EXHIBIT 4.11


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                                   GFSI, Inc.

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

                              SERIES A AND SERIES B

                    9 5/8% SENIOR SUBORDINATED NOTES DUE 2007

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




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

                                    INDENTURE

                          DATED AS OF DECEMBER 31, 2002

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








                       STATE STREET BANK AND TRUST COMPANY

                                     Trustee


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<PAGE>




                                Table of Contents



                                    ARTICLE 1
                   DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01        DEFINITIONS................................................1
Section 1.02        OTHER DEFINITIONS.........................................15
Section 1.03        INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.........16
Section 1.04        RULES OF CONSTRUCTION.....................................16

                                    ARTICLE 2
                                    THE NOTES

Section 2.01        FORM AND DATING...........................................17
Section 2.02        EXECUTION AND AUTHENTICATION..............................17
Section 2.03        REGISTRAR AND PAYING AGENT................................18
Section 2.04        PAYING AGENT TO HOLD MONEY IN TRUST.......................18
Section 2.05        HOLDER LISTS..............................................19
Section 2.06        TRANSFER AND EXCHANGE.....................................19
Section 2.07        REPLACEMENT NOTES.........................................26
Section 2.08        OUTSTANDING NOTES.........................................26
Section 2.09        TREASURY NOTES............................................26
Section 2.10        TEMPORARY NOTES...........................................27
Section 2.11        CANCELLATION..............................................27
Section 2.12        DEFAULTED INTEREST........................................27
Section 2.13        RECORD DATE...............................................27
Section 2.14        CUSIP NUMBER..............................................27

                                    ARTICLE 3
              OPTIONAL REDEMPTION AND MANDATORY OFFERS TO PURCHASE

Section 3.01        NOTICES TO TRUSTEE........................................28
Section 3.02        SELECTION OF NOTES TO BE REDEEMED OR PURCHASED............28
Section 3.03        NOTICE OF REDEMPTION......................................29
Section 3.04        EFFECT OF NOTICE OF REDEMPTION............................30
Section 3.05        DEPOSIT OF REDEMPTION PRICE...............................30
Section 3.06        NOTES REDEEMED IN PART....................................30
Section 3.07        OPTIONAL REDEMPTION PROVISIONS............................30
Section 3.08        MANDATORY PURCHASE PROVISIONS.............................31

                                    ARTICLE 4
                                    COVENANTS

Section 4.01        PAYMENT OF NOTES..........................................33
Section 4.02        SEC REPORTS...............................................33
Section 4.03        COMPLIANCE CERTIFICATE....................................34
Section 4.04        STAY, EXTENSION AND USURY LAWS............................35
Section 4.05        LIMITATION ON RESTRICTED PAYMENTS.........................35
Section 4.06        CORPORATE EXISTENCE.......................................38
Section 4.07        LIMITATION ON INCURRENCE OF INDEBTEDNESS..................38
Section 4.08        LIMITATION ON SENIOR SUBORDINATED DEBT....................39
Section 4.09        LIMITATION ON TRANSACTIONS WITH AFFILIATES................39


                                      -i-

<PAGE>


Section 4.10        LIMITATION ON LIENS.......................................40
Section 4.11        COMPLIANCE WITH LAWS, TAXES...............................41
Section 4.12        LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
                    AFFECTING RESTRICTED SUBSIDIARIES.........................41
Section 4.13        MAINTENANCE OF OFFICE OR AGENCIES.........................42
Section 4.14        CHANGE OF CONTROL.........................................42
Section 4.15        LIMITATION ON ASSET SALES.................................43
Section 4.16        NOTE GUARANTEES...........................................44
Section 4.17        DESIGNATION OF RESTRICTED AND NON-RESTRICTED
                    SUBSIDIARIES..............................................44

                                    ARTICLE 5
                                   SUCCESSORS

Section 5.01        MERGER OR CONSOLIDATION...................................45
Section 5.02        SUCCESSOR CORPORATION SUBSTITUTED.........................46

                                    ARTICLE 6
                              DEFAULTS AND REMEDIES

Section 6.01        EVENTS OF DEFAULT.........................................46
Section 6.02        ACCELERATION..............................................48
Section 6.03        OTHER REMEDIES............................................49
Section 6.04        WAIVER OF PAST DEFAULTS...................................49
Section 6.05        CONTROL BY MAJORITY.......................................49
Section 6.06        LIMITATION ON SUITS.......................................49
Section 6.07        RIGHTS OF HOLDERS TO RECEIVE PAYMENT......................50
Section 6.08        COLLECTION SUIT BY TRUSTEE................................50
Section 6.09        TRUSTEE MAY FILE PROOFS OF CLAIM..........................50
Section 6.10        PRIORITIES................................................50
Section 6.11        UNDERTAKING FOR COSTS.....................................51

                                    ARTICLE 7
                                     TRUSTEE

Section 7.01        DUTIES OF TRUSTEE.........................................51
Section 7.02        RIGHTS OF TRUSTEE.........................................52
Section 7.03        INDIVIDUAL RIGHTS OF TRUSTEE..............................53
Section 7.04        TRUSTEE'S DISCLAIMER......................................53
Section 7.05        NOTICE TO HOLDERS OF DEFAULTS AND EVENTS OF DEFAULT.......53
Section 7.06        REPORTS BY TRUSTEE TO HOLDERS.............................53
Section 7.07        COMPENSATION AND INDEMNITY................................54
Section 7.08        REPLACEMENT OF TRUSTEE....................................54
Section 7.09        SUCCESSOR TRUSTEE BY MERGER, ETC..........................55
Section 7.10        ELIGIBILITY; DISQUALIFICATION.............................55
Section 7.11        PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.....56



                                      -ii-

<PAGE>



                                    ARTICLE 8
                             DISCHARGE OF INDENTURE

Section 8.01        DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE...............56
Section 8.02        CONDITIONS TO DEFEASANCE..................................56
Section 8.03        APPLICATION OF TRUST MONEY................................58
Section 8.04        REPAYMENT TO THE COMPANY..................................58
Section 8.05        INDEMNITY FOR GOVERNMENT OBLIGATIONS......................58
Section 8.06        REINSTATEMENT.............................................58

                                    ARTICLE 9
                                   AMENDMENTS

Section 9.01        AMENDMENTS AND SUPPLEMENTS PERMITTED WITHOUT
                    CONSENT OF HOLDERS........................................59
Section 9.02        AMENDMENTS AND SUPPLEMENTS REQUIRING CONSENT
                    OF HOLDERS................................................59
Section 9.03        COMPLIANCE WITH TIA.......................................60
Section 9.04        REVOCATION AND EFFECT OF CONSENTS.........................60
Section 9.05        NOTATION ON OR EXCHANGE OF NOTES..........................61
Section 9.06        TRUSTEE PROTECTED.........................................61

                                   ARTICLE 10
                                  SUBORDINATION

Section 10.01       AGREEMENT TO SUBORDINATE..................................61
Section 10.02       LIQUIDATION; DISSOLUTION; BANKRUPTCY......................62
Section 10.03       DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS.................62
Section 10.04       ACCELERATION OF NOTES.....................................63
Section 10.05       WHEN DISTRIBUTION MUST BE PAID OVER.......................63
Section 10.06       NOTICE BY COMPANY.........................................64
Section 10.07       SUBROGATION...............................................64
Section 10.08       RELATIVE RIGHTS...........................................64
Section 10.09       SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY..............64
Section 10.10       DISTRIBUTION OR NOTICE TO REPRESENTATIVE..................64
Section 10.11       RIGHTS OF TRUSTEE AND PAYING AGENT........................65
Section 10.12       AUTHORIZATION TO EFFECT SUBORDINATION.....................65
Section 10.13       AMENDMENTS................................................65

                                   ARTICLE 11
                                  MISCELLANEOUS

Section 11.01       TRUST INDENTURE ACT CONTROLS..............................65
Section 11.02       NOTICES...................................................65
Section 11.03       COMMUNICATION BY HOLDERS WITH OTHER HOLDERS...............67
Section 11.04       CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT........67
Section 11.05       STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.............67
Section 11.06       RULES BY TRUSTEE AND AGENTS...............................67
Section 11.07       LEGAL HOLIDAYS............................................68
Section 11.08       NO RECOURSE AGAINST OTHERS................................68


                                     -iii-

<PAGE>


Section 11.09       COUNTERPARTS..............................................68
Section 11.10       VARIABLE PROVISIONS.......................................68
Section 11.11       GOVERNING LAW.............................................68
Section 11.12       NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.............68
Section 11.13       SUCCESSORS................................................68
Section 11.14       SEVERABILITY..............................................68
Section 11.15       TABLE OF CONTENTS, HEADINGS, ETC..........................69

                                   ARTICLE 12
                               GUARANTEE OF NOTES

Section 12.01       EXECUTION AND DELIVERY OF NOTE GUARANTEE..................69
Section 12.02       SUBORDINATION OF NOTE GUARANTEE; GUARANTORS MAY
                    CONSOLIDATE, ETC., ON CERTAIN TERMS.......................69


                                      -iv-

<PAGE>




                                    EXHIBITS

Exhibit A  Form of Note.............................................         A-1
Exhibit B  Certificate of Transferor ...............................         B-1
Exhibit C  Certificate of Institutional Accredited Investor ........         C-1
Exhibit D  Certificate of Regulation S Transferor ..................         D-1
Exhibit E  Form of Note Guarantee...................................         E-1
Exhibit F  Form of Supplemental Indenture...........................         F-1



                                      -v-

<PAGE>

     This  Indenture,  dated as of December 31, 2002, is between  GFSI,  Inc., a
Delaware  corporation (the "Company"),  and State Street Bank and Trust Company,
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 9 5/8% Series A Senior
Subordinated  Notes due 2007 (the  "Series A Notes")  and the  Company's  9 5/8%
Series B Senior  Subordinated Notes due 2007 (the "Series B Notes" and, together
with the Series A Notes, the "Notes"):


                                   ARTICLE 1
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

SECTION 1.01    DEFINITIONS

     "Acquisition Agreement" means the agreement,  dated as of January 24, 1997,
among Holdings, the Company and the shareholders party thereto,  relating to the
purchase and sale of the stock of Winning Ways, Inc.

     "Affiliate"  means  any  of the  following:  (i)  any  Person  directly  or
indirectly  controlling  or  controlled  by or under  direct or indirect  common
control  with the Company,  (ii) any spouse,  immediate  family  member or other
relative who has the same principal  residence as any Person described in clause
(i) above,  (iii) any trust in which any such Persons described in clause (i) or
(ii)  above  has a  beneficial  interest  and  (iv)  any  corporation  or  other
organization of which any such Persons  described above  collectively own 50% or
more of the equity of such entity, provided,  however that MCIT PLC shall not be
deemed an Affiliate of the Company.

     "Affiliated  Embroiderers"  means  the  affiliated  entities  that  provide
embroidery services for the Company as of the 1997 Notes Issue Date.

     "Agent" means any Registrar, Paying Agent or co-registrar.

     "Asset Sale" means the sale, lease,  conveyance or other disposition by the
Company or a Restricted  Subsidiary  of assets or property  whether owned on the
date of  original  issuance  of the Notes or  thereafter  acquired,  in a single
transaction  or in a series of related  transactions;  provided that Asset Sales
will not include such sales,  leases,  conveyances or dispositions in connection
with (i) the sale or disposition of any Restricted  Investment,  (ii) any Equity
Offering by the Company, (iii) the surrender or waiver of contract rights or the
settlement,  release or surrender of contract, tort or other claims of any kind,
(iv) the sale or lease of  inventory,  equipment,  accounts  receivable or other
assets in the ordinary course of business, (v) a sale-leaseback of assets within
one year following the acquisition of such assets, (vi) the grant of any license
of patents,  trademarks,  registration  therefor and other similar  intellectual
property,  (vii) a transfer of assets by the Company or a Restricted  Subsidiary
to  the  Company  or  a  Restricted  Subsidiary,  (viii)  the  designation  of a
Restricted  Subsidiary as a Non-Restricted  Subsidiary pursuant to Section 4.17,
(ix) the sale,  lease,  conveyance or other  disposition of all or substantially
all of the assets of the Company as permitted  under Section 5.01,  (x) the sale
or disposition of obsolete  equipment or other obsolete assets,  (xi) Restricted
Payments  permitted  by Section  4.05,  (xii) the  exchange  of assets for other
non-cash  assets  that (a) are useful in the  business  of the  Company  and its


<PAGE>




Restricted  Subsidiaries  and (b) have a fair market value at least equal to the
fair market value of the assets being  exchanged (as  determined by the Board of
Directors in good faith),  (xiii) the sale,  transfer and/or  termination of the
officers' life insurance policies in effect on the 1997 Notes Issue Date.

     "Bankruptcy  Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.

     "Board  of  Directors"  means  the  Company's  board  of  directors  or any
authorized committee of such board of directors.

     "Business Day" means any day other than a Legal Holiday.

     "Capital  Stock"  means any and all shares,  interests,  participations  or
other  equivalents  (however  designated)  of  corporate  stock,  including  any
preferred stock.

      "Cash Flow" means,  for any given period and Person,  the sum of,  without
duplication,  Consolidated Net Income, plus (a) any provision for taxes based on
income or  profits  to the  extent  such  income or  profits  were  included  in
computing  Consolidated Net Income,  plus (b) Consolidated  Interest Expense, to
the  extent  deducted  in  computing  Consolidated  Net  Income,  plus  (c)  the
amortization  of all  intangible  assets,  to the extent such  amortization  was
deducted in computing  Consolidated Net Income  (including,  but not limited to,
inventory  write-ups,   goodwill,   debt  and  financing  costs,  and  Incentive
Arrangements),  plus  (d) any  non-capitalized  transaction  costs  incurred  in
connection  with actual or proposed  financings,  acquisitions  or  divestitures
(including,  but not limited to, financing and refinancing fees, including those
in  connection  with the  Transactions),  to the extent  deducted  in  computing
Consolidated  Net  Income,  plus (e) all  depreciation  and all  other  non-cash
charges  (including,  without  limitation,  those  charges  relating to purchase
accounting  adjustments  and  LIFO  adjustments),  to  the  extent  deducted  in
computing  Consolidated Net Income,  plus (f) any interest income, to the extent
such income was not included in computing  Consolidated Net Income, plus (g) all
dividend payments on preferred stock (whether or not paid in cash) to the extent
deducted in computing  Consolidated  Net Income,  plus (h) any  extraordinary or
nonrecurring  charge or expense arising out of the implementation of SFAS 106 or
SFAS 109 to the extent deducted in computing  Consolidated Net Income,  plus (i)
to the extent not  covered in clause (d) above,  fees paid or payable in respect
of the TJC  Agreement  to the extent  deducted  in  computing  Consolidated  Net
Income,  plus (j) the net loss of any Person,  other than those of a  Restricted
Subsidiary,  to the extent deducted in computing  Consolidated Net Income,  plus
(k) net  losses in respect  of any  discontinued  operations  as  determined  in
accordance  with GAAP,  to the extent  deducted in  computing  Consolidated  Net
Income,  minus (l) the  portion  of  Consolidated  Net  Income  attributable  to
minority interests in other Persons,  except the amount of such portion received
in cash by the Company or its Restricted Subsidiaries;  provided,  however, that
if any such calculation  includes any period during which an acquisition or sale
of a Person or the incurrence or repayment of Indebtedness  occurred,  then such
calculation for such period shall be made on a Pro Forma Basis.

     "Cash Flow  Coverage  Ratio"  means,  for any given period and Person,  the
ratio of: (i) Cash Flow to (ii) the sum of Consolidated Interest Expense and all
dividend  payments  on any

                                      -2-

<PAGE>



series of preferred  stock of such Person  (except  dividends paid or payable in
additional  shares of Capital Stock (other than  Disqualified  Stock) and except
for accrued and unpaid  dividends with respect to the Holdings  Preferred  Stock
outstanding on the 1997 Notes Issue Date),  in each case,  without  duplication;
provided, however, that if any such calculation includes any period during which
an  acquisition  or  sale  of  a  Person  or  the  incurrence  or  repayment  of
Indebtedness occurred,  then such calculation for such period shall be made on a
Pro Forma Basis.

     "Change of Control" means the  occurrence of any of the following:  (i) the
sale, lease,  transfer,  conveyance or other  disposition  (other than by way of
merger or consolidation),  in one or a series of related transactions, of all or
substantially  all of the assets of the Company and its Subsidiaries  taken as a
whole to any "person" (as such term is used in Section  13(d)(3) of the Exchange
Act) other than the Principals or their Related Parties,  (ii) the adoption of a
plan  relating to the  liquidation  or  dissolution  of the  Company,  (iii) the
consummation of any transaction  (including,  without limitation,  any merger or
consolidation)  the result of which is that any  "person"  (as  defined  above),
other than the Principals  and their Related  Parties,  becomes the  "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the  Exchange
Act, except that a person shall be deemed to have "beneficial  ownership" of all
securities  that such  person has the right to  acquire,  whether  such right is
currently exercisable or is exercisable only upon the occurrence of a subsequent
condition),  directly or indirectly, of more than 50% of the Voting Stock of the
Company  (measured  by voting  power  rather than  number of  shares),  (iv) the
consummation of the first transaction (including, without limitation, any merger
or  consolidation)  the result of which is that any "person" (as defined  above)
becomes the "beneficial  owner" (as defined above),  directly or indirectly,  of
more of the Voting  Stock of the Company  (measured  by voting power rather than
number of shares) than is at the time "beneficially owned" (as defined above) by
the Principals  and their Related  Parties in the aggregate or (v) the first day
on which a majority of the members of the Board of  Directors of the Company are
not Continuing  Directors.  For purposes of this definition,  any transfer of an
equity interest of an entity that was formed following the 1997 Notes Issue Date
for the purpose of acquiring  Voting Stock of the Company will be deemed to be a
transfer of such portion of such Voting Stock as  corresponds  to the portion of
the equity of such entity that has been so transferred.

     "Consolidated Interest Expense" means, for any given period and Person, the
aggregate of the interest  expense in respect of all Indebtedness of such Person
and its  Restricted  Subsidiaries  for such  period,  on a  consolidated  basis,
determined in accordance  with GAAP  (including  amortization  of original issue
discount on any such Indebtedness,  all non-cash interest payments, the interest
portion of any deferred payment obligation and the interest component of capital
lease obligations, but excluding amortization of deferred financing fees if such
amortization  would  otherwise  be  included  in  interest  expense);  provided,
however,  that for the  purpose of the Cash Flow  Coverage  Ratio,  Consolidated
Interest Expense shall be calculated on a Pro Forma Basis; provided further that
any premiums,  fees and expenses (including the amortization thereof) payable in
connection with the Transactions or any other refinancing of Indebtedness  shall
be excluded. For purposes of this definition,  the Consolidated Interest Expense
of the Company  shall  include  the cash  interest  expense of Holdings  paid in
respect of the Holdings Subordinated Notes.

     "Consolidated  Net Income"  means,  for any given  period and  Person,  the
aggregate of the Net Income of such Person and its Restricted  Subsidiaries  for
such period,  on a  consolidated


                                      -3-

<PAGE>



basis, determined in accordance with GAAP; provided,  however, that: (a) the Net
Income of any Person  acquired  in a pooling of  interests  transaction  for any
period  prior  to the  date  of  such  acquisition  shall  be  excluded  and (b)
Consolidated Net Income of any Person will not include, without duplication, any
deduction for: (i) any increased amortization or depreciation resulting from the
write-up of assets pursuant to Accounting  Principles  Board Opinion Nos. 16 and
17, as amended or supplemented  from time to time, (ii) the  amortization of all
intangible assets (including  amortization  attributable to inventory write-ups,
goodwill,  debt and  financing  costs,  and Incentive  Arrangements),  (iii) any
non-capitalized transaction costs incurred in connection with actual or proposed
financings,  acquisitions  or  divestitures  (including,  but  not  limited  to,
financing and refinancing fees), (iv) any extraordinary or nonrecurring  charges
relating to any premium or penalty paid,  write-off or deferred  financing costs
or other  financial  recapitalization  charges in connection  with  redeeming or
retiring any Indebtedness prior to its stated maturity and (v) any Restructuring
Charges;  provided,  however,  that for  purposes of  determining  the Cash Flow
Coverage  Ratio,  Consolidated  Net Income  shall be  calculated  on a Pro Forma
Basis.

     "Consolidated  Net Worth" with respect to any Person means, as of any date,
the consolidated equity of the common stockholders of such Person (excluding the
cumulated  foreign  currency  translation  adjustment),   all  determined  on  a
consolidated basis in accordance with GAAP, but without any reduction in respect
of the payment of dividends on any series of such  Person's  preferred  stock if
such  dividends  are paid in  additional  shares of Capital  Stock  (other  than
Disqualified Stock);  provided,  however, that Consolidated Net Worth shall also
include,  without  duplication:   (a)  the  amortization  of  all  write-ups  of
inventory, (b) the amortization of all intangible assets (including amortization
of goodwill,  debt and financing  costs,  and Incentive  Arrangements),  (c) any
non-capitalized transaction costs incurred in connection with actual or proposed
financings,  acquisitions  or  divestitures  (including,  but  not  limited  to,
financing and refinancing fees), (d) any increased  amortization or depreciation
resulting from the write-up of assets  pursuant to Accounting  Principles  Board
Opinion Nos. 16 and 17, as amended and  supplemented  from time to time, (e) any
extraordinary  or  nonrecurring  charges or expenses  relating to any premium or
penalty  paid,   write-off  or  deferred  financing  costs  or  other  financial
recapitalization  charges  incurred in connection with redeeming or retiring any
Indebtedness prior to its stated maturity, (f) any Restructuring Charges and (g)
any extraordinary or non-recurring  charge arising out of the  implementation of
SFAS 106 or SFAS 109;  provided,  however,  that Consolidated Net Worth shall be
calculated on a Pro Forma Basis.

     "Continuing  Directors" means, as of any date of determination,  any member
of the Board of  Directors  of the Company who (i) was a member of such Board of
Directors  on the 1997 Notes Issue Date or (ii) was  nominated  for  election or
elected to such  Board of  Directors  with the  approval  of a  majority  of the
Continuing  Directors  who  were  members  of  such  Board  at the  time of such
nomination or election.

     "Corporate Trust Office" means the office at which the Trustee  administers
the trust created by this  Indenture,  which office now is located at 225 Asylum
Street, Hartford,  Connecticut 06103, Attention:  Corporate Trust Administration
(GFSI,  Inc. 9 5/8% Senior  Subordinated  Notes due 2007, issued on December 31,
2002).

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

                                      -4-

<PAGE>



     "Definitive  Notes"  means Notes that are in the form of Exhibit A attached
hereto  (but  without  including  the  text  referred  to in  footnotes  1 and 2
thereto).

     "Depositary"  means,  with respect to the Notes issuable or issued in whole
or in part in global  form,  the Person  specified in Section 2.03 hereof as the
Depositary  with  respect  to the  Notes,  until a  successor  shall  have  been
appointed  and become such  pursuant  to Section  2.06 of this  Indenture,  and,
thereafter, "Depositary" shall mean or include such successor.

     "Designated  Senior  Indebtedness"  means (i) any Indebtedness  outstanding
under the  Existing  Credit  Agreement  and (ii) any other  Senior  Indebtedness
permitted under this Indenture the principal amount of which is $10.0 million or
more  and  that  has  been  designated  by the  Company  as  "Designated  Senior
Indebtedness."

     "Disqualified  Stock" means any Capital  Stock that by its terms (or by the
terms  of  any  security  into  which  it is  convertible  or  for  which  it is
exchangeable),  or upon the  happening of any event,  matures or is  mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the  option of the holder  thereof,  in whole or in part on, or prior to, the
maturity date of the Notes.

     "Eligible  Institution"  means a commercial  banking  institution  that has
combined capital and surplus of not less than  $500,000,000 or its equivalent in
foreign  currency,  whose  debt is rated  "A" (or  higher)  according  to S&P or
Moody's at the time as of which any investment or rollover therein is made.

     "Equity   Contribution"   means,   collectively,   (a)  a  contribution  of
$13,600,000  from the Jordan  Investors  to Holdings in  exchange  for  Holdings
Preferred  Stock and  approximately  50% of the common stock of Holdings;  (b) a
contribution of $13,600,000 from certain members of management of the Company to
Holdings in exchange for Holdings  Preferred Stock and  approximately 50% of the
common stock of Holdings;  and (c) a loan of $25,000,000  from a Jordan Investor
to Holdings in exchange for Holdings Subordinated Notes.

     "Equity  Interests"  means  Capital  Stock  or  partnership   interests  or
warrants,  options  or other  rights to  acquire  Capital  Stock or  partnership
interests  (but  excluding (i) any debt security  that is  convertible  into, or
exchangeable  for,  Capital  Stock or  partnership  interests and (ii) any other
Indebtedness or Obligation);  provided,  however, that Equity Interests will not
include any Incentive Arrangements or obligations or payments thereunder.

     "Equity  Offering"  means a public or private  offering  by the Company for
cash of Equity  Interests and all  warrants,  options or other rights to acquire
Capital  Stock,  other  than  (i) an  offering  of  Disqualified  Stock  or (ii)
Incentive Arrangements or obligations or payments thereunder.

     "Exchange  Offer"  means any offer by the  Company to  Holders to  exchange
Series B Notes for (i) Series A Notes and/or (ii) 1997 Notes.

     "Existing Credit Agreement" means that certain credit facility, dated as of
March 28, 2002 and amended as of December  31,  2002,  by and among the Company,
Holdings,  each of the  financial  institutions  a  party  thereto  and  Bank of
America, N.A. as agent for the financial

                                      -5-

<PAGE>




institutions a party thereto,  together with all loan documents and  instruments
thereunder (including, without limitation, any guarantee agreements and security
documents),  in each  case as such  agreements  may be  amended  (including  any
amendment and restatement thereof), supplemented or otherwise modified from time
to time,  including  any  agreement  extending  the  maturity  of,  refinancing,
replacing or otherwise restructuring (including, without limitation,  increasing
the  amount of  available  borrowings,  letters  of  credit  or other  financial
accommodations  thereunder, all or any portion of the Obligations under any such
agreement or any successor or  replacement  agreement and whether by the same or
any other agent, lender or group of lenders).

     "Existing  Indebtedness"  means the  Indebtedness  of Winning Ways, Inc. at
December 31, 1996.

     "GAAP"  means  generally  accepted  accounting   principles,   consistently
applied,  as of the date of original  issuance of the Notes.  All  financial and
accounting  determinations  and calculations under the Indenture will be made in
accordance with GAAP.

     "Global  Note"  means a Note that  contains  the  paragraph  referred to in
footnote 1 and the additional  schedule referred to in footnote 2 to the form of
the Note  attached  hereto as Exhibit A.

      "Government  Securities"  means  direct  obligations  of,  or  obligations
guaranteed  by, the United States of America for the payment of which  guarantee
or obligations the full faith and credit of the United States is pledged.

     "Guarantors"  means  each  Restricted   Subsidiary  that  executes  a  Note
Guarantee  in  accordance  with the  provisions  of this  Indenture,  and  their
respective successors and assigns.

     "Hedging Obligations" means, with respect to any Person, the Obligations of
such  Persons  under  (i)  interest  rate  swap  agreements,  interest  rate cap
agreements and interest rate collar agreements, (ii) foreign exchange contracts,
currency swap  agreements or similar  agreements  and (iii) other  agreements or
arrangements designed to protect such Person against fluctuations,  or otherwise
to establish  financial hedges in respect of, exchange rates,  currency rates or
interest rates.

     "Holder" means a Person in whose name a Note is registered.

     "Holdings" means GFSI Holdings, Inc., a Delaware corporation.

     "Holdings  Preferred  Stock" means the 12% cumulative  preferred  stock due
2009 of Holdings, as in effect on the 1997 Notes Issue Date.

     "Holdings  Subordinated  Notes" means $25.0 million in aggregate  principal
amount of 12%  subordinated  notes due 2008 of Holdings as in effect on the 1997
Notes Issue Date or any  Indebtedness  of  Holdings  issued or given in exchange
for, or the proceeds of which are used to, extend,  refinance,  renew,  replace,
substitute or refund such Holdings  Subordinated  Notes;  provided that any such
Indebtedness  (i) is  issued  in a  principal  amount  not  exceeding  the  then
outstanding  principal amount of the Holdings  Subordinated  Notes,  (ii) has an
interest rate not exceeding 12%, (iii) is subordinated to other  Indebtedness of
Holdings to the same extent as the

                                      -6-


<PAGE>



Holdings  Subordinated Notes and (iv) has a Weighted Average Life to Maturity no
less than the Weighted  Average  Life to Maturity of the  Holdings  Subordinated
Notes.

     "Incentive Arrangements" means any earn-out agreements,  stock appreciation
rights,   "phantom"   stock  plans,   employment   agreements,   non-competition
agreements,  subscription  and  stockholders  agreements and other incentive and
bonus plans, including the Incentive Compensation Plan, and similar arrangements
made in connection with  acquisitions of Persons or businesses by the Company or
the  Restricted  Subsidiaries  or  the  retention  of  consultants,  executives,
officers or employees by Holdings, the Company or the Restricted Subsidiaries.

     "Incentive  Compensation  Plan" means the incentive  compensation  plan for
providing  annual  cash  bonuses  that the  Company  expects to adopt  following
consummation of the Transactions.

     "Indebtedness" means, with respect to any Person, any indebtedness, whether
or not  contingent,  in respect of borrowed money or evidenced by bonds,  notes,
debentures  or  similar  instruments  or  letters  of credit  (or  reimbursement
agreements in respect  thereof) or representing  the deferred and unpaid balance
of the purchase price of any property  (including  pursuant to capital  leases),
except any such balance that  constitutes an accrued expense or a trade payable,
and any Hedging Obligations,  if and to the extent such indebtedness (other than
a Hedging  Obligation)  would appear as a liability upon a balance sheet of such
Person  prepared  on a  consolidated  basis  in  accordance  with  GAAP and also
includes,  to the extent not  otherwise  included,  the  guarantee of items that
would be included within this definition; provided, however, that "Indebtedness"
will  not  include  any  Incentive   Arrangements  or  obligations  or  payments
thereunder.

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

     "Insolvency  or  Liquidation   Proceeding"  means  (i)  any  insolvency  or
bankruptcy or similar case or proceeding,  or any reorganization,  receivership,
liquidation,  dissolution  or winding up of the  Company,  whether  voluntary or
involuntary,  or (ii) any  assignment  for the benefit of creditors or any other
marshaling of assets and liabilities of the Company.

     "Investment"  means any  capital  contribution  to, or other debt or equity
investment in, any Person.

     "issue" means create, issue, assume,  guarantee,  incur or otherwise become
directly  or  indirectly  liable  for any  Indebtedness  or  Capital  Stock,  as
applicable;  provided,  however,  that any  Indebtedness  or Capital  Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by  merger,  consolidation,   acquisition,  redesignation  of  a  Non-Restricted
Subsidiary  or  otherwise)  shall be  deemed  to be  issued  by such  Restricted
Subsidiary at the time it becomes a Restricted Subsidiary.  For this definition,
the terms "issuing," "issuer," "issuance" and "issued" have meanings correlative
to the foregoing.

     "Jordan  Investors"  means The  Jordan  Company,  affiliates  of The Jordan
Company and MCIT PLC.

                                      -7-

<PAGE>




     "Legal  Holiday"  means a  Saturday,  a Sunday  or a day on  which  banking
institutions  in the City of New  York,  the city in which the  Corporate  Trust
Office of the Trustee is located or at a place of payment are authorized by law,
regulation  or executive  order to remain  closed.  If a payment date is a Legal
Holiday  at a place of  payment,  payment  may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.

     "Lien"  means,  with  respect to any asset,  any  mortgage,  lien,  pledge,
charge,  security  interest or encumbrance of any kind in respect of such asset,
whether or not filed,  recorded or  otherwise  perfected  under  applicable  law
(including any conditional sale or other title retention agreement, any lease in
the nature  thereof,  any option or other agreement to sell and any filing of or
agreement to give any financing  statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).

     "Marketable   Securities"   means  (a)  Government   Securities,   (b)  any
certificate  of  deposit  maturing  not more  than 270  days  after  the date of
acquisition  issued  by,  or time  deposit  of,  an  Eligible  Institution,  (c)
commercial  paper  maturing not more than 270 days after the date of acquisition
of an issuer (other than an Affiliate of the Company) with a rating, at the time
as of which any  investment  therein is made, of "A-2" (or higher)  according to
S&P or "P-2" (or higher) according to Moodys or carrying an equivalent rating by
a nationally  recognized  rating agency if both of the two named rating agencies
cease publishing  ratings of investments,  (d) any bankers  acceptances or money
market  deposit  accounts  issued by an  Eligible  Institution  and (e) any fund
investing  exclusively  in  investments  of the types  described  in clauses (a)
through (d) above.

     "Moodys" means Moody's Investors Services, Inc.

     "Net Income"  means,  with respect to any Person,  the net income (loss) of
such Person, determined in accordance with GAAP, excluding, however, any gain or
loss, together with any related provision for taxes, realized in connection with
any Asset Sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions).

     "Net Proceeds" means,  with respect to any Asset Sale, the aggregate amount
of cash  proceeds  (including  any  cash  received  by way of  deferred  payment
pursuant to a note receivable  issued in connection with such Asset Sale,  other
than the portion of such deferred payment constituting  interest,  and including
any amounts  received as disbursements or withdrawals from any escrow or similar
account  established in connection with any such Asset Sale, but, in either such
case,  only as and  when so  received)  received  by the  Company  or any of its
Restricted  Subsidiaries  in respect of such  Asset  Sale,  net of: (i) the cash
expenses  of such Asset Sale  (including,  without  limitation,  the  payment of
principal of, and premium, if any, and interest on, Indebtedness  required to be
paid  as a  result  of such  Asset  Sale  (other  than  the  Notes)  and  legal,
accounting,  management  and  advisory  and  investment  banking  fees and sales
commissions),  (ii) taxes paid or payable as a result thereof, (iii) any portion
of cash  proceeds  that the Company  determines in good faith should be reserved
for  post-closing  adjustments,  it being  understood and agreed that on the day
that all such post-closing adjustments have been determined, the amount (if any)
by which the  reserved  amount in respect of such Asset Sale  exceeds the actual
post-closing  adjustments  payable  by the  Company  or  any  of its  Restricted
Subsidiaries  shall  constitute

                                      -8-

<PAGE>



Net Proceeds on such date, (iv) any relocation  expenses and pension,  severance
and  shutdown  costs  incurred as a result  thereof,  and (v) any  deduction  or
appropriate  amounts to be  provided  by the  Company  or any of its  Restricted
Subsidiaries  as a reserve  in  accordance  with GAAP  against  any  liabilities
associated  with the asset disposed of in such  transaction  and retained by the
Company  or such  Restricted  Subsidiary  after  such sale or other  disposition
thereof,  including,  without  limitation,  pension  and  other  post-employment
benefit liabilities and liabilities related to environmental  matters or against
any indemnification obligations associated with such transaction.

     "1997 Notes" means the  $125,000,000  aggregate  principal amount of 9 5/8%
Senior  Subordinated  Notes of the Company issued pursuant to an indenture dated
February  27, 1997 by and  between  the Company and State  Street Bank and Trust
Company (as successor in interest to Fleet National Bank).

     "1997 Notes Issue Date" means  February 27,  1997,  the date of issuance of
the 1997 Notes.

     "Non-Restricted  Subsidiary" means any Subsidiary of the Company other than
a Restricted Subsidiary.

     "Notes" means the Series A Notes and the Series B Notes.

     "Obligations"  means,  with  respect to any  Indebtedness,  all  principal,
interest, premiums, penalties, fees, indemnities, expenses (including legal fees
and expenses),  reimbursement  obligations and other liabilities  payable to the
holder of such Indebtedness under the documentation governing such Indebtedness,
and any other claims of such holder arising in respect of such Indebtedness.

     "Offering" means the offer and sale of the 9 5/8% Senior Subordinated Notes
of the Company issued under the Indenture  dated as of February 27, 1997 between
the Company and State Street Bank and Trust Company (as successor in interest to
Fleet National Bank), as trustee.

     "Offering  Memorandum"  means the Offering  Memorandum,  dated February 20,
1997, relating to the Company's offering and placement of the 1997 Notes.

     "Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer,  the President,  the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer,  the Controller,  the
Secretary or any Vice-President of such Person.

     "Officers' Certificate" means a certificate signed on behalf of the Company
by two  Officers of the  Company,  one of whom must be the  principal  executive
officer,  the  principal  financial  officer,  the  treasurer  or the  principal
accounting officer of the Company,  that meets the requirements of Section 11.05
hereof.

                                      -9-

<PAGE>



     "Opinion of Counsel"  means an opinion from legal counsel who is reasonably
acceptable to the Trustee,  that meets the requirements of Section 11.05 hereof.
The counsel may be an employee of or counsel to the Company,  any  Subsidiary of
the Company or the Trustee.

     "Other Permitted  Indebtedness"  means: (i) Indebtedness of the Company and
its Restricted  Subsidiaries existing as of the 1997 Notes Issue Date (including
the 1997  Notes) and all  related  Obligations  as in effect on such date;  (ii)
Indebtedness  of the  Company  and its  Restricted  Subsidiaries  in  respect of
bankers  acceptances  and  letters  of credit  (including,  without  limitation,
letters of credit in  respect of  workers'  compensation  claims)  issued in the
ordinary   course  of   business,   or  other   Indebtedness   in   respect   of
reimbursement-type  obligations  regarding workers'  compensation  claims; (iii)
Refinancing  Indebtedness,  provided  that:  (A) the  principal  amount  of such
Refinancing  Indebtedness  shall not exceed the outstanding  principal amount of
Indebtedness  (including  unused  commitments)  extended,  refinanced,  renewed,
replaced,  substituted  or refunded  plus any amounts  incurred to pay premiums,
fees and expenses in  connection  therewith,  (B) the  Refinancing  Indebtedness
shall have a Weighted  Average  Life to  Maturity  equal to or greater  than the
Weighted  Average  Life  to  Maturity  of  the   Indebtedness   being  extended,
refinanced,  renewed, replaced, substituted or refunded; provided, however, that
this limitation in this clause (B) does not apply to Refinancing Indebtedness of
Senior  Indebtedness,  and  (C) in  the  case  of  Refinancing  Indebtedness  of
Indebtedness  that is  subordinated  in  right of  payment  to the  Notes,  such
Refinancing Indebtedness shall be subordinated to the Notes at least to the same
extent as the Subordinated  Indebtedness  being extended,  refinanced,  renewed,
replaced,  substituted or refunded; (iv) intercompany  Indebtedness of and among
the Company and its Restricted Subsidiaries; (v) Indebtedness of the Company and
its  Restricted  Subsidiaries  incurred  in  connection  with  making  permitted
Restricted  Payments under clauses (iii), (iv) (but only to the extent that such
Indebtedness  is provided by the Company or a Restricted  Subsidiary)  or (x) of
Section 4.05(b); provided that any Indebtedness incurred pursuant to this clause
(v) is expressly subordinate in right of payment to the Notes; (vi) Indebtedness
of any Non-Restricted  Subsidiary created after the date of original issuance of
the Notes, provided that such Indebtedness is nonrecourse to the Company and its
Restricted  Subsidiaries and the Company and its Restricted Subsidiaries have no
Obligations with respect to such Indebtedness; (vii) Indebtedness of the Company
and its Restricted  Subsidiaries under Hedging Obligations;  (viii) Indebtedness
of the Company and its  Restricted  Subsidiaries  arising from the honoring by a
bank or other  financial  institution  of a check,  draft or similar  instrument
inadvertently (except in the case of daylight overdrafts, which will not be, and
will not be deemed to be,  inadvertent) drawn against  insufficient funds in the
ordinary course of business; (ix) Indebtedness of the Company and its Restricted
Subsidiaries  in  connection  with  performance,  surety,  statutory,  appeal or
similar  bonds in the  ordinary  course of  business;  (x)  Indebtedness  of the
Company and its Restricted  Subsidiaries in connection with agreements providing
for  indemnification,  purchase  price  adjustments  and similar  obligations in
connection with the sale or disposition of any of their business,  properties or
assets;  (xi)  the  guarantee  by  the  Company  or any  of  the  Guarantors  of
Indebtedness  of the Company or a Restricted  Subsidiary of the Company that was
permitted to be incurred by Section 4.07; and (xii)  Indebtedness  of any Person
at the time it is  acquired  as a  Restricted  Subsidiary,  provided  that  such
Indebtedness was not issued by such Person in connection with or in anticipation
of such acquisition.

     "Permitted  Junior  Securities"  means  Equity  Interests in the Company or
subordinated  debt  securities of the Company that (a) are  subordinated  to all
Senior  Indebtedness  (and any debt

                                      -10-

<PAGE>




securities  issued in  exchange  for Senior  Indebtedness)  to at least the same
extent as the Notes are subordinated to Senior Indebtedness  pursuant to Article
10 of this  Indenture,  (b) have a Weighted  Average Life to Maturity no shorter
than the Weighted Average Life to Maturity of the Notes and (c) if there are any
amounts outstanding under the Existing Credit Agreement, have a Weighted Average
Life to Maturity at least as long as the sum of (i) the Weighted Average Life to
Maturity of the  Existing  Credit  Agreement  or any debt  securities  issued in
exchange therefor  (whichever is longer) plus (ii) the positive  difference,  if
any, between the Weighted Average Life to Maturity of the Notes and the Weighted
Average Life to Maturity of the Existing Credit Agreement, in each case measured
immediately prior to the issuance of such Permitted Junior Securities.

     "Permitted  Liens" means:  (i) Liens securing  Senior  Indebtedness  of the
Company or any Guarantor that was permitted by the terms of this Indenture to be
incurred;  (ii) Liens for  taxes,  assessments,  governmental  charges or claims
which are being  contested  in good faith by  appropriate  proceedings  promptly
instituted  and  diligently  conducted  and if a  reserve  or other  appropriate
provision,  if any, as shall be required in conformity with GAAP shall have been
made therefor; (iii) statutory Liens of landlords and carriers', warehousemen's,
mechanics', suppliers',  materialmen's,  repairmen's or other like Liens arising
in the  ordinary  course  of  business  and  with  respect  to  amounts  not yet
delinquent or being  contested in good faith by  appropriate  proceedings,  if a
reserve  or  other  appropriate  provision,  if any,  as shall  be  required  in
conformity  with GAAP shall have been made  therefor;  (iv)  Liens  incurred  on
deposits  made in the ordinary  course of business in  connection  with workers'
compensation,  unemployment  insurance and other types of social  security;  (v)
Liens  incurred on deposits  made to secure the  performance  of tenders,  bids,
leases,  statutory obligations,  surety and appeal bonds,  government contracts,
performance  and return of money  bonds and other  obligations  of a like nature
incurred in the ordinary  course of business  (exclusive of obligations  for the
payment of  borrowed  money);  (vi)  easements,  rights-of-way,  zoning or other
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances not interfering in any material respect with the business of the
Company or any of its Restricted Subsidiaries incurred in the ordinary course of
business; (vii) Liens (including extensions,  renewals and replacements thereof)
upon property  acquired  (the  "Acquired  Property")  after the date of original
issuance of the Notes,  provided  that:  (A) any such Lien is created solely for
the  purpose  of  securing  Indebtedness  representing,  or issued  to  finance,
refinance  or  refund,  the cost  (including  the cost of  construction)  of the
Acquired Property,  (B) the principal amount of the Indebtedness secured by such
Lien does not exceed 100% of the cost of the  Acquired  Property,  (C) such Lien
does not extend to or cover any property  other than the  Acquired  Property and
any  improvements  on  such  Acquired  Property,  and (D)  the  issuance  of the
Indebtedness  to purchase  the Acquired  Property is permitted by Section  4.07;
(viii) Liens in favor of customs and revenue  authorities arising as a matter of
law to secure  payment of customs duties in connection  with the  importation of
goods;  (ix)  judgment  and  attachment  Liens  not  giving  rise to an Event of
Default;  (x)  leases or  subleases  granted to others  not  interfering  in any
material  respect  with the  business  of the  Company or any of its  Restricted
Subsidiaries;  (xi) Liens securing Indebtedness under Hedging Obligations; (xii)
Liens encumbering  deposits made to secure  obligations  arising from statutory,
regulatory,  contractual or warranty  requirements;  (xiii) Liens arising out of
consignment  or similar  arrangements  for the sale of goods entered into by the
Company or its Restricted Subsidiaries in the ordinary course of business; (xiv)
any  interest  or title of a lessor in  property  subject to any  capital  lease
obligation or operating lease; (xv) Liens arising from filing Uniform Commercial
Code financing

                                      -11-

<PAGE>




statements  regarding  leases;  (xvi)  Liens  existing  on the date of  original
issuance of the Notes and any extensions,  refinancings, renewals, replacements,
substitutions or refundings thereof;  (xvii) any Lien granted to the Trustee and
any substantially  equivalent Lien granted to any trustee or similar institution
under  any  indenture  for  Senior  Indebtedness  permitted  by the terms of the
Indenture;  (xviii) Liens in favor of the Company or any Restricted  Subsidiary;
(xix)  additional  Liens at any one time outstanding in respect of properties or
assets where  aggregate fair market value does not exceed $2.0 million (the fair
market  value  to be  determined  on the  date  such  Lien  is  granted  on such
properties or assets); and (xx) Liens securing intercompany  Indebtedness issued
by any Restricted Subsidiary to the Company or another Restricted Subsidiary.

     "Person" means any  individual,  corporation,  partnership,  joint venture,
association,   joint  stock  company,  trust,   unincorporated  organization  or
government or any agency or political subdivision thereof.

     "Principals"  means  (a)  The  Jordan  Company,   Jordan/Zalaznick  Capital
Corporation and MCIT PLC, and their respective Affiliates,  principals, partners
and employees, family members of any of the foregoing and trusts for the benefit
of  any of the  foregoing,  including,  without  limitation,  Leucadia  National
Corporation and Jordan Industries, Inc., and their respective Subsidiaries,  (b)
the officers,  directors and employees of the Company on the date of issuance of
the Notes and their respective  Affiliates and family members and trusts for the
benefit  of any  of  the  foregoing.  For  the  purpose  of  the  definition  of
"Principals," The Jordan Company,  Jordan/Zalaznick Capital Corporation and MCIT
PLC shall be deemed to be Affiliates.

     "Post-Petition  Interest"  means any interest  accruing  subsequent  to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect  thereto,  whether or not such  interest is an allowed  claim under
applicable law.

     "Pro Forma Basis"  means,  for  purposes of  determining  Consolidated  Net
Income in connection with the Cash Flow Coverage Ratio  (including in connection
with Sections 4.05,  4.17 and 5.01, the incurrence of  Indebtedness  pursuant to
Section 4.07(a) and Consolidated Net Worth for purposes of Section 5.01), giving
pro forma effect to (x) any acquisition or sale of a Person,  business or asset,
related  incurrence,  repayment or refinancing of  Indebtedness or other related
transactions,  including  any  Restructuring  Charges  which would  otherwise be
accounted for as an adjustment  permitted by Regulation S-X under the Securities
Act or on a pro forma basis  under GAAP,  or (y) any  incurrence,  repayment  or
refinancing of any Indebtedness  and the application of the proceeds  therefrom,
in  each  case,  as if  such  acquisition  or  sale  and  related  transactions,
restructurings,  consolidations, cost savings, reductions, incurrence, repayment
or refinancing  were realized on the first day of the relevant period  permitted
by Regulation  S-X under the  Securities Act or on a pro forma basis under GAAP.
Furthermore,  in  calculating  the Cash Flow  Coverage  Ratio,  (1)  interest on
outstanding   Indebtedness   determined  on  a  fluctuating   basis  as  of  the
determination date and which will continue to be so determined  thereafter shall
be  deemed  to have  accrued  at a fixed  rate  per  annum  equal to the rate of
interest  on such  Indebtedness  in effect  on the  determination  date;  (2) if
interest on any Indebtedness  actually  incurred on the  determination  date may
optionally  be  determined at an interest rate based upon a factor of a prime or
similar rate, a eurocurrency  interbank  offered rate, or other rates,  then the
interest rate in effect on the determination date will be deemed to have been in
effect during the relevant  period;  and (3)  notwithstanding  clause (1) above,
interest on Indebtedness  determined on a

                                      -12-

<PAGE>



fluctuating basis, to the extent such interest is covered by agreements relating
to interest rate swaps or similar interest rate protection Hedging  Obligations,
shall be deemed to accrue at the rate per annum resulting after giving effect to
the operation of such agreements.

     "Redeemable  Preferred  Stock" means  preferred  stock that by its terms or
otherwise  is  required to be  redeemed  or is  redeemable  at the option of the
holder thereof on, or prior to, the maturity date of the Notes.

     "Refinancing  Indebtedness"  means (i)  Indebtedness of the Company and its
Restricted  Subsidiaries  issued or given in exchange  for,  or the  proceeds of
which are used to, extend, refinance,  renew, replace,  substitute or refund any
Indebtedness  permitted  under this Indenture or any  Indebtedness  issued to so
extend, refinance, renew, replace, substitute or refund such Indebtedness,  (ii)
any refinancings of Indebtedness issued under the Existing Credit Agreement, and
(iii) any additional  Indebtedness issued to pay premiums and fees in connection
with clauses (i) and (ii).

     "Related  Party" with respect to any  Principal  means (a) any  controlling
stockholder,  80% (or more)  owned  Subsidiary,  or spouse or  immediate  family
member  (in  the  case of an  individual)  of such  Principal  or (b) or  trust,
corporation,  partnership  or other  entity,  the  beneficiaries,  stockholders,
partners,  owners or Persons  beneficially  holding  an 80% or more  controlling
interest of which consist of such Principal  and/or such other Persons  referred
to in the immediately preceding clause (a).

     "Restricted  Investment" means any Investment in any Person;  provided that
Restricted   Investments  will  not  include:   (i)  Investments  in  Marketable
Securities;  (ii) any Incentive Arrangements;  (iii) Investments in the Company;
or (iv) Investments in any Restricted  Subsidiary  (provided that any Investment
in a Restricted  Subsidiary was made for fair market value (as determined by the
Board of  Directors in good  faith)).  The amount of any  Restricted  Investment
shall be the amount of cash and the fair market value at the time of transfer of
all other  property  (as  determined  by the Board of  Directors  in good faith)
initially  invested or paid for such Restricted  Investment,  plus all additions
thereto,  without any  adjustments  for  increases  or  decreases in value of or
write-ups,   write-downs  or  write-offs   with  respect  to,  such   Restricted
Investment.

     "Restricted  Subsidiary"  means: (i) any Subsidiary of the Company existing
on the date of original  issuance of the Notes, and (ii) any other Subsidiary of
the Company formed,  acquired or existing after the date of original issuance of
the  Notes  that is  designated  as a  "Restricted  Subsidiary"  by the  Company
pursuant  to a  resolution  approved  a  majority  of the  Board  of  Directors,
provided,  however,  that the term Restricted  Subsidiary  shall not include any
Subsidiary of the Company that has been  redesignated by the Company pursuant to
a   resolution   approved  by  a  majority  of  the  Board  of  Directors  as  a
Non-Restricted Subsidiary in accordance with Section 4.17 unless such Subsidiary
shall have subsequently been redesignated a Restricted  Subsidiary in accordance
with clause (ii) of this definition.

     "Restructuring  Charges"  means any  charges  or  expenses  in  respect  of
restructuring  or  consolidating  any business,  operations or  facilities,  any
compensation or headcount reduction, or

                                      -13-

<PAGE>



any other cost savings,  of any Persons or  businesses  either alone or together
with  the  Company  or any  Restricted  Subsidiary,  as  permitted  by  GAAP  or
Regulation S-X under the Securities Act.

     "S&P" means  Standard & Poor's Rating  Services,  a division of McGraw-Hill
Companies, Inc.

     "SEC" means the Securities and Exchange Commission.

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

     "Senior   Indebtedness"   means,  with  respect  to  any  Person,  (i)  all
Indebtedness of such Person  outstanding under the Existing Credit Agreement and
all Hedging  Obligations  with respect thereto,  (ii) any other  Indebtedness of
such  Person  permitted  to be  incurred  under  the  terms  of this  Indenture,
provided,  however,  that Senior Indebtedness shall not include any Indebtedness
which  by the  terms  of the  instrument  creating  or  evidencing  the  same is
subordinated  or junior in right of payment to any other Senior  Indebtedness in
any respect,  and (iii) all Obligations  (including any Post-Petition  Interest)
with respect to the foregoing,  in each case whether  outstanding on the date of
the Indenture or thereafter incurred.  Notwithstanding  anything to the contrary
in the  foregoing,  Senior  Indebtedness  will not include (w) any liability for
federal,  state,  local or other  taxes  owed or owing by the  Company,  (x) any
Indebtedness  of such  Person  to any of its  Subsidiaries  or other  Affiliates
(other than Indebtedness  arising under the Existing Credit Agreement),  (y) any
trade  payables or other  liability to trade  creditors  arising in the ordinary
course of business (including guarantees thereof or instruments  evidencing such
liabilities)  or (z) any  Indebtedness  that is  incurred in  violation  of this
Indenture.

     "SFAS 106" means Statement of Financial Accounting Standards No. 106.

     "SFAS 109" means Statement of Financial Accounting Standards No. 109.

     "Significant  Subsidiary"  means any  Restricted  Subsidiary of the Company
that  would be a  "significant  subsidiary"  as  defined  in  clause  (2) of the
definition of such term in Rule 1-02 of Regulation  S-X under the Securities Act
and the Exchange Act.

     "Stated  Maturity"  means,  with respect to any  installment of interest or
principal  on any  series of  Indebtedness,  the date on which  such  payment of
interest or principal  was  scheduled  to be paid in the original  documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay,  redeem or repurchase  any such  interest or principal  prior to the date
originally scheduled for the payment thereof.

     "Subordinated   Indebtedness"   means  all  Obligations   with  respect  to
Indebtedness  if the instrument  creating or evidencing the same, or pursuant to
which the same is outstanding,  designates  such  Obligations as subordinated or
junior in right of payment to Senior Indebtedness.

     "Subsidiary"  of any Person means any entity of which the Equity  Interests
entitled to cast at least a majority of the votes that may be cast by all Equity
Interests  having  ordinary  voting power for the election of directors or other
governing  body of such entity are owned by such Person  (regardless  of whether
such Equity  Interests are owned  directly by such Person or through one or more
Subsidiaries).

                                      -14-

<PAGE>



     "Tax Sharing Agreement" means the tax sharing agreement between the Company
and Holdings, as in effect on the 1997 Notes Issue Date.

     "TIA"  means  the  Trust  Indenture  Act of 1939  (15 U.S.  Code  sections.
77aaa-77bbbb),  as amended, as in effect on the date of original issuance of the
Notes.

     "TJC Agreement" means the Management Consulting  Agreement,  dated the 1997
Notes Issue Date,  between the  Company and TJC  Management  Corporation,  as in
effect on the 1997 Notes Issue Date.

     "Transactions"   means,   collectively,   the  Equity   Contribution,   the
consummation of the Offering,  the execution of the Existing  Credit  Agreement,
the  consummation  by the  Company  of the  acquisition  of Winning  Ways,  Inc.
pursuant  to the  Acquisition  Agreement,  the  repayment  by the Company of the
Existing Indebtedness.

     "Transfer  Restricted Notes" means a "restricted  security" as such term is
defined in Rule 144(a)(3)  under the Securities  Act;  provided that the Trustee
shall be entitled to request and conclusively rely on an Opinion of Counsel with
respect to whether any Note constitutes a Transfer Restricted Note.

     "Trustee"  means  State  Street  Bank and Trust  Company  until a successor
replaces it in accordance with the applicable provisions of this Indenture,  and
thereafter means the successor.

     "Trust  Officer"  means any officer in the  Corporate  Trust  Office of the
Trustee.

     "U.S. Government Obligations" means direct obligations of the United States
of  America  for the  payment  of which the full  faith and credit of the United
States of America is pledged,  provided that no U.S. Government Obligation shall
be callable at the issuer's option.

     "Voting  Stock"  means any class or classes of Capital  Stock  pursuant  to
which  the  holders  thereof  have  the  general  voting  power  under  ordinary
circumstances to elect the board of directors.

     "Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years  obtained by dividing (i) the then  outstanding
principal  amount  of such  Indebtedness  into  (ii)  the sum of the  product(s)
obtained  by  multiplying  (a) the  amount of each then  remaining  installment,
sinking  fund,  serial  maturity  or other  requirement  payment  of  principal,
including  payment at final maturity,  in respect thereof,  by (b) the number of
years  (calculated  to the nearest  one-twelfth)  which will elapse between such
date and the making of such payment.

     "Wolff Noncompetition Agreement" means the agreement,  dated the 1997 Notes
Issue Date, between Holdings and Robert M. Wolff,  relating to certain covenants
not to compete with the business of the Company,  as in effect on the 1997 Notes
Issue Date.

SECTION 1.02    OTHER DEFINITIONS.

                                      -15-

<PAGE>



                                                                      Defined in
         Term                                                          Section

         "Acceleration Notice" ........................................     6.02
         "Affiliate Transaction" ......................................     4.09
         "Asset Transfer Trigger Date" ................................     4.15
         "Asset Sale Disposition Date" ................................     4.15
         "Change of Control Trigger Date" .............................     4.14
         "covenant defeasance option" .................................     8.01
         "Disposition" ................................................     5.01
         "DTC" ........................................................     2.03
         "Event of Default" ...........................................     6.01
         "Excess Proceeds" ............................................     4.15
         "legal defeasance option" ....................................     8.01
         "Note Guarantees" ............................................     4.01
         "Notice of Default" ..........................................     6.01
         "Offer" ......................................................     3.08
         "Paying Agent" ...............................................     2.03
         "Payment Blockage Notice" ....................................    10.03
         "Purchase Date" ..............................................     3.08
         "Registrar" ..................................................     2.03
         "Representative" .............................................    10.05
         "Restricted Payments" ........................................     4.05
         "Successor Corporation" ......................................     5.01
         "Trustee Expenses" ...........................................     6.08

                                      -16-

<PAGE>



SECTION 1.03    INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

     Whenever this Indenture  refers to a provision of the TIA, the provision is
incorporated  by  reference  in, and made a part of, this  Indenture.  Any terms
incorporated by reference in this Indenture that are defined by the TIA, defined
by TIA  reference  to another  statute or defined by SEC rule under the TIA have
the meanings so assigned to them therein.

SECTION 1.04    RULES OF CONSTRUCTION.

     Unless the context otherwise requires:

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

          (2)  an accounting  term not otherwise  defined herein has the meaning
               assigned to it under GAAP;

          (3)  "or" is not exclusive;

          (4)  words in the  singular  include  the  plural,  and in the  plural
               include the singular; and

          (5)  provisions apply to successive events and transactions.

                                   ARTICLE 2
                                   THE NOTES

SECTION 2.01    FORM AND DATING.

     The  Notes  and  the  Trustee's  certificate  of  authentication  shall  be
substantially  in the form of Exhibit A,  which is part of this  Indenture.  The
Notes  may have  notations,  legends  or  endorsements  required  by law,  stock
exchange rule or usage. Each Note shall be dated the date of its authentication.
The Notes shall be in denominations of $1,000 and integral multiples thereof.

     The terms and provisions  contained in the Notes shall constitute,  and are
hereby  expressly made, a part of this Indenture and, to the extent  applicable,
the Company and the Trustee,  by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.

     Each Global Note shall represent such of the outstanding  Notes as shall be
specified  therein and each shall provide that it shall  represent the aggregate
amount of  outstanding  Notes from time to time  endorsed  thereon  and that the
aggregate amount of outstanding Notes represented  thereby may from time to time
be reduced or increased,  as appropriate,  to reflect exchanges and redemptions.
Any  endorsement  of a Global  Note to  reflect  the amount of any  increase  or
decrease in the amount of outstanding Notes represented thereby shall be made by
the  Trustee  or the  Note  Custodian,  at the  direction  of  the  Trustee,  in
accordance with instructions  given by the Holder thereof as required by Section
2.06.



                                      -17-

<PAGE>

SECTION 2.02    EXECUTION AND AUTHENTICATION.

     One  Officer  shall sign the Notes for the  Company by manual or  facsimile
signature.

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

     A Note shall not be valid until authenticated by the manual signature of an
authorized  signatory  of the  Trustee,  and the  Trustee's  signature  shall be
conclusive  evidence that the Note has been authenticated  under this Indenture.
The form of Trustee's  certificate  of  authentication  to be borne by the Notes
shall be substantially as set forth in Exhibit A.

     The  Trustee  shall,  upon a  written  order of the  Company  signed by two
Officers directing the Trustee to authenticate the Notes and certifying that all
conditions  precedent  to the issuance of the Notes  contained  herein have been
complied  with,  authenticate  (i) Series A Notes for  original  issuance  in an
initial aggregate principal amount of $9,900,000,  (ii) Series B Notes from time
to time for issue only in exchange for a like principal amount of Series A Notes
and/or 1997 Notes,  and (iii)  subject to compliance  with Section  4.07,  Notes
(which may be Series A Notes or Series B Notes)  for  original  issue  after the
date of this Indenture in an unlimited amount.

     The Trustee may appoint an  authenticating  agent acceptable to the Company
to  authenticate  Notes.  Unless  limited by the terms of such  appointment,  an
authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference  in  this  Indenture  to   authentication   by  the  Trustee  includes
authentication by such agent. An authenticating  agent has the same rights as an
Agent to deal with the Company or an Affiliate of the Company.

SECTION 2.03    REGISTRAR AND PAYING AGENT.

     The Company  shall  maintain an office or agency  (the  "Registrar")  where
Notes may be  presented  for  registration  of transfer or for  exchange  and an
office or agency (the "Paying  Agent") where Notes may be presented for payment.
The  Registrar  shall keep a  register  of the Notes and of their  transfer  and
exchange.  The Company may  appoint  one or more  co-registrars  and one or more
additional paying agents.  The term "Registrar"  includes any co-registrar,  and
the term "Paying Agent"  includes any additional  paying agent.  The Company may
change any Paying Agent or  Registrar  without  prior notice to any Holder.  The
Company  shall  notify in writing the Trustee and the Trustee  shall  notify the
Holders  in  writing  of the name and  address  of any Agent not a party to this
Indenture.  If the  Company  fails to  appoint  or  maintain  another  entity as
Registrar or Paying  Agent,  the Trustee  shall act as such.  The Company  shall
enter into an  appropriate  agency  agreement with any Agent not a party to this
Indenture,  and such  agreement  shall  incorporate  the  TIA's  provisions  and
implement the provisions of this Indenture that relate to such Agent.

     The Company initially  appoints The Depository Trust Company ("DTC") to act
as Depository with respect to the Global Notes.

     The Company initially  appoints the Trustee as Registrar,  Paying Agent and
agent for  service of notices and  demands in  connection  with the Notes and as
Note  Custodian  with  respect to the Global  Notes.  The  Company or any of its
Subsidiaries may act as Paying Agent, Registrar or co-registrar.  If the Company
fails to appoint or maintain a Registrar and Paying Agent, the


                                      -18-

<PAGE>



Trustee shall act as such, and shall be entitled to appropriate  compensation in
accordance with Section 7.07.

SECTION 2.04    PAYING AGENT TO HOLD MONEY IN TRUST.

     The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the Holders'  benefit or
the Trustee all money the Paying Agent holds for  redemption  or purchase of the
Notes or for the payment of principal of, or premium, if any, or interest on the
Notes,  and will  promptly  notify the  Trustee of any Default by the Company in
providing the Paying Agent with sufficient  funds to (i) purchase Notes tendered
pursuant to an Offer arising  under  Section 4.14,  (ii) redeem Notes called for
redemption, or (iii) make any payment of principal, premium, interest due on the
Notes.  While any such  Default  continues,  the  Trustee may require the Paying
Agent to pay all  money it holds to the  Trustee  and to  account  for any funds
disbursed. The Company at any time may require the Paying Agent to pay all money
it holds to the  Trustee and to account for any funds  disbursed.  Upon  payment
over to the  Trustee,  the Paying Agent (if other than the Company or any of its
Subsidiaries)  shall have no further liability for the money it delivered to the
Trustee.  If the Company or any of its  Subsidiaries  acts as Paying  Agent,  it
shall  segregate and hold in a separate  trust fund for the Holders'  benefit or
the Trustee all money it holds as Paying Agent.

SECTION 2.05    HOLDER 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
all Holders and shall otherwise  comply with TIA section 312(a).  If the Trustee
is not the  Registrar,  the Company  shall furnish to the Trustee at least seven
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 as the
Trustee may  reasonably  require that sets forth the names and addresses of, and
the aggregate  principal  amount of Notes held by, each Holder,  and the Company
shall otherwise comply with Section 312(a) of the TIA.

SECTION 2.06    TRANSFER AND EXCHANGE.

     (a) Transfer and Exchange of Definitive  Notes.  When Definitive  Notes are
presented by a Holder to the Registrar with a request:

          (x)  to register the transfer of the Definitive Notes; or

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

the Registrar  shall  register the transfer or make the exchange as requested if
its requirements  for such  transactions are met;  provided,  however,  that the
Definitive Notes presented or surrendered for register of transfer or exchange:

          (i)  shall be duly endorsed or accompanied by a written instruction of
               transfer in form  satisfactory  to the Registrar duly executed by
               such Holder or by his attorney, duly authorized in writing; and


                                      -19-
<PAGE>

          (ii) in the case of a  Definitive  Note that is a Transfer  Restricted
               Note,   such  request  shall  be  accompanied  by  the  following
               additional information and documents, as applicable:

               (A)  if such Transfer  Restricted  Note is being delivered to the
                    Registrar by a Holder for  registration  in the name of such
                    Holder,  without  transfer,  a certification  to that effect
                    from such  Holder  (in  substantially  the form of Exhibit B
                    hereto); or

               (B)  if such Transfer Restricted Note is being transferred (1) to
                    a "qualified  institutional  buyer" (as defined in Rule 144A
                    under the Securities Act) in accordance with Rule 144A under
                    the  Securities  Act or (2)  pursuant to an  exemption  from
                    registration   in   accordance   with  Rule  144  under  the
                    Securities  Act (and  based on an  opinion of counsel if the
                    Company  so  requests)  or  (3)  pursuant  to  an  effective
                    registration   statement   under  the   Securities   Act,  a
                    certification   to  that   effect   from  such   Holder  (in
                    substantially the form of Exhibit B hereto);

               (C)  if such Transfer  Restricted Note is being transferred to an
                    institutional  "accredited  investor," within the meaning of
                    Rule  501(a)(1),  (2), (3) or (7) under the  Securities  Act
                    pursuant  to  a  private   placement   exemption   from  the
                    registration  requirements  of the Securities Act (and based
                    on an  opinion of counsel  if the  Company so  requests),  a
                    certification   to  that   effect   from  such   Holder  (in
                    substantially   the  form  of   Exhibit  B  hereto)   and  a
                    certification    from   the   applicable    transferee   (in
                    substantially the form of Exhibit C hereto);

               (D)  if  such  Transfer  Restricted  Note  is  being  transferred
                    pursuant to an exemption  from  registration  in  accordance
                    with  Rule 904  under the  Securities  Act (and  based on an
                    opinion   of   counsel   if  the   Company   so   requests),
                    certifications   to  that   effect   from  such  Holder  (in
                    substantially the form of Exhibits B and D hereto); or

               (E)  if such Transfer  Restricted  Note is being  transferred  in
                    reliance  on  another   exemption   from  the   registration
                    requirements  of the Securities Act (and based on an opinion
                    of counsel if the Company so requests),  a certification  to
                    that effect from such Holder (in  substantially  the form of
                    Exhibit B hereto).

     (b)  Transfer of a Definitive  Note for a  Beneficial  Interest in a Global
Note. A  Definitive  Note may not be  exchanged  for a beneficial  interest in a
Global Note except upon  satisfaction of the requirements set forth below.  Upon
receipt by the Trustee of a Definitive  Note,  duly endorsed or  accompanied  by
appropriate  instruments  of  transfer,  in form  satisfactory  to the  Trustee,
together with:

                                      -20-

<PAGE>



      (i)   if  such   Definitive  Note  is  a  Transfer   Restricted   Note,  a
            certification  from the Holder thereof (in substantially the form of
            Exhibit B hereto) to the effect that such  Definitive  Note is being
            transferred by such Holder to a "qualified  institutional buyer" (as
            defined in Rule 144A under the  Securities  Act) in accordance  with
            Rule 144A under the Securities Act; and

      (ii)  whether or not such Definitive Note is a Transfer  Restricted  Note,
            written  instructions  from the Holder thereof directing the Trustee
            to make, or to direct the Note  Custodian to make, an endorsement on
            the Global Note to reflect an increase  in the  aggregate  principal
            amount of the Notes  represented  by the Global  Note,  the  Trustee
            shall cancel such  Definitive  Note in accordance  with Section 2.11
            and cause, or direct the Note Custodian to cause, in accordance with
            the  standing  instructions  and  procedures  existing  between  the
            Depository and the Note Custodian, the aggregate principal amount of
            Notes represented by the Global Note to be increased accordingly. If
            no Global Notes are then  outstanding,  the Company shall issue and,
            upon receipt of an  authentication  order in accordance with Section
            2.02,  the  Trustee  shall  authenticate  a new  Global  Note in the
            appropriate principal amount.

     (c)  Transfer and  Exchange of Global  Notes.  The transfer and exchange of
Global  Notes or  beneficial  interests  therein  shall be effected  through the
Depository,  in  accordance  with  this  Indenture  and  the  procedures  of the
Depository therefor,  which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.

     (d)  Transfer of a  Beneficial  Interest in a Global Note for a  Definitive
Note.

      (i)   Any Person  having a  beneficial  interest in a Global Note may upon
            request  exchange such  beneficial  interest for a Definitive  Note.
            Upon  receipt by the Trustee of written  instructions  or such other
            form of instructions  as is customary for the  Depository,  from the
            Depository  or  its  nominee  on  behalf  of  any  Person  having  a
            beneficial interest in a Global Note, and, in the case of a Transfer
            Restricted Note, the following additional  information and documents
            (all of which may be submitted by facsimile):

            (A)   if such beneficial interest is being transferred to the Person
                  designated by the Depository as being the beneficial  owner, a
                  certification   to  that   effect   from   such   Person   (in
                  substantially the form of Exhibit B hereto); or

            (B)   if such  beneficial  interest  is being  transferred  (1) to a
                  "qualified institutional buyer" (as defined in Rule 144A under
                  the  Securities  Act) in  accordance  with Rule 144A under the
                  Securities   Act  or  (2)  pursuant  to  an   exemption   from
                  registration  in accordance with Rule 144 under the Securities
                  Act (and based on an  opinion  of  counsel  if the  Company so
                  requests) or (3) pursuant to an effective

                                      -21-

<PAGE>



                  registration   statement   under   the   Securities   Act,   a
                  certification   to  that  effect  from  the   transferor   (in
                  substantially the form of Exhibit B hereto); or

            (C)   if  such  beneficial  interest  is  being  transferred  to  an
                  institutional  "accredited  investor,"  within the  meaning of
                  Rule  501(a)(1),  (2),  (3) or (7)  under the  Securities  Act
                  pursuant   to  a   private   placement   exemption   from  the
                  registration  requirements of the Securities Act (and based on
                  an  opinion  of  counsel  if  the  Company  so  requests),   a
                  certification   to  that   effect   from   such   Holder   (in
                  substantially   the  form  of   Exhibit   B   hereto)   and  a
                  certification from the applicable transferee (in substantially
                  the form of Exhibit C hereto);

            (D)   if such beneficial  interest is being transferred  pursuant to
                  an exemption  from  registration  in accordance  with Rule 904
                  under the  Securities  Act (and based on an opinion of counsel
                  if the  Company so  requests),  certifications  to that effect
                  from such Holder (in  substantially the form of Exhibits B and
                  D hereto); or

            (E)   if such beneficial  interest is being  transferred in reliance
                  on another exemption from the registration requirements of the
                  Securities  Act (and  based on an  opinion  of  counsel if the
                  Company so requests), a certification to that effect from such
                  Holder (in substantially the form of Exhibit B hereto).

               the  Trustee  or the  Note  Custodian,  at the  direction  of the
               Trustee,  shall, in accordance with the standing instructions and
               procedures   existing   between  the   Depository  and  the  Note
               Custodian,  cause the aggregate  principal amount of Global Notes
               to be reduced  accordingly  and,  following such  reduction,  the
               Company  shall  execute and,  upon  receipt of an  authentication
               order in accordance  with Section 2.02 hereof,  the Trustee shall
               authenticate  and deliver to the transferee a Definitive  Note in
               the appropriate principal amount.

          (ii) Definitive Notes issued in exchange for a beneficial  interest in
               a  Global  Note  pursuant  to  this  Section   2.06(d)  shall  be
               registered in such names and in such authorized  denominations as
               the  Depository,  pursuant  to  instructions  from its  direct or
               indirect  participants or otherwise,  shall instruct the Trustee.
               The  Trustee  shall  deliver  in  accordance  with  the  standard
               procedures of the Depository such Definitive Notes to the Persons
               in whose names such Notes are so registered.

     (e) Restrictions on Transfer and Exchange of Global Notes.  Notwithstanding
any other  provision of this  Indenture  (other than the provisions set forth in
subsection  (f) of this Section 2.06), a Global Note 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


                                      -22-

<PAGE>



nominee  of  the  Depository  or by the  Depository  or any  such  nominee  to a
successor Depository or a nominee of such successor Depository.

     (f) Authentication of Definitive Notes in Absence of Depository.  If at any
time:

          (i)  the  Depository  for the  Notes  notifies  the  Company  that the
               Depository is unwilling or unable to continue as  Depository  for
               the Global Notes and a successor  Depository for the Global Notes
               is not appointed by the Company  within 90 days after delivery of
               such notice; or

          (ii) The  Company,  at its sole  discretion,  notifies  the Trustee in
               writing that it elects to cause the issuance of Definitive  Notes
               under this Indenture,

then the Company  shall  execute,  and the  Trustee  shall,  upon  receipt of an
authentication order in accordance with Section 2.02,  authenticate and deliver,
Definitive Notes in an aggregate  principal amount equal to the principal amount
of the Global  Notes in exchange for such Global  Notes and  registered  in such
names as the Depository shall instruct the Trustee or the Company in writing.

     (g) Legends.

          (i)  Except  for any  Transfer  Restricted  Note  sold or  transferred
               (including any Transfer  Restricted Note  represented by a Global
               Note) as described in (ii) below,  each Transfer  Restricted Note
               certificate evidencing Global Notes and Definitive Notes (and all
               Notes issued in exchange therefor or substitution  thereof) shall
               bear legends in substantially the following form:

               "THE  SECURITY  (OR  ITS   PREDECESSOR)   EVIDENCED   HEREBY  WAS
               ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
               SECTION  5 OF THE  UNITED  STATES  SECURITIES  ACT OF  1933  (THE
               "SECURITIES  ACT"), AND THE SECURITY  EVIDENCED HEREBY MAY NOT BE
               OFFERED,  SOLD OR  OTHERWISE  TRANSFERRED  IN THE ABSENCE OF SUCH
               REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
               OF THE  SECURITY  EVIDENCED  HEREBY IS HEREBY  NOTIFIED  THAT THE
               SELLER MAY BE RELYING ON THE  EXEMPTION  FROM THE  PROVISIONS  OF
               SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
               THE  HOLDER  OF THE  SECURITY  EVIDENCED  HEREBY  AGREES  FOR THE
               BENEFIT  OF THE  COMPANY  THAT (A) SUCH  SECURITY  MAY BE RESOLD,
               PLEDGED OR OTHERWISE  TRANSFERRED,  ONLY (1)(a) INSIDE THE UNITED
               STATES  TO A  PERSON  WHO THE  SELLER  REASONABLY  BELIEVES  IS A
               QUALIFIED  INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
               SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
               144A, (b) IN A TRANSACTION  MEETING THE  REQUIREMENTS OF RULE 144
               UNDER THE

                                      -23-

<PAGE>



               SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
               IN A TRANSACTION  MEETING THE  REQUIREMENTS OF RULE 904 UNDER THE
               SECURITIES ACT OR (d) IN ACCORDANCE  WITH ANOTHER  EXEMPTION FROM
               THE  REGISTRATION  REQUIREMENTS  OF THE SECURITIES ACT (AND BASED
               UPON AN OPINION OF COUNSEL IF THE  COMPANY SO  REQUESTS),  (2) TO
               THE  COMPANY  OR  (3)  PURSUANT  TO  AN  EFFECTIVE   REGISTRATION
               STATEMENT  AND, IN EACH CASE, IN ACCORDANCE  WITH ANY  APPLICABLE
               SECURITIES  LAWS OF ANY STATE OF THE  UNITED  STATES OR ANY OTHER
               APPLICABLE  JURISDICTION  AND  (B)  THE  HOLDER  WILL,  AND  EACH
               SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF
               THE  SECURITY  EVIDENCED  HEREBY OF THE RESALE  RESTRICTIONS  SET
               FORTH IN (A) ABOVE."

          (ii) Upon  any  sale  or  transfer  of  a  Transfer   Restricted  Note
               (including any Transfer  Restricted Note  represented by a Global
               Note) pursuant to an effective  registration  statement under the
               Securities Act,  pursuant to Rule 144 under the Securities Act or
               pursuant to an opinion of counsel reasonably  satisfactory to the
               Company and the Registrar that no legend is required:

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

               (B)  in the case of any Transfer Restricted Note represented by a
                    Global  Note,  such  Transfer  Restricted  Note shall not be
                    required  to bear the  legend  set forth in (i) above if all
                    other  interests  in  such  Global  Note  have  been  or are
                    concurrently being sold or transferred  pursuant to Rule 144
                    under  the  Securities  Act  or  pursuant  to  an  effective
                    registration  statement  under the Securities  Act, but such
                    Transfer Restricted Note shall continue to be subject to the
                    provisions of Section 2.06(c); provided,  however, that with
                    respect  to  any  request  for  an  exchange  of a  Transfer
                    Restricted  Note that is  represented by a Global Note for a
                    Definitive  Note that does not bear the  legend set forth in
                    (i) above,  which request is made in reliance upon Rule 144,
                    the Holder thereof shall certify in writing to the Registrar
                    that such  request is being made  pursuant to Rule 144 (such
                    certification  to be  substantially in the form of Exhibit B
                    hereto).

              (iii) Notwithstanding  the  foregoing,  upon  consummation  of the
                    Exchange Offer, the Company shall issue and, upon receipt of
                    an authentication order in accordance with Section 2.02, the
                    Trustee shall  authenticate,

                                      -24-

<PAGE>



                    Series B Notes in exchange for Series A Notes and 1997 Notes
                    accepted for exchange in the Exchange Offer,  which Series B
                    Notes shall not bear the legend set forth in (i) above,  and
                    the Registrar  shall rescind any restriction on the transfer
                    of such Notes, in each case unless the Holder of such Series
                    A  Notes  is  either  (A)  a  broker-dealer,  (B)  a  Person
                    participating  in the  distribution of the Series A Notes or
                    (C) a Person who is an  affiliate  (as defined in Rule 144A)
                    of the Company.  The Company  shall  identify to the Trustee
                    such Holders of the Notes in a written  certification signed
                    by an Officer of the Company and, absent  certification from
                    the Company to such  effect,  the Trustee  shall assume that
                    there are no such Holders.

     (h)  Cancellation  and/or  Adjustment of Global Notes.  At such time as all
beneficial  interests in Global Notes have been exchanged for Definitive  Notes,
redeemed,  repurchased  or  cancelled,  all Global Notes shall be returned to or
retained and  cancelled by the Trustee in  accordance  with Section 2.11. At any
time prior to such cancellation,  if any beneficial interest in a Global Note is
exchanged  for  Definitive  Notes,  redeemed,   repurchased  or  cancelled,  the
principal  amount of Notes  represented  by such  Global  Note  shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Notes  Custodian,  at the  direction  of the  Trustee,  to  reflect  such
reduction.

     (i) General Provisions Relating to Transfers and Exchanges.

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

               (ii) No  service  charge  shall  be  made  to a  Holder  for  any
                    registration  of transfer or  exchange,  but the Company may
                    require  payment of a sum  sufficient  to cover any transfer
                    tax or similar  governmental  charge  payable in  connection
                    therewith  (other  than any such  transfer  taxes or similar
                    governmental   charge  payable  upon  exchange  or  transfer
                    pursuant to Sections 3.07, 4.14, 4.15 and 9.05).

              (iii) Neither the Company nor the  Registrar  shall be required to
                    register the  transfer of or exchange any Note  selected for
                    redemption  in  whole  or in  part,  except  the  unredeemed
                    portion of any Note being redeemed in part.

               (iv) All  Definitive  Notes  and  Global  Notes  issued  upon any
                    registration of transfer or exchange of Definitive  Notes or
                    Global Notes in accordance  with this  Indenture  (including
                    any increase in the aggregate  principal amount of the Notes
                    represented  by the Global Note pursuant to  subsection  (b)
                    above)  shall  be the  valid  obligations  of  the  Company,
                    evidencing  the same debt, and entitled to the same benefits
                    under  this  Indenture,  as the  Definitive  Notes or Global
                    Notes  surrendered  upon such  registration  of  transfer or
                    exchange.

                                      -25-

<PAGE>



               (v)  The  Company  shall not be  required  to issue Notes and the
                    Registrar  shall not be required to register the transfer of
                    or to  exchange  Notes  during  a  period  beginning  at the
                    opening of business 15 days before the day of any  selection
                    of Notes for redemption under Section 3.02 and ending at the
                    close of  business on the day of  selection,  or to register
                    the  transfer of or to exchange a Note between a record date
                    and the next succeeding interest payment date.

               (vi) Prior to due presentment for the  registration of a transfer
                    of any Note, the Trustee, any Agent and the Company may deem
                    and treat the Person in whose name any Note is registered as
                    the absolute owner of such Note for the purpose of receiving
                    payment of principal of, premium, if any, accrued and unpaid
                    interest on such Notes,  and neither the Trustee,  any Agent
                    nor the Company shall be affected by notice to the contrary.

              (vii) The Trustee shall  authenticate  Definitive Notes and Global
                    Notes in accordance with the provisions of Section 2.02.

SECTION 2.07    REPLACEMENT NOTES.

     If any mutilated Note is surrendered to the Trustee, or the Company and the
Trustee receive evidence to their satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon the Company's written
order signed by two  Officers,  shall  authenticate  a  replacement  Note if the
Trustee's  requirements  are met. If the Trustee or the Company requires it, the
Holder must supply an indemnity  bond that is  sufficient in the judgment of the
Trustee and the Company to protect the Company,  the  Trustee,  any Agent or any
authenticating  agent  from any loss  that any of them may  suffer  if a Note is
replaced. The Company and the Trustee may charge for their expenses in replacing
a Note. Every replacement Note is an additional Obligation of the Company.

SECTION 2.08    OUTSTANDING NOTES.

     The  Notes  outstanding  at any  time are all the  Notes  the  Trustee  has
authenticated  except  for those it has  cancelled,  those  delivered  to it for
cancellation,  those  representing  reductions  in the interest in a Global Note
effected by the Trustee in  accordance  with the  provisions  hereof,  and those
described in this Section as not outstanding.

     If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding
unless the Trustee receives proof  satisfactory to it that a bona fide purchaser
holds the replaced Note.

     If the entire  principal of, and premium,  if any, and accrued  interest on
any Note is considered  paid under Section 4.01, it ceases to be outstanding and
interest on it cease to accrue.

     Subject to Section  2.09, a Note does not cease to be  outstanding  because
the Company or an Affiliate holds the Note.



                                      -26-

<PAGE>

SECTION 2.09    TREASURY NOTES.

     In  determining  whether the Holders of the  required  principal  amount of
Notes have  concurred in any  direction,  waiver or consent,  Notes owned by the
Company or an Affiliate  shall be considered as though not  outstanding,  except
that for the purposes of  determining  whether the Trustee shall be protected in
relying  on any such  direction,  waiver or  consent,  only  Notes  that a Trust
Officer  of  the  Trustee   knows  are  so  owned   shall  be  so   disregarded.
Notwithstanding the foregoing,  Notes that the Company or an Affiliate offers to
purchase  or acquires  pursuant to an Offer,  exchange  offer,  tender  offer or
otherwise  shall not be deemed to be owned by the Company or an Affiliate  until
legal title to such Notes passes to the Company or such  Affiliate,  as the case
may be.

SECTION 2.10    TEMPORARY NOTES.

     Until Definitive Notes are ready for delivery,  the Company may prepare and
the  Trustee  shall  authenticate  temporary  Notes.  Temporary  Notes  shall be
substantially  in the form of Definitive  Notes but may have variations that the
Company considers  appropriate for temporary Notes.  Without unreasonable delay,
the Company shall prepare and the Trustee, upon receipt of the Company's written
order signed by two Officers  which shall specify the amount of temporary  Notes
to be  authenticated  and the  date  on  which  the  temporary  Notes  are to be
authenticated,  shall authenticate Definitive Notes and deliver them in exchange
for temporary  Notes.  Until such exchange,  Holders of temporary Notes shall be
entitled to the same rights, benefits and privileges as Definitive Notes.

SECTION 2.11    CANCELLATION.

     The Company at any time may deliver Notes to the Trustee for  cancellation.
The  Registrar  and the Paying  Agent  shall  forward to the  Trustee  any Notes
surrendered to them for registration of transfer, exchange, replacement, payment
(including  all Notes called for  redemption  and all Notes accepted for payment
pursuant to an Offer) or  cancellation,  and the Trustee  shall  cancel all such
Notes and shall  destroy all  cancelled  Notes  (subject to the  Exchange  Act's
record retention requirements) and deliver a certificate of their destruction to
the Company unless by written order, signed by two Officers of the Company,  the
Company shall direct that cancelled Notes be returned to it. The Company may not
issue new Notes to replace any Notes that have been  cancelled by the Trustee or
that have been delivered to the Trustee for  cancellation.  If the Company or an
Affiliate acquires any Notes (other than by redemption or pursuant to an Offer),
such  acquisition  shall not  operate as a  redemption  or  satisfaction  of the
Indebtedness represented by such Notes unless and until such Notes are delivered
to the Trustee for cancellation.

SECTION 2.12    DEFAULTED INTEREST.

     If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted  interest,  to Holders on a subsequent  special  record
date, in each case at the rate  provided in the Notes and in Section  4.01.  The
Company shall fix or cause to be fixed each such special record date and payment
date. As early as practicable  prior to the special record date, the Company (or
the  Trustee,  in the name of and at the  expense of the  Company)  shall mail a
notice that states the special  record  date,  the related  payment date and the
amount of interest to be paid.

                                      -27-

<PAGE>



SECTION 2.13    RECORD DATE.

     The record date for  purposes  of  determining  the  identity of Holders of
Notes entitled to vote or consent to any action by vote or consent authorized or
permitted  under this  Indenture  shall be determined as provided for in section
316(c) of the TIA.

SECTION 2.14    CUSIP NUMBER.

     A "CUSIP"  number shall be printed on the Notes,  and the Trustee shall use
the CUSIP number in notices of redemption, purchase or exchange as a convenience
to Holders,  provided that any such notice may state that no  representation  is
made as to the correctness or accuracy of the CUSIP number printed in the notice
or on the Notes and that reliance may be placed only on the other identification
numbers  printed on the Notes.  The Company shall promptly notify the Trustee of
any change in the CUSIP number.

                                   ARTICLE 3
              OPTIONAL REDEMPTION AND MANDATORY OFFERS TO PURCHASE

SECTION 3.01    NOTICES TO TRUSTEE.

     If the Company  elects to redeem Notes  pursuant to Section  3.07, it shall
furnish to the  Trustee,  at least 40 days prior to the  redemption  date and at
least 10 days prior to the date that notice of the redemption is to be mailed by
the Company to Holders,  an Officers'  Certificate  stating that the Company has
elected to redeem Notes pursuant to Section 3.07(a) or 3.07(b),  as the case may
be, the date notice of  redemption  is to be mailed to Holders,  the  redemption
date,  the aggregate  principal  amount of Notes to be redeemed,  the redemption
price for such Notes and the amount of accrued and unpaid interest on such Notes
as of the  redemption  date.  If the Trustee is not the  Registrar,  the Company
shall,  concurrently with delivery of its notice to the Trustee of a redemption,
cause the  Registrar  to deliver to the  Trustee a  certificate  (upon which the
Trustee may rely) setting forth the name of, and the aggregate  principal amount
of Notes held by, each Holder.

     If the Company is required to offer to purchase  Notes  pursuant to Section
4.14 or 4.15, it shall furnish to the Trustee, at least two Business Days before
notice of the Offer is to be mailed to Holders, an Officers' Certificate setting
forth that the Offer is being made pursuant to Section 4.14 or 4.15, as the case
may be, the Purchase Date, the maximum  principal amount of Notes the Company is
offering to purchase  pursuant to the Offer,  the purchase price for such Notes,
and the amount of accrued and unpaid  interest on such Notes as of the  Purchase
Date.

     The Company will also provide the Trustee with any  additional  information
that the Trustee reasonably requests in connection with any redemption or Offer.

SECTION 3.02    SELECTION OF NOTES TO BE REDEEMED OR PURCHASED.

     If less than all  outstanding  Notes are to be redeemed or if less than all
Notes tendered pursuant to an Offer are to be accepted for payment,  the Trustee
shall  select the  outstanding  Notes to be redeemed or accepted for payment pro
rata,  by lot or by a method that complies  with the  requirements  of any stock
exchange on which the Notes are listed and that the Trustee

                                      -28-

<PAGE>



considers  fair and  appropriate.  If the  Company  elects  to mail  notice of a
redemption  to Holders,  the Trustee  shall at least five Business Days prior to
the date  notice of  redemption  is to be  mailed,  (i)  select  the Notes to be
redeemed from Notes  outstanding  not previously  called for redemption and (ii)
notify the Company of the names of each Holder of Notes selected for redemption,
the principal  amount of Notes held by each such Holder and the principal amount
of such Holder's Notes that are to be redeemed.  If less than all Notes tendered
pursuant to an Offer on the Purchase  Date are to be accepted  for payment,  the
Trustee  shall  select on or promptly  after the  Purchase  Date the Notes to be
accepted for payment.  The Trustee shall select for redemption or purchase Notes
or portions of Notes in  principal  amounts of $1,000 or integral  multiples  of
$1,000;  except that if all of the Notes of a Holder are selected for redemption
or purchase,  the aggregate  principal  amount of the Notes held by such Holder,
even if not a multiple  of $1,000,  shall be redeemed  or  purchased.  Except as
provided in the preceding  sentence,  provisions of this Indenture that apply to
Notes  called for  redemption  or  tendered  pursuant  to an Offer also apply to
portions of Notes called for  redemption or tendered  pursuant to an Offer.  The
Trustee  shall notify the Company  promptly of the Notes or portions of Notes to
be called for redemption or selected for purchase.

SECTION 3.03    NOTICE OF REDEMPTION.

     At least 30 days but not more than 60 days before a  redemption  date,  the
Company  shall mail a notice of  redemption  to each Holder of Notes or portions
thereof that are to be redeemed.

     The notice shall identify the Notes or portions  thereof to be redeemed and
shall state:

               (1)  the redemption date;

               (2)  the redemption  price for the Notes and  separately  stating
                    the amount of unpaid and  accrued  interest on such Notes as
                    of the date of redemption;

               (3)  if any Note is being  redeemed  in part,  the portion of the
                    principal  amount  of such  Notes to be  redeemed  and that,
                    after the  redemption  date,  upon surrender of such Note, a
                    new  Note  or  Notes  in  principal   amount  equal  to  the
                    unredeemed portion will be issued;

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

               (5)  that Notes called for redemption  must be surrendered to the
                    Paying  Agent to collect the  redemption  price for, and any
                    accrued and unpaid interest on such Notes;

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

               (7)  the  paragraph  of the  Notes  pursuant  to which  the Notes
                    called for redemption are being redeemed; and

                                      -29-

<PAGE>



               (8)  the CUSIP number; provided that no representation is made as
                    to the correctness or accuracy of the CUSIP number listed in
                    such notice and printed on the Notes.

     At the Company's request, the Trustee shall (at the Company's expense) give
the notice of redemption in the Company's  name at least 30 but not more than 60
days before a redemption;  provided,  however, that the Company shall deliver to
the Trustee,  at least 45 days prior to the redemption date and at least 10 days
prior to the date that notice of the  redemption is to be mailed to Holders,  an
Officers'  Certificate  that (i)  requests  the  Trustee  to give  notice of the
redemption to Holders, (ii) sets forth the information to be provided to Holders
in the notice of  redemption,  as set forth in the  preceding  paragraph,  (iii)
states that the Company has elected to redeem Notes pursuant to Section  3.07(a)
or  3.07(b),  as the case may be,  and (iv) sets forth the  aggregate  principal
amount of Notes to be  redeemed  and the amount of accrued  and unpaid  interest
thereon as of the  redemption  date.  If the Trustee is not the  Registrar,  the
Company  shall,  concurrently  with any such  request,  cause the  Registrar  to
deliver to the Trustee a  certificate  (upon which the Trustee may rely) setting
forth the name of, the address of, and the aggregate  principal  amount of Notes
held by, each Holder.

SECTION 3.04    EFFECT OF NOTICE OF REDEMPTION.

     Once notice of redemption is mailed, Notes called for redemption become due
and  payable  on the  redemption  date at the price set forth in the Note.  Upon
surrender to the Trustee or Paying Agent, such Notes called for redemption shall
be paid at the redemption price (which shall include accrued interest thereon to
the redemption date) but  installments of interest,  the maturity of which is on
or prior to the  redemption  date,  shall be payable to Holders of record at the
close of business on the relevant record dates.

SECTION 3.05    DEPOSIT OF REDEMPTION PRICE.

     Prior to 10 a.m. on any redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money  sufficient to pay the  redemption  price
of, and accrued  interest on all Notes to be redeemed on that date.  The Trustee
or the Paying  Agent  shall  return to the  Company  any money that the  Company
deposited  with the  Trustee  or the  Paying  Agent  in  excess  of the  amounts
necessary to pay the redemption  price of, and accrued  interest on all Notes to
be redeemed.

     If the Company complies with the preceding paragraph, interest on the Notes
to be redeemed will cease to accrue on such Notes on the  applicable  redemption
date, whether or not such Notes are presented for payment. If a Note is redeemed
on or after an  interest  record  date but on or prior to the  related  interest
payment date,  then any accrued and unpaid  interest shall be paid to the Person
in whose name such Note was  registered  at the close of business on such record
date. If any Note called for redemption  shall not be so paid upon surrender for
redemption  because of the failure of the  Company to comply with the  preceding
paragraph,  interest will be paid on the unpaid principal,  premium, if any, and
interest from the redemption date until such principal,  premium and interest is
paid, at the rate of interest provided in the Notes and Section 4.01.

                                      -30-

<PAGE>



SECTION 3.06    NOTES REDEEMED IN PART.

     Upon  surrender of a Note that is redeemed in part, the Company shall issue
and the Trustee shall authenticate for the Holder at the Company's expense a new
Note  equal  in  principal  amount  to  the  unredeemed   portion  of  the  Note
surrendered.

SECTION 3.07    OPTIONAL REDEMPTION PROVISIONS.

     During the periods  indicated  below,  the Notes will be  redeemable at the
option of the Company,  in whole or in part, on at least 30 but not more than 60
days' notice to each Holder of Notes to be redeemed,  at the  redemption  prices
(expressed as  percentages  of the principal  amount) set forth below,  plus any
accrued and unpaid interest to the redemption date:


Year                                                                  Percentage
----                                                                  ----------

December 31, 2002 through February 28, 2003 ......................      104.813
March 1, 2003 through February 29, 2004 ..........................      103.208
March 1, 2004 through February 28, 2005...........................      101.604
March 1, 2005 and thereafter .....................................      100.000%


SECTION 3.08    MANDATORY PURCHASE PROVISIONS.

     (a) Within 30 days after any Change of Control  Trigger  Date or Asset Sale
Trigger  Date,  the Company  shall mail a notice to each Holder at such Holder's
registered address stating (i) that an offer ("Offer") is being made pursuant to
Section 4.14 or Section  4.15,  as the case may be, the length of time the Offer
shall remain open and the maximum aggregate  principal amount of Notes that will
be accepted for payment pursuant to such Offer;  (ii) the purchase price for the
Notes (as set forth in Section  4.14 or Section  4.15,  as the case may be), the
amount of accrued and unpaid interest on such Notes as of the purchase date, and
the  purchase  date (which shall be no earlier than 30 days and no later than 40
days from the date such notice is mailed (the "Purchase Date"));  (iii) that any
Note not  accepted  for payment  will  continue to accrue  interest;  (iv) that,
unless the Company  fails to deposit with the Paying Agent on the Purchase  Date
an amount  sufficient to purchase all Notes accepted by the Company for payment,
interest  shall cease to accrue on such Notes after the Purchase  Date; (v) that
Holders  electing  to tender any Note or portion  thereof  will be  required  to
surrender their Note, with a form entitled  "Option of Holder to Elect Purchase"
completed,  to the Paying Agent at the address  specified in the notice prior to
the close of business on the Business Day preceding the Purchase Date,  provided
that  Holders  electing  to  tender  only a portion  of any Note  must  tender a
principal amount of $1,000 or integral multiples thereof; (vi) that Holders will
be entitled to withdraw  their  election to tender  Notes,  if the Paying  Agent
receives,  not  later  than the close of  business  on the  third  Business  Day
preceding the Purchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder,  the principal  amount of Notes  delivered
for purchase,  and a statement

                                      -31-

<PAGE>



that such Holder is withdrawing  his election to have such Note  purchased;  and
(vii) that  Holders  whose Notes are accepted for payment in part will be issued
new  Notes  equal  in  principal  amount  to the  unpurchased  portion  of Notes
surrendered;  provided  that  only  Notes in a  principal  amount  of  $1,000 or
integral multiples thereof will be accepted for payment in part.

     (b) On the Purchase Date for any Offer,  the Company  shall,  to the extent
required by this Indenture and such Offer, (i) in the case of an Offer resulting
from a Change of  Control,  accept for  payment  all Notes or  portions  thereof
tendered  pursuant to such Offer and, in the case of an Offer  resulting from an
Asset Sale, accept for payment the maximum principal amount of Notes or portions
thereof  tendered  pursuant  to such Offer that can be  purchased  out of Excess
Proceeds from such Asset Sale Trigger  Date,  (ii) deposit with the Paying Agent
the  aggregate  purchase  price of all Notes or portions  thereof  accepted  for
payment  and any accrued  and unpaid  interest on such Notes as of the  Purchase
Date,  and (iii)  deliver  or cause to be  delivered  to the  Trustee  all Notes
tendered pursuant to the Offer.

     (c) With  respect  to any  Offer,  if less than all of the  Notes  tendered
pursuant to an Offer are to be  purchased  by the  Company,  the  Trustee  shall
select on the  Purchase  Date the Notes or portions  thereof to be accepted  for
payment pursuant to Section 3.02.

     (d) Promptly  after  consummation  of an Offer,  (i) the Paying Agent shall
mail (or  cause to be  transferred  by book  entry)  to each  Holder of Notes or
portions thereof accepted for payment an amount equal to the purchase price for,
plus any accrued and unpaid  interest  on such Notes,  (ii) with  respect to any
tendered  Note not accepted for payment in whole or in part,  the Trustee  shall
return  such Note to the  Holder  thereof,  and (iii)  with  respect to any Note
accepted for payment in part,  the Trustee shall  authenticate  and mail to each
such Holder a new Note equal in principal  amount to the unpurchased  portion of
the tendered Note.

     (e) The Company shall  publicly  announce the results of the Offer on or as
soon as practicable after the Purchase Date.

     (f) The Company shall comply with any tender offer rules under the Exchange
Act which may then be  applicable  to the  Company,  including  Rule  14e-1,  in
connection  with an Offer  required to be made by the Company to repurchase  the
Notes as a result of a Change of Control  Trigger  Date or an Asset Sale Trigger
Date. To the extent that the  provisions of any  securities  laws or regulations
conflict with  provisions of this  Indenture,  the Company shall comply with the
applicable  securities  laws and  regulations  and  shall  not be deemed to have
breached its obligations under this Indenture by virtue thereof.

     (g) With respect to any Offer, if the Company deposits prior to 10 a.m. New
York City time with the Paying Agent on the Purchase Date an amount in available
funds  sufficient  to purchase  all Notes  accepted by the Company for  payment,
interest shall cease to accrue on such Notes after the Purchase Date;  provided,
however,  that if the Company fails to deposit such amount on the Purchase Date,
interest shall continue to accrue on such Notes until such deposit is made.


                                      -32-

<PAGE>


                                   ARTICLE 4
                                   COVENANTS

SECTION 4.01    PAYMENT OF NOTES.

     (a) The  Company  shall pay the  principal  of, and  premium,  if any,  and
accrued and unpaid interest on the Notes on the dates and in the manner provided
in the Notes. Holders of Notes must surrender their Notes to the Paying Agent to
collect  principal  payments.  Principal  of,  premium,  if any, and accrued and
unpaid  interest  shall be  considered  paid on the date due if the Paying Agent
(other than the Company or any of its  Subsidiaries),  the Global Note Holder or
each Holder that has specified an account, holds, as of 10:00 a.m. New York City
time, money the Company deposited in immediately  available funds designated for
and  sufficient to pay in cash all principal,  premium,  if any, and accrued and
unpaid interest on, then due; provided that, to the extent that the Holders have
not specified accounts, such amounts shall be considered paid on the date due if
the Company mails a check for such amounts on such date.  The Paying Agent shall
return  to the  Company,  no later  than  five (5)  days  following  the date of
payment,  any money  (including  accrued  interest)  that  exceeds the amount of
principal, premium, if any, accrued and unpaid interest paid on the Notes.

     (b) To the  extent  lawful,  the  Company  shall  pay  interest  (including
Post-Petition  Interest)  on (i)  overdue  principal  and  premium  at the  then
applicable interest rate on the Notes,  compounded semiannually and (ii) overdue
installments of interest  (without regard to any applicable grace period) at the
same rate as set forth in clause (i), compounded semiannually.

SECTION 4.02    SEC REPORTS.

     (a) So long as the Notes are  outstanding,  whether  or not the  Company is
subject to the  reporting  requirements  of Section 13 or 15(d) of the  Exchange
Act, the Company and the Guarantors shall file with the SEC (unless the SEC will
not  accept  such  filing)  the  annual  reports,  quarterly  reports  and other
documents  relating  to the  Company and its  Restricted  Subsidiaries  that the
Company  would have been required to file with the SEC pursuant to Section 13 or
15(d) if the Company were subject to such reporting requirements.

     (b) The Company and the  Guarantors  shall  provide to the Holders and file
with the Trustee, within 15 days after it files them with the SEC, copies of the
annual  reports,  quarterly  reports  and  other  documents  (or  copies of such
portions  of any of the  foregoing  as the  SEC  may by  rules  and  regulations
prescribe) that the Company is required to file with the SEC pursuant to Section
13 or  15(d)  of  the  Exchange  Act.  If the  Company  is  not  subject  to the
requirements  of  Section 13 or 15(d) of the  Exchange  Act and the SEC will not
accept  such filing as is  prescribed  in Section  4.02(a),  the Company and the
Guarantors  shall  provide to the Holders and file with the  Trustee,  within 15
days after it would have been required or permitted, as the case may be, to file
with the SEC,  financial  statements,  including  any  notes  thereto  (and with
respect to annual reports, an auditor's report by a firm of established national
reputation),  and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," both comparable to that which the Company would have
been  required to include in such annual  reports,  quarterly  reports and other
documents relating to the Company and its Restricted Subsidiaries if the Company
were subject to the  requirements  of Section 13 or 15(d) of the  Exchange  Act.
Subsequent to the  qualification  of this  Indenture  under the TIA, the Company
also shall comply with the provisions of section 314(a) of the TIA.

                                      -33-

<PAGE>



     (c) If the Company is required to furnish  annual or  quarterly  reports to
its  stockholders  pursuant to the  Exchange  Act,  the Company  shall cause any
annual report furnished to its stockholders generally and any quarterly or other
financial  reports it furnishes to its  stockholders  generally to be filed with
the  Trustee,  and the Company  shall mail such  reports to the Holders at their
addresses appearing in the register of Notes maintained by the Registrar. If the
Company  is  not  required  to  furnish  annual  or  quarterly  reports  to  its
stockholders pursuant to the Exchange Act, the Company shall cause its financial
statements referred to in Section 4.02(a), including any notes thereto (and with
respect to annual reports, an auditors' report by a firm of established national
reputation),  and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," to be so mailed to the Holders within 120 days after
the end of each of the  Company's  fiscal years and within 60 days after the end
of each of the first three fiscal quarters of each year. The Company shall cause
to be  disclosed in a statement  accompanying  any annual  report or  comparable
information as of the date of the most recent financial  statements in each such
report or comparable  information the amount available for payments  pursuant to
Section 4.05.

     (d) If the  Company  is not  subject to the  requirements  of Section 13 or
15(d) of the  Exchange  Act, for so long as any Notes  remain  outstanding,  the
Company  shall  furnish to the  Holders,  securities  analysts  and  prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.

SECTION 4.03    COMPLIANCE CERTIFICATE.

     The Company shall deliver to the Trustee,  within 120 days after the end of
each fiscal year of the Company, an Officers'  Certificate stating that a review
of the  activities  of the Company  and its  Subsidiaries  during the  preceding
fiscal year has been made under the  supervision of the signing  Officers with a
view to  determining  whether  the  Company has kept,  observed,  performed  and
fulfilled its obligations under this Indenture,  and further stating, as to each
such  Officer  signing  such  certificate,  that,  to  the  best  of  his or her
knowledge,  the Company has kept,  observed,  performed and  fulfilled  each and
every  covenant  contained  in  this  Indenture  and is not  in  default  in the
performance or observance of any of the terms,  provisions and conditions hereof
(or, if a Default or Event of Default shall have  occurred,  describing all such
Defaults  or Events of  Default of which he or she may have  knowledge  and what
action the Company has taken or proposes to take with respect thereto) and that,
to the best of his or her  knowledge  no  event  has  occurred  and  remains  in
existence by reason of which  payments on account of the principal of,  premium,
if any, and accrued and unpaid  interest on the Notes are  prohibited or if such
event has occurred,  a  description  of the event and what action the Company is
taking or proposes to take with respect thereto.

     So long as not contrary to the then current recommendations of the American
Institute of Certified Public Accountants,  the financial  statements  delivered
pursuant to Section  4.02 shall be  accompanied  by a written  statement  of the
Company's  independent  public  accountants  (who shall be a firm of established
national reputation  reasonably  satisfactory to the Trustee) that in making the
examination necessary for certification of such financial statements nothing has
come to their  attention  that would lead them to believe  that the  Company has
violated any provisions of Section 4.01,  4.05,  4.06,  4.07,  4.08, 4.09, 4.10,
4.11,  4.12,  4.13, 4.14, 4.15 or 4.17 or of Article 5 or, if any such violation
has occurred, specifying the nature and period of existence thereof, it

                                      -34-

<PAGE>



being  understood  that  such  accountants  shall  not  be  liable  directly  or
indirectly  to any  Person  for any  failure  to  obtain  knowledge  of any such
violation.

     The Company shall, so long as any of the Notes are outstanding,  deliver to
the Trustee,  forthwith upon any Officer  becoming aware of any Default or Event
of Default, an Officers' Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto.

SECTION 4.04    STAY, EXTENSION AND USURY LAWS.

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

SECTION 4.05    LIMITATION ON RESTRICTED PAYMENTS.

     (a) The Company shall not, and shall not permit any  Restricted  Subsidiary
to,  directly  or  indirectly,  (i)  declare  or pay any  dividend  or make  any
distribution on account of the Company's or any Restricted  Subsidiary's  Equity
Interests  (other than dividends or  distributions  payable in Equity  Interests
(other than  Disqualified  Stock) of the Company and dividends or  distributions
payable by a Restricted Subsidiary pro rata to its shareholders;  (ii) purchase,
redeem or  otherwise  acquire or retire for value any  Equity  Interests  of the
Company  or any of its  Restricted  Subsidiaries,  other  than any  such  Equity
Interests  purchased  from the  Company or any  Restricted  Subsidiary  for fair
market value determined by the Board of Directors in good faith;  (iii) make any
payment on or with respect to, or purchase, redeem, defease or otherwise acquire
or retire for value any Subordinated Indebtedness,  except a payment of interest
or principal at Stated  Maturity;  or (iv) make any Restricted  Investment  (all
such  payments  and other  actions set forth in clauses  (i) through  (iv) above
being collectively referred to as "Restricted Payments") if, at the time of such
Restricted Payment:

               (A)  a Default or Event of Default  shall  have  occurred  and be
                    continuing or shall occur as a consequence thereof; or

               (B)  immediately  after such Restricted  Payment and after giving
                    effect  thereto on a Pro Forma Basis,  the Company shall not
                    be able to issue $1.00 of additional  Indebtedness  pursuant
                    to Section 4.07(a); or

               (C)  such Restricted Payment,  together with the aggregate of all
                    other  Restricted  Payments  made after the 1997 Notes Issue
                    Date,  without  duplication,  exceeds the sum of: (1) 50% of
                    the aggregate  Consolidated Net Income (including,  for this
                    purpose,  gains  from  Asset  Sales  and,  to the extent not
                    included in Consolidated Net

                                      -35-

<PAGE>



                    Income,  any gain from a sale or disposition of a Restricted
                    Investment)  of the Company (or, in case such aggregate is a
                    loss,  100%  of such  loss)  for the  period  (taken  as one
                    accounting  period)  from the  beginning of the first fiscal
                    quarter  commencing  immediately  after the 1997 Notes Issue
                    Date  and  ended as of the  Company's  most  recently  ended
                    fiscal quarter at the time of such Restricted Payment;  plus
                    (2) 100% of the  aggregate  net cash  proceeds  and the fair
                    market value of any property or securities, as determined by
                    the  Board  of  Directors  in good  faith,  received  by the
                    Company  from the issue or sale of Equity  Interests  of the
                    Company  or  Holdings  (to  the  extent  contributed  to the
                    Company) subsequent to the 1997 Notes Issue Date (other than
                    (x)  Equity   Interests  issued  or  sold  to  a  Restricted
                    Subsidiary  and  (y)  Disqualified  Stock);  plus  (3)  $5.0
                    million;  plus (4) the amount by which the principal  amount
                    of and any accrued interest on either Senior Indebtedness of
                    the Company or any  Restricted  Subsidiary is reduced on the
                    Company's  consolidated balance sheet upon the conversion or
                    exchange (other than by a Restricted  Subsidiary) subsequent
                    to the 1997  Notes  Issue  Date of any  Indebtedness  of the
                    Company  or  any  Restricted  Subsidiary  (not  held  by the
                    Company or any Restricted  Subsidiary) for Equity  Interests
                    (other than  Disqualified  Stock) of the  Company  (less the
                    amount of any cash,  or the fair  market  value of any other
                    property  or  securities  (as  determined  by the  Board  of
                    Directors in good faith),  distributed by the Company or any
                    Restricted  Subsidiary (to Persons other than the Company or
                    any other  Restricted  Subsidiary)  upon such  conversion or
                    exchange);  plus  (5) if any  Non-Restricted  Subsidiary  is
                    redesignated  as a Restricted  Subsidiary,  the value of the
                    Restricted Payment that would result if such Subsidiary were
                    redesignated as a Non-Restricted Subsidiary at such time, as
                    determined in  accordance  with Section  4.17(a);  provided,
                    however,  that for purposes of this clause (5), the value of
                    any redesignated  Non-Restricted Subsidiary shall be reduced
                    by the amount  that any such  redesignation  replenishes  or
                    increases the amount of Restricted  Investments permitted to
                    be made pursuant to clause (ii) of Section 4.05(b).

     (b) Notwithstanding the foregoing, the following Restricted Payments may be
made:  (i) the  payment  of any  dividend  within  60  days  after  the  date of
declaration  thereof, if at said date of declaration,  such payment would comply
with all covenants of this  Indenture  (including,  but not limited to,  Section
4.05); (ii) making Restricted Investments at any time, and from time to time, in
an aggregate outstanding amount of $10.0 million after the 1997 Notes Issue Date
(it being  understood  that if any  Restricted  Investment  after the 1997 Notes
Issue Date  pursuant  to this  clause  (ii) is sold,  transferred  or  otherwise
conveyed to any Person  other than the Company or a Restricted  Subsidiary,  the
portion  of the net  cash  proceeds  or  fair  market  value  of  securities  or
properties paid or transferred to the Company and its Restricted Subsidiaries in
connection with such sale, transfer or conveyance that relates or corresponds to
the repayment or return of

                                      -36-

<PAGE>



the original cost of such a Restricted Investment will replenish or increase the
amount of  Restricted  Investments  permitted to be made pursuant to this clause
(ii), so that up to $10.0 million of Restricted  Investments  may be outstanding
under this clause (ii) at any given  time);  provided  that,  without  otherwise
limiting  this clause (ii),  any  Restricted  Investment  in a  Subsidiary  made
pursuant to this clause (ii) is made for fair market value (as determined by the
Board of Directors in good faith); (iii) the repurchase,  redemption, retirement
or  acquisition  of  Equity  Interests  of the  Company  or  Holdings  from  the
executives,   management,  employees  or  consultants  of  the  Company  or  its
Restricted  Subsidiaries in an aggregate amount not to exceed $7.5 million; (iv)
any  loans,  advances,  distributions  or  payments  from  the  Company  to  its
Restricted Subsidiaries, or any loans, advances,  distributions or payments by a
Restricted  Subsidiary to the Company or to another  Restricted  Subsidiary,  in
each  case  pursuant  to  intercompany  Indebtedness,   intercompany  management
agreements and other intercompany agreements and obligations;  (v) the purchase,
redemption,  retirement or other  acquisition  of the Notes pursuant to Sections
3.08, 4.14 or 4.15; (vi) the payment of (a) consulting, financial and investment
banking  fees  under the TJC  Agreement,  provided,  that no Default or Event of
Default  shall have  occurred and be  continuing or shall occur as a consequence
thereof, and the Company's  Obligations to pay such fees under the TJC Agreement
shall be subordinated  expressly to the Company's  Obligations in respect of the
Notes, and (b) indemnities,  expenses and other amounts under the TJC Agreement;
(vii) the redemption,  repurchase, retirement or other acquisition of any Equity
Interests of the Company or any Restricted Subsidiary in exchange for, or out of
the proceeds of, the  substantially  concurrent sale (other than to a Subsidiary
of the  Company)  of other  Equity  Interests  of the  Company  (other  than any
Disqualified  Stock)  or  the  redemption,   repurchase,   retirement  or  other
acquisition  of any Equity  Interests of any  Restricted  Subsidiary in exchange
for, or out of the proceeds of, the substantially concurrent sale (other than to
the Company or a Subsidiary  of the  Company) of other Equity  Interests of such
Restricted  Subsidiary;  provided that, in each case, any net cash proceeds that
are  utilized  for  any  such  redemption,   repurchase,   retirement  or  other
acquisition,  and any Net Income  resulting  therefrom,  shall be excluded  from
Sections  4.05(a)(iv)(C)(1)  and  (2);  (viii)  the  defeasance,  redemption  or
repurchase  of  Subordinated  Indebtedness  of the  Company  or  any  Restricted
Subsidiary with the net cash proceeds from an issuance of permitted  Refinancing
Indebtedness or the substantially concurrent sale (other than to a Subsidiary of
the Company) of Equity Interests of the Company (other than Disqualified  Stock)
or the defeasance,  redemption or repurchase of Subordinated Indebtedness of any
Restricted  Subsidiary  with  the  net  cash  proceeds  from  the  substantially
concurrent sale (other than to a Subsidiary of the Company) of Equity  Interests
of such Restricted Subsidiary (other than Disqualified Stock); provided that, in
each case,  any net cash  proceeds  that are utilized  for any such  defeasance,
redemption  or  repurchase,  and any Net Income  resulting  therefrom,  shall be
excluded from Sections  4.05(a)(iv)(C)(1)  and (2); (ix) Restricted  Investments
made or received in connection  with the sale,  transfer or  disposition  of any
business,  properties  or assets of the  Company or any  Restricted  Subsidiary,
provided,  that if such sale, transfer or disposition constitutes an Asset Sale,
the  Company   complies  with  Section  4.15;  (x)  any  Restricted   Investment
constituting  securities or instruments of a Person issued in exchange for trade
or  other   claims   against  such  Person  in   connection   with  a  financial
reorganization or restructuring of such person;  (xi) payments to Holdings in an
amount  sufficient to permit Holdings to make required  payments on the Holdings
Subordinated  Notes;  (xii) payments in connection with the  Transactions as set
forth  in the  Offering  Memorandum;  (xiii)  payments  of  fees,  expenses  and
indemnities to the directors of Holdings, the Company and

                                      -37-

<PAGE>



its  Restricted   Subsidiaries;   (xiv)  payments  to  Holdings  in  respect  of
accounting,   legal  or  other   professional  or  administrative   expenses  or
reimbursements  or franchise or similar taxes and governmental  charges incurred
by it relating to the  business,  operations  or finances of the Company and its
Restricted  Subsidiaries and in respect of fees and related expenses  associated
with any  registration  statements  relating to the Notes filed with the SEC and
subsequent ongoing public reporting requirements with respect to the Notes; (xv)
so long as  Holdings  files  consolidated  income tax returns  that  include the
Company,  payments to Holdings  pursuant  to the Tax  Sharing  Agreement;  (xvi)
payments,  if any,  relating to any purchase  price  adjustment  pursuant to the
terms of the  Acquisition  Agreement;  (xvii)  payments  in respect of the Wolff
Noncompetition   Agreement;  and  (xviii)  shareholder  loans  in  an  aggregate
principal amount not to exceed $1.0 million.

SECTION 4.06    CORPORATE EXISTENCE.

     Subject to Section 4.15 and Article 5, the Company  shall do or cause to be
done all  things  necessary  to  preserve  and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each of
its Restricted  Subsidiaries  in accordance  with the respective  organizational
documents of each of its  Restricted  Subsidiaries  and the rights  (charter and
statutory),  licenses and  franchises of the Company and each of its  Restricted
Subsidiaries;  provided,  however,  that the  Company  shall not be  required to
preserve any such right, license or franchise, or the corporate,  partnership or
other  existence of any Restricted  Subsidiary,  if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its  Restricted  Subsidiaries  taken as a whole,
and that the loss thereof is not adverse in any material respect to the Holders.

SECTION 4.07    LIMITATION ON INCURRENCE OF INDEBTEDNESS.

     (a) The Company shall not, and shall not permit any  Restricted  Subsidiary
to, issue any Indebtedness unless the Company's Cash Flow Coverage Ratio for its
four full fiscal quarters next preceding the date such  additional  Indebtedness
is issued  would  have been at least 2.0 to 1  determined  on a Pro Forma  Basis
(including,  for this purpose, any other Indebtedness  incurred since the end of
the applicable four quarter period) as if such additional  Indebtedness  and any
other  Indebtedness  issued since the end of such four  quarter  period had been
issued at the beginning of such four quarter period.

     (b) Section 4.07(a) shall not apply to the issuance of: (i) Indebtedness of
the  Company  and/or  its  Restricted  Subsidiaries  under the  Existing  Credit
Agreement in an aggregate  principal amount outstanding on such date of issuance
not to exceed the  greater of (A) $115.0  million and (B) the sum of: (1) 85% of
the  book  value  of  accounts  receivable  of the  Company  and its  Restricted
Subsidiaries  on a  consolidated  basis  and (2) 65% of the  book  value  of the
inventories  of the Company and its Restricted  Subsidiaries;  provided that the
aggregate  principal  amount of Indebtedness  outstanding  under this clause (i)
together with the aggregate  principal amount of Indebtedness  outstanding under
clause (iii) below shall not exceed $140.0  million at any one time  outstanding
(less the amount of any permanent reductions as set forth in Section 4.15); (ii)
Indebtedness  of the Company and its Restricted  Subsidiaries in connection with
capital leases,  sale and leaseback  transactions,  purchase money  obligations,
capital  expenditures or similar financing  transactions  relating to: (A) their
properties, assets and rights as of the 1997

                                      -38-

<PAGE>



Notes Issue Date not to exceed $7.5 million in aggregate principal amount at any
one time outstanding, or (B) their properties,  assets and rights acquired after
the 1997 Notes Issue Date,  provided that the aggregate principal amount of such
Indebtedness  under this clause (ii)(B) does not exceed 100% of the cost of such
properties,  assets and rights; (iii) additional Indebtedness of the Company and
its Restricted Subsidiaries in an aggregate principal amount up to $25.0 million
(all or any portion of which may be issued as additional  Indebtedness under the
Existing  Credit  Agreement)  provided  that the aggregate  principal  amount of
Indebtedness  outstanding  under this clause (iii)  together  with the aggregate
principal  amount of Indebtedness  outstanding  under clause (i) above shall not
exceed  $140.0  million  at any one time  outstanding  (less  the  amount of any
permanent  reductions as set forth in Section  4.15);  and (iv) Other  Permitted
Indebtedness.

SECTION 4.08    LIMITATION ON SENIOR SUBORDINATED DEBT.

     (a) The  Company  shall not incur,  create,  issue,  assume,  guarantee  or
otherwise  become liable for any  Indebtedness  that is subordinate or junior in
right of payment to any Senior  Indebtedness  and senior in any respect in right
of payment to the Notes.

     (b) No Guarantor shall incur, create, issue, assume, guarantee or otherwise
become liable for any  Indebtedness  that is  subordinate  or junior in right of
payment to any Senior Indebtedness and senior in any respect in right of payment
to the Note Guarantees.

SECTION 4.09    LIMITATION ON TRANSACTIONS WITH AFFILIATES.

     (a) Except as otherwise  set forth  herein,  neither the Company nor any of
its Restricted  Subsidiaries shall make any loan, advance,  guarantee or capital
contribution to, or for the benefit of, or sell,  lease,  transfer or dispose of
any  properties  or assets to, or for the  benefit  of, or purchase or lease any
property  or assets  from,  or enter into or amend any  contract,  agreement  or
understanding  with, or for the benefit of, an Affiliate (each such  transaction
or series of related transactions that are part of a common plan are referred to
as an  "Affiliate  Transaction"),  except in good faith and on terms that are no
less favorable to the Company or the relevant  Restricted  Subsidiary than those
that would have been  obtained in a  comparable  transaction  on an arm's length
basis from an unrelated Person.

     (b) The Company shall not, and shall not permit any  Restricted  Subsidiary
to, engage in any Affiliate  Transaction  involving  aggregate payments or other
transfers  by the  Company  and its  Restricted  Subsidiaries  in excess of $5.0
million  (including cash and non-cash payments and benefits valued at their fair
market value by the Board of Directors of the Company in good faith)  unless the
Company  delivers to the Trustee:  (i) a resolution of the Board of Directors of
the Company  stating  that the Board of  Directors  (including a majority of the
disinterested  directors,  if any)  has,  in good  faith,  determined  that such
Affiliate  Transaction complies with the provisions of this Indenture,  and (ii)
(A) with  respect to any  Affiliate  Transaction  involving  the  incurrence  of
Indebtedness, a written opinion of a nationally recognized investment banking or
accounting firm experienced in the review of similar types of transactions,  (B)
with  respect  to any  Affiliate  Transaction  involving  the  transfer  of real
property, fixed assets or equipment,  either directly or by a transfer of 50% or
more of the Capital Stock of a Restricted  Subsidiary  which holds any such real
property,  fixed  assets or  equipment,  a written  appraisal  from a nationally

                                      -39-

<PAGE>



recognized appraiser, experienced in the review of similar types of transactions
or (C) with respect to any Affiliate  Transaction not otherwise described in (A)
and (B) above, a written certification from a nationally recognized professional
or firm experienced in evaluating  similar types of transactions,  in each case,
stating  that the  terms of such  transaction  are fair to the  Company  or such
Restricted Subsidiary, as the case may be, from a financial point of view.

     (c)  Notwithstanding  Sections 4.09(a) and (b), Section 4.09 will not apply
to: (i)  transactions  between  the  Company and any  Restricted  Subsidiary  or
between Restricted  Subsidiaries;  (ii) payments under the TJC Agreement;  (iii)
any other payments or transactions  permitted pursuant to Section 4.05; (iv) (A)
payments  and  transactions  under  Incentive  Arrangements  and (B)  reasonable
compensation  paid to officers,  employees or  consultants of the Company or any
Restricted  Subsidiary as  determined  in good faith by the  Company's  Board of
Directors or executives;  (v) payments and  transactions  in connection with the
Transactions  and the  application  of the net proceeds  therefrom;  or (vi) the
sale,  transfer and/or  termination of the officers' life insurance  policies in
effect on the 1997 Notes Issue Date.

     (d)  Notwithstanding  Sections  4.09(a) and (b), any Affiliate  Transaction
between the Company and  Affiliated  Embroiderers  relating to the  provision of
embroidery  services in the ordinary  course of business shall not be subject to
the provisions of clause (ii) of Section 4.09(b).

SECTION 4.10    LIMITATION ON LIENS.

     The  Company  shall  not,  and  shall  not  permit  any of  its  Restricted
Subsidiaries  to,  directly or indirectly,  create,  incur,  assume or suffer to
exist any Lien, other than Permitted Liens, upon any property or asset now owned
or hereafter acquired by them, or any income or profits therefrom,  or assign or
convey any right to receive income  therefrom unless all payments due under this
Indenture  and the Notes are  secured  on an equal and  ratable  basis  with the
obligations so secured until such time as such obligations are no longer secured
by a Lien.

SECTION 4.11    COMPLIANCE WITH LAWS, TAXES.

     The Company shall, and shall cause each of its Restricted  Subsidiaries to,
comply with all statutes, laws, ordinances,  or government rules and regulations
to which it is subject, the non-compliance with which would materially adversely
affect the  business,  prospects,  earnings,  properties,  assets or  condition,
financial or otherwise,  of the Company and its Restricted Subsidiaries taken as
a whole.

     The Company shall, and shall cause each of its Restricted  Subsidiaries to,
pay prior to delinquency all taxes,  assessments and governmental levies, except
those contested in good faith by appropriate proceedings.

SECTION 4.12    LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
                RESTRICTED SUBSIDIARIES.

     (a) The  Company  shall not,  and shall not  permit  any of its  Restricted
Subsidiaries to, directly or indirectly,  create or otherwise cause or suffer to
exist or become effective,  any encumbrance or restriction on the ability of any
Restricted  Subsidiary to: (i) pay dividends or make any other  distributions on
its Capital Stock or any other interest or participation in, or

                                      -40-

<PAGE>



measured by, its profits, owned by the Company or any Restricted Subsidiary,  or
pay any  Indebtedness  owed to, the Company or any Restricted  Subsidiary,  (ii)
make loans or advances to the Company,  or (iii)  transfer any of its properties
or assets to the Company,  except for such encumbrances or restrictions existing
under or by reason of: (A) applicable law, (B) Indebtedness  permitted (1) under
Section 4.07(a) and (2) under clauses (i), (ii) and (iii) of Section 4.07(b) and
clauses (iv), (vii) and (x) of the definition of "Other Permitted Indebtedness,"
provided that such amendments, modifications, restatements, renewals, increases,
supplements,  refundings,  replacement or refinancings  are no more  restrictive
with  respect  to the  items set forth in  clauses  (i),  (ii) and (iii) of this
Section  4.12(a) than those  contained in the  Existing  Credit  Agreement as in
effect  on the date of this  Indenture,  (C)  customary  provisions  restricting
subletting  or  assignment  of  any  lease  or  license  of the  Company  or any
Restricted Subsidiary,  (D) customary provisions of any franchise,  distribution
or similar  agreement,  (E) any instrument  governing  Indebtedness or preferred
stock or any  other  encumbrance  or  restriction  of a Person  acquired  by the
Company or any  Restricted  Subsidiary  at the time of such  acquisition,  which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person,  other than the Person,  or the  property or assets of the
Person, so acquired,  (F) Indebtedness or other agreements  existing on the 1997
Notes Issue Date, (G) any Refinancing Indebtedness permitted under Section 4.07,
provided  that the  restrictions  contained  in the  agreements  governing  such
Refinancing  Indebtedness  are no more  restrictive in any material respect with
regard to the interests of the holders of the Notes than those  contained in the
agreements  governing the Indebtedness  being refinanced,  (H) any restrictions,
with respect to a Restricted  Subsidiary,  imposed pursuant to an agreement that
has been entered into for the sale or disposition of the stock, business, assets
or properties of such Restricted Subsidiary,  (I) the terms of purchase money or
capital  lease  obligations,   but  only  to  the  extent  such  purchase  money
obligations  restrict or prohibit the  transfer of the property so acquired,  or
(J) any instrument governing the sale of assets of the Company or any Restricted
Subsidiary, which encumbrance or restriction applies solely to the assets of the
Company or such Restricted subsidiary being sold in such transaction.

     (b) Nothing  contained  in Section  4.12 shall  prevent  the  Company  from
entering  into any  agreement or  instrument  providing  for the  incurrence  of
Permitted  Liens or  restricting  the sale or other  disposition  of property or
assets of the Company or any of its Restricted  Subsidiaries that are subject to
Permitted Liens.

SECTION 4.13    MAINTENANCE OF OFFICE OR AGENCIES.

     The Company  shall  maintain in the Borough of  Manhattan,  the City of New
York an  office  or an agency  (which  may be an office or agency of any  Agent)
where Notes may be  surrendered  for  registration  of transfer or exchange  and
where  notices  and  demands to or upon the  Company in respect of the Notes and
this  Indenture may be served.  The Company shall give prompt  written notice to
the Trustee of any change in the  location  of such office or agency.  If at any
time the Company  shall fail to furnish the  Trustee  with the address  thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office.

     The Company may also from time to time  designate one or more other offices
or agencies where the Notes may be presented or surrendered  for any or all such
purposes and may from

                                      -41-

<PAGE>



time  to  time  rescind  such  designations;  provided,  however,  that  no such
designation  or  rescission  shall in any  matter  relieve  the  Company  of its
obligation to maintain an office or agency in the Borough of Manhattan, the City
of New York for such  purposes.  The Company shall give prompt written notice to
the  Trustee  of any such  designation  or  rescission  and of any change in the
location of any such other office or agency.  The Company hereby  designates the
corporate  trust  office  of State  Street  Bank and  Trust  Company,  N.A.,  an
Affiliate of the Trustee located at 61 Broadway, New York, New York 10006 as one
such office or agency of the Company in accordance with Section 2.03.

SECTION 4.14   CHANGE OF CONTROL.

     (a) Upon the occurrence of a Change of Control (such date being the "Change
of Control Trigger Date"),  each Holder of Notes shall have the right to require
the Company to purchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes pursuant to an Offer at a purchase price in cash
equal to 101% of the aggregate  principal  amount thereof,  plus any accrued and
unpaid interest to the date of purchase.  Although the failure of the Company to
purchase all Notes tendered in such an Offer shall be a Default,  if the Company
is unable to purchase  all Notes  tendered in such an Offer,  the Company  shall
nevertheless  purchase the maximum  principal amount of Notes that it is able to
purchase at that time.

     (b) Prior to the mailing of the notice referred to in Section 3.08(a),  but
in any event within 30 days  following any Change of Control  Trigger Date,  the
Company shall (i) repay in full and terminate all commitments under Indebtedness
under the Existing Credit Agreement and all other Senior  Indebtedness the terms
of which  require  repayment  upon a Change of Control or offer to repay in full
and terminate all commitments  under all Indebtedness  under the Existing Credit
Agreement and all other such Senior  Indebtedness  and to repay the Indebtedness
owed to each lender which has accepted  such offer or (ii) obtain the  requisite
consents  under  the  Existing  Credit  Agreement  and  all  such  other  Senior
Indebtedness  to permit the  repurchase  of the Notes.  The Company  shall first
comply with the covenant in the immediately  preceding  sentence before it shall
be required to repurchase Notes pursuant to the provisions of this Section 4.14.
The Company's  failure to comply with this covenant shall constitute an Event of
Default  described in clause  (a)(iii) and not in clause  (a)(ii)  under Section
6.01.

     (c) In the event of a Change of  Control,  the  Company  shall not offer to
purchase  or redeem any  Subordinated  Indebtedness  required or entitled by its
terms to be  redeemed  or  purchased  until the Change of Control  Offer for the
Notes has been  consummated  and all Notes tendered  pursuant to such Offer have
been accepted for payment.

SECTION 4.15    LIMITATION ON ASSET SALES.

     (a) The Company shall not, and shall not permit any  Restricted  Subsidiary
to, directly or indirectly,  consummate an Asset Sale (including the sale of any
of the Capital Stock of any Restricted Subsidiary) providing for Net Proceeds in
excess of $2.5 million  unless at least 75% of the Net Proceeds  from such Asset
Sale are applied (in any manner otherwise permitted by this Indenture) to one or
more of the following  purposes in such  combination as the Company shall elect:
(a) an  investment in another asset or business in the same line of business as,
or a line of  business  similar to that of, the line of  business of the Company
and its Restricted Subsidiaries at

                                      -42-

<PAGE>



the time of the Asset  Sale or the  making of a  capital  expenditure  otherwise
permitted by this  Indenture;  provided that such  investment  occurs within 365
days of the date of such Asset Sale (the "Asset Sale Disposition  Date"), (b) to
reimburse the Company or its Restricted  Subsidiaries for expenditures made, and
costs incurred, to repair, rebuild, replace or restore property subject to loss,
damage  or taking to the  extent  that the Net  Proceeds  consist  of  insurance
proceeds  received  on  account  of such  loss,  damage or  taking,  (c) to cash
collateralize  letters of credit;  provided any such cash collateral released to
the Company or its Restricted  Subsidiaries  upon the expiration of such letters
of credit shall again be deemed to be Net Proceeds  received on the date of such
release, (d) the permanent purchase, redemption or other prepayment or repayment
of  outstanding  Senior  Indebtedness  of the  Company  or  Indebtedness  of the
Company's  Restricted  Subsidiaries  (with  a  corresponding  reduction  in  any
commitment  relating  thereto) on or prior to the 365th day  following the Asset
Sale Disposition Date or (e) an Offer expiring on or prior to the Purchase Date.

     (b) The Company shall not, and shall not permit any  Restricted  Subsidiary
to, directly or indirectly,  consummate an Asset Sale unless at least 75% of the
consideration  thereof received by the Company or such Restricted  Subsidiary is
in the form of cash or Marketable Securities; provided that, solely for purposes
of calculating such 75% of the consideration,  the amount of (x) any liabilities
(as shown on the Company's or such Restricted  Subsidiary's  most recent balance
sheet or in the  notes  thereto,  excluding  contingent  liabilities  and  trade
payables) of the Company or any Restricted  Subsidiary  (other than  liabilities
that are by their  terms  subordinated  to the  Notes)  that are  assumed by the
transferee of any such assets and (y) any notes or other obligations received by
the Company or any such  Restricted  Subsidiary  from such  transferee  that are
promptly,  but in no event more than 90 days  after  receipt,  converted  by the
Company  or such  Restricted  Subsidiary  into  cash (to the  extent of the cash
received),  shall be deemed to be cash and cash equivalents for purposes of this
provision. Any Net Proceeds from any Asset Sale that are not applied or invested
as provided in the first sentence of this  paragraph  shall  constitute  "Excess
Proceeds."

     (c) When the  aggregate  amount of Excess  Proceeds  exceeds  $10.0 million
(such date being an "Asset Sale Trigger Date"),  the Company shall make an Offer
to all Holders of Notes to purchase  the maximum  principal  amount of the Notes
then outstanding that may be purchased out of Excess Proceeds, at an offer price
in cash in an amount equal to 100% of principal  amount thereof plus any accrued
and unpaid  interest to the Purchase Date in accordance  with the procedures set
forth in this Indenture.

     (d) To the extent that any Excess  Proceeds  remain after  completion of an
Offer, the Company may use such remaining amount for general corporate purposes.

     (e) If the  aggregate  principal  amount of Notes  surrendered  by  Holders
thereof  exceeds the amount of Excess  Proceeds,  the Trustee  shall  select the
Notes to be purchased on a pro rata basis,  by lot or by a method that  complies
with the  requirements  of any stock  exchange on which the Notes are listed and
that the Trustee considers fair and appropriate.

     (f) Upon  completion of an Asset Sale Offer,  the amount of Excess Proceeds
shall be reset at zero.

                                      -43-

<PAGE>

     (g) Notwithstanding the foregoing, to the extent that any or all of the Net
Proceeds of an Asset Sale is prohibited or delayed by applicable  local law from
being  repatriated  to the United  States,  the portion of such Net  Proceeds so
affected  will not be required to be applied as described in Section  4.15,  but
may be retained for so long, but only for so long, as the  applicable  local law
prohibits repatriation to the United States. The Company shall promptly take all
reasonable  actions  required  by  the  applicable  local  law  to  permit  such
repatriation,  and once such  repatriation  of any  affected Net Proceeds is not
prohibited  under applicable  local law, such  repatriation  will be immediately
effected and such  repatriated  Net  Proceeds  will be applied in the manner set
forth above as if such Asset Sale have occurred on the date of repatriation.

SECTION 4.16    NOTE GUARANTEES.

     In the event that the Company or any of its Restricted  Subsidiaries  shall
acquire  or  create  another  Restricted  Subsidiary  after  the  date  of  this
Indenture,  then such newly  acquired  or created  Restricted  Subsidiary  shall
execute and deliver to the Trustee a Note  Guarantee in accordance  with Section
12.01 hereof.

SECTION 4.17    DESIGNATION OF RESTRICTED AND NON-RESTRICTED SUBSIDIARIES.

     (a) From and after the date of original  issuance of the Notes, the Company
may  designate  any  existing  or  newly  formed  or  acquired  Subsidiary  as a
Non-Restricted Subsidiary;  provided that (i) either (A) the Subsidiary to be so
designated  has total assets of $1.0 million or less or (B)  immediately  before
and after  giving  effect to such  designation  on a Pro  Forma  Basis:  (1) the
Company could incur $1.00 of additional Indebtedness pursuant to Section 4.07(a)
determined  on a Pro Forma Basis;  and (2) no Default or Event of Default  shall
have  occurred  and  be  continuing,  and  (ii)  all  transactions  between  the
Subsidiary  to be so  designated  and its  Affiliates  remaining  in effect  are
permitted  pursuant to Section 4.09. Any  Investment  made by the Company or any
Restricted  Subsidiary  that is redesignated  from a Restricted  Subsidiary to a
Non-Restricted  Subsidiary  shall be  considered  a  Restricted  Payment (to the
extent not  previously  included as a Restricted  Payment)  made on the day such
Subsidiary  is  designated  a  Non-Restricted  Subsidiary  in the  amount of the
greater of (i) the fair market value (as determined by the Board of Directors of
the Company in good faith) of the Equity  Interests of such  Subsidiary  held by
the Company and its Restricted Subsidiaries on such date, and (ii) the amount of
the  Investments  determined in accordance with GAAP made by the Company and any
of its Restricted Subsidiaries in such Subsidiary.

     (b)  A  Non-Restricted  Subsidiary  may  be  redesignated  as a  Restricted
Subsidiary.  The  Company  shall  not,  and  shall  not  permit  any  Restricted
Subsidiary  to,  take any  action  or enter  into any  transaction  or series of
transactions  that would  result in a Person  becoming a  Restricted  Subsidiary
(whether  through  an  acquisition,   the   redesignation  of  a  Non-Restricted
Subsidiary  or  otherwise,  but not  including  through  the  creation  of a new
Restricted  Subsidiary)  unless,  immediately  before and after giving effect to
such action, transaction or series of transactions on a Pro Forma Basis, (i) the
Company  could  incur at least  $1.00 of  additional  Indebtedness  pursuant  to
Section  4.07(a) and (ii) no Default or Event of Default shall have occurred and
be continuing.

                                      -44-

<PAGE>



     (c) The  designation  of a  Subsidiary  as a Restricted  Subsidiary  or the
removal of such designation is required to be made by a resolution  adopted by a
majority  of the Board of  Directors  of the Company  stating  that the Board of
Directors has made such  designation in accordance with this Indenture,  and the
Company is required to deliver to the Trustee such  resolution  together with an
Officers'  Certificate  certifying  that  the  designation  complies  with  this
Indenture.  Such  designation  will be effective as of the date specified in the
applicable resolution, which may not be before the date the applicable Officers'
Certificate is delivered to the Trustee.

                                   ARTICLE 5
                                   SUCCESSORS

SECTION 5.01    MERGER OR CONSOLIDATION.

      (a) The  Company  shall not  consolidate  or merge with or into,  or sell,
lease, convey or otherwise dispose of all or substantially all of its assets to,
any Person (any such consolidation, merger or sale being a "Disposition") unless
(i) the successor  corporation of such  Disposition or the  corporation to which
such  Disposition  shall have been made is a  corporation  organized or existing
under the laws of the  United  States,  any state  thereof  or the  District  of
Columbia;  (ii) the successor corporation of such Disposition or the corporation
to which such Disposition shall have been made expressly assumes the Obligations
of the  Company,  pursuant  to a  supplemental  indenture  in a form  reasonably
satisfactory  to  the  Trustee,   under  the  Indenture  and  the  Notes;  (iii)
immediately after such Disposition,  no Default or Event of Default shall exist;
and (iv) the  corporation  formed by or surviving any such  Disposition,  or the
corporation  to which such  Disposition  shall  have been  made,  shall (A) have
Consolidated  Net Worth  (immediately  after the Disposition but prior to giving
any pro forma effect to purchase accounting adjustments or Restructuring Charges
resulting from the  Disposition)  equal to or greater than the  Consolidated Net
Worth of the Company  immediately  preceding the  Disposition,  (B) be permitted
immediately  after the  Disposition  by the terms of this  Indenture to issue at
least $1.00 of additional  Indebtedness determined on a Pro Forma Basis, and (C)
have a Cash  Flow  Coverage  Ratio,  for the four  fiscal  quarters  immediately
preceding the applicable Disposition, and determined on a Pro Forma Basis, equal
to or greater than the actual Cash Flow  Coverage  Ratio of the Company for such
four quarter period.

      (b) Prior to the  consummation  of any proposed  Disposition,  the Company
shall deliver to the Trustee an Officers'  Certificate  to the foregoing  effect
and an  Opinion  of  Counsel  stating  that the  proposed  Disposition  and such
supplemental indenture comply with this Indenture.

SECTION 5.02    SUCCESSOR CORPORATION SUBSTITUTED.

      Upon any  Disposition,  the  Successor  Corporation  resulting  from  such
Disposition  shall succeed to, and be  substituted  for, and may exercise  every
right and power of, the Company under this  Indenture with the same effect as if
such Successor has been named as the Company  herein;  provided,  however,  that
neither the Company nor any  Successor  Corporation  shall be released  from its
Obligation  to pay the  principal  of,  premium,  if any, and accrued and unpaid
interest on the Notes.


                                      -45-

<PAGE>



                                   ARTICLE 6
                              DEFAULTS AND REMEDIES

SECTION 6.01    EVENTS OF DEFAULT.

    (a) An Event of Default is:

         (i)      a default for 30 days in payment of interest on the Notes;

         (ii)     a default in payment when due of principal or premium, if any,
                  with respect to, the Notes;

         (iii)    the  failure of the  Company  to comply  with any of its other
                  agreements or covenants in, or provisions  of, this  Indenture
                  or the Notes  outstanding  and the Default  continues  for the
                  period,  if  applicable,  and after the  notice  specified  in
                  Section 6.01(b);

         (iv)     a default by the Company or any  Restricted  Subsidiary  under
                  any mortgage, indenture or instrument under which there may be
                  issued  or by which  there may be  secured  or  evidenced  any
                  Indebtedness   for  money  borrowed  by  the  Company  or  any
                  Restricted  Subsidiary  (or the payment of which is guaranteed
                  by the Company or any  Restricted  Subsidiary),  whether  such
                  Indebtedness  or  guarantee  now  exists  or shall be  created
                  hereafter,  if (A) either (1) such  default  results  from the
                  failure  to  pay   principal   of  or  interest  on  any  such
                  Indebtedness  at or after the final  maturity  thereof  (after
                  giving effect to any extensions thereof) or (2) as a result of
                  such  default  the  maturity  of such  Indebtedness  has  been
                  accelerated  prior  to its  expressed  maturity,  and  (B) the
                  principal  amount  of such  Indebtedness,  together  with  the
                  principal amount of any other such Indebtedness in default for
                  failure to pay  principal or interest  thereon,  or because of
                  the acceleration of the maturity thereof, aggregates in excess
                  of $10,000,000;

         (v)      a failure by the Company or any  Restricted  Subsidiary to pay
                  final  judgments  (not covered by  insurance)  aggregating  in
                  excess of  $5,000,000,  which  judgments a court of  competent
                  jurisdiction  does not  rescind,  annul or stay within 45 days
                  after their entry;

         (vi)     in existence  when 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 all or substantially all of its property, or


                                      -46-

<PAGE>



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

         (vii)    in existence when 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 all or  substantially
                           all of the property of the Company or any Significant
                           Subsidiary, or

                  (C)      orders  the   liquidation   of  the  Company  or  any
                           Significant Subsidiary,  and any such order or decree
                           remains unstayed and in effect for 60 days.

         (viii)   except as  permitted  by this  Indenture,  any Note  Guarantee
                  shall  be held in any  judicial  proceeding  unenforceable  or
                  invalid or shall  cease for any reason to be in full force and
                  effect or any Guarantor, or any Person acting on behalf of any
                  Guarantor,  shall deny or disaffirm its obligations  under its
                  Note Guarantee.

      (b) A Default or Event of Default under Section  6.01(a)(iii)  (other than
an Event of Default  arising  under  Section  5.01,  which  shall be an Event of
Default  with the notice but  without  the  passage  of time  specified  in this
Section  6.01(b))  is not an Event of  Default  under this  Indenture  until the
Trustee  or the  Holders of at least 25% in  principal  amount of the Notes then
outstanding notify the Company of the Default, and the Company does not cure the
Default within 30 days after receipt of the notice.  The notice must specify the
Default,  demand that it be remedied,  and state that the notice is a "Notice of
Default."

      (c) In the case of any Event of Default  pursuant to  Sections  6.01(a)(i)
and (ii) occurring by reason of any willful  action (or inaction)  taken (or not
taken) by or on behalf of the Company with the intention of avoiding  payment of
the premium  that the Company  would have to pay if the Company then had elected
to redeem the Notes pursuant to paragraph 5 of the Notes, an equivalent  premium
shall also become and be immediately due and payable to the extent  permitted by
law,  anything  in this  Indenture  or in the Notes  contained  to the  contrary
notwithstanding.

      (d) The  Trustee  shall not be charged  with  knowledge  of any Default or
Event of Default  unless written notice thereof shall have been given to a Trust
Officer at the Corporate Trust Office of the Trustee by the Company or any other
Person.

      (e) The  Trustee  may  withhold  from  Holders of the Notes  notice of any
continuing  Default or Event of Default (except a Default or an Event of Default
pursuant  to  Sections  6.01(a)(i)  and  (ii)) if the  Trustee  determines  that
withholding notice is in their interest.



                                      -47-

<PAGE>

SECTION 6.02    ACCELERATION.

      (a) Upon the  occurrence  of an Event of Default  (other  than an Event of
Default under clause Sections 6.01(a)(vi) and (vii)), the Trustee or the holders
of at least 25% in principal  amount of the then  outstanding  Notes may declare
all Notes (i) to be due and  payable  immediately  by notice in  writing  to the
Company and the Trustee  specifying the respective  Event of Default and that it
is a "notice of acceleration" (the  "Acceleration  Notice") and, upon receipt by
the Company of such Acceleration  Notice, the principal of, premium, if any, and
any  accrued  and  unpaid  interest  on  all  Notes  shall  be due  and  payable
immediately;  or (ii) if there are any amounts  outstanding  under the  Existing
Credit Agreement,  to be due and payable  immediately upon the first to occur of
(A) an  acceleration  under the Existing  Credit  Agreement or (B) five business
days after receipt by the Company of such Acceleration  Notice, but only if such
Event of  Default is then  continuing;  provided,  however,  that if an Event of
Default arises under Section 6.01(a)(vi) or (vii), the principal of, premium, if
any, and any accrued and unpaid  interest on all Notes,  shall ipso facto become
and be immediately  due and payable  without any declaration or other act on the
part of the Trustee or any Holders of Notes.

      (b) The  holders  of a  majority  in  principal  amount of the Notes  then
outstanding,   by  notice  to  the  Trustee,  may  rescind  any  declaration  of
acceleration  of such Notes and its  consequences  (if the rescission  would not
conflict with any judgment or decree) if all existing  Events of Default  (other
than the  nonpayment  of  principal of or interest on such Notes that shall have
become due by such declaration) shall have been cured or waived.

      (c) If there has been a declaration of  acceleration  of the Notes because
an Event of Default under Section  6.01(a)(iv)  has occurred and is  continuing,
such declaration of acceleration shall be automatically  annulled if the holders
of  the  Indebtedness  described  in  Section  6.01(a)(iv)  have  rescinded  the
declaration of acceleration in respect of such  Indebtedness  within 30 Business
Days thereof and if (i) the  annulment of such  acceleration  would not conflict
with any  judgment  or decree  of a court of  competent  jurisdiction,  (ii) all
existing Events of Default, except non-payment of principal,  premium,  interest
that shall have become due solely because of the  acceleration,  have been cured
or waived,  and (iii) the Company has delivered an Officers'  Certificate to the
Trustee to the effect of clauses (i) and (ii) above.

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 of, premium, if any, or
any accrued and unpaid  interest on the Notes or to enforce the  performance  of
any provision of the Notes or this Indenture.

      The Trustee may maintain a  proceeding  even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder 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.  All remedies are  cumulative  to the
extent permitted by law.


                                      -48-

<PAGE>



SECTION 6.04    WAIVER OF PAST DEFAULTS.

      The holders of a majority in aggregate  principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of all Holders of Notes waive
any  existing  Default  or  Event  of  Default  under  this  Indenture  and  its
consequences,  except a continuing  Default in the payment of the  principal of,
premium,  if any, and interest on such Notes,  which may only be waived with the
consent of each Holder of Notes  affected.  Upon any such  waiver,  such Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured for every  purpose of this  Indenture;  provided that no such
waiver  shall  extend to any  subsequent  or other  Default  or impair any right
consequent thereon.

SECTION 6.05    CONTROL BY MAJORITY.

      Subject to Section 7.01(e),  the Holders of a majority in principal amount
of the  then  outstanding  Notes  may  direct  the  time,  method  and  place of
conducting any proceeding for any remedy  available to the Trustee or exercising
any trust or power conferred on it by this Indenture.  However,  the Trustee may
refuse to follow any direction that conflicts with law or this  Indenture,  that
the Trustee  determines may be unduly prejudicial to the rights of other Holders
or would involve the Trustee in personal liability.

SECTION 6.06    LIMITATION ON SUITS.

      A Holder may pursue a remedy with  respect to this  Indenture or the Notes
only if (i) the Holder  gives to the  Trustee  notice of a  continuing  Event of
Default;  (ii) the  Holders  of at least  25% in  principal  amount  of the then
outstanding Notes make a request to the Trustee to pursue the remedy; (iii) such
Holder or Holders  offer to the Trustee  indemnity  satisfactory  to the Trustee
against any loss,  liability  or expense;  (iv) the Trustee does not comply with
the  request  within  60 days  after  receipt  of the  request  and the offer of
indemnity;  and (v)  during  such  60-day  period the  Holders of a majority  in
principal  amount  of the then  outstanding  Notes do not  give  the  Trustee  a
direction inconsistent with the request.

      A Holder may not use this  Indenture  to  prejudice  the rights of another
Holder or to obtain a preference or priority over another Holder.

      Holders of the Notes may not enforce  this  Indenture,  except as provided
herein.

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, premium,  if any, and any accrued and
unpaid  interest on a Note, on or after a respective  due date  expressed in the
Note, or to bring suit for the  enforcement of any such payment on or after such
respective  date,  shall not be impaired or affected  without the consent of the
Holder.

SECTION 6.08    COLLECTION SUIT BY TRUSTEE.

      If an Event of Default specified in Section  6.01(a)(i) or (ii) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as  trustee of an express  trust  against  the  Company  for (i) the  principal,
premium and interest  remaining  unpaid on the Notes,  (ii)  interest on overdue
principal and premium,  if any, and, to the extent lawful,  interest,  and (iii)



                                      -49-

<PAGE>



such further  amount as shall be  sufficient  to cover the costs and expenses of
collection,  including the reasonable compensation,  expenses, disbursements and
advances of the Trustee, its agents and counsel ("Trustee Expenses").

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 to have the claims of the Trustee  (including  any
claim for  Trustee  Expenses)  and the  Holders  allowed  in any  Insolvency  or
Liquidation  Proceeding or other judicial proceeding relative to the Company (or
any other  obligor upon the Notes),  its  creditors or its property and shall be
entitled and empowered to collect,  receive and  distribute to Holders any money
or other  property  payable or  deliverable  on any such  claims and each Holder
authorizes  any Custodian in any such  Insolvency or  Liquidation  Proceeding or
other  judicial  proceeding  to make such  payments to the  Trustee,  and if the
Trustee shall consent to the making of such payments directly to the Holders any
such  Custodian  is hereby  authorized  to make such  payments  directly  to the
Holders,  and to pay to the Trustee any amount due to it  hereunder  for Trustee
Expenses,  and any other  amounts due the Trustee  under  Section  7.07.  To the
extent that the payment of any such Trustee Expenses,  and any other amounts due
the Trustee under Section 7.07 out of the estate in any such  proceeding,  shall
be denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions,  dividends,  money,  securities
and other  properties  which the  Holders  may be  entitled  to  receive in such
proceeding,  whether  in  liquidation  or under  any plan of  reorganization  or
arrangement or otherwise.  Nothing herein contained shall be deemed to authorize
the  Trustee  to  authorize  or  consent  to or accept or adopt on behalf of any
Holder  any  plan of  reorganization,  arrangement,  adjustment  or  composition
affecting the Notes or the rights of any Holder,  or to authorize the Trustee to
vote in  respect  of the claim of any Holder in any  Insolvency  or  Liquidation
Proceeding.

SECTION 6.10    PRIORITIES.

      If the Trustee  collects any money pursuant to this Article,  it shall pay
out the money in the following order:

      First: to the Trustee for amounts due under Section 7.07;

      Second: to Holders for amounts due and unpaid on the Notes for  principal,
              premium  and  interest, ratably, without preference or priority of
              any  kind,  according   to  the  amounts  due  and  payable on the
              Notes for principal, premium and interest, respectively; and

      Third:  to  the  Company  or to  such  party  as  a  court  of   competent
              jurisdiction shall direct.

      The  Trustee  may fix a record  date and  payment  date for any payment to
Holders.


                                      -50-
<PAGE>

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 for any action taken or omitted by
it as a Trustee,  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,  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  principal
amount of the then outstanding Notes.

                                    ARTICLE 7
                                     TRUSTEE

SECTION 7.01    DUTIES OF TRUSTEE.

      (a) If an Event of Default  occurs  (and has not been  cured) the  Trustee
shall (i) exercise  the rights and powers  vested in it by this  Indenture,  and
(ii) use the same degree of care and skill in exercising  such rights and powers
as a prudent person would exercise or use under the circumstances in the conduct
of its own affairs.

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

            (i)   the Trustee's duties shall be determined solely by the express
                  provisions of this Indenture and the Trustee need perform only
                  those duties that are specifically set forth in this Indenture
                  and no others,  and no implied  covenants or obligations shall
                  be read into this Indenture against the Trustee; and

            (ii)  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   furnished  to  the  Trustee  and
                  conforming to the requirements of this Indenture. However, the
                  Trustee  shall  examine  the   certificates  and  opinions  to
                  determine   whether   they   conform   to   this   Indenture's
                  requirements.

      (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:

            (i)   this paragraph does not limit the effect of Section 7.01(b);

            (ii)  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

            (iii) 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 it receives pursuant to Section 6.05.


                                      -51-

<PAGE>



      (d)  Whether  or not  expressly  so  provided,  every  provision  of  this
Indenture  that in any way relates to the Trustee is subject to paragraphs  (a),
(b), (c) and (e) of this Section.

      (e) No provision of this Indenture  shall require the Trustee to expend or
risk  its own  funds or  incur  any  liability.  The  Trustee  shall be under no
obligation to exercise any of its rights and powers under this  Indenture at the
request of any Holders  unless such  Holders  shall have  offered to the Trustee
security  and  indemnity  satisfactory  to it  against  any loss,  liability  or
expense.

      (f) The Trustee  shall not be liable for interest on any money it receives
except as the Trustee may agree in writing with the  Company.  Money the Trustee
holds in trust  need not be  segregated  from other  funds  except to the extent
required by law.

SECTION 7.02    RIGHTS OF TRUSTEE.

      (a) The Trustee may rely on any  document it believes to be genuine and to
have been signed or presented  by the proper  Person.  The Trustee  shall not be
obligated to investigate any fact or matter stated in the document.

      (b) Before the Trustee  acts or refrains  from acting,  it may  reasonably
require an Officers'  Certificate or an Opinion of Counsel, or both. The Trustee
shall not be liable  for any  action it takes or omits to take in good  faith in
reliance on such Officers'  Certificate  or Opinion of Counsel.  The Trustee may
consult with counsel and advice of such counsel or any Opinion of Counsel  shall
be full and  complete  authorization  and  protection  in  respect of any action
taken,  suffered  or  omitted  by it  hereunder  in good  faith and in  reliance
thereon.

      (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,  except to the extent  that such  action or  omission  to act  constitutes
negligence or wilful misconduct on the part of the Trustee.

      (e) Unless otherwise specifically provided in this Indenture,  any demand,
request,  direction or notice from the Company  shall be sufficient if signed by
an Officer.

SECTION 7.03    INDIVIDUAL RIGHTS OF TRUSTEE.

      The Trustee in its  individual or any other  capacity may become the owner
or pledgee of Notes and may otherwise deal with the Company or an Affiliate with
the same rights it would have if it were not  Trustee.  However,  if the Trustee
acquires any  conflicting  interest it must  eliminate  such conflict  within 90
days,  apply to the SEC for  permission  to continue  as Trustee or resign.  Any
Agent may do the same with like rights.  The Trustee is also subject to Sections
7.10 and 7.11.



                                      -52-

<PAGE>



SECTION 7.04    TRUSTEE'S DISCLAIMER.

      The Trustee shall not be responsible for and makes no representation as to
the  validity  or  adequacy  of this  Indenture  or the  Notes,  it shall not be
accountable  for the  Company's  use of the  proceeds  from the Notes or for any
money paid to the Company or upon the Company's  direction  under any provisions
hereof,  it shall not be responsible for the use or application of any money any
Paying Agent other than the Trustee  receives,  and it shall not be  responsible
for any  statement or recital  herein or any statement in the Notes or any other
document  furnished  or  issued  in  connection  with the  sale of the  Notes or
pursuant to this Indenture, other than its certificate of authentication.

SECTION 7.05    NOTICE TO HOLDERS OF DEFAULTS AND EVENTS OF DEFAULT.

      If a Default or Event of Default  occurs  and is  continuing  and if it is
actually known to the Trustee, the Trustee shall mail to Holders a notice of the
Default or Event of Default  within 90 days after it occurs.  Except in the case
of a Default or Event of Default in payment on any Note  (including  any failure
to redeem Notes called for  redemption or any failure to purchase Notes tendered
pursuant  to an Offer that are  required  to be  purchased  by the terms of this
Indenture), 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 Holders' interests.

SECTION 7.06    REPORTS BY TRUSTEE TO HOLDERS.

      Within 60 days after each May 15 beginning  with May 15, 2003, the Trustee
shall  mail to  Holders  a brief  report  dated as of such  reporting  date that
complies  with section  313(a) of the TIA (but if no event  described in section
313(a) of the TIA has occurred within the twelve months  preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with section
313(b)(2)  of the TIA.  The Trustee  shall also  transmit by mail all reports as
required by section 313(c) of the TIA.

      Commencing at the time this  Indenture is qualified  under the TIA, a copy
of each report at the time of its mailing to Holders shall be filed with the SEC
and each national securities exchange on which the Notes are listed. The Company
shall notify the Trustee  when the Notes are listed on any  national  securities
exchange.

SECTION 7.07    COMPENSATION AND INDEMNITY.

      The Company shall pay to the Trustee (in its capacities as Trustee, Paying
Agent  and/or  Registrar)  from  time to time  reasonable  compensation  for its
services hereunder.  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  disbursements,  advances,  fees and
expenses it incurs or makes in addition to the  compensation  for its  services.
Such  expenses  shall include the  reasonable  compensation,  disbursements  and
expenses of the Trustee's agents and counsel.

      The  Company  shall  indemnify  and  hold  harmless  the  Trustee  (in its
capacities  as  Trustee,  Paying  Agent  and/or  Registrar)  against any and all
losses,  liabilities  or  expenses  the  Trustee  incurs  arising  out  of or in
connection  with the  acceptance  or  administration  of its  duties  under this
Indenture,  except as set forth  below.  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


                                      -53-
<PAGE>


relieve the Company of its Obligations  hereunder.  The Company shall defend the
claim and the Trustee shall reasonably cooperate in the defense. The Trustee may
have separate counsel and the Company shall pay the reasonable fees and expenses
of such counsel.  The Company need not pay for any  settlement  made without its
consent, which consent shall not be unreasonably withheld.

      The  Company's  Obligations  under this  Section  7.07 shall  survive  the
satisfaction and discharge of this Indenture.

      The Company need not reimburse  any expense or indemnify  against any loss
or liability the Trustee incurs through the Trustee's negligence or bad faith.

      To secure the Company's  payment of its  Obligations in this Section,  the
Trustee  shall  have a Lien  prior to the  Notes on all  money or  property  the
Trustee  holds or  collects.  Such  Lien  shall  survive  the  satisfaction  and
discharge of this Indenture.

      When the Trustee  incurs  expenses or renders  services  after an Event of
Default specified in Section 6.01(a)(vii) or (viii) occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute administrative expenses under any Bankruptcy
Law.

SECTION 7.08    REPLACEMENT OF TRUSTEE.

      A  resignation  or removal of the Trustee and  appointment  of a successor
Trustee shall become effective only upon the successor  Trustee's  acceptance of
appointment as provided in this Section.

      The Trustee may resign and be discharged  from the trust hereby created by
so notifying the Company.  The Holders of a majority in principal  amount of the
then  outstanding  Notes may remove the Trustee by so notifying  the Trustee and
the Company. The Company may remove the Trustee if:

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

            (ii)  the Trustee is adjudged a bankrupt or an insolvent or an order
                  for relief is entered  with  respect to the Trustee  under any
                  Bankruptcy Law;

            (iii) a Custodian or public  officer  takes charge of the Trustee or
                  its property; or

            (iv)  the Trustee becomes incapable of acting.

      If the Trustee  resigns or is removed or if a vacancy exists in the office
of Trustee  for any  reason,  the  Company  shall  promptly  appoint a successor
Trustee, provided that the Holders of a majority in principal amount of the then
outstanding  Notes may  appoint a  successor  Trustee to replace  any  successor
Trustee appointed by the Company.

      If a  successor  Trustee  does not take  office  within 60 days  after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in


                                      -54-
<PAGE>



principal  amount  of the then  outstanding  Notes  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 Holder may petition
any court of  competent  jurisdiction  for the  removal of the  Trustee  and the
appointment of 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  appointment  to
Holders.  The retiring Trustee shall promptly  transfer all property it holds as
Trustee  to the  successor  Trustee,  provided  all sums  owing to the  retiring
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07. Notwithstanding  replacement of the Trustee pursuant to this Section 7.08,
the Company's  obligations  under  Section 7.07 shall  continue for the retiring
Trustee's  benefit with respect to expenses and liabilities it incurred prior to
being replaced.

SECTION 7.09    SUCCESSOR TRUSTEE BY MERGER, ETC.

      If the Trustee consolidates,  merges or converts into, or transfers all or
substantially all of its corporate trust business  (including the administration
of the trust created by this Indenture) to, another  corporation,  the successor
corporation without any further act shall be the successor Trustee.

SECTION 7.10    ELIGIBILITY; DISQUALIFICATION.

      The Trustee  shall at all times (i) be a  corporation  organized and doing
business  under the laws of the United States of America,  of any state thereof,
or the  District of Columbia  authorized  under such laws to exercise  corporate
trustee power, (ii) be subject to supervision or examination by federal or state
authority, (iii) have, individually,  a combined capital and surplus of at least
$150,000 as set forth in its most recent  published  annual report of condition,
(iv) have,  together with its Affiliates,  a combined  capital and surplus of at
least  $100,000,000 as set forth in its most recent  published  annual report of
condition,  and (v) satisfy the requirements of sections 310(a)(1),  (2) and (5)
of the TIA. The Trustee is subject to section 310(b) of the TIA.

SECTION 7.11    PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.

      The  Trustee  is  subject  to  section  311(a) of the TIA,  excluding  any
creditor  relationship  listed in section  311(b) of the TIA. A Trustee  who has
resigned or been  removed  shall be subject to section  311(a) of the TIA to the
extent indicated therein.

                                   ARTICLE 8
                             DISCHARGE OF INDENTURE

SECTION 8.01    DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE.

      (a) When (i) the Company  delivers to the  Trustee all  outstanding  Notes
(other than Notes replaced pursuant to Section 2.07) for  cancellation,  or (ii)
all  outstanding  Notes have


                                      -55-
<PAGE>



become due and  payable and the Company  irrevocably  deposits  with the Trustee
funds sufficient to pay at maturity all outstanding  Notes,  including  interest
and premium thereon (other than Notes replaced pursuant to Section 2.07), and if
in either case the Company pays all other sums payable  under this  Indenture by
the Company,  then this Indenture  shall,  subject to Sections 8.01(c) and 8.06,
cease to be of further effect.

      (b) Subject to Sections  8.01(c),  8.02, and 8.06, the Company at any time
may terminate (i) all its obligations under the Notes and this Indenture ("legal
defeasance  option") or (ii) its obligations  under Sections 4.02,  4.03,  4.05,
4.06,  4.07,  4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17, and
the operation of Sections  5.01(a)(iii),  5.01(a)(iv),  or 6.01(a)(iii)  through
(a)(v)  ("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 Notes
may not be accelerated  because of an Event of Default. If the Company exercises
its covenant  defeasance  option,  payment of the Notes shall not be accelerated
because of an Event of Default specified in Sections 6.01(a)(iii) through (a)(v)
or because of the  Company's  failure to comply with  Section  5.01(a)(iii)  and
5.01(a)(iv).

      Upon  satisfaction  of the  conditions  set  forth  herein  and  upon  the
Company's request (and at the Company's expense),  the Trustee shall acknowledge
in writing the discharge of those obligations that the Company has terminated.

      (c) Notwithstanding  clauses (a) and (b) above, the Company's  obligations
in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 4.04, 7.07, 7.08, 8.04, 8.05 and
8.06, and the Trustee's and the Paying Agent's obligations in Section 8.04 shall
survive  until the  Notes  have been  paid in full.  Thereafter,  the  Company's
obligations in Sections 7.07 and 8.05 and the  Company's,  the Trustee's and the
Paying Agent's obligations in Section 8.04 shall survive.

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 (the  "defeasance
                  trust") with the Trustee money or U.S. Government  Obligations
                  sufficient  for  the  payment  in full  of the  principal  of,
                  premium,  if any,  and any accrued and unpaid  interest on the
                  Notes  then   outstanding,   as  of  the  maturity  date,  the
                  redemption date or the Purchase Date, as the case may be;

            (2)   the  Company  delivers  to the  Trustee a  certificate  from a
                  nationally  recognized  firm of independent  accountants or an
                  investment  bank  expressing  its opinion that the payments of
                  principal  and interest when due and without  reinvestment  of
                  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  when  due
                  principal  of,  premium,  if any,  and any  accrued and unpaid
                  interest on all the Notes to maturity  or  redemption,  as the
                  case may be;


                                      -56-
<PAGE>



            (3)   since  the  Company's  irrevocable  deposit  provided  for  in
                  Section 8.02(1), 91 days have passed;

            (4)   no Default has occurred and is  continuing on the date of such
                  deposit and after giving effect to it;

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

            (6)   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, as amended;

            (7)   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)
                  under  applicable  federal  income tax law, in either case, to
                  the effect  that,  and based  thereon  such Opinion of Counsel
                  shall  confirm that,  the Holders will not  recognize  income,
                  gain or loss for  federal  income tax  purposes as a result of
                  such  deposit  and  defeasance  and will be subject to federal
                  income tax on the same  amount,  in the same manner and at the
                  same times as would have been the case if such  defeasance had
                  not occurred;

            (8)   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 Holders will not recognize income, gain or
                  loss for  federal  income  tax  purposes  as a result  of such
                  deposit and covenant defeasance and will be subject to federal
                  income tax on the same  amount,  in the same manner and at the
                  same  times as  would  have  been  the  case if such  covenant
                  defeasance  had  not  occurred  (and,  in the  case  of  legal
                  defeasance  only,  such  opinion of counsel must be based on a
                  ruling of the  Internal  Revenue  Service  or other  change in
                  applicable federal income tax law); and

            (9)   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  Notes
                  contemplated by this Article 8 have been satisfied.

      Before or after a deposit, the Company may make arrangements  satisfactory
to the  Trustee  for the  redemption  or  purchase  of Notes at a future date in
accordance with Article 3.

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 8. It shall apply the deposited money
and the money from U.S.


                                      -57-
<PAGE>



Government  Obligations  through the Paying  Agent and in  accordance  with this
Indenture to the payment of principal of,  premium,  if any, and any accrued and
unpaid interest on the Notes.

SECTION 8.04    REPAYMENT TO THE COMPANY.

      After the Notes have been paid in full,  the Trustee and the Paying  Agent
shall  promptly  turn over to the Company any excess  money or  securities  they
hold.

      The Trustee and the Paying  Agent  shall pay to the Company  upon  written
request by the Company any money they hold for the payment of principal, premium
or interest  that remains  unclaimed for one year after the date upon which such
payment shall have become due;  provided,  however,  that the Company shall have
either  caused  notice of such  payment  to be mailed  to each  Holder  entitled
thereto no less than 30 days prior to such repayment or within such period shall
have  published such notice in a financial  newspaper of widespread  circulation
published  in The  City of New York  (including,  without  limitation,  The Wall
Street  Journal).  After payment to the Company,  Holders  entitled to the money
must look to the Company for payment as general  creditors  unless an applicable
abandoned  property law  designates  another  Person,  and all  liability of the
Trustee and such Paying Agent with respect to such money shall cease.

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 8 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 Notes shall be revived and
reinstated  as though no deposit had  occurred  pursuant to this Article 8 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  8;  provided,
however,  that, if the Company has made any payment of principal of, premium, if
any,  and  any  accrued  and  unpaid  interest  on  any  Notes  because  of  the
reinstatement  of its  Obligations,  the  Company  shall  be  subrogated  to the
Holders'  rights to  receive  such  payment  from the  money or U.S.  Government
Obligations the Trustee or Paying Agent holds.

                                   ARTICLE 9
                                   AMENDMENTS

SECTION 9.01    AMENDMENTS AND SUPPLEMENTS PERMITTED WITHOUT CONSENT OF HOLDERS.

      Notwithstanding  Section  9.02,  the  Company and the Trustee may amend or
supplement  this Indenture or the Notes without the consent of any Holder (a) to
cure any ambiguity,  defect or inconsistency;  (b) to provide for uncertificated
Notes in addition to or in place of certificated



                                      -58-

<PAGE>



Notes;  (c) to provide  for the  assumption  by a Successor  Corporation  of the
Company's  Obligations to the Holders in the event of a Disposition  pursuant to
Article  5; (d) to comply  with SEC's  requirements  to effect or  maintain  the
qualification of this Indenture under the TIA; (e) to comply with Section 12.01;
or (f) to make any change  that does not  adversely  affect any  Holder's  legal
rights under this Indenture.

      Upon the Company's  request,  after receipt by the Trustee of a resolution
of  the  Board  of  Directors  authorizing  the  execution  of  any  amended  or
supplemental  indenture,  the documents  described in Section 9.06,  the Trustee
shall join with the  Company in the  execution  of any  amended or  supplemental
indenture authorized or permitted by the terms of this Indenture and to make any
further  appropriate  agreements and  stipulations  that may be contained in any
such amended or supplemental  indenture,  but the Trustee shall not be obligated
to enter into an amended or supplemental  indenture that affects its own rights,
duties or immunities under this Indenture or otherwise.

SECTION 9.02    AMENDMENTS AND SUPPLEMENTS REQUIRING CONSENT OF HOLDERS.

      Subject  to  Section  6.07,  the  Company  and the  Trustee  may  amend or
supplement  this Indenture or the Notes with the written  consent of the Holders
of at  least a  majority  in  principal  amount  of the then  outstanding  Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Notes).  Subject to Sections 6.04 and 6.07, the Holders of a majority in
principal amount of the Notes then outstanding  (including  consents obtained in
connection  with a tender offer or exchange  offer for the Notes) may also waive
any existing  Default or Event of Default (other than a payment Default) and its
consequences  or  compliance  in a  particular  instance by the Company with any
provision of this Indenture or the Notes.

      Upon  the  Company's  request  and  after  receipt  by  the  Trustee  of a
resolution  of  the  Board  of  Directors   authorizing  the  execution  of  any
supplemental  indenture,  evidence of the Holders'  consent,  and the  documents
described  in Section  9.06,  the  Trustee  shall  join with the  Company in the
execution  of such  amended or  supplemental  indenture  unless such  amended or
supplemental  indenture  affects the Trustee's own rights,  duties or immunities
under  this  Indenture  or  otherwise,  in  which  case the  Trustee  may in its
discretion,  but not be obligated  to,  enter into such amended or  supplemental
indenture.

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

      After an amendment or waiver under this  Section  becomes  effective,  the
Company shall mail to each Holder affected  thereby a notice briefly  describing
the  amendment,  supplement  or waiver.  Any failure of the Company to mail such
notice, or any defect therein,  shall not, however,  in any way impair or affect
the validity of any such amended or  supplemental  indenture or waiver.  Without
the consent of each Holder  affected,  an amendment,  supplement or waiver under
this Section may not (1) reduce the principal amount of Notes whose Holders must
consent to an amendment,  supplement or waiver; (2) reduce the rate of or change
the time for  payment of  interest,  including  interest as set forth in Section
4.01, on any Note or alter the  redemption or purchase  provisions  with respect
thereto or the price at which the Company is  required to offer to



                                      -59-
<PAGE>



purchase any Note;  (3) reduce the principal of or change the fixed  maturity of
any Note; (4) make any Note payable in money other than that stated in the Note;
(5) make any change in Section 6.04 or 6.07 or in this  sentence of this Section
9.02; or (6) waive a default in the payment of the principal of, or premium,  if
any, or any accrued and unpaid  interest on or  redemption  or purchase  payment
with respect to, any Note (except a rescission of  acceleration  of the Notes by
the Holders of at least a majority  in  aggregate  principal  amount of the then
outstanding  Notes and a waiver of the payment  default that  resulted from such
acceleration).

      Without the consent of the Holders of at least 75% in aggregate  principal
amount of the Notes then outstanding,  no amendment,  supplement or waiver under
this  Section  may make any change in the  provisions  under  Article 10 of this
Indenture.

SECTION 9.03    COMPLIANCE WITH TIA.

      Every  amendment or supplement to this Indenture or the Notes shall be set
forth in an amended supplemental indenture that complies with the TIA as then in
effect.

SECTION 9.04    REVOCATION AND EFFECT OF CONSENTS.

      Until an amendment,  supplement or waiver becomes effective,  a consent to
it by a  Holder  of a Note is a  continuing  consent  by the  Holder  and  every
subsequent  Holder  of a Note or  portion  of a Note  that  evidences  the  same
Indebtedness as the consenting Holder's Note, even if notation of the consent is
not made on any Note.  However,  any such Holder or subsequent Holder may revoke
the consent as to his or her Note or portion of a Note if the  Trustee  receives
the  notice of  revocation  before  the date on which the  Trustee  receives  an
Officer's  Certificate  certifying  that the Holders of the requisite  principal
amount of Notes have consented to the amendment or waiver.

      The Company may, but shall not be obligated  to, fix a record date for the
purpose of determining the Holders of Notes entitled to consent to any amendment
or waiver. If a record date is fixed,  then,  notwithstanding  the provisions of
the immediately preceding paragraph,  those Persons who were Holders of Notes at
such record date (or their duly  designated  proxies),  and only those  Persons,
shall be  entitled  to  consent  to such  amendment  or waiver or to revoke  any
consent previously given,  whether or not such Persons continue to be Holders of
Notes after such record date.  No consent  shall be valid or effective  for more
than 90 days  after  such  record  date  unless  consents  from  Holders  of the
principal amount of Notes required  hereunder for such amendment or waiver to be
effective shall have also been given and not revoked within such 90-day period.

      After an amendment or waiver becomes effective it shall bind every Holder,
unless it is of the type  described in any of clauses (1) through (6) of Section
9.02.  In such case,  the  amendment  or waiver  shall bind each  Holder who has
consented to it and every  subsequent  Holder of a Note that  evidences the same
debt as the consenting Holder's Note.

SECTION 9.05    NOTATION ON OR EXCHANGE OF NOTES.

      The Trustee may (at the Company's  expense) place an appropriate  notation
about an amendment,  supplement or waiver on any Note thereafter  authenticated.
The  Company  in


                                      -60-
<PAGE>



exchange for all Notes may issue and the Trustee  shall  authenticate  new Notes
that reflect the amendment, supplement or waiver.

      Failure  to make the  appropriate  notation  or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.

SECTION 9.06    TRUSTEE PROTECTED.

      The Trustee shall sign any amendment or supplemental  indenture authorized
pursuant  to this  Article 9 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 or  supplemental
indenture,  the Trustee  shall be entitled  to receive  and,  subject to Section
7.01,  shall be fully  protected in relying upon, an Officers'  Certificate  and
Opinion of Counsel as conclusive  evidence that such  amendment or  supplemental
indenture  is  authorized  or  permitted  by  this  Indenture,  that  it is  not
inconsistent herewith, and that it will be valid and binding upon the Company in
accordance with its terms. The Company may not sign an amendment or supplemental
indenture until the Board of Directors approves it.

                                   ARTICLE 10
                                  SUBORDINATION

SECTION 10.01   AGREEMENT TO SUBORDINATE.

      The Company agrees,  and each Holder by accepting a Note agrees,  that the
Indebtedness  evidenced by the Note is subordinated in right of payment,  to the
extent and in the manner  provided in this  Article 10, to the prior  payment in
full  in cash or  Marketable  Securities  of all  Senior  Indebtedness  (whether
outstanding  on the date  hereof or  hereafter  created,  incurred,  assumed  or
guaranteed),  and that the  subordination  is for the  benefit of the holders of
Senior Indebtedness.

SECTION 10.02   LIQUIDATION; DISSOLUTION; BANKRUPTCY.

      Upon any  distribution  to  creditors of the Company in a  liquidation  or
dissolution  of the  Company  or in a  bankruptcy,  reorganization,  insolvency,
receivership or similar proceeding  relating to the Company or its property,  in
an assignment  for the benefit of creditors or any  marshalling of the Company's
assets and liabilities:

      (a) holders of Senior Indebtedness shall be entitled to receive payment in
full in cash or Marketable  Securities of all Obligations due in respect of such
Senior  Indebtedness  (including  interest  after the  commencement  of any such
proceeding at the rate specified in the applicable Senior  Indebtedness)  before
Holders  shall be  entitled to receive  any  payment  with  respect to the Notes
(except  that  Holders may  receive (i)  Permitted  Junior  Securities  and (ii)
payments and other distributions made from any defeasance trust created pursuant
to Section 8.02 hereof); and

      (b) until all Obligations with respect to Senior  Indebtedness are paid in
full in cash or Marketable  Securities,  any distribution to which Holders would
be  entitled  but for  this  Article  10  shall  be made to  holders  of  Senior
Indebtedness  (except that Holders may receive (i) Permitted


                                      -61-

<PAGE>


Junior  Securities  and (ii)  payments  and  other  distributions  made from any
defeasance  trust created  pursuant to Section 8.02 hereof),  as their interests
may appear.

SECTION 10.03   DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS.

      (a) The Company may not make any payment or distribution to the Trustee or
any  Holder in  respect  of  Obligations  with  respect to the Notes and may not
acquire  from the  Trustee or any Holder any Notes for cash or  property  (other
than (x) Permitted  Junior  Securities and (y) payments and other  distributions
made from any  defeasance  trust created  pursuant to Section 8.02 hereof) until
all principal and other Obligations with respect to the Senior Indebtedness have
been paid in full if:

            (i)   a default in the payment of any principal or other Obligations
                  with respect to Designated Senior  Indebtedness  occurs and is
                  continuing   beyond  any   applicable   grace  period  in  the
                  agreement,   indenture  or  other   document   governing  such
                  Designated Senior Indebtedness; or

            (ii)  a default,  other than a payment default, on Designated Senior
                  Indebtedness  occurs  and  is  continuing  that  then  permits
                  holders of the Designated  Senior  Indebtedness  to accelerate
                  its maturity and the Trustee  receives a notice of the default
                  (a "Payment  Blockage  Notice")  from a Person who may give it
                  pursuant to Section 10.12 hereof.  If the Trustee receives any
                  such Payment Blockage Notice,  no subsequent  Payment Blockage
                  Notice shall be effective for purposes of this Section  unless
                  and until at least 360 days shall have elapsed  since the date
                  of receipt by the  Trustee of the  immediately  prior  Payment
                  Blockage  Notice.  No  nonpayment  default that existed or was
                  continuing  on the date of delivery  of any  Payment  Blockage
                  Notice to the  Trustee  shall be, or be made,  the basis for a
                  subsequent  Payment  Blockage Notice (it being understood that
                  any  subsequent  action,  or any breach of any  covenant for a
                  period  commencing after the date of receipt by the Trustee of
                  such Payment Blockage Notice, that, in either case, would give
                  rise to such a default pursuant to any provision under which a
                  default  previously existed or was continuing shall constitute
                  a new default for this purpose).

      (b) The Company may and shall  resume  payments  on and  distributions  in
respect of the Notes and may acquire them upon the earlier of: (i) the date upon
which the default is cured or waived,  or (ii) in the case of a default referred
to in Section  10.03(a)(ii)  hereof,  179 days pass after the applicable Payment
Blockage  Notice is received by the Company if the  maturity of such  Designated
Senior  Indebtedness  has not been  accelerated  (or, if such Designated  Senior
Indebtedness has been accelerated,  such Designated Senior  Indebtedness has not
been  paid  in  full  in cash  or  Marketable  Securities)  and if this  Article
otherwise  permits the payment,  distribution or acquisition at the time of such
payment or acquisition.


                                      -62-
<PAGE>

SECTION 10.04   ACCELERATION OF NOTES.

      If payment of the Notes is accelerated because of an Event of Default, the
Company  shall   promptly   notify  holders  of  Senior   Indebtedness   of  the
acceleration.

SECTION 10.05   WHEN DISTRIBUTION MUST BE PAID OVER.

      (a) In the event that the  Trustee or any Holder  receives  any payment of
any  Obligations  with  respect to the Notes at a time when the  Trustee or such
Holder,  as applicable,  has actual knowledge that such payment is prohibited by
Section 10.03  hereof,  such payment shall be held by the Trustee or such Holder
in trust for the benefit  of, and shall be paid  forthwith  over and  delivered,
upon written request,  to, the holders of Senior Indebtedness as their interests
may appear or their representative (the "Representative") under the indenture or
other  agreement  (if any) pursuant to which Senior  Indebtedness  may have been
issued, as their respective interests may appear, for application to the payment
of all Obligations with respect to Senior  Indebtedness  remaining unpaid to the
extent  necessary  to pay  such  Obligations  in  full  in  cash  or  Marketable
Securities in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.

      (b) With  respect  to the  holders  of Senior  Indebtedness,  the  Trustee
undertakes  to perform only such  obligations  on the part of the Trustee as are
specifically  set  forth  in  this  Article  10,  and no  implied  covenants  or
obligations  with  respect to the holders of Senior  Indebtedness  shall be read
into this Indenture against the Trustee.  The Trustee shall not be deemed to owe
any  fiduciary  duty to the  holders  of Senior  Indebtedness,  and shall not be
liable to any such holders if the Trustee  shall pay over or distribute to or on
behalf of Holders or the  Company or any other  Person  money or assets to which
any holders of Senior  Indebtedness  shall be entitled by virtue of this Article
10,  except if such  payment is made as a result of the  willful  misconduct  or
gross negligence of the Trustee.

SECTION 10.06   NOTICE BY COMPANY.

      The Company shall promptly  notify the Trustee and the Paying Agent of any
facts known to the Company  that would cause a payment of any  Obligations  with
respect to the Notes to violate  this  Article,  but failure to give such notice
shall not affect the  subordination  of the Notes to the Senior  Indebtedness as
provided in this Article.

SECTION 10.07   SUBROGATION.

      After  all  Senior  Indebtedness  is paid  in  full in cash or  Marketable
Securities  and until the Notes are paid in full,  Holders  shall be  subrogated
(equally and ratably with all other  Indebtedness  pari passu with the Notes) to
the rights of holders of Senior Indebtedness to receive distributions applicable
to Senior Indebtedness to the extent that distributions otherwise payable to the
Holders have been applied to the payment of Senior Indebtedness.  A distribution
made under this Article to holders of Senior  Indebtedness  that otherwise would
have been made to Holders is not, as between the Company and Holders,  a payment
by the Company on the Notes.

SECTION 10.08   RELATIVE RIGHTS.

      (a) This  Article  defines the  relative  rights of Holders and holders of
Senior Indebtedness. Nothing in this Indenture shall: (i) impair, as between the
Company and  Holders,



                                      -63-
<PAGE>


the  obligation  of the  Company,  which is absolute and  unconditional,  to pay
principal of and  interest on the Notes in  accordance  with their  terms;  (ii)
affect the relative  rights of Holders and  creditors of the Company  other than
their rights in relation to holders of Senior Indebtedness; or (iii) prevent the
Trustee or any Holder from  exercising its available  remedies upon a Default or
Event of  Default,  subject  to the  rights  of  holders  and  owners  of Senior
Indebtedness to receive distributions and payments otherwise payable to Holders.

      (b) If the Company  fails  because of this Article to pay  principal of or
interest  on a Note on the due date,  the failure is still a Default or Event of
Default.

SECTION 10.09   SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.

      No right of any holder of Senior Indebtedness to enforce the subordination
of the  Indebtedness  evidenced  by the Notes  shall be  impaired  by any act or
failure to act by the  Company or any Holder or by the failure of the Company or
any Holder to comply with this Indenture.

SECTION 10.10   DISTRIBUTION OR NOTICE TO REPRESENTATIVE.

      Whenever  a  distribution  is to be made or a notice  given to  holders of
Senior Indebtedness,  the distribution may be made and the notice given to their
Representative.

      Upon any payment or distribution  of assets of the Company  referred to in
this Article 10, the Trustee and the Holders  shall be entitled to rely upon any
order  or  decree  made by any  court  of  competent  jurisdiction  or upon  any
certificate of such  Representative  or of the  liquidating  trustee or agent or
other Person  making any  distribution  to the Trustee or to the Holders for the
purpose  of   ascertaining   the  Persons   entitled  to   participate  in  such
distribution,  the holders of the Senior  Indebtedness and other Indebtedness of
the Company,  the amount thereof or payable thereon,  the amount or amounts paid
or distributed  thereon and all other facts pertinent thereto or to this Article
10.

SECTION 10.11   RIGHTS OF TRUSTEE AND PAYING AGENT.

      Notwithstanding  the provisions of this Article 10 or any other  provision
of this  Indenture,  the  Trustee  shall not be charged  with  knowledge  of the
existence  of any  facts  that  would  prohibit  the  making of any  payment  or
distribution  by the Trustee,  and the Trustee and the Paying Agent may continue
to make  payments on the Notes,  unless the Trustee  shall have  received at its
Corporate  Trust  Office at least five  Business  Days prior to the date of such
payment  written notice of facts that would cause the payment of any Obligations
with  respect  to the Notes to  violate  this  Article.  Only the  Company  or a
Representative may give the notice.  Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.

      The  Trustee  in its  individual  or any other  capacity  may hold  Senior
Indebtedness  with the same  rights it would  have if it were not  Trustee.  Any
Agent may do the same with like rights.


                                      -64-
<PAGE>

SECTION 10.12   AUTHORIZATION TO EFFECT SUBORDINATION.

      Each Holder of a Note by the Holder's  acceptance  thereof  authorizes and
directs  the  Trustee  on the  Holder's  behalf  to take  such  action as may be
necessary or  appropriate to effectuate  the  subordination  as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes.  If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any  proceeding  referred to in Section
6.09  hereof at least 30 days  before  the  expiration  of the time to file such
claim, the Holders are hereby authorized to file an appropriate claim.

SECTION 10.13   AMENDMENTS.

      The provisions of this Article 10 shall not be amended or modified without
the written  consent of the holders of all Senior  Indebtedness  (in  accordance
with the provisions thereof).

                                   ARTICLE 11
                                  MISCELLANEOUS

SECTION 11.01   TRUST INDENTURE ACT CONTROLS.

      If any provision of this Indenture  limits,  qualifies,  or conflicts with
the duties imposed by operation of section 318(c) of the TIA, the imposed duties
shall control.

SECTION 11.02   NOTICES.

      Any notice or  communication by the Company or the Trustee to the other is
duly given if in  writing  and  delivered  in person,  mailed by  registered  or
certified  mail,  postage  prepaid,  return  receipt  requested  or delivered by
telecopier  or  overnight  air  courier  guaranteeing  next day  delivery to the
other's address:

         If to the Company:

                  GFSI, Inc.
                  9700 Commerce Parkway
                  Lenexa, Kansas  66219
                  Attention: Director of Finance
                  Telecopier: (913) 693-3907

         with copies to:

                  Mayer, Brown, Rowe & Maw
                  1675 Broadway
                  New York, New York  10019
                  Attention:  James B. Carlson, Esq.
                  Telecopier No.: (212) 262-1910

         If to the Trustee:

                  State Street Bank and Trust Company
                  225 Asylum Street


                                      -65-


<PAGE>



                  Hartford, Connecticut 06103
                  Attention: Corporate Trust Administration (GFSI, Inc. 9 5/8
                    Senior Subordinated Notes due 2007,
                  issued on December 31, 2002)
                  Telecopier No.: (860) 244-1889

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

      All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given:  at the time  delivered by hand,  if  personally
delivered;  the date  receipt  is  acknowledged,  if  mailed  by  registered  or
certified  mail;  when answered back, if  telecopied;  and the next Business Day
after  timely  delivery  to the  courier,  if  sent  by  overnight  air  courier
guaranteeing next day delivery.

      Any notice or  communication  to a Holder  shall be mailed by  first-class
mail to his or her address shown on the register kept by the Registrar.  Failure
to mail a notice  or  communication  to a Holder  or any  defect in it shall not
affect its sufficiency with respect to other Holders.

      If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.

      If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.

SECTION 11.03   COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.

      Holders may  communicate  pursuant to section 312(b) of the TIA with other
Holders  with respect to their  rights  under this  Indenture or the Notes.  The
Company,  the  Trustee,  the  Registrar  and any  other  Person  shall  have the
protection of section 312(c) of the TIA.

SECTION 11.04   CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

      Upon any request or  application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:

      (a) an Officers' Certificate (which shall include the statements set forth
in Section  11.05)  stating that, in the opinion of the signers,  all conditions
precedent and covenants,  if any, provided for in this Indenture relating to the
proposed action have been complied with; and

      (b) an Opinion of Counsel (which shall include the statements set forth in
Section 11.05) stating that, in the opinion of such counsel, all such conditions
precedent  provided for in this Indenture  relating to the proposed  action have
been complied with.

SECTION 11.05   STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

      Each certificate or opinion with respect to compliance with a condition or
covenant  provided  for in this  Indenture  (other than a  certificate  provided
pursuant to section 314(a)(4) of the TIA) shall include:



                                      -66-
<PAGE>


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

            (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 Person,  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,  in such  Person's  opinion,  such
                  condition or covenant has been complied with.

SECTION 11.06   RULES BY TRUSTEE AND AGENTS.

      The  Trustee  may make  reasonable  rules for action by or at a meeting of
Holders.  The  Registrar  or  Paying  Agent  may make  reasonable  rules and set
reasonable requirements for its functions.

SECTION 11.07   LEGAL HOLIDAYS.

      If a payment date is a Legal Holiday at a place of payment, payment may be
made at that place on the next  succeeding day that is not a Legal Holiday,  and
no interest shall accrue for the intervening period.

SECTION 11.08   NO RECOURSE AGAINST OTHERS.

      No officer, employee,  director,  stockholder or Subsidiary of the Company
shall have any liability for any  Obligations  of the Company under the Notes or
this Indenture,  or for any claim based on, in respect of, or by reason of, such
Obligations  or the creation of any such  Obligation,  except,  in the case of a
Subsidiary,  for an express guarantee or an express creation of any Lien by such
Subsidiary  of the  Company's  Obligations  under  the  Notes.  Each  Holder  by
accepting a Note waives and  releases  all such  liability,  and such waiver and
release  is part  of the  consideration  for  the  issuance  of the  Notes.  The
foregoing  waiver may not be  effective to waive  liabilities  under the Federal
securities  law and the SEC is of the view that such a waiver is against  public
policy.

SECTION 11.09   COUNTERPARTS.

      This  Indenture may be executed in any number of  counterparts  and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken  together  shall  constitute one
and the same agreement.

SECTION 11.10   VARIABLE PROVISIONS.

      The Company initially appoints the Trustee as Paying Agent,  Registrar and
authenticating agent.



                                      -67-
<PAGE>



      The first  compliance  certificate  to be  delivered by the Company to the
Trustee pursuant to Section 4.03 shall be for the fiscal year ending on June 30,
2003.

SECTION 11.11   GOVERNING LAW.

      The internal laws of the State of New York shall govern this Indenture and
the Notes, without regard to the conflict of laws provisions thereof.

SECTION 11.12   NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

      This  Indenture may not be used to interpret  another  indenture,  loan or
debt  agreement  of  the  Company  or  any of  its  Subsidiaries,  and no  other
indenture, loan or debt agreement may be used to interpret this Indenture.

SECTION 11.13   SUCCESSORS.

      All  agreements of the Company in this  Indenture and the Notes shall bind
its successor.  All  agreements of the Trustee in this Indenture  shall bind its
successor.

SECTION 11.14   SEVERABILITY.

      If any  provision  in this  Indenture  or in the Notes  shall be  invalid,
illegal or  unenforceable,  the  validity,  legality and  enforceability  of the
remaining  provisions  shall not in any way be  affected  or  impaired  thereby.

SECTION 11.15 TABLE OF CONTENTS, HEADINGS, ETC.

      The Table of Contents, Cross-Reference Table, and headings of the Articles
and Sections of this Indenture  have been inserted for  convenience of reference
only,  are not to be  considered  a part  hereof,  and shall in no way modify or
restrict any of the terms or provisions hereof.

                                   ARTICLE 12
                               GUARANTEE OF NOTES

SECTION 12.01   EXECUTION AND DELIVERY OF NOTE GUARANTEE.

      (a)  After  the  date of this  Indenture,  if the  Company,  or any of its
Restricted  Subsidiaries,  shall acquire or create a Restricted  Subsidiary,  or
redesignate a Non-Restricted Subsidiary to be a Restricted Subsidiary, then such
Restricted Subsidiary shall execute a guarantee (a "Note Guarantee").  Such Note
Guarantee  shall  be  substantially  in the  form  of  Exhibit  E and  shall  be
accompanied by a Supplemental Indenture  substantially in the form of Exhibit F,
along with such other  opinions,  certificates  and documents as required  under
this Indenture;  provided,  however,  that any Subsidiary that has been properly
designated as a  Non-Restricted  Subsidiary in accordance with Section 4.17 need
not  execute  a Note  Guarantee  for so long as it  continues  to  constitute  a
Non-Restricted Subsidiary.

      (b) Except as provided  for under  Section  12.02,  a  Guarantor  shall be
subject to the provisions of this  Indenture  from the date of the  Supplemental
Indenture to which its Note


                                      -68-
<PAGE>



Guarantee  relates and until such time as it has been  properly  designated as a
Non-Restricted Subsidiary pursuant to Section 4.17.

SECTION 12.02   SUBORDINATION OF NOTE GUARANTEE; GUARANTORS MAY CONSOLIDATE,
                ETC., ON CERTAIN TERMS.

      (a) The obligations of each Guarantor under its Note Guarantee pursuant to
this Article 12 shall be  subordinated  to the prior  payment in full in cash or
Marketable  Securities of all Senior  Indebtedness of each Guarantor  (including
such Guarantor's  guarantee of the Existing Credit Agreement) to the same extent
that the Notes are  subordinated to Senior  Indebtedness of the Company pursuant
to Article 10 of this  Indenture.  For the purposes of this foregoing  sentence,
the  Trustee  and the  Holders  shall  have the right to receive  and/or  retain
payments by any of the  Guarantors in respect of any Note Guarantee only at such
times as they may  receive  and/or  retain  payments  in  respect  of the  Notes
pursuant to this Indenture, including Article 10 hereof.

      (b) No Guarantor  may  consolidate  with or merge with or into (whether or
not such  Guarantor is the surviving  Person),  another  corporation,  Person or
entity whether or not affiliated  with such Guarantor  unless (i) subject to the
provisions  of Section  12.02(c),  the Person  formed by or  surviving  any such
consolidation  or  merger  (if  other  than  such  Guarantor)  assumes  all  the
obligations of such Guarantor  pursuant to a supplemental  indenture in form and
substance  reasonably  satisfactory  to the  Trustee,  under  the Notes and this
Indenture; (ii) immediately after giving effect to such transaction,  no Default
or Event of Default  exists;  (iii) such  Guarantor,  or any Person formed by or
surviving any such  consolidation or merger,  would have  Consolidated Net Worth
(immediately after giving effect to such transaction),  equal to or greater than
the  Consolidated  Net  Worth  of  such  Guarantor   immediately  preceding  the
transaction;  and (iv) the Company would be permitted by virtue of the Company's
pro forma Cash Flow  Coverage  Ratio,  immediately  after giving  effect to such
transaction,  to incur at least $1.00 of additional Indebtedness pursuant to the
Cash  Flow  Coverage  test  set  forth  in  Section  4.07;  provided,  that  the
requirements  of clauses (iii) and (iv) of this  paragraph will not apply in the
case of a  consolidation  with or merger  with or into the  Company  or  another
Guarantor.

      (c) In the event of a sale or other  disposition  of all of the  assets of
any Guarantor, by way of merger,  consolidation or otherwise, or a sale or other
disposition  of all of the capital stock of any  Guarantor,  then such Guarantor
(in  the  event  of a sale  or  other  disposition,  by way  of  such a  merger,
consolidation or otherwise, of all of the capital stock of such Guarantor or any
such  designation) or the corporation  acquiring the property (in the event of a
sale or other  disposition  of all of the  assets  of such  Guarantor)  shall be
released and relieved of any obligations under its Note Guarantee; provided that
the Net  Proceeds of such sale or other  disposition  are applied in  accordance
with the applicable provisions of this Indenture.

      (d)  In  the  event  that  the  Company  designates  a  Guarantor  to be a
Non-Restricted Subsidiary, then such Guarantor shall be released and relieved of
any  obligations  under its Note  Guarantee;  provided that such  designation is
conducted in accordance with Section 4.17.

                          [NEXT PAGE IS SIGNATURE PAGE]


                                      -69-
<PAGE>


Dated as of the date first above written.

                                 GFSI, INC.


                                 By:  /S/ LARRY GRAVEEL
                                    -------------------------------------------
                                    Name:  Larry Gravell
                                    Title: President and Chief Operating Officer



                                 STATE STREET BANK AND TRUST COMPANY,
                                 as Trustee


                                 By:   /S/ MICHAEL M. HOPKINS
                                    -------------------------------------------
                                    Name:  Michael M. Hopkins
                                    Title: Vice President



                                      -70-
<PAGE>



                                GUARANTORS:

                                CC PRODUCTS, INC.

                                 By:  /S/ LARRY GRAVEEL
                                    -------------------------------------------
                                    Name:  Larry Gravell
                                    Title: President and Chief Operating Officer




                                 EVENT1, INC.

                                 By:  /S/ LARRY GRAVEEL
                                    -------------------------------------------
                                    Name:  Larry Gravell
                                    Title: President and Chief Operating Officer



                                 GFSI CANADA COMPANY

                                 By:  /S/ LARRY GRAVEEL
                                    -------------------------------------------
                                    Name:  Larry Gravell
                                    Title: President and Chief Operating Officer




                                      -71-


<PAGE>

                                                                      EXHIBIT A

                                 (Face of Note)

               9 5/8% Series [A] Senior Subordinated Note due 2007

No.                                                                 $__________

CUSIP No. [______________]

                                   GFSI, INC.

promises to pay to

or registered assigns,

the principal sum of

Dollars on _________, 2007.

Interest Payment Dates:

Record Dates:


                            Dated: December __, 2002

                            GFSI, INC.



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


Trustee's Certificate of Authentication
Dated:  December __, 2002



This is one of the Notes referred to in the within-mentioned Indenture:

STATE STREET BANK AND TRUST COMPANY,
as Trustee


By:_____________________________
     (Authorized Signatory)



                                      A-1
<PAGE>


[Unless and until it is  exchanged  in whole or in part for Notes in  definitive
form, this Senior  Subordinated Note may not be transferred except as a whole 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.  The Depository  Trust Company shall act as the  Depository  until a
successor  shall be  appointed  by the  Company and the  Registrar.  Unless this
certificate is presented by an authorized representative of The Depository Trust
Company (55 Water  Street,  New York,  New York)  ("DTC"),  to the issuer or its
agent for  registration  of transfer,  exchange or payment,  and any certificate
issued  is  registered  in the name of Cede & Co. or such  other  name as may be
requested  by an  authorized  representative  of DTC (and any payment is made to
Cede  & Co.  or  such  other  entity  as  may  be  requested  by  an  authorized
representative  of DTC),  ANY TRANSFER,  PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE  BY OR TO ANY Person IS  WRONGFUL  inasmuch  as the  registered  owner
hereof, Cede & Co., has an interest herein.]1

            THE SECURITY (OR ITS  PREDECESSOR)  EVIDENCED  HEREBY WAS ORIGINALLY
            ISSUED IN A TRANSACTION  EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
            THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND
            THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED,  SOLD OR OTHERWISE
            TRANSFERRED  IN THE ABSENCE OF SUCH  REGISTRATION  OR AN  APPLICABLE
            EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
            IS HEREBY  NOTIFIED  THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
            FROM THE  PROVISIONS OF SECTION 5 OF THE  SECURITIES ACT PROVIDED BY
            RULE 144A  THEREUNDER.  THE HOLDER OF THE SECURITY  EVIDENCED HEREBY
            AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH  SECURITY MAY BE
            RESOLD,  PLEDGED OR OTHERWISE  TRANSFERRED,  ONLY (1)(a)  INSIDE THE
            UNITED  STATES TO A PERSON WHO THE SELLER  REASONABLY  BELIEVES IS A
            QUALIFIED  INSTITUTIONAL  BUYER (AS  DEFINED  IN RULE 144A UNDER THE
            SECURITIES  ACT) IN A TRANSACTION  MEETING THE  REQUIREMENTS OF RULE
            144A,  (b) IN A  TRANSACTION  MEETING THE  REQUIREMENTS  OF RULE 144
            UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
            PERSON IN A TRANSACTION  MEETING THE  REQUIREMENTS OF RULE 904 UNDER
            THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER  EXEMPTION FROM
            THE REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON
            AN  OPINION  OF COUNSEL  IF THE  COMPANY  SO  REQUESTS),  (2) TO THE
            COMPANY OR (3) PURSUANT TO AN EFFECTIVE  REGISTRATION STATEMENT AND,
            IN EACH CASE, IN ACCORDANCE  WITH ANY APPLICABLE  SECURITIES LAWS OF
            ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE  JURISDICTION
            AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT  HOLDER IS REQUIRED TO,
            NOTIFY ANY PURCHASER FROM IT OF THE

------
1   This paragraph should be included only if the Senior Subordinated Note is
    issued in global form.

                                      A-2

<PAGE>



            SECURITY  EVIDENCED  HEREBY OF THE RESALE  RESTRICTIONS SET FORTH IN
            (A) ABOVE.

         Additional provisions of this Senior Subordinated Note are set forth on
the other side of this Senior Subordinated Note.




                                      A-3
<PAGE>


                                 (Back of Note)

              9 5/8% SERIES [A/B] SENIOR SUBORDINATED NOTE DUE 2007

      1. INTEREST.  GFSI, Inc. (the  "Company")  promises to pay interest on the
principal  amount of the Notes at the rate and in the  manner  specified  below.
Interest on the Notes will accrue at 9 5/8% per annum from the date this Note is
issued until maturity.  Interest will be payable semiannually in cash in arrears
on March 1 and  September  1 of each year,  or if any such day is not a Business
Day on the next  succeeding  Business Day (each,  an "Interest  Payment  Date").
Interest on the Notes will  accrue  from the most recent date on which  interest
has been  paid or,  if no  interest  has been  paid,  from the date of  original
issuance;  provided that the first Interest Payment Date shall be March 1, 2003.
The Company shall pay interest on overdue  principal  and premium,  if any, from
time to time on  demand  at the  interest  rate  then in  effect  and  shall pay
interest on overdue  installments of interest  (without regard to any applicable
grace  periods)  from  time to time on  demand  at the same  rate to the  extent
lawful.  Interest  will be  computed  on the basis of a  360-day  year of twelve
30-day months.

      2. METHOD OF PAYMENT.  The Company will pay interest on the Notes  (except
defaulted  interest) to the Persons who are  registered  holders of Notes at the
close of business on the record date for the next Interest  Payment Date even if
such Notes are  cancelled  after such record date and on or before such Interest
Payment  Date.  Holders  must  surrender  Notes  to a Paying  Agent  to  collect
principal  payments on such Notes. The Company will pay principal,  premium,  if
any, interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts.  The Company will pay principal,
premium, if any, interest by wire transfer of immediately available funds to the
accounts  specified  by the  Holders  or, if no such  account is  specified,  by
mailing a check to each such Holder's registered address;  provided that payment
by wire transfer of immediately available funds will be required with respect to
principal, premium, if any, interest on all Global Notes.

      3. PAYING AGENT AND REGISTRAR.   State Street Bank and Trust  Company (the
"Trustee") will initially act as the Paying Agent and Registrar. The Company may
appoint additional paying agents or co-registrars,  and change the Paying Agent,
any additional  paying agent,  the Registrar or any  co-registrar  without prior
notice to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.

      4. INDENTURE. The Company issued the Notes under an Indenture, dated as of
December  31, 2002 (the  "Indenture"),  among the Company and the  Trustee.  The
terms of the Notes  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.  Code
sections  77aaa-77bbbb) as in effect on the date of the original issuance of the
Notes (the "Trust  Indenture  Act"). The Notes are subject to, and qualified by,
all such terms, certain of which are summarized herein, and Holders are referred
to the Indenture and the Trust  Indenture Act for a statement of such terms (all
capitalized  terms not defined  herein shall have the meanings  assigned them in
the  Indenture).  The Notes are general  unsecured  obligations  of the Company,
subordinated in right of payment, subject to Article 10 of the Indenture, to the
prior  payment  in  full  in  cash  or  Marketable   Securities  of  all  Senior
Indebtedness  (whether  outstanding  on the date  hereof or  hereafter  created,
incurred, assumed or guaranteed),  and that the subordination is for the benefit
of the holders of Senior Indebtedness.

                                      A-4
<PAGE>


      5. OPTIONAL REDEMPTION. During the periods indicated below, the Notes will
be redeemable at the option of the Company,  in whole or in part, on at least 30
but not more than 60 days' notice to each Holder of Notes to be redeemed, at the
redemption  prices  (expressed as percentages of the principal amount) set forth
below, plus any accrued and unpaid interest to the date of redemption:


YEAR                                                                  PERCENTAGE

December 31, 2002 through February 28, 2003........................   104.813%
March 1, 2003 through February 29, 2004 ...........................   103.208%
March 1, 2004 through February 28, 2005............................   101.604%
March 1, 2005 and thereafter.......................................   100.000%

      6.   MANDATORY REDEMPTION.  Subject to  the  Company's  obligation to make
an offer to purchase Notes under certain circumstances pursuant to Sections 4.14
and 4.15 of the Indenture  (as  described in paragraph 7 below),  the Company is
not required to make any mandatory redemption, purchase or sinking fund payments
with respect to the Notes.

      7. MANDATORY OFFERS TO PURCHASE NOTES. (a) Upon the occurrence of a Change
of Control (such date being the "Change of Control Trigger  Date"),  each Holder
of Notes shall have the right to require the Company to purchase all or any part
(equal  to  $1,000 or an  integral  multiple  thereof)  of such  Holder's  Notes
pursuant to an offer (a "Change of Control  Offer") at a purchase  price in cash
equal to 101% of the aggregate  principal  amount thereof,  plus any accrued and
unpaid interest to the date of purchase.

      (b)  If the Company or any Restricted Subsidiary  consummates  one or more
Asset  Sales and does not use all of the Net  Proceeds  from such Asset Sales as
provided  in  the  Indenture,  the  Company  will  be  required,  under  certain
circumstances, to utilize the Excess Proceeds from such Asset Sales to offer (an
"Asset Sale Offer") to purchase  Notes at a purchase  price equal to 100% of the
principal amount of the Notes,  plus any accrued and unpaid interest to the date
of  purchase.  If the Excess  Proceeds  are  insufficient  to purchase all Notes
tendered pursuant to any Asset Sale Offer, the Trustee shall select the Notes to
be purchased in accordance with the terms of the Indenture.

      (c) Holders may tender all or,  subject to paragraph 8 below,  any portion
of their Notes in a Change of Control  Offer or Asset Sale Offer  (collectively,
an "Offer") by  completing  the form below  entitled  "OPTION OF HOLDER TO ELECT
PURCHASE."

      (d) The  Company  shall  comply  with any  tender  offer  rules  under the
Exchange Act which may then be applicable,  including Rule 14e-1,  in connection
with an offer  required to be made by the Company to  repurchase  the Notes as a
result of a Change of Control or an Asset Sale Trigger  Date. To the extent that
the provisions of any securities laws or regulations conflict with provisions of
this Indenture, the Company shall comply with the applicable securities laws

                                      A-5


<PAGE>



and regulations  and shall not be deemed to have breached its obligations  under
this Indenture by virtue thereof.

      8. NOTICE OF REDEMPTION OR PURCHASE.  Notice of an optional  redemption or
an Offer  will be mailed to each  Holder at its  registered  address at least 30
days but not more than 60 days before the date of redemption or purchase.  Notes
may be redeemed or  purchased  in part,  but only in whole  multiples  of $1,000
unless all Notes held by a Holder are to be redeemed or  purchased.  On or after
any date on which Notes are redeemed or purchased,  interest ceases to accrue on
the Notes or portions  thereof called for redemption or accepted for purchase on
such date.

      9.  DENOMINATIONS,  TRANSFER,  EXCHANGE.  The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples  thereof.  The
transfer of Notes may be  registered  and Notes may be  exchanged as provided in
the  Indenture.  Holders  seeking to  transfer  or  exchange  their Notes may be
required,  among other things, to furnish appropriate  endorsements and transfer
documents  and to pay any taxes and fees  required  by law or  permitted  by the
Indenture.  The Registrar need not exchange or register the transfer of any Note
or portion of a Note selected for  redemption or tendered  pursuant to an Offer.
Also, it need not exchange or register the transfer of any Notes for a period of
15 Business  Days before a selection of Notes to be redeemed or between a record
date and the next succeeding Interest Payment Date.

      10. PERSONS DEEMED OWNERS.  The registered Holder of a Note may be treated
as its owner for all purposes.

      11. AMENDMENTS AND WAIVERS.  Subject to certain exceptions,  the Indenture
or the Notes may be amended or  supplemented  with the consent of the Holders of
at least a majority in principal amount of the then  outstanding  Notes, and any
existing  Default  (except a payment  Default) may be waived with the consent of
the Holders of a majority in  principal  amount of the then  outstanding  Notes.
Without the consent of any Holder, the Indenture or the Notes may be amended to:
cure any ambiguity, defect or inconsistency; provide for uncertificated Notes in
addition to or in place of  certificated  Notes;  provide for the  assumption by
another  corporation  of the Company's  obligations to Holders in the event of a
merger or consolidation of the Company in which the Company is not the surviving
corporation or a sale of substantially all of the Company's assets to such other
corporation;  comply  with the SEC's  requirements  to effect  or  maintain  the
qualification  of the  Indenture  under the Trust  Indenture  Act;  provide  for
additional  Guarantees with respect to the Notes;  or, make any change that does
not materially adversely affect any Holder's rights under the Indenture.

      12. DEFAULTS AND REMEDIES.  Events of Default include: default for 30 days
in payment of  interest  on the Notes;  default in payment of  principal  of, or
premium,  if any, on the Notes;  failure by the Company for 30 days after notice
to it to comply with any of its other  agreements or covenants in, or provisions
of, the Indenture or the Notes; certain defaults under and acceleration prior to
maturity of, or failure to pay at maturity, certain other Indebtedness;  certain
final  judgments  that  remain   undischarged;   certain  judicial  findings  of
unenforceability  or  invalidity  as to  any  guarantee  of  the  Notes  or  the
disaffirmance  or denial by any  guarantor of its  guarantee  of the Notes;  and
certain  events  of  bankruptcy  or  insolvency  involving  the  Company  or any
Restricted Subsidiary that is a Significant  Subsidiary.  If an Event of Default
occurs  and is  continuing,  the  Trustee  or the  Holders  of at  least  25% in
principal amount of the Notes may


                                      A-6
<PAGE>

declare all the Notes to be  immediately  due and payable in an amount  equal to
the principal of,  premium,  if any, and any accrued and unpaid interest on such
Notes;  provided,  however, that in the case of an Event of Default arising from
certain events of bankruptcy or insolvency,  the principal of, premium,  if any,
and any  accrued  and  unpaid  interest  on the Notes  becomes  due and  payable
immediately  without  further action or notice.  Subject to certain  exceptions,
Holders of a majority  in  principal  amount of the then  outstanding  Notes may
direct the  Trustee in its  exercise  of any trust or power,  provided  that the
Trustee  will be under no  obligation  to  exercise  any of its rights or powers
under the  Indenture at the request of Holders  unless such Holders have offered
to the  Trustee  security  and  indemnity  satisfactory  to it.  Holders may not
enforce the  Indenture  or the Notes  except as provided in the  Indenture.  The
Trustee may withhold from Holders  notice of any  continuing  default  (except a
payment Default) if it determines that withholding notice is in their interests.
The Company must furnish an annual compliance certificate to the Trustee.

      13.  TRUSTEE DEALINGS WITH THE COMPANY.  The Trustee, in its individual or
any other  capacity,  may make  loans to,  accept  deposits  from,  and  perform
services  for the  Company or any  Affiliate,  and may  otherwise  deal with the
Company or any Affiliate, as if it were not Trustee.

      14.  NO  RECOURSE  AGAINST  OTHERS.   No  officer,   employee,   director,
stockholder  or  Subsidiary  of the  Company  shall have any  liability  for any
Obligations  of the Company under the Notes or the  Indenture,  or for any claim
based on, in respect of, or by reason of, such  Obligations  or the  creation of
any  such  Obligation,  except,  in the  case of a  Subsidiary,  for an  express
guarantee or an express creation of any Lien by such Subsidiary of the Company's
Obligations under the Notes. Each Holder by accepting a Note waives and releases
all such liability, and such waiver and release is part of the consideration for
the issuance of the Notes.  The  foregoing  waiver may not be effective to waive
liabilities  under the  Federal  securities  law and the SEC is of the view that
such a waiver is against public policy.

      15. SUCCESSOR SUBSTITUTED. Upon the consolidation or merger by the Company
with or into another corporation,  or upon the sale, lease,  conveyance or other
disposition of all or substantially all of its assets to another corporation, in
accordance  with the  Indenture,  the  corporation  surviving any such merger or
consolidation  (if not the Company) or the corporation to which such assets were
sold or  transferred  to shall  succeed  to,  and be  substituted  for,  and may
exercise  every right and power of the Company under the Indenture with the same
effect as if such surviving or other  corporation  had been named as the Company
in the Indenture.

      16.  GOVERNING  LAW.  This Note  shall be  governed  by and  construed  in
accordance with the internal laws of the State of New York without regard to the
conflict of laws provisions thereof.

      17.  AUTHENTICATION.  This Note shall not be valid until  authenticated by
the manual signature of the Trustee or an authenticating agent.

      18.  ABBREVIATIONS.  Customary  abbreviations may be used in the name of a
Holder or an  assignee,  such as:  TEN COM (=  tenants  in  common),  TEN ENT (=
tenants by the  entireties),  JT TEN (= joint tenants with right of survivorship
and not as tenants in common),  CUST (=Custodian),  and U/G/M/A (= Uniform Gifts
to Minors Act).


                                      A-7
<PAGE>

      19.  CUSIP NUMBERS.   Pursuant  to a  recommendation  promulgated  by  the
Committee  on Uniform  Note  Identification  Procedures,  the Company has caused
CUSIP  numbers to be printed on the Notes and have  directed  the Trustee to use
CUSIP  numbers  in  notices  of  redemption  as a  convenience  to  Holders.  No
representation  is made as to the accuracy of such numbers  either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers printed on the Notes.

      20.  SUBORDINATION.  The Notes are subordinated to Senior  Indebtedness of
the  Company,  as  defined  in the  Indenture.  To the  extent  provided  in the
Indenture,  Senior Indebtedness of the Company must be paid before the Notes may
be paid. The Company agrees,  and each Holder by accepting a Note agrees, to the
subordination  provisions  contained in the Indenture and authorizes the Trustee
to give it effect and appoints the Trustee as attorney-in-fact for such purpose.

         The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture, which has in it the text of this Note in larger
type. Request may be made to:

                                   GFSI, Inc.
                              9700 Commerce Parkway
                              Lenexa, Kansas 66219
                         Attention: Director of Finance
                           Telecopier: (913) 752-3336



                                      A-8
<PAGE>


                                 ASSIGNMENT FORM

         To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:





                  (Insert assignee's soc. sec. or tax I.D. no.)





              (Print or type assignee's name, address and zip code)


and irrevocably appoint
                              as agent to transfer this Note 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 Note)



Signature Guarantee:
                    -----------------------------


                                      A-9
<PAGE>


                       OPTION OF HOLDER TO ELECT PURCHASE

         If you elect to have this Note purchased by the Company pursuant to
Section 4.14 of the Indenture, check the box: []

         If you elect to have this Note purchased by the Company pursuant to
Section 4.15 of the Indenture, check the box: []

         If you elect to have only part of this Note purchased by the Company
pursuant to Section 4.14 or 4.15 of the Indenture, state the amount (multiples
of $1000 only):

$





Date:                           Your Signature:
                                               ---------------------------------
                                              (Sign exactly as your name appears
                                               on the other side of this Note)



Signature Guarantee:
                    ---------------------------




                                      A-10
<PAGE>


SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES2

         The following exchanges of a part of this Global Note for Definitive
Notes have been made:
<TABLE>
<CAPTION>

                                                                          Principal Amount of
                                                                           this Global Note         Signature of
                           Amount of decrease    Amount of increase in      following such       authorized officer
                           in Principal Amount    Principal Amount of          decrease          of Trustee or Note
    Date of Exchange       of this Global Note      this Global Note         (or increase)            Custodian
-----------------------  ----------------------  ----------------------  ---------------------  --------------------
<S>                      <C>                    <C>                      <C>                    <C>

</TABLE>












----------

2       This should be included only if the Note is issued in global form.



                                      A-11
<PAGE>

                                                                      EXHIBIT B

                    CERTIFICATE TO BE DELIVERED UPON EXCHANGE
                      OR REGISTRATION OF TRANSFER OF NOTES

                                                       -----------------, ------

Re:  9 5/8% Series [A/B] Senior Subordinated Notes due 2007 of GFSI, Inc.

      This  Certificate  relates  to $_____  principal  amount of Notes  held in
*________  book-entry  or  *_______  definitive  form by  ________________  (the
"Transferor").

The Transferor*:

        [ ]   has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Note held by the Depository a Note or
Notes in definitive, registered form equal to its beneficial interest in such
Global Note (or the portion thereof indicated above); or

        [ ]  has requested the Trustee by written order to exchange or register
the transfer of a Note or Notes.

         In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Notes and that the transfer of this
Note does not require registration under the Securities Act (as defined below)
because: *

        [ ]  Such Note is being acquired for the Transferor's own account
without transfer (in satisfaction of Section 2.06(a)(ii)(A) or
Section 2.06(d)(i)(A) of the Indenture).

        [ ]  Such Note is being transferred (i) to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")), in reliance on Rule 144A or (ii) pursuant to an
exemption from registration in accordance with Rule 904 under the Securities Act
(and in the case of clause (ii), based on an opinion of counsel if the Company
so requests and together with a certification in substantially the form of
Exhibit D to the Indenture).

        [ ]  Such Note is being transferred (i) in accordance with Rule 144
under the Securities Act (and based on an opinion of counsel if the Company so
requests) or (ii) pursuant to an effective registration statement under the
Securities Act.

        [ ]  Such Note is being transferred to an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act pursuant to a private placement exemption from the registration
requirements of the Securities Act (and based on an opinion of counsel if the
Company so requests together with a certification in substantially the form of
Exhibit C to the Indenture).


-------
*   Check applicable box.


                                      B-1
<PAGE>

        [ ] Such Note is being transferred in reliance on and in compliance
with another exemption from the registration requirements of the Securities Act
(and based on an opinion of counsel if the Company so requests).



                                    [INSERT NAME OF TRANSFEROR]



                                    By:
                                       ----------------------------------------
                                       Name:
                                       Title:
                                       Address:




                                      B-2
<PAGE>

                                                                      EXHIBIT C

                     FORM OF CERTIFICATE TO BE DELIVERED BY
                       INSTITUTIONAL ACCREDITED INVESTORS

                                                         ---------------, -----

___________________, as Registrar
Attention: Corporate Trust Department

Ladies and Gentlemen:

      We  are  delivering   this  letter  in  connection  with  an  offering  of
$______________  of 9 5/8% Series [A/B] Senior  Subordinated Notes due 2007 (the
"Notes") of GFSI, Inc., a Delaware corporation (the "Company").

(i)   we are an "accredited investor" within the meaning of Rule 501(a)(1),(2),
      (3) or (7) under the Securities Act (an "Institutional Accredited
      Investor");

(ii)  any purchase of Notes will be for our own account or for the account of
      one or more other Institutional Accredited Investors;

(iii) in the event that we purchase any Notes, we will acquire Notes having a
      minimum purchase price of at least $100,000 for our own account and for
      each separate account for which we are acting;

(iv)  we have such sophistication, knowledge and experience in financial and
      business matters that we are capable of evaluating the merits and risks
      of purchasing Notes;

(v)   we are not acquiring Notes with a view to any distribution thereof in a
      transaction that would violate the Securities Act or the securities laws
      of any state of the United States or any other applicable jurisdiction;
      provided that the disposition of our property and the property of any
      accounts for which we are acting as fiduciary shall remain at all times
      within our control; and

(vi)  if we so requested of the Company, we have received the information
      required pursuant to Rule 144A(d)(4) and acknowledge that we have had
      access to such financial and other information, and have been afforded
      the opportunity to ask such questions of representatives of the Company
      and receive answers thereto, as we deem satisfactory and necessary in
      connection with our decision to purchase Notes.

      We  understand  that the Notes  are being  offered  in a  transaction  not
involving any public  offering within the meaning of the Securities Act and that
the Notes have not been  registered  under the Securities  Act, and we agree, on
our own behalf  and on behalf of each  account  for which we acquire  any Notes,
that such Notes may be offered, resold, pledge or otherwise transferred only (i)
to a person whom we reasonably believe to be a "qualified  institutional  buyer"
(as defined in Rule 144A under the Securities Act) in a transaction  meeting the
requirements  of Rule 144  under  the  Securities  Act,  outside  the U.S.  in a
transaction meeting the




                                      C-1
<PAGE>



requirements of Rule 904 under the Securities Act, or in accordance with another
exemption from the  registration  requirements  of the Securities Act (and based
upon an opinion of counsel if the Company so  requests),  (ii) to the Company or
(iii)  pursuant to an effective  registration  statement,  and in each case,  in
accordance with any applicable securities laws of any State of the United States
or any other applicable  jurisdiction.  We understand that the registrar and the
transfer agent will not be required to accept for  registration  of transfer any
Notes, except upon presentation of evidence satisfactory to the Company that the
foregoing   restrictions  on  transfer  have  been  complied  with.  We  further
understand  the Notes  purchased  by us will be initially  in  book-entry  form,
however,   to  the  extent  that  the  definitive   physical   certificates  are
subsequently  issued in exchange therefor,  such certificates will bear a legend
reflecting the substance of this paragraph.

      We  acknowledge  that  you,  the  Company  and  others  will rely upon our
confirmations, acknowledgements and agreements set forth herein, and we agree to
notify  you  promptly  in writing if any of our  representations  or  warranties
herein ceases to be accurate and complete.

      THIS LETTER SHALL BE GOVERNED BY, AND  CONSTRUED IN ACCORDANCE  WITH,  THE
LAWS OF THE STATE OF NEW YORK.



                                          Very truly yours,




                                          [Name of Purchaser]



                                          By:
                                             -----------------------------------
                                             Name:
                                             Title:
                                             Address:



                                      C-2
<PAGE>

                                                                       EXHIBIT D

                FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
                     WITH TRANSFERS PURSUANT TO REGULATION S

                                                          ---------------, -----

______________________, as Registrar
Attention: Corporate Trust Department

Ladies and Gentlemen:

         In connection with our proposed sale of certain 9 5/8% Series [A/B]
Senior Subordinated Notes due 2007 (the "Notes") of GFSI, Inc., a Delaware
corporation (the "Company"), we represent that:

(i)   the offer of the Notes was not made to a person in the United States;

(ii)  at the time the buy order was originated, the transferee was outside the
      United States or we and any person acting on our behalf reasonably
      believed that the transferee was outside the United States;

(iii) no directed selling efforts have been made by us in the United States in
      contravention of the requirements of Rule 903(b) or Rule 904(b) of
      Regulation S, as applicable; and

(iv)  the transaction is not part of a plan or scheme to evade the registration
      requirements of the U.S. Securities Act of 1933.

      You and the  Company  are  entitled  to rely upon this  letter and you are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any  administrative  or legal  proceedings  or  official  inquiry  with
respect to the matters covered hereby.  Terms used in this  certificate have the
meanings set forth in Regulation S.


                                        Very truly yours,



                                        [Name of Transferor]




                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:
                                           Address:


                                      D-1
<PAGE>

                                                                       EXHIBIT E

                             FORM OF NOTE GUARANTEE

      Each of the  Guarantors  hereby,  jointly and  severally,  unconditionally
guarantees to each Holder of a Note  authenticated  and delivered by the Trustee
and to the Trustee and its successors and assigns,  irrespective of the validity
and  enforceability  of the  Indenture  dated as of December  31,  2002,  by and
between  GFSI,  Inc.  and State Street Bank and Trust  Company,  as Trustee (the
"Indenture"),  the  Notes  or the  obligations  of  the  Company,  hereunder  or
thereunder,  that:  (a) the  principal  of and premium and interest on the Notes
will be promptly paid in full when due,  whether at maturity,  by  acceleration,
redemption or otherwise,  and interest on the overdue  principal or, premium and
interest  on the  Notes if any,  if  lawful,  and all other  Obligations  of the
Company to the Holders or the Trustee  hereunder or thereunder  will be promptly
paid in full or performed,  all in accordance with the terms hereof and thereof;
and (b) in case of any  extension of the time of payment or renewal of any Notes
or any of such other  obligations,  that same will be promptly paid in full when
due or  performed  in  accordance  with the terms of the  extension  or renewal,
whether at stated maturity,  by acceleration or otherwise.  Failing payment when
due of any amount so guaranteed or any  performance  so guaranteed  for whatever
reason,  the Guarantors will be jointly and severally  obligated to pay the same
immediately.

      The  Obligations  of the Guarantors to the Holders of the Notes and to the
Trustee  pursuant to this Note  Guarantee  and the  Indenture  are expressly set
forth in Article 12 of the  Indenture.  The terms of Article 12 of the Indenture
are incorporated herein by reference.

      This is a  continuing  Note  Guarantee  and shall remain in full force and
effect and shall be binding upon each  Guarantor and its  respective  successors
and  assigns  to the  extent  set forth in the  Indenture  until  full and final
payment of all of the Company's  Obligations  under the Notes and the Indenture.
The Note  Guarantee  shall inure to the benefit of the successors and assigns of
the  Trustee  and the  Holders of Notes  and,  in the event of any  transfer  or
assignment  of rights by any  Holder of Notes or the  Trustee,  the  rights  and
privileges herein conferred upon that party shall automatically extend to and be
vested in such  transferee or assignee,  all subject to the terms and conditions
hereof. This is a Note Guarantee of payment and not of collection.

      In  certain  circumstances  more fully  described  in the  Indenture,  any
Guarantor may be released from its liability under this Note Guarantee,  and any
such release will be effective whether or not noted hereon.

      This Note Guarantee shall not be valid or obligatory for any purpose until
the certificate of  authentication on the Note upon which this Note Guarantee is
noted shall have been  executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.

      Capitalized  terms  used  herein  have  the  same  meanings  given  in the
Indenture unless otherwise indicated.



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


                                      E-1
<PAGE>


                                                                       EXHIBIT F

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


                                   GFSI, Inc.

                                       and


                           the Guarantors named herein


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


                              SERIES A AND SERIES B


                    9 5/8% SENIOR SUBORDINATED NOTES DUE 2007


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


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


                         FORM OF SUPPLEMENTAL INDENTURE


                      AND AMENDMENT -- SUBSIDIARY GUARANTEE


                         DATED AS OF ________ ___, ____


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


                       STATE STREET BANK AND TRUST COMPANY


                                     Trustee


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


                                      F-1




<PAGE>


      This SUPPLEMENTAL INDENTURE, dated as of __________ ___, ____, among GFSI,
INC., a Delaware  corporation  (the "Company"),  each of the parties  identified
under the caption  "Guarantors" on the signature pages hereto (the "Guarantors")
and State Street Bank and Trust Company, as Trustee.

                                    RECITALS

      WHEREAS,  the Company and the Trustee entered into an Indenture,  dated as
of December  31, 2002 (the  "Indenture"),  pursuant to which the Company  issued
$125,000,000 in principal  amount of 9 5/8% Senior  Subordinated  Notes due 2007
(the "Notes"); and

      WHEREAS,  Section  9.01(e) of the Indenture  provides that the Company and
the Trustee may amend or  supplement  the  Indenture  in order to execute a Note
Guarantee  to comply  with  Section  12.01  thereof  without  the consent of the
Holders of the Notes; and

      WHEREAS,  pursuant to Section 12.01 of the Indenture,  all Guarantors must
execute a Note Guarantee and Supplemental Indenture.

      WHEREAS,  all acts and things  prescribed by the Indenture,  by law and by
the  Certificate  of  Incorporation  and  the  Bylaws  of  the  Company,  of the
Guarantors and of the Trustee  necessary to make this  Supplemental  Indenture a
valid instrument legally binding on the Company, the Guarantors and the Trustee,
in accordance with its terms, have been duly done and performed;

      NOW,  THEREFORE,  to comply with the  provisions  of the  Indenture and in
consideration of the above premises, the Company, the Guarantors and the Trustee
covenant  and agree for the equal and  proportionate  benefit of the  respective
Holders of the Notes as follows:

                                   ARTICLE 1

      SECTION 1.01. This Supplemental Indenture is supplemental to the Indenture
and does and  shall be  deemed  to form a part of,  and  shall be  construed  in
connection with and as part of, the Indenture for any and all purposes.

      SECTION  1.02.  This   Supplemental   Indenture  shall  become   effective
immediately  upon  its  execution  and  delivery  by  each of the  Company,  the
Guarantors and the Trustee.

                                   ARTICLE 2

      SECTION  2.01.  From this date,  in  accordance  with Section 12.01 and by
executing this  Supplemental  Indenture and the  accompanying  Note Guarantee (a
copy of which is attached hereto),  the Guarantors whose signatures appear below
are subject to the  provisions  of the  Indenture to the extent  provided for in
Article 12 thereunder.

      SECTION 2.02. The Note Guarantee constitutes a part of the Note as soon as
the certificate of authentication has been executed by the Trustee.


                                      F-2
<PAGE>

                                   ARTICLE 3

      SECTION 3.01.  Except as specifically  modified herein,  the Indenture and
the Notes are in all respects  ratified and  confirmed  (mutatis  mutandis)  and
shall  remain in full force and effect in  accordance  with their terms with all
capitalized  terms used herein  without  definition  having the same  respective
meanings ascribed to them as in the Indenture.

      SECTION 3.02.  Except as otherwise  expressly  provided herein, no duties,
responsibilities  or  liabilities  are  assumed,  or  shall be  construed  to be
assumed,  by  the  Trustee  by  reason  of  this  Supplemental  Indenture.  This
Supplemental  Indenture is executed  and accepted by the Trustee  subject to all
the terms and  conditions  set forth in the  Indenture  with the same  force and
effect as if those terms and conditions  were repeated at length herein and made
applicable to the Trustee with respect hereto.

      SECTION  3.03.  The  laws of the  State  of New  York  shall  govern  this
Supplemental  Indenture  without  regard  to the  conflict  of  laws  provisions
thereof.  The  Trustee,  the Company and each  Guarantor  agree to submit to the
jurisdiction  of the courts of the State of New York in any action or proceeding
arising out of or relating to this Supplemental Indenture.

      SECTION  3.04.  The  parties  may  sign  any  number  of  copies  of  this
Supplemental  Indenture.  Each signed copy shall be an original, but all of such
executed copies together shall represent the same agreement.

                          [NEXT PAGE IS SIGNATURE PAGE]


                                      F-3
<PAGE>


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



                                        GFSI, INC.


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



                                        GUARANTORS

                                        [                         ]
                                         -------------------------


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



                                        STATE STREET BANK AND TRUST
                                        COMPANY, as trustee


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




                                      F-4