the  Trustee  and the Paying  Agent to such  effect  designating  such
account no later than 30 days  immediately  preceding  the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).

 3.  Paying Agent and Registrar
     --------------------------

                  Initially,  CITIBANK,  N.A.,  a  banking  association,  London
Office, 5 Carmelite Street, London, EC4Y OPA (the "Trustee"), will act as Paying
Agent and  Registrar.  The  Company  may  appoint  and change any Paying  Agent,
Registrar or co-registrar without notice. The Company or any of its domestically
incorporated  Wholly Owned  Subsidiaries  may act as Paying Agent,  Registrar or
co-registrar.



<PAGE>

                                                                               5



4.   Indenture
     ---------

                  The Company issued the Securities  under an Indenture dated as
of January 18, 2001 (the "Indenture"),  between the Company and the Trustee. The
terms of the  Securities  include  those stated in the  Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
                                                                          ------
ss.ss.  77aaa-77bbbb)  as in effect on the date of the  Indenture  (the  "TIA").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the  Indenture.  The  Securities  are subject to all such terms,  and
Securityholders  are  referred to the  Indenture  and the TIA for a statement of
those terms.

                  The Securities are senior unsecured obligations of the Company
limited to an aggregate  principal amount (on a U.S. Dollar Equivalent basis) at
any one time outstanding of (x) $850.0 million less (y) the aggregate  principal
amount of Dollar Notes issued by the Company  (subject to Sections 2.01 and 2.08
of the Indenture).  [This Security is one of the Original Securities referred to
in the Indenture  issued in an aggregate  principal amount of 125.0 million euro
dollars.  The Securities  include the Original  Securities,  additional  Initial
Securities  that may be issued under the  Indenture  in an  aggregate  principal
amount (on a U.S. Dollar  Equivalent basis) of up to (x) $350.0 million less (y)
the  aggregate  principal  amount of Dollar Notes issued by the Company that are
not Issue Date Dollar Notes, and any Exchange  Securities issued in exchange for
Initial Securities].  [This Security is one of the additional Initial Securities
in an aggregate  principal amount (on a U.S. Dollar  Equivalent  basis) of up to
(x) $350.0  million  less (y) the  aggregate  principal  amount of Dollar  Notes
issued by the  Company  that are not Issue Date  Dollar  Notes.  The  Securities
include such  additional  Securities,  the Original  Securities  in an aggregate
principal  amount of 125.0  million  euro  dollars  previously  issued under the
Indenture and any Exchange Securities issued in exchange for Initial Securities.
The  additional  Initial  Securities,  the Original  Securities and the Exchange
Securities are treated as a single class of securities under the Indenture.] The
Original  Securities,  such  additional  Initial  Securities  and  the  Exchange
Securities are treated as a single class of securities under the Indenture.  The
Indenture  imposes  certain  limitations  on the  ability of the Company and its
Restricted  Subsidiaries  to, among other things,  make certain  Investments and
other Restricted Payments,  pay dividends and other distribu- tions, incur Debt,
enter into  consensual  restrictions  upon the payment of certain  dividends and
distributions by such Restricted  Subsidiaries,  issue or sell shares of capital
stock of such Restricted Subsidiaries, enter into or permit certain transactions
with Affiliates, create or incur Liens



<PAGE>

                                                                               6


and make Asset Sales.  The Indenture also imposes  limitations on the ability of
the  Company  to  consolidate  or merge  with or into any other  Person or sell,
transfer, assign, lease, convey or otherwise dispose of all or substantially all
of the Property of the Company.

5.   Optional Redemption
     -------------------

                  Except  as  set  forth  below,   the  Securities  may  not  be
redeemable  prior to January 15, 2005.  On and after that date,  the Company may
redeem the  Securities  in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid  interest,  if any, to the  redemption  date  (subject to the
right of Holders of record on the relevant record date



<PAGE>

                                                                               7



to receive  interest  due on the  relevant  interest  payment date that is on or
prior to the  date of  redemption),  if  redeemed  during  the  12-month  period
beginning on or after January 15 of the years set forth below:

                                Redemption
Period                            Price
------                            -----

2005 ..........................  105.813%
2006 ..........................  102.906%
2007 and thereafter ...........  100.000%


                  Notwithstanding  the  foregoing,  on or prior to  January  15,
2004, the Company may redeem up to 33 1/3% of the original  aggregate  principal
amount of the Securities issued with the proceeds from one or more Public Equity
Offerings  by the  Company,  at a  redemption  price  equal  to 111  5/8% of the
principal amount thereof,  plus accrued and unpaid interest thereon,  if any, to
the  redemption  date (subject to the right of Holders of record on the relevant
record date to receive  interest due on the relevant  interest payment date that
it on or prior to the date of redemption);  provided, however, that after giving
effect  to any  such  redemption,  at least  66 2/3% of the  original  aggregate
principal  amount of the Securities  remains  outstanding.  Any such  redemption
shall be made within 75 days of such Public Equity Offering.

6.   Sinking Fund
     ------------

                  The Securities are not subject to any sinking fund.

7.   Notice of Redemption
     --------------------

                  Notice of  redemption  will be mailed by  first-class  mail at
least 30 days but not  more  than 60 days  before  the  redemption  date to each
Holder of Securities to be redeemed at his or her registered address. Securities
in denominations larger than 1,000 euro dollars may be redeemed in part but only
in whole  multiples  of 1,000  euro  dollars.  If  money  sufficient  to pay the
redemption price of and accrued interest on all Securities (or portions thereof)
to be redeemed on the  redemption  date is deposited with the Paying Agent on or
before the redemption  date and certain other  conditions are satisfied,  on and
after such date interest  ceases to accrue on such  Securities (or such portions
thereof) called for redemption.


<PAGE>

                                                                               8



 8.  Repurchase of Securities at the Option of Holders upon Change of Control
     ------------------------------------------------------------------------

                  Upon a Change of Control,  any Holder of Securities  will have
the right,  subject to certain conditions  specified in the Indenture,  to cause
the Company to repurchase  all or any part of the Securities of such Holder at a
purchase  price equal to 101% of the  principal  amount of the  Securities to be
repurchased  plus accrued and unpaid  interest,  if any, to the date of purchase
(subject  to the  right of  Holders  of record on the  relevant  record  date to
receive  interest due on the relevant  interest payment date that is on or prior
to the date of  purchase)  as  provided  in,  and  subject  to the terms of, the
Indenture.

9.   Denominations; Transfer; Exchange
     ---------------------------------

                  The  Securities  are in  registered  form  without  coupons in
denominations of 1,000 euro dollars and whole multiples of 1,000 euro dollars. A
Holder may transfer or exchange  Securities  in accordance  with the  Indenture.
Upon any  transfer  or  exchange,  the  Registrar  and the Trustee may require a
Holder,  among other things,  to furnish  appropriate  endorsements  or transfer
documents  and to pay any taxes  required by law or permitted by the  Indenture.
The  Registrar  need not register  the  transfer of or exchange  any  Securities
selected  for  redemption  (except,  in the case of a Security to be redeemed in
part, the portion of the Security not to be redeemed) or to transfer or exchange
any  Securities for a period of 15 days prior to a selection of Securities to be
redeemed or 15 days before an interest payment date.
10.  Persons Deemed Owners
     ---------------------

                  The  registered  Holder of this Security may be treated as the
owner of it for all purposes.

11.  Unclaimed Money
     ---------------

                  If money for the  payment of  principal  or  interest  remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written  request unless an abandoned  property law designates
another Person. After any such payment,  Holders entitled to the money must look
only to the Company and not to the Trustee for payment.

12.  Discharge and Defeasance
     ------------------------

                  Subject to  certain  conditions,  the  Company at any time may
terminate some of or all its obligations  under the Securities and the Indenture
if the Company deposits with the



<PAGE>

                                                                               9


Trustee money or U.S.  Government  Obligations  for the payment of principal and
interest on the Securities to redemption or maturity, as the case may be.

13.  Amendment, Waiver
     -----------------

                  Subject to certain exceptions set forth in the Indenture,  (i)
the  Indenture  or the  Securities  may be amended  without  prior notice to any
Securityholder  but  with  the  written  consent  of the  Holders  of at least a
majority in aggregate  principal  amount of the outstanding  Securities and (ii)
any default or  noncompliance  with any provision may be waived with the written
consent  of the  Holders  of at least a  majority  in  principal  amount  of the
outstanding  Securities.   Subject  to  certain  exceptions  set  forth  in  the
Indenture,  without the consent of any Holder of Securities, the Company and the
Trustee may amend the  Indenture or the  Securities  (i) to cure any  ambiguity,
omission,  defect  or  inconsistency;  (ii)  to  comply  with  Article  V of the
Indenture;  (iii) to provide for uncertificated  Securities in addition to or in
place  of  certificated  Securities;   (iv)  to  make  certain  changes  in  the
subordination provisions;  (v) to add Guarantees with respect to the Securities;
(vi) to secure the Securities; (vii) to add additional covenants or to surrender
rights  and  powers  conferred  on  the  Company;  (viii)  to  comply  with  the
requirements of the SEC in order to effect or maintain the  qualification of the
Indenture  under the TIA;  or (ix) to make any  change  that does not  adversely
affect the rights of any Securityholder.

14.  Defaults and Remedies
     ---------------------

                  If an Event of Default occurs and is  continuing,  the Trustee
or the Holders of at least 25% in aggregate  principal  amount of the Securities
then outstanding, subject to certain limitations, may declare all the Securities
to be  immediately  due and payable.  Certain events of bankruptcy or insolvency
are Events of Default and shall result in the Securities  being  immediately due
and payable upon the  occurrence  of such Events of Default  without any further
act of the Trustee or any Holder.

                  Holders of  Securities  may not enforce the  Indenture  or the
Securities  except as  provided  in the  Indenture.  The  Trustee  may refuse to
enforce the Indenture or the Securities unless it receives reasonable  indemnity
or security. Subject to certain limitations,  Holders of a majority in aggregate
principal  amount of the Securities  then  outstanding may direct the Trustee in
its  exercise  of any  trust or power  under the  Indenture.  The  Holders  of a
majority in aggregate  principal amount of the Securities then  outstanding,  by
written notice



<PAGE>

                                                                              10


to the Company and the Trustee,  may rescind any declaration of acceleration and
its  consequences  if the  rescission  would not  conflict  with any judgment or
decree,  and if all existing  Events of Default have been cured or waived except
nonpayment  of principal or interest  that has become due solely  because of the
acceleration.

15.  Trustee Dealings with the Company
     ---------------------------------

                  Subject to certain limitations imposed by the TIA, the Trustee
under the  Indenture,  in its individual or any other  capacity,  may become the
owner  or  pledgee  of  Securities  and may  otherwise  deal  with  and  collect
obligations  owed to it by the Company or its  Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

16.  No Recourse Against Others
     --------------------------

                  A director,  officer, employee or stockholder, as such, of the
Company shall not have any liability  for any  obligations  of the Company under
the  Securities  or the Indenture or for any claim based on, in respect of or by
reason of such  obligations  or their  creation.  By accepting a Security,  each
Securityholder  waives and releases all such  liability.  The waiver and release
are part of the consideration for the issue of the Securities.

17.  Authentication
     --------------

                  This Security shall not be valid until an authorized signatory
of the Trustee (or an  authenticating  agent)  manually signs the certificate of
authentication on the other side of this Security.

18.  Abbreviations
     -------------

                  Customary   abbreviations  may  be  used  in  the  name  of  a
Securityholder  or an assignee,  such as TEN COM  (=tenants in common),  TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian),  and U/G/M/A (=Uniform Gift to
Minors Act).

19.  Governing Law
     -------------

                  THIS   SECURITY   SHALL  BE  GOVERNED  BY,  AND  CONSTRUED  IN
ACCORDANCE  WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE  PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.



<PAGE>

                                                                              11



20.  CUSIP, ISIN and Common Code Numbers
     -----------------------------------

                  Pursuant to a  recommendation  promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be  printed  on the  Securities  and has  directed  the  Trustee to use CUSIP
numbers in notices of  redemption as a convenience  to  Securityholders.  To the
extent such  numbers  have been  issued,  the Company has caused ISIN and Common
Code  numbers  to be  similarly  printed  on the  Securities  and has  similarly
instructed  the Trustee.  No  representation  is made as to the accuracy of such
numbers  either as printed on the  Securities  or as  contained in any notice of
redemption and reliance may be placed only on the other  identification  numbers
placed thereon.

                  THE  COMPANY  WILL  FURNISH TO ANY HOLDER OF  SECURITIES  UPON
WRITTEN  REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE  WHICH
HAS IN IT THE TEXT OF THIS SECURITY.



<PAGE>

                                                                              12


                                 ASSIGNMENT FORM


To assign this Security, fill in the form below:

I or we assign and transfer this Security to


       (Print or type assignee's name, address and zip code)

       (Insert assignee's soc. sec. or tax I.D. No.)


and irrevocably appoint                               agent to
transfer this Security on the books of the Company.  The agent may
 substitute another to act for him.


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

 Date: ________________ Your Signature: _____________________


 ____________________________________________________________
Sign exactly as your name appears on the other side of this Security.

In  connection  with any  transfer of any of the  Securities  evidenced  by this
certificate  occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such  Securities  and the last date,  if any, on which such  Securities  were
owned by the Company or any Affiliate of the Company,  the undersigned  confirms
that such Securities are being transferred in accordance with its terms:

 CHECK ONE BOX BELOW

       (1)    [ ]        to the Company; or

       (2)    [ ]        pursuant to an effective registration statement under
                         the Securities Act of 1933; or

       (3)    [ ]        inside the United States to a "qualified  institutional
                         buyer" (as defined in Rule 144A under the Securities
                         Act of 1933) that purchases for its own account or for
                         the account of a qualified  institutional buyer to whom
                         notice is given that such transfer is being made in
                         reliance on Rule 144A, in each



<PAGE>

                                                                              13



                         case pursuant to and in compliance with Rule 144A under
                         the Securities Act of 1933; or

       (4)    [ ]        outside  the United  States in an offshore  transaction
                         within the meaning of Regulation S under the Securities
                         Act in compliance  with Rule 904 under the Securities
                         Act of 1933; or

       (5)    [ ]        to an institutional "accredited investor"  (as  defined
                         in Rule 501(a)(1), (2), (3) or (7) under the Securities
                         Act of 1933) that has furnished to the Trustee a signed
                         letter containing certain representations and
                         agreements (the form of which letter can be obtained
                         from the Trustee or the Company); or

       (6)    [ ]        pursuant to another available exemption from
                         registration  provided by Rule 144 under the Securities
                         Act of 1933.

       Unless one of the boxes is checked,  the Trustee  will refuse to register
       any of the  Securities  evidenced by this  certificate in the name of any
       person other than the registered holder thereof; provided,  however, that
       if box (4),  (5) or (6) is checked,  the Trustee  may  require,  prior to
       registering  any such transfer of the  Securities,  such legal  opinions,
       certifications  and  other  information  as the  Company  has  reasonably
       requested  to confirm  that such  transfer  is being made  pursuant to an
       exemption  from,  or in a  transaction  not subject to, the  registration
       requirements of the Securities Act of 1933.


                                                     --------------------------
                                                            Your Signature

Signature Guarantee:

Date: -------------------                            --------------------------
Signature must be guaranteed                         Signature of Signature
by a participant in a                                       Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable to the Trustee


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



<PAGE>

                                                                              14


              TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

                  The undersigned  represents and warrants that it is purchasing
this  Security  for its own  account  or an  account  with  respect  to which it
exercises  sole  investment  discretion  and that it and any such  account  is a
"qualified  institutional  buyer"  within  the  meaning  of Rule 144A  under the
Securities  Act of  1933,  and is aware  that  the  sale to it is being  made in
reliance on Rule 144A and  acknowledges  that it has received  such  information
regarding the Company as the undersigned has requested  pursuant to Rule 144A or
has  determined  not to request such  information  and that it is aware that the
transferor is relying upon the undersigned's foregoing  representations in order
to claim the exemption from registration provided by Rule 144A.


              Dated: ---------------------    --------------------------------
                                              NOTICE: To be executed by
                                                      an executive officer



<PAGE>

                                                                              15


                      [TO BE ATTACHED TO GLOBAL SECURITIES]

              SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

                         The initial principal amount of this Global Security is
       [          ] euro dollars. The following  increases  or decreases in this
       Global Security have been made:


<TABLE>
<S>           <C>                     <C>                   <C>                    <C>
Date of       Amount of decrease      Amount of increase    Principal amount       Signature of
Exchange      in  Principal           in Principal          of this Global         authorized
              Amount of this          Amount of this        Security following     signatory of
              Global Security         Global Security       such decrease or       Trustee or Common
                                                            increase               Depository
</TABLE>



<PAGE>

                                                                              16


                       OPTION OF HOLDER TO ELECT PURCHASE


                  If you want to elect to have this  Security  purchased  by the
 Company  pursuant to Section  4.07 (Asset  Sale) or 4.12 (Change of Control) of
 the Indenture, check the box:

                                [   ]

                  If you  want to  elect  to  have  only  part of this  Security
purchased  by the  Company  pursuant to Section  4.07 or 4.12 of the  Indenture,
state the amount:

Euro dollars


Date:                           Your Signature:
     ---------------------                     -------------------------------
(Sign exactly as your name appears on the other side of the Security)


Signature Guarantee:
                    ----------------------------------------------------------
                    Signature must be guaranteed by a participant in a
                    recognized signature guaranty medallion program or other
                    signature guarantor acceptable to the Trustee.



<PAGE>


                                                                       EXHIBIT A





                       [FORM OF FACE OF EXCHANGE SECURITY]

 No.                        [up to](3) Euro dollars
 ---                                                -------------

                          11 5/8% Senior Note due 2008

                                                  CUSIP No.    [52736R AH 5](1)
                                                               [U52799 AD 2](2)
                                                  ISIN No.    [XS0123432725](1)
                                                              [XS0123430604](2)
                                                  Common Code No.[012343272](1)
                                                                 [012343060](2)


                  LEVI STRAUSS & CO., a Delaware corporation, promises to pay to
[Citivic Nominees Limited]3, or registered assigns, the principal sum [of
          Euros](4) [as set forth on the Schedule of Increases or Decreases
annexed hereto](3)on January 15, 2008.

                  Interest Payment Dates:  January 15 and July 15.

                  Record Dates:  January 1 and July 1.

                  Additional  provisions  of this  Security are set forth on the
other side of this Security.


                  IN WITNESS WHEREOF, the parties have caused this instrument to
be duly executed.


                                                     LEVI STRAUSS & CO.,

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

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

-----------------------
 (1)   Insert for Rule 144 A Global.

 (2)   Insert for Reg. S Global Note.

 (3)   Insert for Global Securities.

 (4)   Insert for Definitive Securities



<PAGE>

                                                                               2


 TRUSTEE'S CERTIFICATE OF
      AUTHENTICATION

 Dated:  January 18, 2001

 CITIBANK, N.A.,

         as Trustee, certifies
         that this is one of
         the Securities referred
         to in the Indenture.



 by:
     ------------------------------
         Authorized Signatory




------------------------
*/ If the  Security is to be issued in global  form,  add the Global  Securities
Legend  from  Exhibit 1 to  Appendix A and the  attachment  from such  Exhibit 1
captioned  "TO BE  ATTACHED TO GLOBAL  SECURITIES  - SCHEDULE  OF  INCREASES  OR
DECREASES IN GLOBAL SECURITY".



<PAGE>

                                                                               3


                       [FORM OF REVERSE SIDE OF SECURITY]

                          11 5/8% Senior Note due 2008


 1.  Interest
     --------

                  LEVI STRAUSS & CO. a Delaware  corporation (such  corporation,
and its  successors  and assigns  under the Indenture  hereinafter  referred to,
being herein  called the  "Company"),  promises to pay interest on the principal
amount of this Security at the rate per annum shown above.  The Company will pay
interest  semiannually  on January 15 and July 15 of each year.  Interest on the
Securities will accrue from the most recent date to which interest has been paid
or, if no interest  has been paid,  from  January 18,  2001.  Interest  shall be
computed on the basis of a 360-day  year of twelve  30-day  months.  The Company
shall pay interest on overdue principal at the rate borne by the Securities plus
1% per annum,  and it shall pay interest on overdue  installments of interest at
the rate borne by the Securities to the extent lawful.

2.   Method of Payment
     -----------------

                  The  Company  will  pay  interest  on the  Securities  (except
defaulted  interest) to the Persons who are registered  Holders of Securities at
the close of  business on the January 1 or July 1 next  preceding  the  interest
payment date even if  Securities  are  canceled  after the record date and on or
before the interest payment date. Holders must surrender  Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in euro or any successor money of the European Union that at the time of payment
is legal tender for payment of public and private debts.  Payments in respect of
the Securities  represented by a Global Security (including  principal,  premium
and interest)  will be made by wire transfer of immediately  available  funds to
the accounts specified by the Euroclear Clearance System or Clearstream Banking,
S.A.  The Company  will make all  payments in respect of a  Definitive  Security
(including  principal,  premium  and  interest),  by  mailing  a  check  to  the
registered address of each Holder thereof;  provided,  however, that payments on
the Securities  may also be made, in the case of a Holder of at least  1,000,000
euro dollars  aggregate  principal  amount of Securities,  by wire transfer to a
euro  account  maintained  by the  payee  with a bank in a  member  state of the
European  Union if such Holder elects payment by wire transfer by giving written
notice to the  Trustee  and the Paying  Agent to such  effect  designating  such
account no later than 30 days



<PAGE>

                                                                               4


immediately  preceding  the relevant due date for payment (or such other date as
the Trustee may accept in its discretion).

3.   Paying Agent and Registrar
     --------------------------

                  Initially,  CITIBANK,  N.A.,  a  banking  association,  London
Office, 5 Carmelite Street, London, EC4Y OPA (the "Trustee"), will act as Paying
Agent and  Registrar.  The  Company  may  appoint  and change any Paying  Agent,
Registrar or co-registrar without notice. The Company or any of its domestically
incorporated  Wholly Owned  Subsidiaries  may act as Paying Agent,  Registrar or
co-registrar.

4.   Indenture
     ---------

                  The Company issued the Securities  under an Indenture dated as
of January 18, 2001 (the "Indenture"),  between the Company and the Trustee. The
terms of the  Securities  include  those stated in the  Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
                                                                          ------
ss.ss.  77aaa-77bbbb)  as in effect on the date of the  Indenture  (the  "TIA").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the  Indenture.  The  Securities  are subject to all such terms,  and
Securityholders  are  referred to the  Indenture  and the TIA for a statement of
those terms.

                  The Securities are senior unsecured obligations of the Company
limited to an aggregate  principal amount (on a U.S. Dollar Equivalent basis) at
any one time outstanding of (x) $850.0 million  aggregate  principal amount less
(y) the  aggregate  principal  amount of  Dollar  Notes  issued  by the  Company
(subject to Sections  2.01 and 2.08 of the  Indenture).  This Security is one of
the  Exchange  Securities  referred to in the  Indenture  issued in exchange for
Initial Securities. The Securities include the Exchange Securities, the Original
Securities in the aggregate  principal  amount of 125.0 million euro dollars and
additional Initial Securities in an aggregate principal amount (on a U.S. Dollar
Equivalent  basis) of up to (x) $350.0 million less (y) the aggregate  principal
amount of Dollar  Notes  issued by the  Company  that are not Issue Date  Dollar
Notes.  The Exchange  Securities,  the Original  Securities and such  additional
Initial  Securities  are  treated  as a single  class of  securities  under  the
Indenture.  The  Indenture  imposes  certain  limitations  on the ability of the
Company and its  Restricted  Subsidiaries  to, among other things,  make certain
Investments  and other  Restricted  Payments,  pay dividends and other distribu-
tions,  incur  Debt,  enter into  consensual  restrictions  upon the  payment of
certain  dividends and distributions by such Restricted  Subsidiaries,  issue or
sell shares of capital stock of such Restricted



<PAGE>

                                                                               5


Subsidiaries,  enter into or permit certain transactions with Affiliates, create
or incur Liens and make Asset Sales.  The Indenture also imposes  limitations on
the ability of the Company to consolidate or merge with or into any other Person
or  sell,  transfer,  assign,  lease,  convey  or  otherwise  dispose  of all or
substantially all of the Property of the Company.

5.   Optional Redemption
     -------------------

                  Except  as  set  forth  below,   the  Securities  may  not  be
redeemable  prior to January 15, 2005.  On and after that date,  the Company may
redeem the  Securities  in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid  interest,  if any, to the  redemption  date  (subject to the
right of Holders of record on the relevant record date



<PAGE>

                                                                               6


to receive  interest  due on the  relevant  interest  payment date that is on or
prior to the  date of  redemption),  if  redeemed  during  the  12-month  period
beginning on or after January 15 of the years set forth below:


                                       Redemption
Period                                   Price
------                                   -----

2005 .................................. 105.813%
2006 .................................. 102.906%
2007 and thereafter ................... 100.000%


                  Notwithstanding  the  foregoing,  on or prior to  January  15,
2003, the Company may redeem up to 33 1/3% of the original  aggregate  principal
amount of the Securities issued with the proceeds from one or more Public Equity
Offerings  by the  Company,  at a  redemption  price  equal  to 111  5/8% of the
principal amount thereof,  plus accrued and unpaid interest thereon,  if any, to
the  redemption  date (subject to the right of Holders of record on the relevant
record date to receive  interest due on the relevant  interest payment date that
it on or prior to the date of redemption);  provided, however, that after giving
effect  to any  such  redemption,  at least  66 2/3% of the  original  aggregate
principal  amount of the Securities  remains  outstanding.  Any such  redemption
shall be made within 75 days of such Public Equity Offering.

6.   Sinking Fund
     ------------

                  The Securities are not subject to any sinking fund.

7.   Notice of Redemption
     --------------------

                  Notice of  redemption  will be mailed by  first-class  mail at
least 30 days but not  more  than 60 days  before  the  redemption  date to each
Holder of Securities to be redeemed at his or her registered address. Securities
in denominations larger than 1,000 euro dollars may be redeemed in part but only
in whole  multiples  of 1,000  euro  dollars.  If  money  sufficient  to pay the
redemption price of and accrued interest on all Securities (or portions thereof)
to be redeemed on the  redemption  date is deposited with the Paying Agent on or
before the redemption  date and certain other  conditions are satisfied,  on and
after such date interest  ceases to accrue on such  Securities (or such portions
thereof) called for redemption.



<PAGE>

                                                                               7


8.   Repurchase of Securities at the Option of Holders upon Change of Control
     ------------------------------------------------------------------------

                  Upon a Change of Control,  any Holder of Securities  will have
the right,  subject to certain conditions  specified in the Indenture,  to cause
the Company to repurchase  all or any part of the Securities of such Holder at a
purchase  price equal to 101% of the  principal  amount of the  Securities to be
repurchased  plus accrued and unpaid  interest,  if any, to the date of purchase
(subject  to the  right of  Holders  of record on the  relevant  record  date to
receive  interest due on the relevant  interest payment date that is on or prior
to the date of  purchase)  as  provided  in,  and  subject  to the terms of, the
Indenture.

9.   Denominations; Transfer; Exchange
     ---------------------------------

                  The  Securities  are in  registered  form  without  coupons in
denominations of 1,000 euro dollars and whole multiples of 1,000 euro dollars. A
Holder may transfer or exchange  Securities  in accordance  with the  Indenture.
Upon any  transfer  or  exchange,  the  Registrar  and the Trustee may require a
Holder,  among other things,  to furnish  appropriate  endorsements  or transfer
documents  and to pay any taxes  required by law or permitted by the  Indenture.
The  Registrar  need not register  the  transfer of or exchange  any  Securities
selected  for  redemption  (except,  in the case of a Security to be redeemed in
part, the portion of the Security not to be redeemed) or to transfer or exchange
any  Securities for a period of 15 days prior to a selection of Securities to be
redeemed or 15 days before an interest payment date.

10.  Persons Deemed Owners
     ---------------------

                  The  registered  Holder of this Security may be treated as the
owner of it for all purposes.

11.  Unclaimed Money
     ---------------

                  If money for the  payment of  principal  or  interest  remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written  request unless an abandoned  property law designates
another Person. After any such payment,  Holders entitled to the money must look
only to the Company and not to the Trustee for payment.

12.  Discharge and Defeasance
     ------------------------

                  Subject to  certain  conditions,  the  Company at any time may
terminate some of or all its obligations  under the Securities and the Indenture
if the Company deposits with the



<PAGE>

                                                                               8


Trustee money or U.S.  Government  Obligations  for the payment of principal and
interest on the Securities to redemption or maturity, as the case may be.

13.  Amendment, Waiver

                  Subject to certain exceptions set forth in the Indenture,  (i)
the  Indenture  or the  Securities  may be amended  without  prior notice to any
Securityholder  but  with  the  written  consent  of the  Holders  of at least a
majority in aggregate  principal  amount of the outstanding  Securities and (ii)
any default or  noncompliance  with any provision may be waived with the written
consent  of the  Holders  of at least a  majority  in  principal  amount  of the
outstanding  Securities.   Subject  to  certain  exceptions  set  forth  in  the
Indenture,  without the consent of any Holder of Securities, the Company and the
Trustee may amend the  Indenture or the  Securities  (i) to cure any  ambiguity,
omission,  defect  or  inconsistency;  (ii)  to  comply  with  Article  V of the
Indenture;  (iii) to provide for uncertificated  Securities in addition to or in
place  of  certificated  Securities;   (iv)  to  make  certain  changes  in  the
subordination provisions;  (v) to add Guarantees with respect to the Securities;
(vi) to secure the Securities; (vii) to add additional covenants or to surrender
rights  and  powers  conferred  on  the  Company;  (viii)  to  comply  with  the
requirements of the SEC in order to effect or maintain the  qualification of the
Indenture  under the TIA;  or (ix) to make any  change  that does not  adversely
affect the rights of any Securityholder.

14.  Defaults and Remedies
     ---------------------

                  If an Event of Default occurs and is  continuing,  the Trustee
or the Holders of at least 25% in aggregate  principal  amount of the Securities
then outstanding, subject to certain limitations, may declare all the Securities
to be  immediately  due and payable.  Certain events of bankruptcy or insolvency
are Events of Default and shall result in the Securities  being  immediately due
and payable upon the  occurrence  of such Events of Default  without any further
act of the Trustee or any Holder.

                  Holders of  Securities  may not enforce the  Indenture  or the
Securities  except as  provided  in the  Indenture.  The  Trustee  may refuse to
enforce the Indenture or the Securities unless it receives reasonable  indemnity
or security. Subject to certain limitations,  Holders of a majority in aggregate
principal  amount of the Securities  then  outstanding may direct the Trustee in
its  exercise  of any  trust or power  under the  Indenture.  The  Holders  of a
majority in aggregate  principal amount of the Securities then  outstanding,  by
written notice



<PAGE>

                                                                               9


to the Company and the Trustee,  may rescind any declaration of acceleration and
its  consequences  if the  rescission  would not  conflict  with any judgment or
decree,  and if all existing  Events of Default have been cured or waived except
nonpayment  of principal or interest  that has become due solely  because of the
acceleration.

15.  Trustee Dealings with the Company
     ---------------------------------

                  Subject to certain limitations imposed by the TIA, the Trustee
under the  Indenture,  in its individual or any other  capacity,  may become the
owner  or  pledgee  of  Securities  and may  otherwise  deal  with  and  collect
obligations  owed to it by the Company or its  Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

16.  No Recourse Against Others
     --------------------------

                  A director,  officer, employee or stockholder, as such, of the
Company shall not have any liability  for any  obligations  of the Company under
the  Securities  or the Indenture or for any claim based on, in respect of or by
reason of such  obligations  or their  creation.  By accepting a Security,  each
Securityholder  waives and releases all such  liability.  The waiver and release
are part of the consideration for the issue of the Securities.

17.  Authentication
     --------------

                  This Security shall not be valid until an authorized signatory
of the Trustee (or an  authenticating  agent)  manually signs the certificate of
authentication on the other side of this Security.

18.  Abbreviations
     -------------

                  Customary   abbreviations  may  be  used  in  the  name  of  a
Securityholder  or an assignee,  such as TEN COM  (=tenants in common),  TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian),  and U/G/M/A (=Uniform Gift to
Minors Act).

19.  Governing Law
     -------------

                  THIS   SECURITY   SHALL  BE  GOVERNED  BY,  AND  CONSTRUED  IN
ACCORDANCE  WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE  PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.



<PAGE>

                                                                              10


20.  CUSIP, ISIN and Common Code Numbers
     -----------------------------------

                  Pursuant to a  recommendation  promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be  printed  on the  Securities  and has  directed  the  Trustee to use CUSIP
numbers in notices of  redemption as a convenience  to  Securityholders.  To the
extent such  numbers  have been  issued,  the Company has caused ISIN and Common
Code  numbers  to be  similarly  printed  on the  Securities  and has  similarly
instructed  the Trustee.  No  representation  is made as to the accuracy of such
numbers  either as printed on the  Securities  or as  contained in any notice of
redemption and reliance may be placed only on the other  identification  numbers
placed thereon.

                  THE  COMPANY  WILL  FURNISH TO ANY HOLDER OF  SECURITIES  UPON
WRITTEN  REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE  WHICH
HAS IN IT THE TEXT OF THIS SECURITY.



<PAGE>

                                                                              11


                                 ASSIGNMENT FORM


To assign this Security, fill in the form below:

I or we assign and transfer this Security to


         (Print or type assignee's name, address and zip code)

         (Insert assignee's soc. sec. or tax I.D. No.)


and irrevocably appoint                          agent to transfer this Security
on the books of the Company. The agent may substitute another to act for him.


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

Date:                    Your Signature:
     -------------------                ----------------------

-----------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.  Signature
must be guaranteed by a participant in a recognized signature guaranty medallion
program or other signature guarantor acceptable to the Trustee.



<PAGE>

                                                                              12


                       OPTION OF HOLDER TO ELECT PURCHASE


                  IF YOU WANT TO ELECT TO HAVE THIS  SECURITY  PURCHASED  BY THE
 COMPANY  PURSUANT TO SECTION  4.07 (ASSET  SALE) OR 4.12 (CHANGE OF CONTROL) OF
 THE INDENTURE, CHECK THE BOX:

                                [  ]

                           IF YOU  WANT  TO  ELECT  TO  HAVE  ONLY  PART OF THIS
SECURITY PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.07
OR 4.12 OF THE INDENTURE, STATE THE AMOUNT:

Euro Dollars


DATE:             YOUR SIGNATURE:
     ------------                -----------------------------------
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THE SECURITY)


SIGNATURE GUARANTEE:
                    --------------------------------------------------
                    SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A
                    RECOGNIZED SIGNATURE GUARANTY MEDALLION PROGRAM OR
                    OTHER SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEE.



<PAGE>


                                                                       EXHIBIT B




                                     Form of
                       Transferee Letter of Representation


[Company]

In care of
[                  ]
[                  ]
[                  ]


Ladies and Gentlemen:


                  This  certificate  is  delivered  to  request  a  transfer  of
[     ] euro dollars principal amount of the 11 5/8%  Senior Notes due 2008 (the
"Securities") of LEVI STRAUSS & CO. (the "Company").

                  Upon transfer,  the Securities would be registered in the name
of the new beneficial owner as follows:

Name:
     ----------------------------
Address:
        -------------------------
Taxpayer ID Number:
                   --------------
                  The undersigned represents and warrants to you that:

                  1. We are an institutional  "accredited  investor" (as defined
in Rule 501(a)(1),  (2), (3) or (7) under the Securities Act of 1933, as amended
(the  "Securities  Act")),  purchasing for our own account or for the account of
such an institutional  "accredited  investor" at least $250,000 principal amount
of the  Securities,  and we are acquiring the  Securities not with a view to, or
for offer or sale in  connection  with,  any  distribution  in  violation of the
Securities  Act. We have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our investment in
the  Securities,  and  we  invest  in or  purchase  securities  similar  to  the
Securities in the normal course of our business.  We, and any accounts for which
we are acting, are each able to bear the economic risk of our or its investment.

                  2.  We understand that the Securities have not been registered
under the  Securities Act and,  unless so registered,  may not be sold except as
permitted in the following sentence. We agree on our own behalf and on




<PAGE>

                                                                               2


behalf of any investor account for which we are purchasing  Securities to offer,
sell or otherwise  transfer such Securities  prior to the date that is two years
after  the  later of the date of  original  issue and the last date on which the
Company or any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company,  (b)  pursuant  to a  registration  statement  that has  been  declared
effective  under the  Securities  Act, (c) in a transaction  complying  with the
requirements of Rule 144A under the Securities Act ("Rule 144A"), to a person we
reasonably believe is a qualified  institutional buyer under Rule 144A (a "QIB")
that is  purchasing  for its own account or for the account of a QIB and to whom
notice is given that the  transfer is being made in  reliance on Rule 144A,  (d)
pursuant  to offers and sales that occur  outside the United  States  within the
meaning  of  Regulation  S under the  Securities  Act,  (e) to an  institutional
"accredited  investor"  within the meaning of Rule  501(a)(1),  (2),  (3) or (7)
under the  Securities  Act that is  purchasing  for its own  account  or for the
account  of such  an  institutional  "accredited  investor,"  in each  case in a
minimum principal amount of Securities of $100,000, or (f) pursuant to any other
available  exemption from the  registration  requirements of the Securities Act,
subject  in each of the  foregoing  cases  to any  requirement  of law  that the
disposition of our property or the property of such investor account or accounts
be at all  times  within  our  or  their  control  and in  compliance  with  any
applicable state securities laws. The foregoing  restrictions on resale will not
apply subsequent to the Resale  Restriction  Termination  Date. If any resale or
other  transfer of the  Securities is proposed to be made pursuant to clause (e)
above prior to the Resale  Restriction  Termination  Date, the transferor  shall
deliver a letter from the transferee substantially in the form of this letter to
the Company and the Trustee,  which shall provide,  among other things, that the
transferee is an institutional  "accredited investor" within the meaning of Rule
501(a)(1),  (2),  (3) or (7) under the  Securities  Act and that it is acquiring
such Securities for investment purposes and not for distribution in violation of
the Securities Act. Each purchaser acknowledges that the Company and the Trustee
reserve the right prior to the offer, sale or other transfer prior to the Resale
Restriction Termination Date of the





<PAGE>

                                                                               3


Securities  pursuant to clause (d),  (e) or (f) above to require the delivery of
an opinion of counsel,  certifications or other information  satisfactory to the
Company and the Trustee.



                          TRANSFEREE:
                                     -----------------------,

                           by:
                              ------------------------------