Exhibit 10.36 Indenture of Trust

                     THE PENDER COUNTY INDUSTRIAL FACILITIES
                    AND POLLUTION CONTROL FINANCING AUTHORITY


                                       to


                  NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION



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

                               INDENTURE OF TRUST

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





                            Dated as of June 1, 1997



                                   Relating to
               $7,000,000 The Pender County Industrial Facilities
                    and Pollution Control Financing Authority
                      Industrial Development Revenue Bonds
                    (Leslie-Locke, Inc. Project), Series 1997



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<PAGE>

                              INDENTURE OF TRUST

                              TABLE OF CONTENTS

(This Table of Contents is not a part of the Indenture of Trust and is only for
convenience of reference.)

Parties......................................................................1
Recitals.....................................................................1
Granting Clauses.............................................................2

                                   ARTICLE I
                                  DEFINITIONS

Section 101.  Definitions..................................................  4
Section 102.  Use of Words................................................. 11

                                  ARTICLE II
                                   THE BONDS

Section 201.  Authorized Amount of Bonds................................... 11
Section 202.  Details of Bonds............................................. 11
Section 203.  Form......................................................... 15
Section 204.  Payment...................................................... 15
Section 205.  Execution.................................................... 16
Section 206.  Limited Obligation........................................... 16
Section 207.  Authentication............................................... 17
Section 208.  Delivery of the Bonds........................................ 17
Section 209.  Mutilated, Destroyed or Lost Bonds........................... 17
Section 210.  Registration and Transfer of Bonds........................... 18
Section 211.  Cancellation................................................. 19
Section 212.  Temporary Bonds.............................................. 19
Section 213.  Additional Bonds............................................. 19
Section 214.  Book Entry System. .......................................... 21
Section 215.  CUSIP Numbers................................................ 22

                                  ARTICLE III
                      REDEMPTION OF BONDS BEFORE MATURITY

Section 301.  Redemption and Purchase of Bonds............................. 23
Section 302.  Notice....................................................... 26
Section 303.  Redemption Payments.......................................... 26
Section 304.  Cancellation................................................. 26
Section 305.  Partial Redemption of Bonds.................................. 26
Section 306.  Selection of Bonds for Redemption............................ 27


                                     (i)
<PAGE>

Section 307.  Mandatory Purchase of Bonds.................................. 27

                                  ARTICLE IV
                               GENERAL COVENANTS

Section 401.  Payment of Principal, Premium, if any, and Interest.......... 28
Section 402.  Performance of Covenants..................................... 28
Section 403.  Instruments of Further Assurance............................. 29
Section 404.  Recordation and Other Instruments............................ 29
Section 405.  Inspection of Project Books.................................. 29
Section 406.  Rights Under Loan Agreement and Letter of Credit............. 29
Section 407.  Prohibited Activities........................................ 29
Section 408.  Transfer and Return of Letter of Credit...................... 30
Section 409.  Substitute Letter of Credit.................................. 30

                                   ARTICLE V
                              REVENUES AND FUNDS

Section 501.  Creation of Bond Fund........................................ 31
Section 502.  Payments Into Bond Fund...................................... 32
Section 503.  Use of Moneys in Bond Fund................................... 32
Section 504.  Withdrawals from Bond Fund................................... 33
Section 505.  Non-Presentment of Bonds..................................... 33
Section 506.  Fees, Expenses and Charges of Issuer, Trustee,
              Remarketing Agent, and Paying Agent.......................... 33
Section 507.  Moneys to be Held in Trust................................... 34
Section 508.  Payment of Excess Amounts.................................... 34
Section 509.  Letter of Credit............................................. 34
Section 510.  Rebate Fund.................................................. 35
Section 511.  Creation of Bond Purchase Fund............................... 36

                                  ARTICLE VI
                   CUSTODY AND APPLICATION OF BOND PROCEEDS

Section 601.  Creation of Construction Fund................................ 37
Section 602.  Payments into Construction Fund.............................. 37
Section 603.  Cost of the Project.......................................... 37
Section 604.  Payments from Construction Fund.............................. 38
Section 605.  Disposition of Balance in Construction Fund.................. 39
Section 606.  Disposition of Balance in Construction Fund upon Default..... 39

                                  ARTICLE VII
                                  INVESTMENTS

Section 701.  Investment of Moneys......................................... 39


                                     (ii)
<PAGE>

                                 ARTICLE VIII
                RIGHTS OF THE COMPANY UNDER THE LOAN AGREEMENT
Section 801.  Rights of Company Under Loan Agreement....................... 41

                                  ARTICLE IX
          DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS

Section 901.  Events of Default............................................ 41
Section 902.  Acceleration................................................. 42
Section 903.  Other Remedies; Rights of Bondholders........................ 43
Section 904.  Right of Bondholders to Direct Proceedings................... 43
Section 905.  Appointment of Receiver...................................... 43
Section 906.  Waiver....................................................... 44
Section 907.  Application of Moneys........................................ 44
Section 908.  Remedies Vested in Trustee................................... 45
Section 909.  Rights and Remedies of Bondholders........................... 45
Section 910.  Termination of Proceedings................................... 46
Section 911.  Waivers of Events of Default................................. 46
Section 912.  Disposition of Amounts Drawn on Letter of Credit;
              Assignment of Rights to Contest.............................. 47
Section 913.  Letter of Credit Bank Deemed Owner........................... 47
Section 914.  Subrogation Rights of the Bank............................... 48

                                   ARTICLE X
                               DISCHARGE OF LIEN

Section 1001.  Discharge of Lien........................................... 48
Section 1002.  Effect of Discharge on Bonds................................ 50

                                  ARTICLE XI
                   TRUSTEE; PAYING AGENTS; REMARKETING AGENT

Section 1101.  Acceptance of Trusts........................................ 50
Section 1102.  Fees, Charges and Expenses of Trustee and Paying
               Agents; Trustee's Prior Lien................................ 52
Section 1103.  Notice to Bondholders of Default............................ 53
Section 1104.  Intervention by Trustee..................................... 53
Section 1105.  Merger or Consolidation of Trustee.......................... 53
Section 1106.  Resignation by Trustee...................................... 54
Section 1107.  Removal of Trustee.......................................... 54
Section 1108.  Appointment of Successor Trustee............................ 54
Section 1109.  Concerning Any Successor Trustee............................ 55
Section 1110.  Reliance Upon Instruments................................... 55
Section 1111.  Appointment of Co-Trustee................................... 55
Section 1112.  Designation and Succession of Paying Agents................. 56


                                    (iii)
<PAGE>

Section 1113.  Remarketing Agent........................................... 56
Section 1114.  Qualifications of Remarketing Agent......................... 57

                                  ARTICLE XII
                       PURCHASE AND REMARKETING OF BONDS

Section 1201.  Remarketing of Bonds........................................ 57
Section 1202.  Purchase of Bonds........................................... 59
Section 1203.  Delivery of Bonds........................................... 59
Section 1204.  Drawings on Letter of Credit................................ 60
Section 1205.  Delivery of Proceeds of Sale................................ 60
Section 1206.  Issuer to Cooperate......................................... 60
Section 1207.  No Remarketing After Default................................ 60
Section 1208.  Duties of Trustee........................................... 60
Section 1209.  No Remarketing Under Certain Conditions..................... 61

                                 ARTICLE XIII
                            SUPPLEMENTAL INDENTURES

Section 1301.  Supplemental Indentures Not Requiring Consent of Bondholders 61
Section 1302.  Supplemental Indentures Requiring Consent of Bondholders.... 62
Section 1303.  Consent of Company and Bank; Bond Counsel Opinion........... 63

                                  ARTICLE XIV
                       AMENDMENT TO LOAN AGREEMENT, NOTE
                             AND LETTER OF CREDIT

Section 1401.  Amendments Not Requiring Consent of Bondholders............. 63
Section 1402.  Amendments Requiring Consent of Bondholders................. 64

                                  ARTICLE XV
                                 MISCELLANEOUS

Section 1501.  Consents, etc............................................... 64
Section 1502.  Notices..................................................... 64
Section 1503.  Limitation of Rights........................................ 66
Section 1504.  Severability................................................ 66
Section 1505.  Applicable Provisions of Law................................ 67
Section 1506.  Counterparts................................................ 67
Section 1507.  Successors and Assigns...................................... 67
Section 1508.  Captions.................................................... 67
Section 1509.  Photocopies and Reproductions............................... 67
Section 1510.  Bonds Owned by the Issuer or the Company.................... 67
Section 1511.  Limitation of Liability of Directors, Officers of
               Issuer and the Trustee...................................... 67
Section 1512.  Bank as Third Party Beneficiary............................. 68


                                     (iv)
<PAGE>

Section 1513.  Expiration of Letter of Credit.............................. 68
Section 1514.  Trustee Books Open for Inspection........................... 68

Signatures and Seals........................................................66

Exhibit A -- Form of Variable Rate Bond
Exhibit B -- Form of Fixed Rate Bond
Exhibit C -- Form of Requisition


                                     (v)
<PAGE>

                              INDENTURE OF TRUST


      This INDENTURE OF TRUST, dated as of June 1, 1997 (the "Indenture"), by
and between THE PENDER COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY, a public body politic and corporate under the laws of the
State of North Carolina (the "Issuer"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking institution (the "Trustee");

                             W I T N E S S E T H :

      WHEREAS, the Industrial and Pollution Control Facilities Financing Act,
Chapter 159C of the General Statutes of North Carolina, as amended (the "Act"),
authorizes the creation of industrial facilities and pollution control financing
authorities by the several counties in North Carolina and empowers such
authorities to acquire, construct, own, repair, maintain, extend, improve,
rehabilitate, renovate, furnish, equip and sell, lease, exchange, transfer or
otherwise dispose of industrial or manufacturing facilities to the end that such
authorities may be able to promote the right to gainful employment opportunity
and private industry, and thereby promote the general welfare of the inhabitants
of North Carolina, by exercising such powers to aid in financing industrial or
manufacturing facilities for the purpose of alleviating unemployment or raising
below average manufacturing wages and further authorizes such authority to loan
to others the proceeds of bonds issued for the purpose of paying for all or any
part of an industrial or manufacturing facility, to mortgage and pledge any or
all of such facilities, whether then owned or thereafter acquired, as security
for the payment of the principal of, premium, if any, and interest on any such
bonds and any agreements made in connection therewith and to pledge or assign
the revenues and receipts from such facilities or loan or from any other source
to the payment of such bonds; and

      WHEREAS, the Issuer has been duly organized pursuant to the Act; and

      WHEREAS, in order to further the purposes of the Act, the Issuer has
proposed to assist the Company (as defined below) by reimbursing the Company for
the costs of construction of a 156,000 square foot expansion to the Company's
existing facility, and acquisition and installation of equipment therein for the
manufacture of building products in Pender County, North Carolina (the
"Project"), whereby the proceeds to be received from the sale thereof will be
loaned to Leslie-Locke, Inc., a Delaware corporation (the "Company"), pursuant
to a Loan Agreement between the Issuer and the Company dated as of the date of
this Indenture of Trust (the "Loan Agreement"); and

      WHEREAS, the Issuer intends to assign to the Trustee as security for the
Bonds certain of the Issuer's rights under the Loan Agreement and the Company's
promissory note in the principal amount of $7,000,000 (the "Note") issued by the
Company and delivered to the Issuer pursuant to the Loan Agreement; and

      WHEREAS, the Company has caused an irrevocable Letter of Credit to be
issued by Branch Banking and Trust Company (the "Bank") as additional security
for the Bonds pursuant to a Letter


                                      1
<PAGE>

of Credit and Reimbursement Agreement between the Bank and the Company dated as
of June 1, 1997 (the "Reimbursement Agreement"); and

      WHEREAS, the execution and delivery of this Indenture and the issuance,
sale and delivery of the Issuer's bonds under the Act as herein provided have
been in all respects approved and duly and validly authorized by resolutions
duly adopted by the Issuer; and

      WHEREAS, the Issuer has determined to issue its Industrial Development
Revenue Bonds in an aggregate principal amount of Seven Million Dollars
($7,000,000) (the "Bonds") to reimburse the Company for cost of acquiring,
constructing and equipping the Project, including necessary expenses incidental
thereto; and

      WHEREAS, such Bonds and the Trustee's certificate of authentication to be
endorsed thereon are to be in substantially the form attached hereto as Exhibit
A, with appropriate variations, omissions and inserts as are permitted or
required by this Indenture; and

      WHEREAS, the Bonds are limited obligations of the Issuer, payable solely
from the revenues and receipts derived from the Loan Agreement, and neither the
faith and credit nor the taxing powers of the Issuer or Pender County are
pledged to the payment of the Bonds; and

      WHEREAS, all things necessary to make the Bonds, when authenticated by the
Trustee and issued as in this Indenture provided, the valid, binding and legal
obligations of the Issuer according to the import thereof, and to constitute
this Indenture a valid assignment and pledge of revenues to the payment of the
principal of and premium, if any, and interest on the Bonds, in accordance with
the provisions hereof, have or will have been done and performed, and the
creation, execution and delivery of this Indenture of Trust and the creation,
execution and issuance of the Bonds, subject to the terms hereof, have in all
respects been duly authorized;

      NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, THIS INDENTURE
WITNESSETH:

                               GRANTING CLAUSES

      That the Issuer, in consideration of the premises and the acceptance by
the Trustee of the trusts hereby created and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, (i)
as security for the payment of the principal of and premium, if any, and
interest on the Bonds, and the purchase price therefor, as hereinafter defined
and for the funds which may be advanced by the Trustee pursuant hereto and the
performance and observance by the Issuer of the covenants and obligations
expressed herein and in the Bonds, and (ii) to secure payment of all amounts
owed to the Bank pursuant to the Reimbursement Agreement as a result and to the
extent of funds drawn under the Letter of Credit by the Trustee, does hereby
irrevocably pledge, grant, bargain, sell, convey, transfer and assign unto and
grant a lien and security interest to, the Trustee, and its successor or
successors in trust, the following described property (collectively, the "Trust
Estate"):



                                      2
<PAGE>

            1. All rights, title and interest of the Issuer in and to the Loan
Agreement (except for the rights of the Issuer under Sections 4.1(c), 6.4, 6.6
and 8.5 thereof and any rights of the Issuer to receive notices, certificates,
or other communications or to give its consent thereunder), and the Note and all
revenues (and receipts) and the proceeds of all thereof;

            2. All the rights and interest of the Issuer in and to the Bond Fund
(as hereinafter defined), Bond Purchase Fund (as hereinafter defined) and
Construction Fund (as hereinafter defined), and all moneys and investments
therein, but subject to the provisions of this Indenture pertaining thereto,
including those pertaining to the making of disbursements therefrom; and

            3. All moneys, securities and obligations from time to time held by
the Trustee under the terms of this Indenture (except for moneys, securities or
obligations deposited with or paid to the Trustee for redemption or payment of
Bonds which are deemed to have been paid in accordance with Article IX hereof
and funds held pursuant to Sections 202(e), 505, 506, 510 and 1204 hereof, which
shall be held by the Trustee in accordance with the provisions of said Article
IX or Sections 204, 505, 506, 510 and 1204 as the case may be), and any and all
real and personal property of every name and nature from time to time hereafter
by delivery or by writing of any kind conveyed, mortgaged, pledged, assigned or
transferred, as and for additional security hereunder by the Issuer or by anyone
in its behalf or with its written consent to the Trustee which is hereby
authorized to receive any and all such property at any and all times and to hold
and apply the same subject to the terms hereof;

      TO HAVE AND TO HOLD all the same with all privileges and appurtenances
hereby conveyed and assigned, or agreed or intended so to be, to the Trustee and
its successors in said trusts and to them and their assigns forever;

      IN TRUST, NEVERTHELESS, upon the terms and trust herein set forth for the
equal and proportionate benefit, security and protection of all owners of the
Bonds issued under and secured by this Indenture to the extent of any
obligations due thereunder, as their respective interests may appear, without
privilege, priority or distinction of any of the Bonds over any of the other of
the Bonds and for the Bank to secure payment and performance by the Company of
its obligations under the Reimbursement Agreement; provided, however, that if
the Issuer, its successors or assigns, shall well and truly pay, or cause to be
paid, the principal of the Bonds and the interest due thereon at the times and
in the manner provided in the Bonds according to the true intent and meaning
thereof, and shall make the payments into the Bond Fund as required hereunder or
shall provide, as permitted hereby, for the payment thereof by depositing or
causing to be deposited with the Trustee the amount specified herein, and shall
well and truly keep, perform and observe all the covenants and conditions
pursuant to the terms of this Indenture to be kept, performed and observed by
it, and shall pay to the Trustee all sums of money due or to become due to it in
accordance with the terms and provisions hereof, and the Company shall have paid
or performed all obligations owing to the Bank under the Reimbursement Agreement
to the extent of payments made by it under the Letter of Credit, then upon such
final payments this Indenture and the rights hereby granted shall cease,
determine and be void; otherwise, this Indenture to be and remain in full force
and effect; and



                                      3
<PAGE>

      THIS INDENTURE FURTHER WITNESSETH that, and it is expressly declared, all
Bonds issued and secured hereunder are to be issued, authenticated and delivered
and all said revenues and income hereby pledged are to be dealt with and
disposed of under, upon and subject to the terms, conditions, stipulations,
covenants, agreements, trusts, uses and purposes as hereinafter expressed, and
the Issuer has agreed and covenanted, and does hereby agree and covenant, with
the Trustee and with the respective owners, from time to time of the Bonds, as
follows:

                                   ARTICLE I
                                  DEFINITIONS

      Section 101. Definitions. In addition to the words and terms elsewhere
defined in this Indenture or in the Loan Agreement, the following words and
terms as used in this Indenture shall have the following meanings unless the
context or use indicates another or different meaning:

      "Act" shall mean Chapter 159C of the General Statutes of North Carolina
and any successor provisions thereto.

      "Additional Bonds" shall mean any bonds issued pursuant to Section 213.

      "Authorized Company Representative" shall mean the person or persons at
the time designated to act on behalf of the Company, such designation in each
case to be evidenced by a certificate furnished to the Issuer and the Trustee
containing the specimen signature of such person or persons and signed on behalf
of the Company by its President, any Vice President, Treasurer or Assistant
Treasurer, or Secretary or Assistant Secretary. Such certificate may designate
an alternate or alternates.

      "Available Moneys" shall mean moneys which have been on deposit with the
Trustee for at least 366 days during which no Event of Bankruptcy with respect
to the Company or the Issuer shall have occurred, and the proceeds from the
investment thereof; provided that, if a petition giving rise to an Event of
Bankruptcy is filed during such one year period and such petition is dismissed
and the dismissal is final and not subject to appeal, the period shall continue
to run and no Event of Bankruptcy shall be deemed to have occurred during such
period.

      "Bank" shall mean Branch Banking and Trust Company, in its capacity as
issuer of the Letter of Credit, its successors in such capacity and their
assigns, or any bank issuing a Substitute Letter of Credit.

      "Beneficial Owner" means the Person in whose name a Bond is recorded as
beneficial owner of such Bond by the Securities Depository or a Participant or
an Indirect Participant on the records of such Securities Depository,
Participant or Indirect Participant, as the case may be, or such Person's
subrogee.

      "Bond Counsel" shall mean initially Hunton & Williams, and any other firm
of nationally recognized municipal bond counsel selected by the Company and
acceptable to the Issuer and the Trustee.


                                      4
<PAGE>

      "Bond Registrar" shall mean the Trustee.

      "Bond Fund" shall mean the fund by that name created and established in
Section 501 of this Indenture.

      "Bond Purchase Fund" shall mean the fund by that name created and
established by Section 511 of this Indenture.

      "Bonds" shall mean The Pender County Industrial Facilities and Pollution
Control Financing Authority Industrial Development Revenue Bonds (Leslie-Locke,
Inc. Project), Series 1997, in the aggregate principal amount of $7,000,000,
issued under and secured by this Indenture.

      "Book Entry System" means a book entry system established and operated for
the recordation of Beneficial Owners of the Bonds pursuant to Section 214.

      "Business Day" shall mean a day of the year, other than a Saturday or a
Sunday, on which banks located in the cities in which the principal corporate
trust office of the Trustee, the principal office of any Paying Agent and the
principal office of the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.

      "Certificate of Authentication" shall mean the certificate described in
Section 207 of this Indenture.

      "Chairman" shall mean the person holding the office and performing the
duties of the Chairman of the Issuer.

      "Code" shall mean the Internal Revenue Code of 1986, as amended, the
regulations (whether proposed, temporary or final) under that Code or the
statutory predecessor of that Code, and any amendments of, or successor
provisions to, the foregoing and any official rulings, announcements, notices,
procedures and judicial determinations regarding any of the foregoing, all as
and to the extent applicable. Unless otherwise indicated, reference to a Section
of the Code means that Section of the Code, including such applicable
regulations, rulings, announcements, notices, procedures and determinations
pertinent to that Section of the Code.

      "Commission" means the Local Government Commission of North Carolina, a
division of the North Carolina Department of State Treasurer, and any successor
or successors thereto.

      "Company" shall mean Leslie-Locke, Inc., a corporation organized and
existing under the laws of the State of Delaware, and its permitted successors
and assigns under the Loan Agreement.

      "Construction Fund" shall mean the fund created under Section 601 hereof.

      "Conversion Date" shall mean the date specified by the Company pursuant to
Section 202(d) hereof, on which the variable rate feature borne by the Bonds
shall be terminated and the Bonds shall thereafter bear interest at a Fixed
Rate.


                                      5
<PAGE>

      "Cost of the Project" shall have the meaning set forth in Section 603
hereof.

      "Credit Modification Date" shall mean a Substitution Date if either of the
following occurs:

                  (i) if the Bonds are then rated by a Rating Agency, the
      Company provides notice that a Substitute Letter of Credit will be
      provided in accordance with Section 409 hereof but fails to deliver to the
      Trustee the letter from any Rating Agency then rating the Bonds as
      required by Section 409(c) hereof, or (2) the Company delivers such notice
      and the letter required by Section 409(c) but prior to the Substitution
      Date, such Rating Agency revokes such letter, or (3) the Company delivers
      such notice and letter but such Substitute Letter of Credit is not
      delivered to, and accepted by, the Trustee on or prior to the Substitution
      Date; or

                  (ii) the Bonds are not then rated and (1) the Company provides
      notice that a Substitute Letter of Credit will be provided in accordance
      with Section 409 hereof but fails to deliver to the Trustee the evidence
      required by Section 409(d) hereof, or (2) the Company delivers such notice
      and evidence but such Substitute Letter of Credit is not delivered to, and
      accepted by, the Trustee on or prior to the Substitution Date.

      "Event of Bankruptcy" shall mean (a) with the respect to the Company and
the Issuer, the filing of a petition in bankruptcy by or against the Company or
the Issuer under the United States Bankruptcy Code or the commencement of a
proceeding by or against the Company or the Issuer under any other law
concerning insolvency, reorganization or bankruptcy; and (b) with respect to the
Bank, the Bank shall become insolvent or bankrupt or fail to pay its debts
generally as such debts become due or shall admit in writing its inability to
pay any of its indebtedness or shall consent to or petition for or apply to any
authority for the appointment of a receiver, liquidator or trustee or similar
official for itself or for all or any substantial part of its properties or
assets or any such trustee, receiver, liquidator or similar official is
otherwise appointed or bankruptcy, insolvency, reorganization, arrangement or
liquidation proceedings or similar proceedings shall be instituted by or against
the Bank or entry of an order of relief by or against the Bank.

      "Event of Default" shall mean any event of default specified in Section
1001 hereof.

      "Fixed Rate" shall mean the fixed rate of interest on the Bonds determined
pursuant to Section 202(d) hereof.

      "Government Securities" shall mean (i) direct obligations of the United
States of America, and (ii) obligations unconditionally guaranteed by the United
States of America, and the full and timely payment of which securities, receipts
or obligations is unconditionally guaranteed by the United States of America
(including any securities described in (i) or (ii) issued or held in book-entry
form on the books of the Department of the Treasury of the United States of
America), which obligations, in either case, are not subject to redemption prior
to maturity at less than par at the option of anyone other than the holder
thereof. "Government Securities" shall include short term money market funds
comprised either entirely of the foregoing or of a portfolio which is limited to
such obligations and


                                      6
<PAGE>

repurchase agreements fully collateralized by such obligations. Such money
market funds may include funds advised by the Trustee.

      "Holder" or "bondholder" or "Bondholder" or "owner of the Bonds" or
"registered owner" shall mean the registered owner of any Bond.

      "Indenture" shall mean this Indenture of Trust and any amendments and
supplements hereto.

      "Indirect Participant" means a broker-dealer, bank or other financial
institution for which the Securities Depository holds Bonds as a securities
depository through a Participant.

      "Interest Payment Date" shall mean the first day of each March, June,
September and December, commencing September 1, 1997, prior to and including the
Conversion Date, and each June 1 and December 1 after the Conversion Date,
provided that, if such day shall not be a Business Day, payment shall be made on
the next succeeding Business Day with the same force and effect as if made on
the date such payment was due.

      "Issuer" shall mean The Pender County Industrial Facilities and Pollution
Control Financing Authority, a political subdivision and a body corporate and
politic of the State of North Carolina, and its successors and assigns.

      "Letter of Credit" shall mean the irrevocable letter of credit in an
amount not to exceed $7,466,666 dated the date of the issuance of the Bonds and
issued by the Bank to the Trustee at the request and for the account of the
Company pursuant to the Reimbursement Agreement, including any permitted
amendments thereto and any renewals or substitutes therefor, or any Substitute
Letter of Credit.

      "Loan Agreement" shall mean the Loan Agreement dated as of June 1, 1997,
by and between the Issuer and the Company, and any amendments and supplements
thereto.

      "Maximum Rate" shall mean 12% per annum, or such greater rate not
exceeding 15% as shall be fixed, at one time or from time to time, in a
certificate filed by the Issuer (at the direction of the Company), provided that
in order to increase the maximum rate to any rate greater than 12% during the
variable rate period, the Company shall have caused to be filed with the Trustee
a Substitute Letter of Credit in an amount sufficient to pay the principal of
the Outstanding Bonds, plus interest at such new rate fixed in the certificate
for a period of not less than 111 days plus a premium of 3% of the principal of
the Bonds Outstanding.

      "Minimum Denominations" shall mean $100,000 and $5,000 multiples in excess
thereof (except that to the extent that less than $100,000 in principal amount
of Bonds is outstanding, "Minimum Denominations" shall mean such lesser amount);
provided that, following the Conversion Date, "Minimum Denominations" shall mean
$5,000 and integral multiples thereof if the conditions described in Section
202(f) hereof are satisfied.



                                      7
<PAGE>

      "Moody's" shall mean Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successor
and assigns and, if such corporation shall be dissolved or liquidated or shall
no longer perform the functions of a securities rating agency, "Moody's" shall
be deemed to refer to any other nationally recognized securities rating agency
designated by the Company with the approval of the Remarketing Agent, by notice
to the Issuer and the Trustee.

      "Net Proceeds", when used with respect to any insurance recovery or
condemnation award with respect to the Project, shall mean the gross proceeds
from such insurance recovery or condemnation award less payment of reasonable
attorneys' fees, fees and expenses of the Trustee and all other expenses
properly incurred in the collection of such gross proceeds.

      "Outstanding" shall mean when used with reference to the Bonds, as of any
particular date, the aggregate of all Bonds authenticated and delivered under
this Indenture except:

                  (a) Bonds canceled at or prior to such date or delivered to or
      acquired by the Trustee at or prior to such date for cancellation;

                  (b) Bonds deemed to be paid in accordance with Article X of
      this Indenture; and

                  (c) Bonds in lieu of or in exchange or substitution for which
      other Bonds shall have been authenticated and delivered pursuant to this
      Indenture.

In determining whether the owners of a requisite aggregate principal amount of
Bonds Outstanding have concurred in any request, demand, authorization,
direction, notice, consent or waiver under the provisions hereof, Bonds which
are held by or on behalf of the Company (unless all of the Bonds Outstanding are
then owned by the Company) or an Affiliate of the Company (as defined below)
shall be disregarded for the purpose of any such determination; provided that
the Trustee can assume that no Bonds are owned by an Affiliate of the Company
unless the Trustee has received written notice from the Company as to the
identity of such Affiliate. For the purpose of this paragraph, an "Affiliate" of
any specified entity means any other entity directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified
entity and "control" when used with respect to any specified entity, means the
power to direct the management and policies of such entity, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing. Any Bonds owned by the Company but pledged to the
Bank under the Reimbursement Agreement shall be deemed to be Outstanding, and
the Bank shall be entitled to give any consent, waiver, notice, request, demand,
authorization or direction as a Holder under the Indenture.

      "Paying Agent" shall mean any bank or trust company named by the Issuer as
the place at which the principal of and premium, if any, and interest on the
Bonds are payable, and initially shall be the Trustee.



                                      8
<PAGE>

      "Participant" shall mean a broker-dealer, bank or other financial
institution for which the Securities Depository holds Bonds as a securities
depository.

      "Person" shall mean natural persons, firms, associations, partnerships,
corporations, limited liability companies, and public bodies.

      "Project" shall mean the facility for the manufacture of building products
constructed and equipped in Pender County, North Carolina, as described in
Exhibit A attached to the Loan Agreement, as the same may be revised in
accordance with Section 3.2 thereof, as the same may at any time exist.

      "Purchase Date" shall have the meaning set forth in Section 202(e) hereof.

      "Rate Computation Date" shall mean prior to the Conversion Date the
Wednesday of each calendar week, provided that if any Wednesday is not a
Business Day then the Rate Computation Date shall be the first Business Day
preceding such Wednesday.

      "Rate Period" shall mean prior to the Conversion Date, a period from and
including the first Thursday following a Rate Computation Date to and including
the next succeeding Wednesday or the Conversion Date, if earlier.

      "Rating Agency" shall mean Moody's, if such agency's ratings are in effect
with respect to the Bonds, or Standard & Poor's, if such agency's ratings are in
effect with respect to the Bonds, and their respective successors and assigns.
If either such corporation ceases to act as a securities rating agency, the
Company may, with the approval of the Remarketing Agent and the Bank, appoint
any nationally recognized securities rating agency as a replacement.

      "Record Date" shall mean with respect to any Variable Rate Interest
Payment Date, the day that is the Business Day prior to such Interest Payment
Date, or, if such day shall not be a Business Day, the next preceding Business
Day; and with respect to any Fixed Rate Interest Payment Date, the fifteenth day
of the calendar month next preceding such Interest Payment Date, or, if such day
shall not be a Business Day, the next succeeding Business Day.

      "Registrar" shall mean the bank or trust company acting in the capacity of
registrar under this Indenture.

      "Reimbursement Agreement" shall mean the Letter of Credit and
Reimbursement Agreement dated as of June 1, 1997, by and between the Bank and
the Company, and any amendments and supplements thereto.

      "Remarketing Agent" shall mean the remarketing agent appointed in
accordance with Section 1113 hereof, which initially shall be Blount Parrish &
Roton, Inc., Montgomery, Alabama.



                                      9
<PAGE>

      "Revenues" shall mean all amounts payable pursuant to Section 4.1 of the
Loan Agreement with respect to principal of, premium, if any, purchase price or
interest on the Bonds.

      "Secretary" shall mean the person holding the office and performing the
duties of the Secretary of the Issuer.

      "Securities Depository" shall mean The Depository Trust Company and any
substitute for or successor to such securities depository that shall maintain a
Book Entry System with respect to the Bonds.

      "Securities Depository Nominee" shall mean the Securities Depository or
the nominee of such Securities Depository in whose name there shall be
registered on the Register the Bonds to be delivered to such Securities
Depository during the continuation with such Securities Depository of
participation in its Book Entry System.

      "Standard & Poor's" shall mean Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, its successors and their assigns and, if
such corporation shall be dissolved or liquidated or shall no longer perform the
functions of a securities rating agency, "Standard & Poor's" shall be deemed to
refer to any other nationally recognized securities rating agency designated by
the Company with the approval of the Remarketing Agent, by notice to the Issuer
and the Trustee.

      "Substitute Letter of Credit" shall mean an irrevocable direct pay letter
of credit (which may include a letter of credit together with a confirming
letter of credit that satisfies the requirements of this definition), other than
the Letter of Credit issued by the Bank and delivered to the Trustee
concurrently with the original issuance of the Bonds (as such Letter of Credit
may be extended from time to time), issued by a commercial bank organized or
licensed under the laws of the United States or any state of the United States
or a branch or agency of a foreign commercial bank located in the United States
and subject to regulation by state or federal banking regulatory authorities, in
favor of the Trustee for the benefit of the owners of the Bonds, the terms of
which are in all material respects the same as the Letter of Credit (except for
any appropriate revisions in the forms of certificates attached thereto), with a
term of at least one year (or fifteen days following maturity of the Bonds if
sooner), which shall be delivered in accordance with the terms of Section 409
hereof. An amendment to the Letter of Credit for the sole purpose of extending
the term thereof shall not be deemed to be a Substitute Letter of Credit.

      "Substitution Date" shall mean a Business Day not less than fifteen (15)
days prior to the expiration or termination date of the Letter of Credit then in
effect on which the Company notifies the Trustee pursuant to Section 409 hereof
will be the effective date of a Substitute Letter of Credit.

      "Trustee" shall mean Norwest Bank Minnesota, National Association, in
Minneapolis, Minnesota, or its successors as such hereunder.

      "Trust Estate" shall mean the property conveyed to the Trustee pursuant to
the Granting Clauses hereof.



                                      10
<PAGE>

      "Variable Rate" shall mean the variable rate of interest on the Bonds
determined pursuant to Section 202(c) hereof.

      Section 102. Use of Words. Words of the masculine gender shall be deemed
and construed to include correlative words of the feminine and neuter genders.
Unless the context shall otherwise indicate, the words "Bond," "owner," "holder"
and "person" shall include the plural, as well as the singular, number.

                                  ARTICLE II
                                   THE BONDS

      Section 201. Authorized Amount of Bonds. No Bonds may be issued under the
provisions of this Indenture except in accordance with this Article and except
as otherwise set forth with respect to Additional Bonds. The total principal
amount of Bonds that may be issued is hereby expressly limited to $7,000,000,
except as provided in Sections 209, 212 and 213 hereof.

      Section 202. Details of Bonds. (a) The Bonds (i) shall be designated "The
Pender County Industrial Facilities and Pollution Control Financing Authority
Industrial Development Revenue Bonds (Leslie-Locke, Inc. Project), Series 1997,"
(ii) shall be in the aggregate principal amount of $7,000,000, (iii) shall be
dated and numbered as hereinafter provided, (iv) shall bear interest as
hereinafter provided, and (v) shall mature on June 1, 2010. The Bonds shall be
issued as registered bonds without coupons as is hereinafter provided.

            (b) The Bonds shall bear interest from and including the date
thereof until payment of the principal or redemption price thereof shall have
been made or provided for in accordance with the provisions hereof, whether at
maturity, upon redemption or otherwise. Interest on the Bonds shall be paid on
each Interest Payment Date and shall be computed as follows: (i) for each Rate
Period ending prior to or on the Conversion Date, on the basis of a year of 365
or 366 days, as appropriate, for the actual number of days elapsed, and (ii)
commencing on the Conversion Date, on the basis of a year of 360 days consisting
of twelve 30-day months.

            (c) For the first Rate Period, the Bonds shall bear interest at the
rate set prior to the issuance of the Bonds in the manner set forth in
subsection (c)(i). Thereafter, for each Rate Period ending prior to or on the
Conversion Date, the interest rate on the Bonds shall be the rate, determined as
follows:

                  (i) On the Rate Computation Date of each calendar week the
      Remarketing Agent shall determine that interest rate which, if borne by
      the Bonds, would, in its judgment having due regard to prevailing
      financial market conditions and the yields at which comparable securities
      are then being sold, be the lowest interest rate necessary, but which
      would not exceed the interest rate necessary, to enable the Remarketing
      Agent to sell the Bonds at par plus accrued interest, and the interest
      rate so determined shall be the interest rate on the Bonds for the next
      succeeding Rate Period; provided, however, such Variable Rate may be
      adjusted by the Remarketing Agent on any date during such Rate Period if
      such an adjustment is needed in order to enable the Remarketing Agent to
      remarket a Bond which has


                                      11
<PAGE>

      been tendered for purchase in accordance with Section 202(e) hereof. Such
      determination or adjustment shall be based on the knowledge of the
      Remarketing Agent of actual sales or pricing during the prior 105 days for
      securities which in the judgment of the Remarketing Agent are comparable
      to the Bonds and prevailing market conditions, or the marketing efforts
      with, or solicitation of proposals from, not less than three institutional
      or money fund investors or other entities or individuals who customarily
      purchase industrial development bonds or other tax-exempt securities in
      denominations of $100,000 or more. Any such adjustment of the Variable
      Rate occurring during a Rate Period shall apply to all of the Bonds
      outstanding at the time that such adjustment is made, and shall be
      effective beginning on the date immediately following the date on which
      such rate is announced by the Remarketing Agent and thereafter to the
      beginning of the next Rate Period. On the same Business Day the
      Remarketing Agent shall give telegraphic or telephonic notice, promptly
      confirmed in writing, to the Trustee and the Company specifying the
      interest rate so determined.

                  (ii) In the event that no person is serving as the Remarketing
      Agent on the applicable Rate Computation Date, or if at any time the
      Remarketing Agent fails to establish the Variable Rate in accordance with
      the procedure described in the preceding paragraph, then the Variable Rate
      for the Rate Period affected shall be the same as for the preceding Rate
      Period. If no Variable Rate has been set by the Remarketing Agent for the
      two immediately preceding Rate Periods, then the Variable Rate shall be
      determined by the Trustee and shall be a percentage per annum (not to
      exceed the Maximum Rate) equal to eighty percent (80%) of the bond
      equivalent yield (calculated in accordance with standard practice in the
      banking industry) applicable to 91-day United States Treasury bills
      determined on the basis of the average per annum discount rate at which
      such 91-day Treasury bills shall have been sold at the most recent
      Treasury auction of such 91-day Treasury bills as quoted or published by
      the Federal Reserve Board or any department or agency of the United States
      of America; provided further, that in the event that there shall not have
      been a Treasury auction of such 91-day Treasury bills on any date during
      the ten (10) Business Days immediately preceding such date of
      determination of the Variable Rate, or in the event that discount rates
      for any Treasury auction of such 91-day Treasury bills during such ten
      (10) Business Day period shall not be quoted or published by the Federal
      Reserve Board or any department or agency of the United States of America,
      the Variable Rate for the immediately preceding Rate Period shall remain
      in effect for such Rate Period.

                  (iii) Notwithstanding the foregoing the Variable Rate shall
      never exceed a rate which would cause the net effective interest rate for
      the Bonds as of any date, computed in accordance with applicable usury
      law, to exceed the Maximum Rate. All calculations of the Variable Rate
      shall be rounded to the nearest .01%.

The determination of the Variable Rate by the Remarketing Agent or the Trustee
shall be conclusive and binding upon the owners of the Bonds and, if determined
by the Remarketing Agent, on the Trustee.

            (d) The Company shall have the option to convert the rate of
interest payable on the Bonds from the Variable Rate to the Fixed Rate on any
Interest Payment Date by giving written


                                      12
<PAGE>

notice to the Issuer, the Bank, the Trustee, and the Remarketing Agent stating
(i) its election to convert to the Fixed Rate, (ii) the date as of which the
Fixed Rate shall be computed, which date shall be not less than seven (7)
Business Days prior to the Conversion Date, and (iii) the Conversion Date, which
date shall be an Interest Payment Date not less than forty-five (45) days after
the date the Company gives notice. Such Fixed Rate shall be effective from the
Conversion Date until final maturity (or earlier optional redemption) of the
Bonds. An election by the Company shall not be effective unless the Company
furnishes to the Trustee, concurrently with the notice of election: (A) an
opinion of Bond Counsel to the effect that the conversion to a Fixed Rate is
lawful under applicable law, is permitted by this Indenture, and will not
adversely affect the exclusion of the interest on the Bonds from gross income
for Federal income tax purposes, (B) payment to the Trustee of such amount as
the Trustee reasonably determines may be required in connection with the
conversion including but not limited to its own fees and expenses and the cost
of printing the Bonds in Fixed Rate form, if printed Bonds are required, and (C)
a commitment from a Bank to issue a Substitute Letter of Credit in an amount
sufficient to pay principal of the Outstanding Bonds, plus interest at the Fixed
Rate for a period of not less than 200 days, plus a premium equal to 3% of the
principal amount of Bonds Outstanding, with a term of at least one year from its
date of issuance (or fifteen days after the final maturity date of the Bonds, if
less than one year). Upon receipt of such notice the Trustee shall give written
notice thereof to all registered owners of the Bonds, which notice shall be
given not less than 30 days prior to the Conversion Date. Such notice shall be
given by mail in accordance with Section 302 hereof and shall state (U) that the
interest rate on the Bonds will be converted to the Fixed Rate on the Conversion
Date, (V) the Conversion Date, (W) the date the Fixed Rate shall be determined
and the procedure, which may include the furnishing of a telephone number which
registered owners can call, for informing the registered owners of the Bonds of
the Fixed Rate; (X) that interest on the Bonds will accrue at the Fixed Rate on
and after the Conversion Date until June 1, 2010, (Y) that following the
Conversion Date the Bonds will be secured by a Substitute Letter of Credit and
the name of the Bank issuing such Substitute Letter of Credit, together with the
information about such Substitute Letter of Credit required by Section 409
hereof, and (Z) that the Bonds shall be purchased by the Trustee on the
Conversion Date in accordance with Section 307 hereof. Commencing on the
Conversion Date, the interest rate on the Bonds shall be the Fixed Rate,
determined as follows:

                  (i) Upon the date set forth in the notice from the Company as
      hereinabove provided, the Remarketing Agent shall determine that interest
      rate which, if borne by the Bonds, would, in its judgment having due
      regard to prevailing financial market conditions, be the interest rate
      necessary, but which would not exceed the interest rate necessary, to
      enable the Remarketing Agent to sell the Bonds at the principal amount
      thereof on the Conversion Date, and the interest rate so determined shall
      be the interest rate on the Bonds for the period from and including the
      Conversion Date to and including June 1, 2010. The Remarketing Agent shall
      give telegraphic or telephonic notice, promptly confirmed in writing, to
      the Trustee and the Company specifying the interest rate so determined.

                  (ii) Notwithstanding the foregoing, the Fixed Rate shall not
      exceed a rate which would cause the net effective rate for the Bonds as of
      any date, computed in accordance with applicable usury law, to exceed the
      Maximum Rate.



                                      13
<PAGE>

The determination of the Fixed Rate by the Remarketing Agent shall be conclusive
and binding upon the Trustee and the owners of the Bonds.

            (e) On or prior to the Conversion Date, any Bond shall be purchased,
on the demand of the registered owner thereof, in Minimum Denominations, on any
Business Day at a purchase price equal to the principal amount thereof plus
accrued interest, if any, to the Purchase Date (as defined below), upon: (i)
delivery to the Trustee at its principal corporate trust office by telephonic
notice, followed by written notice within two days (which may be delivered by
telecopy, and which shall be satisfactory to the Trustee), which (A) states the
principal amount of such Bond and (B) states the date on which such Bond shall
be purchased pursuant to this Section 202(e), which date shall be a Business Day
not prior to the seventh day next succeeding the date of the delivery of such
notice to the Trustee (the "Purchase Date"); and (ii) delivery of such Bond
(with an appropriate transfer of registration form executed in blank acceptable
to the Trustee) at the principal corporate trust office of the Trustee at or
prior to 10:00 a.m., Central time, on the Purchase Date; provided, however, that
such Bond shall be so purchased pursuant to this Section 202(e) only if the Bond
so delivered to the Trustee shall conform in all respects to the description
thereof in the aforesaid notice. Delivery of a notice to tender a Bond or Bonds
for purchase and delivery of the Bond or Bonds described therein to the Trustee
shall each constitute irrevocable acts on the part of the owner of such Bond or
Bonds. If less than all of the principal amount of a Bond is purchased pursuant
to this subsection, the bondholder must retain Bonds in Minimum Denominations
and a replacement Bond in the remaining principal amount shall be issued to the
holder tendering his Bond.

      If a Bond is to be purchased in accordance with the preceding paragraph on
a Purchase Date that occurs after notice of a redemption or mandatory purchase
for such Bond is given but before such redemption or mandatory purchase occurs,
purchasers (other than the Company) of such Bond shall be given a copy of such
notice of redemption or mandatory purchase upon delivery of such Bond.

            (f) The Bonds shall be originally issued and until the Conversion
Date in the denomination of $100,000 each, or any integral multiple of $5,000 in
excess thereof, numbered consecutively from VR-1 upwards in order of issuance
according to the records of the Trustee. On and after the Conversion Date, the
Bonds shall be issued in the denomination of $100,000, or any integral multiple
of $5,000 in excess thereof, numbered consecutively from FR-1 upwards in order
of issuance according to the records of the Trustee; provided that, if after the
Conversion Date the Bonds are rated A or better by a Rating Agency, the Bonds
may, at the direction of the Company, be issued in the denomination of $5,000,
or any integral multiple of $5,000 in excess thereof. Upon the original issuance
and delivery of the Bonds, the Bonds shall be dated the date of such issuance
and delivery, and any Bonds authenticated and delivered in exchange or
substitution for other Bonds shall be dated so that no gain or loss of interest
results from such exchange or substitution. The Bonds shall bear interest from
the date appearing thereon.

      Section 203. Form. Bonds bearing interest at a variable rate shall be
substantially in the form attached hereto as Exhibit A with such appropriate
variations, omissions and insertions as are permitted or required by this
Indenture. Bonds bearing interest at a Fixed Rate shall be substantially


                                      14
<PAGE>

in the form attached hereto as Exhibit B with such appropriate variations,
omissions and insertions as are permitted or required by this Indenture. The
Bonds may be in printed or typewritten form.

      Section 204. Payment. The principal of and premium, if any, on the Bonds
shall be paid upon the presentation and surrender of said Bonds at the principal
corporate trust office of the Trustee. The interest on the Bonds shall be
payable by check or draft drawn upon the Trustee and mailed to the registered
owners as of the close of business on the Record Date next preceding the
Interest Payment Date at their respective addresses as such appear as of the
close of business on such Record Date on the bond registration books kept by the
Trustee, provided that, owners of Bonds in the aggregate principal amount of not
less than $500,000 may, by written instruction filed with the Trustee on or
before the Record Date next preceding such Interest Payment Date, direct that
interest payments be transmitted by wire transfer to an account in the
continental United States (which wire transfer shall be at the expense of the
holder). If and to the extent that there shall be a default in the payment of
the interest due on any Interest Payment Date, such defaulted interest shall be
paid to the owners in whose name any such Bonds (or any Bond or Bonds issued
upon transfer or exchange thereof) are registered at the close of business on
the fifth Business Day next preceding the date of payment of such defaulted
interest. Payment of the final installment of principal and interest on each
Bond shall be made only upon surrender thereof at the principal corporate trust
office of the Trustee. All payments shall be made in lawful money of the United
States of America.

      Section 205. Execution. The Bonds shall be executed on behalf of the
Issuer by the manual or facsimile signatures of the Chairman or Vice Chairman
and the Secretary or Assistant Secretary and shall have impressed or imprinted
thereon the seal of the Issuer. A facsimile signature and seal shall have the
same force and effect as if personally signed. In case any officer whose
signature or facsimile of whose signature shall appear on the Bonds shall cease
to be such officer before the delivery of such Bonds, such signature or such
facsimile shall nevertheless be valid and sufficient for all purposes, the same
as if he had remained in office until delivery.

      Section 206. Limited Obligation. The Bonds, together with interest
thereon, shall be payable from the Bond Fund, as hereinafter set forth, and
shall be a valid claim of the holders thereof only against the Bond Fund and the
Revenues, which Revenues are hereby pledged and mortgaged for the equal and
ratable payment of the Bonds (principal, purchase price, premium, if any, and
interest) and shall be used for no other purpose than to pay the principal of
and premium, if any, and interest on the Bonds, and the Paying Agent's and the
Trustee's fees, except as may be otherwise expressly authorized in this
Indenture. THE PRINCIPAL OF THE BONDS, THE PREMIUM, IF ANY, AND THE INTEREST
THEREON SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND
CREDIT OF THE STATE OF NORTH CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF,
INCLUDING THE ISSUER. NEITHER THE STATE OF NORTH CAROLINA NOR ANY POLITICAL
SUBDIVISION THEREOF, INCLUDING THE ISSUER, SHALL BE OBLIGATED TO PAY THE
PRINCIPAL OF, PURCHASE PRICE, PREMIUM, IF ANY, OR INTEREST ON, OR PURCHASE PRICE
OF, THE BONDS OR OTHER COSTS INCIDENT THERETO EXCEPT FROM THE REVENUES AND
RECEIPTS PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER
OF THE STATE OF NORTH CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING
THE ISSUER, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF,


                                      15
<PAGE>

PURCHASE PRICE, PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR OTHER COSTS
INCIDENT THERETO.

      Section 207. Authentication. Only such Bonds as shall have endorsed
thereon a certificate of authentication substantially in the form set forth in
Exhibits A and B attached hereto duly executed by the Trustee shall be entitled
to any right or benefit under this Indenture. No Bond shall be valid and
obligatory for any purpose unless and until such certificate of authentication
shall have been duly executed by the Trustee, and such certificate of the
Trustee upon any such Bond shall be conclusive evidence that such Bond has been
authenticated and delivered under this Indenture. The Trustee's Certificate of
Authentication on any Bond shall be deemed to have been executed if signed by an
authorized officer of the Trustee, but it shall not be necessary that the same
officer sign the Certificate of Authentication on all of the Bonds issued
hereunder.

      Section 208. Delivery of the Bonds. The Issuer shall execute and deliver
to the Trustee and the Trustee shall authenticate the Bonds and deliver said
Bonds to the original purchaser or purchasers thereof. Prior to the delivery or
original issuance by the Trustee of any authenticated Bonds there shall be or
have been delivered to the Trustee:

            (a) An original executed counterpart of this Indenture.

            (b) An original executed counterpart of the Loan Agreement.

            (c) The original executed Letter of Credit.

            (d) An original executed Note, together with an executed
                assignment from the Issuer to the Trustee.

            (e) A written request to the Trustee by the Issuer to authenticate
                and deliver the Bonds to the original purchaser or purchasers
                thereof upon payment to the Trustee, of a sum specified in
                such request plus accrued interest thereon, if any, as the
                case may be, to the date of delivery.

            (f) A copy, duly certified by the Secretary or Assistant
                Secretary, of the proceedings of the governing body of the
                Issuer authorizing the issuance of the Bonds.

            (g) An opinion of Bond Counsel that the Bonds have been validly
                issued and that the interest on the Bonds will be excluded
                from gross income for Federal income tax purposes.

            (h) Any other instrument or document the Trustee reasonably
                requires.

      Section 209. Mutilated, Destroyed or Lost Bonds. In case any Bond issued
hereunder shall become mutilated or be destroyed or lost, the Issuer, shall, if
not then prohibited by law, cause to be executed and the Trustee may
authenticate and deliver a new Bond of like date, number, maturity and


                                      16
<PAGE>

tenor in exchange and substitution for and upon cancellation of such mutilated
Bond, or in lieu of and in substitution for such Bond destroyed or lost, upon
the holder's paying the reasonable expenses and charges of the Issuer and
Trustee in connection therewith, and, in the case of a Bond destroyed or lost,
his filing with the Trustee evidence satisfactory to it that such Bonds were
destroyed or lost, and of his ownership thereof, and furnishing the Issuer and
Trustee with indemnity satisfactory to them. The Trustee is hereby authorized to
authenticate any such new Bond. In the event any such Bonds shall have matured,
instead of issuing a new Bond, the Issuer may pay the same without the surrender
thereof.

      Section 210. Registration and Transfer of Bonds. The Issuer hereby
constitutes and appoints the Trustee as Bond Registrar of the Issuer, and as
Bond Registrar the Trustee shall keep books for the registration and for the
transfer of the Bonds as provided in this Indenture at the principal corporate
trust office of the Trustee. The person in whose name any Bond shall be
registered shall be deemed and regarded as the absolute owner thereof for all
purposes and payment of or on account of the principal of and interest on any
such Bond shall be made only to or upon the order of the registered owner
thereof, or his legal representative, and neither the Issuer, the Trustee, nor
the Bond Registrar shall be affected by any notice to the contrary but such
registration may be changed as herein provided. All such payments shall be valid
and effectual to satisfy and discharge the liability upon such Bond to the
extent of the sum or sums so paid.

      The transfer of the Bonds may be registered on the books of registration
kept by the Trustee by the registered owner in person or by his duly authorized
attorney, upon surrender thereof, together with a written instrument of transfer
duly executed by the registered owner or his duly authorized attorney. Upon
surrender for registration of any Bond at the principal corporate office of the
Trustee, the Issuer shall execute and the Trustee shall authenticate and deliver
in the name of the transferee or transferees a new Bond or Bonds in the same
aggregate principal amount and of any authorized denomination or denominations.

      Bonds may be exchanged at the principal corporate trust office of the
Trustee for an equal aggregate principal amount of Bonds of any other authorized
denomination or denominations. The Issuer shall execute and the Trustee shall
authenticate and deliver Bonds which the bondholder making the exchange is
entitled to receive, bearing numbers not contemporaneously then outstanding. The
execution by the Issuer of any Bond of any denomination shall constitute full
and due authorization of such denomination and the Trustee shall thereby be
authorized to authenticate and deliver such Bond.

      On and after the Conversion Date, the Trustee shall not be required to
register the transfer or exchange any Bond during the period from and including
a Record Date to the next succeeding Interest Payment Date of such Bond nor to
transfer or exchange any Bond after the mailing of notice calling such Bond for
redemption has been made and prior to such redemption.

      Such registrations of transfer or exchanges of Bonds shall be without
charge to the holders of such Bonds, but any taxes or other governmental charges
required to be paid with respect to the same shall be paid by the holder of the
Bond requesting such transfer or exchange as a condition precedent to the
exercise of such privilege.


                                      17
<PAGE>

      Section 211. Cancellation. All Bonds surrendered for the purpose of
payment or retirement, or for exchange, or for replacement or payment as
provided above shall be canceled upon surrender thereof to the Trustee and, at
the option of the Trustee, either cremated, shredded or otherwise disposed of.
In the case of cremating, shredding or other disposition, the Trustee shall
execute and forward to the Issuer, upon request of the Issuer, an appropriate
certificate describing the Bonds involved and the manner of disposition.

      Section 212. Temporary Bonds. Until Bonds in definitive form are ready for
delivery, the Issuer may execute, and upon the request of the Issuer the Trustee
shall authenticate and deliver, subject to the provisions, limitations and
conditions set forth herein, one or more Bonds in temporary form, whether
printed, typewritten, lithographed or otherwise produced, substantially in the
form of the definitive Bonds, with appropriate omissions, variations and
insertions, and in authorized denominations. Until exchanged for Bonds in
definitive form, such Bonds in temporary form shall be entitled to the lien and
benefit of this Indenture. Upon the presentation and surrender of any Bond or
Bonds in temporary form, the Issuer shall, without unreasonable delay, prepare,
execute and deliver to the Trustee and the Trustee shall authenticate and
deliver, in exchange therefor, a Bond or Bonds in definitive form. Such exchange
shall be made by the Trustee without making any charge therefor to the holder of
such Bond in temporary form.

      Section 213. Additional Bonds. (a) At any time while the Issuer is not in
default under this Indenture, and to the extent permitted by law then in effect,
including, without limitation, the Act, and subject to receipt by the Trustee of
the documents listed below, the Issuer may, with the prior written consent of
the Bank, issue one or more series of Additional Bonds (1) to pay the cost of
completion of the Project, (2) to pay the cost of such additions, modifications
or improvements to the Project or other facilities of the Company within Pender
County, North Carolina which qualify under the Act, (3) to refund all or part of
a series of Bonds, or (4) for any combination of such purposes. Each such series
of Additional Bonds shall be issued pursuant to a supplement to this Indenture
and shall be equally and ratably secured under this Indenture with the Bonds
issued pursuant to Section 202 hereof and any other series of Additional Bonds,
without preference, priority or distinction of any Bonds over any other Bonds,
except, to the extent authorized by the Act, such Additional Bonds shall not be
secured by the Letter of Credit (but must be secured by a letter of credit or
other credit enhancement in accordance with the terms of this Indenture), and
notice that such Additional Bonds are not secured by the Letter of Credit and
the nature of the credit enhancement for such Additional Bonds shall be given to
each purchaser of any such Additional Bond prior to the purchase thereof. Unless
provided otherwise in a supplement to this Indenture, all such Additional Bonds
shall be in substantially the same form as the Bonds issued under Section 202
hereof, but shall be of such denomination or denominations, bear such date or
dates, bear interest at such rate or rates, have such maturity dates, redemption
dates and redemption premiums, contain an appropriate series designation, and be
issued at such prices as shall be set forth in a supplemental indenture all to
the extent not inconsistent with the Bonds. Nothing in this Indenture shall
create any obligation on the part of the Issuer to issue Additional Bonds.



                                      18
<PAGE>

            (b) The Trustee shall authenticate and deliver such Additional
Bonds, but only upon receipt of the following:

                  (1) A certificate of an Authorized Representative of the
      Issuer stating that as of the date of such delivery no event or condition
      has happened or existed, or is happening or existing, which constitutes,
      or which, with notice or lapse of time or both, would constitute, an Event
      of Default by the Issuer under this Indenture;

                  (2) A certificate of an Authorized Representative of the
      Company stating the purpose of such Additional Bonds and requesting the
      issuance and approving the terms of such Additional Bonds and stating that
      (A) as of the date of such delivery no event or condition has happened or
      existed, or is happening or existing, which constitutes, or which, with
      notice or lapse of time or both, would constitute, an Event of Default or
      the violation of any covenant or agreement under the Loan Agreement or (B)
      if any such event or condition is happening or existing, specifying such
      event or condition and stating in detail acceptable to the Trustee that
      such event or condition will be corrected before the issuance of such
      Additional Bonds;

                  (3) A certified copy of a resolution or resolutions of the
      Issuer authorizing (A) the execution and delivery of any amendment to the
      Loan Agreement, (B) the execution and delivery of the supplement to this
      Indenture, and (C) the issuance, sale, execution and delivery of such
      Additional Bonds;

                  (4) In the event such Additional Bonds are issued for the
      purpose of constructing additional facilities, original executed
      counterparts of amendments or supplements to the Loan Agreement;

                  (5) The executed supplement to the Note issued in an aggregate
      principal amount at least equal to the principal of the Additional Bonds,
      or an executed substitute for the Note issued in an aggregate principal
      amount at least equal to the principal amount of the Bonds outstanding and
      the Additional Bonds, in either case assigned to the Trustee;

                  (6) An original executed counterpart of the supplement to this
      Indenture relating to the Additional Bonds;

                  (7) The original executed letter of credit or other credit
      enhancement that will secure the Additional Bonds;

                  (8) A written request to the Trustee by the Issuer to
      authenticate and deliver the Additional Bonds to the original purchaser or
      purchasers thereof upon payment to the Trustee, but for the account of the
      Issuer, of a sum specified in such order plus or less accrued interest
      thereon, if any, as the case may be, to the date of delivery;



                                      19
<PAGE>

                  (9) A copy, duly certified by the Secretary or Assistant
      Secretary, of the proceedings of the governing body of the Issuer
      authorizing the issuance of the Additional Bonds;

                  (10) A written opinion of Bond Counsel addressed to the
      Trustee and the Issuer that the issuance of such Additional Bonds has been
      duly authorized, that the Additional Bonds have been validly issued, that
      the issuance of such Additional Bonds will have no adverse effect upon the
      exemption from Federal income taxation of interest on any Bonds then
      outstanding, and that the interest on the Additional Bonds will be
      excluded from gross income for Federal income tax purposes;

                  (11) An opinion of counsel satisfactory to the Trustee that
      any amendment or supplement to the Loan Agreement, the supplement to or
      substitute for the Note and the supplement to this Indenture have been
      properly authorized and executed;

                  (12) Written consent of the Bank authorizing the issuance of
      the Additional Bonds; and

                  (13) Any other instrument or document the Trustee reasonably
requires.

            (c) The proceeds of such Additional Bonds shall be deposited by the
Trustee in the Bond Fund and the Construction Fund as provided in the supplement
to this Indenture referred to above.

            (d) If the Additional Bonds are refunding bonds for the Bonds issued
under Section 202 hereof, the supplement to this Indenture, if consented to in
writing by the Bank, may require the Trustee to draw on the Letter of Credit to
redeem such Bonds then called for redemption.

            (e) No Additional Bonds shall be issued hereunder unless the LGC has
approved such issuance.

      Section 214. Book Entry System. The Bonds shall be initially issued
pursuant to a Book Entry System administered by the Securities Depository with
no physical distribution of Bond certificates to be made except as provided in
this Section 214. Any provision of this Indenture or the Bonds requiring
physical delivery of the Bonds shall, with respect to any Bonds held under the
Book Entry System, be deemed to be satisfied by a notation on the Register
maintained by the Registrar that such Bonds are subject to the Book Entry
System.

      So long as a Book Entry System is being used, one Bond in the aggregate
principal amount of the Bonds and registered in the name of the Securities
Depository Nominee will be issued and deposited with the Securities Depository
and held in its custody. The Book Entry System will be maintained by the
Securities Depository and the Participants and Indirect Participants and will
evidence beneficial ownership of the Bonds in Authorized Denominations, with
registration of transfers of ownership effected on the records of the Securities
Depository, the Participants and the Indirect Participants pursuant to rules and
procedures established by the Securities Depository, the


                                      20
<PAGE>

Participants and the Indirect Participants. The principal of and premium, if
any, on each Bond shall be payable to the Securities Depository Nominee or any
other person appearing on the Register as the registered Holder of such Bond or
his/her registered assigns or legal representative at the principal office of
the Registrar. So long as the Book Entry System is in effect, the Securities
Depository will be recognized as the Holder of the Bonds for all purposes
(except as provided in Section 202(e) with respect to purchases at the demand of
the holder). Transfer of principal, interest and any premium payments or notices
to Participants and Indirect Participants will be the responsibility of the
Securities Depository, and transfer of principal, interest and any premium
payments or notices to Beneficial Owners will be the responsibility of the
Participants and the Indirect Participants. No other party will be responsible
or liable for such transfers of payments or notices or for maintaining,
supervising or reviewing such records maintained by the Securities Depository,
the Participants or the Indirect Participants. While the Securities Depository
Nominee or the Securities Depository, as the case may be, is the registered
owner of the Bonds, notwithstanding any other provisions set forth herein,
payments of principal of, redemption premium, if any, and interest on the Bonds
shall be made to the Securities Depository Nominee or the Securities Depository,
as the case may be, by wire transfer in immediately available funds to the
account of said Holder as may be specified in the Register maintained by the
Registrar or by such other method of payment as the Trustee may determine to be
necessary or advisable with the concurrence of the Securities Depository.

      In the event that (i) the Securities Depository determines not to continue
to administer a Book Entry System for the Bonds, or (ii) the Remarketing Agent,
with the consent of the Trustee, determines that continuation of a Book Entry
System of evidence and transfer of ownership of the Bonds would adversely affect
the interests of the Beneficial Owners, then the Book Entry System will be
discontinued, in which case the Trustee will deliver replacement Bonds in the
form of fully registered certificates in Authorized Denominations in exchange
for the Outstanding Bonds as required by the Trustee and the Beneficial Owners.

      The Securities Depository may be removed at any time at the election of
the Remarketing Agent, with the consent of the Trustee and the Company, and a
new Securities Depository may thereupon be appointed by the Remarketing Agent,
subject to the approval of the Trustee and the Company.

      Section 215. CUSIP Numbers. The Issuer in issuing the Bonds may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Bonds or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Bonds, and any such redemption shall not
be affected by any defect in or omission of such numbers.

                                  ARTICLE III
                      REDEMPTION OF BONDS BEFORE MATURITY

      Section 301. Redemption and Purchase of Bonds. (a) The Bonds shall be
redeemed in the event the Company shall elect to exercise its option to prepay
installments payable under the Loan Agreement upon the occurrence of any of the
events set forth in Section 9.2 of the Loan Agreement,


                                      21
<PAGE>

in whole but not in part, at any time, at a redemption price equal to 100% of
the principal amount thereof, plus interest accrued to the redemption date. Such
redemption shall be made only with the prior written consent of the Bank.

            (b) The Bonds shall be redeemed in the event the Company shall
become obligated to prepay installments payable under Section 9.3 of the Loan
Agreement upon the occurrence of a "Determination of Taxability," as such term
is defined in Section 9.3 of the Loan Agreement, in whole at any time, at a
redemption price equal to 103% of the principal amount thereof, plus interest
accrued to the redemption date. Fewer than all of the Bonds may be redeemed if,
in the opinion of Bond Counsel, redemption of fewer than all of the Bonds would
result in the interest payable on the Bonds remaining Outstanding being excluded
from gross income for Federal income tax purposes. Notice of a redemption
pursuant to this Section shall be sent to the Holders pursuant to Section 302
hereof within thirty days after the occurrence of a Determination of Taxability.

            (c) Prior to the Conversion Date, the Bonds shall be subject to
redemption prior to maturity at the option of the Issuer, to be exercised as
directed by the Company, with the prior written consent of the Bank, in whole at
any time or in part (in Minimum Denominations) on any Interest Payment Date at a
redemption price equal to 100% of the principal amount being redeemed plus
accrued interest to the redemption date.

            (d) After the Conversion Date, the Bonds shall be subject to
redemption, at the direction of the Company, with the prior written consent of
the Bank, in whole at any time or in part (in Minimum Denominations) on any
Interest Payment Date occurring after the applicable period of Call Protection
(as defined below) set forth below at a price equal to the principal amount
thereof plus a redemption premium (expressed as a percentage of principal
amount) plus accrued interest thereon to the redemption date as follows:


                                      22
<PAGE>


<TABLE>
<CAPTION>
                              Redemption Prices as a
                              Percentage of Principal          Call Protection (Length of
Length of Period from the     Amount (measured from and        time (measured from the
Interest Payment Date         including the Interest           Interest Payment Date
immediately succeeding the    Payment Date immediately         immediately succeeding
Conversion Date to June       succeeding the Conversion        the Conversion Date) before
1, 2010                       Date)                            Bonds may be called)
-----------------------       -------------------------        ---------------------------
<S>                           <C>                              <C>
Greater than 10 years         After 5 years (less one day)     5 years (less one day)
                              at 102%, declining 1/2% per 6
                              months

Less than or equal to 10 and  After 3 years (less one day)     3 years (less one day)
greater than 7 years          at 101-1/2%, declining 1/2%
                              per 6 months


Less than or equal to 7 and   After 2 years (less one day) at  2 years (less one day)
greater than 4 years          101%, declining 1/2% per
                              6 months


Less than or equal to 4 and   After 2 years (less one day) at  2 years (less one day)
greater than 3 years          100-1/2%, declining 1/2% per
                              6 months


Less than or equal to 3 and   After 1 year (less one day) at   1 year (less one day)
greater than 2 years          100-1/2%, declining 1/2% per
                              6 months


Less than or equal to 2 and   After 1 year (less one day) at   1 year (less one day)
greater than 1 year           100%

Less than or equal to 1 year  On or after the first Interest   The portion of such period
                              Payment Date during such         prior to the first Interest
                              period at 100%                   Payment Date therein
</TABLE>


            (e) The Bonds shall be redeemed in whole prior to their scheduled
maturity at a redemption price equal to the principal amount thereof, without
premium, plus accrued interest to the redemption date on the first Interest
Payment Date which is not less than 90 days after the Issuer has notified the
Trustee and the Bank in writing that the Company has, in the opinion of the
Issuer, ceased to operate the Project as an "industrial project for industry"
within the meaning of the Act. A cessation of operation shall not be deemed to
have occurred until 90 days shall have elapsed after written notice has been
given to the Company and the Bank by the Issuer that operations at the Project
shall have ceased and the Company shall not have demonstrated to the
satisfaction of the Issuer that the Company has resumed the operations of the
Project as an "industrial project for


                                      23
<PAGE>

industry" within the meaning of the Act or that the Company is, in good faith,
seeking to arrange resumption of an economically reasonable operation of the
Project by the Company or, if permitted under the Loan Agreement, by an assignee
or purchaser of the Project as such an "industrial project for industry";
provided that a temporary shutdown due to a strike or other labor dispute, lack
of fuel or similar occurrence shall not be deemed a cessation of operation.

            (f) The Bonds are subject to mandatory sinking fund redemption prior
to their scheduled maturity on June 1, 1999, and on each succeeding June 1
thereafter to and including June 1, 2009, in the principal amount of $600,000.
The remaining $400,000 in the principal amount of Bonds shall be redeemed on
June 1, 2010.

            (g) The Bonds are subject to mandatory redemption at a redemption
price equal to the principal amount thereof plus accrued interest to, but not
including, the redemption date in whole or in part, without premium, at the
earliest date for which notice of redemption can be given upon receipt by the
Trustee of written notice from the Bank requesting such redemption, specifying
the principal amount of the Bonds to be redeemed (if less than all of the Bonds
Outstanding are to be redeemed) and stating that (i) an "Event of Default" under
and as defined in the Reimbursement Agreement has occurred and is continuing or
(ii) it holds as the registered or beneficial owner Bonds purchased by the Bank
in accordance with Section 307, 301(k) or 912(a) and not remarketed; provided,
however, only Bonds so held by the Bank shall be subject to mandatory redemption
pursuant to this subsection (ii).

            (h) Each series of Additional Bonds shall be subject to redemption
by the Issuer on such dates and at such prices as may be provided in the
supplement to this Indenture authorizing their issuance.

            (i)   Bonds purchased on the Mandatory Purchase Date described in
Section 307(a)(iii) hereof shall not be remarketed but rather shall be deemed to
have been redeemed and shall be canceled.

            (j) The Bonds are subject to mandatory redemption in part to the
extent of any proceeds remaining in the Construction Fund after the Completion
Date, which proceeds shall be transferred to the Bond Fund in accordance with
Section 605 hereof.

            (k) When Bonds are subject to redemption pursuant to subsections
(a), (b) or (g) in this Section 301, Bonds paid by the Company or paid from a
draw or claim under the Letter of Credit or otherwise paid by or on behalf of
the Bank shall be purchased in lieu of redemption on the applicable redemption
date at a purchase price equal to the principal amount thereof, plus accrued
interest thereon to but not including the date of such purchase, if the Trustee
has received a written request on or before said purchase date from the Company
or the Bank, as the case may be, specifying that the moneys provided or to be
provided by such party shall be used to purchase Bonds in lieu of redemption. No
purchase of Bonds by the Company or the Bank pursuant to this Indenture or
advance or use of any moneys to effectuate any such purchase shall be deemed to
be a payment or redemption of the Bonds or any portion thereof, and such
purchase shall not operate to extinguish or discharge the indebtedness evidenced
by such Bonds. No Bonds purchased pursuant to this


                                      24
<PAGE>

subsection (k) shall be required to be remarketed by the Remarketing Agent
pursuant to Section 1201, unless the Remarketing Agent specifically agrees to
undertake such remarketing.

      Section 302. Notice. Notice of the call for any redemption, identifying
the Bonds or portions thereof being called and the date on which they shall be
presented for payment, shall be given by the Trustee by first-class mail to the
registered owner of each such Bond addressed to such registered owner at his
registered address and placed in the mails not less than twenty (20) days prior
to the date fixed for redemption if such date is on or prior to the Conversion
Date, and not less than thirty (30) days prior to the date fixed for redemption
if such date is after the Conversion Date; provided, however, that failure to
give such notice, or any defect therein, shall not affect the validity of the
proceedings for the redemption of any Bond with respect to which no such failure
or defect has occurred. Any notice mailed as provided in this Section shall be
conclusively presumed to have been duly given, whether or not the registered
owner receives the notice.

      Notice of redemption shall also be given by the Trustee, by first-class
mail, to all organizations registered with the Securities and Exchange
Commission as securities depositories, and to at least one information service
of national recognition which disseminates redemption information with respect
to tax-exempt securities. In preparing such notice, the Trustee shall take into
account, to the extent applicable, the prevailing tax-exempt securities industry
standards and any regulatory statement of any federal or state administrative
body having jurisdiction over the Issuer, the Company or the tax-exempt
securities industry, including without limitation Release No. 34-23856 of the
Securities and Exchange Commission, or any subsequent amending or superseding
release. Failure to give notice specified in this paragraph, or any defect
therein, shall not affect the validity of any proceedings for the redemption of
any Bonds with respect to which the notice specified in the foregoing paragraph
is correctly given.

      Section 303. Redemption Payments. On or prior to the date fixed for
redemption, funds shall be deposited with the Trustee to pay, and Trustee is
hereby authorized and directed to apply such funds in accordance with Section
509 to the payment of, the Bonds or portions thereof called, together with
accrued interest thereon to the redemption date and any required premium. Upon
the giving of notice and the deposit of funds for redemption, interest on the
Bonds or portions thereof thus called shall no longer accrue after the date
fixed for redemption.

      Section 304. Cancellation. All Bonds which have been redeemed shall not be
reissued but shall be canceled and disposed of by the Trustee in accordance with
Section 211 hereof.

      Section 305. Partial Redemption of Bonds. In case a Bond is of a
denomination larger than $100,000, a portion of such Bond in Minimum
Denominations may be redeemed, so long as the holder retains Bonds in Minimum
Denominations following the partial redemption. Upon surrender of any Bond for
redemption in part only, the Issuer shall execute and the Trustee shall
authenticate and deliver to the holder thereof a new Bond or Bonds in the same
form and of authorized denominations in an aggregate principal amount equal to
the unredeemed portion of the Bond surrendered.



                                      25
<PAGE>

      Section 306. Selection of Bonds for Redemption. In the event of a partial
redemption of Bonds pursuant to Section 301(a), (b), (c), (d), (f) or (g)
hereof, the Trustee shall select Bonds for redemption in accordance with the
following criteria: (a) the Trustee shall first select for redemption Bonds held
in the name of the Company or pledged to the Bank under Section 1203(c) hereof;
and (b) thereafter, the Trustee shall select Bonds for redemption by lot or in
such other manner as may be determined by the Trustee to be fair and equitable.
In no event shall the Trustee select a Bond or Bonds for redemption if such
redemption will result in any Bondholder owning Bonds with a principal amount
that is less than a Minimum Denomination; provided that, if a redemption cannot
be effected to result in Minimum Denominations for all holders, the Trustee
shall select Bonds for redemption such that one holder owns a Bond or Bonds with
a principal amount that is less than a Minimum Denomination, which Bond or Bonds
shall be deemed to be authorized under Section 202(f) hereof.

      Section 307. Mandatory Purchase of Bonds. (a) The Bonds are subject to
mandatory purchase on the following dates (each of which is designated a
Mandatory Purchase Date):

                  (i) on the Conversion Date, at a purchase price equal to 100%
      of the principal amount thereof plus accrued and unpaid interest thereon
      to but not including the date of purchase, such purchase price to be paid
      from the proceeds of the remarketing of the Bonds to the fixed rate
      holders or from the proceeds of a draw under the Letter of Credit, in
      accordance with Section 509 hereof; and

                  (ii) on any Credit Modification Date, at a purchase price
      equal to 100% of the principal amount being purchased plus interest
      accrued to the Mandatory Purchase Date and shall be paid with the process
      of a draw under the Letter of Credit in accordance with Section 509
      hereof; and

                  (iii) on the Business Day that is fifteen days prior to the
      expiration or termination date of the Letter of Credit then in effect (or
      if such date is not a Business Day, on the next preceding Business Day) in
      the event the Company has not provided notice that a Substitute Letter of
      Credit will be provided in accordance with Section 409.

            (b) Notice of mandatory purchase shall be given to the holders at
least thirty (30) days prior to each Mandatory Purchase Date in accordance with
Section 302 hereof; provided that, in the event of a Credit Modification Date
resulting from a failure by the Company to deliver a Substitute Letter of Credit
on the Substitution Date, such mandatory purchase shall occur as soon as
practicable after such failure, but in all events no later than two Business
Days preceding the termination or expiration of the Letter of Credit then in
effect, and notice thereof shall be given as soon as practicable to the holders.

            (c) In the event that the Trustee does not receive the opinion of
Bond Counsel required by Section 202(d)(A) and the Substitute Letter of Credit
required by Sections 202(d)(C) and 409 by 5:00 p.m. Central Time on the Business
Day preceding the Conversion Date, the interest rate on the Bonds shall not be
converted to the Fixed Rate, the Bonds shall be purchased on such date in
accordance with Section 1202 hereof, and shall continue to bear interest at the
Variable Rate.


                                      26
<PAGE>

                                  ARTICLE IV
                               GENERAL COVENANTS

      Section 401. Payment of Principal, Premium, if any, and Interest. The
Issuer shall promptly pay when due the principal of (whether at maturity, by
acceleration or call for redemption or otherwise), premium, if any, and interest
on, and the purchase price of, the Bonds at the places, on the dates and in the
manner provided herein and in the Bonds according to the true intent and meaning
thereof; provided, however, that such obligations are not general obligations of
the Issuer but are limited obligations payable solely from the Revenues, which
Revenues are hereby specifically pledged to such purposes in the manner and to
the extent provided herein. The Bonds, the premium, if any, and the interest
thereon shall not be deemed to constitute a debt or a pledge of the faith and
credit of the State of North Carolina or any political subdivision thereof,
including the Issuer. Neither the State of North Carolina nor any political
subdivision thereof, including the Issuer, shall be obligated to pay the
principal of, premium, if any, or interest on or purchase price of the Bonds or
other costs incident thereto except from the revenues and receipts pledged
therefor, and neither the faith and credit nor the taxing power of the State of
North Carolina or any political subdivision thereof, including the Issuer, is
pledged to the payment of the principal of, premium, if any, or interest on the
Bonds or other costs incident thereto.

      Section 402. Performance of Covenants. The Issuer shall faithfully observe
and perform all covenants, conditions and agreements on its part contained in
this Indenture, in every Bond executed, authenticated and delivered hereunder
and in all proceedings of its Board of Commissioners pertaining thereto;
provided, however, that the liability of the Issuer under any such covenant,
condition or agreement for any breach or default by the Issuer thereof or
thereunder shall be limited solely to the Revenues and payments under the Letter
of Credit. The Issuer represents that it is duly authorized under the
Constitution and laws of the State of North Carolina, including particularly and
without limitation the Act, to issue, sell and deliver the Bonds authorized
hereby and to execute this Indenture, to execute and assign the Loan Agreement,
to assign the Note and to pledge the revenues and receipts thereunder and the
security therefor in the manner and to the extent herein set forth; that all
action on its part for the issuance, sale and delivery of the Bonds, the
execution and delivery of this Indenture, the execution and assignment of the
Loan Agreement and the assignment of the Note and the security therefor has been
duly and effectively taken (or if Additional Bonds are issued hereafter pursuant
to Section 213, will be duly taken as provided therein); and that the Bonds in
the hands of the holders thereof are and will be valid and enforceable
obligations of the Issuer according to the import thereof.

      Section 403. Instruments of Further Assurance. The Issuer covenants that
it will do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered, such indenture or indentures supplemental hereto and
such further acts, instruments and transfers as the Trustee may reasonably
require for the better assuring, transferring mortgaging, pledging, assigning
and confirming unto the Trustee the Trust Estate; provided that, the Issuer
shall not be required to do or take any action after the initial issuance of the
Bonds and the assignment of the Note and the Loan Agreement to the Issuer unless
and until the Company has satisfied any demand by the Issuer for advance payment
of any fees, or adequate assurance of future payment, for any expenses, or costs
that may


                                      27
<PAGE>

be incurred or anticipated by it in connection with the performance of any act
or thing that it may be called upon or required to do under the terms of the
Loan Agreement.

      Section 404. Recordation and Other Instruments. The Issuer and the Trustee
covenant that they will cooperate with the Company in causing this Indenture,
the Loan Agreement, such security agreements, financing statements and all
supplements thereto, if any, and other instruments as may be required from time
to time to be kept, to be recorded and filed in such manner and in such places
as may be required by law in order to fully preserve and protect the security of
the holders and owners of the Bonds and the rights of Trustee hereunder, and to
perfect the security interest created by this Indenture. The Company shall be
responsible for making and recording such filings.

      Section 405. Inspection of Project Books. The Issuer and the Trustee
covenant and agree that all books and documents in their possession relating to
the Project and the revenues derived from the Project shall at all reasonable
times be open to inspection by such accountants or other agencies as the other
party may from time to time designate in writing and by the Company.

      Section 406. Rights Under Loan Agreement and Letter of Credit. The Loan
Agreement, duly executed counterparts of which have been filed with the Trustee,
sets forth the covenants and obligations of the Issuer and the Company,
including provisions that subsequent to the issuance of Bonds and prior to their
payment in full or provision for payment thereof in accordance with the
provisions hereof the Loan Agreement may not be effectively amended, changed,
modified, altered or terminated, or any provision waived without the written
consent of the Trustee, and reference is hereby made to the same for a detailed
statement of said covenants and obligations of the Company thereunder. The
Issuer agrees that the Trustee in its name or in the name of the Issuer may
enforce all rights of the Issuer and all obligations of the Company under and
pursuant to the Loan Agreement and the Letter of Credit for and on behalf of the
bondholders, whether or not the Issuer is in default hereunder.

      Section 407. Prohibited Activities. The Issuer and the Trustee covenant
that neither of them shall knowingly take any action or suffer or permit any
action to be taken or condition to exist which causes or may cause the interest
payable on the Bonds to be subject to Federal income taxation. Without limiting
the generality of the foregoing, the Issuer and the Trustee covenant that they
will not knowingly permit the proceeds of the sale of the Bonds, the earnings
thereon, and any other moneys on deposit in any fund or account maintained in
respect of the Bonds (whether such moneys were derived from the proceeds of the
sale of the Bonds or from other sources), to be used directly or indirectly in
such manner as to cause the Bonds to be treated as "arbitrage bonds" within the
meaning of Section 148 of the 1986 Code.

       Section 408. Transfer and Return of Letter of Credit. The Trustee shall
not sell, assign or transfer the Letter of Credit except to a successor trustee
under this Indenture in accordance with the requirements of the Letter of
Credit. The Trustee shall return the Letter of Credit to the Bank for
cancellation and together with such certificates or other documents as may be
required in accordance with its terms.



                                      28
<PAGE>

       Section 409. Substitute Letter of Credit. If the Company, in accordance
with Section 4.4 of the Loan Agreement, shall elect to provide a Substitute
Letter of Credit, the Company shall notify the Trustee not less than forty-five
(45) days prior to the Substitution Date and not less than sixty (60) days prior
to the expiration date of the Letter of Credit then in effect of its intention
to provide such Substitute Letter of Credit. The Company shall also provide to
the Trustee the following:

            (a) an opinion of nationally recognized counsel satisfactory to the
Trustee that the Substitute Letter of Credit is the legal, valid and binding
obligation of the Bank issuing the Substitute Letter of Credit (or, in the case
of a branch or agency of a foreign commercial bank, the branch or agency issuing
the same) enforceable in accordance with its terms. In the case of a Substitute
Letter of Credit issued by a branch or agency of a foreign commercial bank,
there shall also be delivered an opinion of counsel, satisfactory to the Trustee
and licensed to practice law in the jurisdiction in which the head office of
such Bank is located, to the effect that the Substitute Letter of Credit is the
legal, valid and binding obligation of such Bank enforceable in such
jurisdiction in accordance with its terms; and

            (b) an opinion of Bond Counsel stating that the delivery of such
Substitute Letter of Credit is authorized under this Indenture and complies with
the terms hereof and that the delivery of such Substitute Letter of Credit will
not have an adverse effect on the exclusion of interest on the Bonds from gross
income for Federal income tax purposes; and, if applicable

            (c) if the Bonds are rated by Moody's and/or Standard & Poor's,
written evidence from Moody's, if the Bonds are rated by Moody's, and from
Standard & Poor's, if the Bonds are rated by Standard & Poor's, in each case to
the effect that such rating agency has reviewed the proposed Substitute Letter
of Credit and that the substitution of the proposed Substitute Letter of Credit
for the then current Letter of Credit will not, by itself, result in (A) a
permanent withdrawal of its rating of the Bonds or (B) a reduction of the then
current rating of the Bonds, or,

            (d) if the Bonds are not rated, evidence that the issuer of such
Substitute Letter of Credit is a commercial bank or insurance company organized
and doing business in the United States of America or a branch or agency of a
foreign commercial bank located and doing business in the United States of
America and subject to regulation by state or federal banking regulatory
authorities and that has, as of the date sixty (60) days prior to such
expiration or termination date (i) senior debt or long-term bank deposits rated
by a Rating Agency with a rating at least equivalent to the senior debt or
long-term bank deposits of the Bank issuing the Letter of Credit then in effect
or (ii) outstanding letters of credit, insurance policies, surety bonds or other
similar instruments that, when supporting debt obligations, result in such debt
obligations being rated by a Rating Agency with a rating at least the equivalent
of the ratings assigned to debt obligations supported with letters of credit,
insurance policies, surety bonds or other similar instruments or devices issued
by such Bank on the date ninety (90) days prior to such expiration or
termination date.

      In the event the Company does not provide to the Trustee the written
evidence specified in (c) or (d) above not later than two Business Days prior to
the Substitution Date, the Substitution Date shall be a Credit Modification
Date, and the Bonds shall be subject to mandatory tender for purchase on such
date in accordance with Section 307 hereof.


                                      29
<PAGE>

      The Trustee shall notify all persons who are then registered owners of the
Bonds that a Substitute Letter of Credit will be delivered to the Trustee, which
notice shall state (i) the Substitution Date, (ii) the expiration date of the
Letter of Credit for which the Substitute Letter of Credit is to be substituted,
(iii) the expiration date of the Substitute Letter of Credit, (iv) the Bank
which is issuing the Substitute Letter of Credit and a brief description of such
Bank, and (v) whether or not the Bonds are subject to mandatory tender for
purchase on the Substitution Date in accordance with Section 307 hereof. Such
notice shall be given not less than forty-five (45) days prior to the expiration
of the existing Letter of Credit, and, if such date is expected to be a Credit
Modification Date, not less than thirty (30) days prior to the Substitution
Date. Such notice shall be given by mail in accordance with Section 302 hereof.
The Company shall cause a description of the Bank issuing the Substitute Letter
of Credit to be furnished to the Trustee in time sufficient to permit the
Trustee to give the notice provided for in this Section 409. The Substitute
Letter of Credit must be delivered to the Trustee not later than 10:00 a.m.,
Eastern Time, on the Substitution Date.

                                   ARTICLE V
                              REVENUES AND FUNDS

      Section 501. Creation of Bond Fund. There is hereby created and ordered to
be established with the Trustee a trust fund of and in the name of the Issuer to
be designated "The Pender County Industrial Facilities and Pollution Control
Financing Authority Industrial Development Revenue Bond Fund (Leslie-Locke, Inc.
Project)." There is also hereby created and ordered to be established within the
Bond Fund two subaccounts, designated the "Letter of Credit Subaccount" and the
"Company Payments Account." Within the Company Payments Account there shall be
established, as and when required, a subaccount entitled "Available Moneys
Subaccount." Moneys deposited into the Letter of Credit Subaccount and the
Available Moneys Subaccount may not be commingled with moneys on deposit in the
other subaccounts of the Bond Fund or with other moneys held under this
Indenture. As provided in the granting clauses hereof, the Bond Fund is subject
to a lien and charge in favor of the Holders of the Bonds and the Bank. The
Letter of Credit Subaccount is established as a special trust fund for the
benefit of Bondholders and the Trustee shall have the sole right of withdrawal
therefrom. Neither the Company nor the Issuer shall have any legal, equitable or
beneficial right, title or interest in such subaccount. Any moneys deposited
with the Trustee in the Company Payments Account shall be transferred to the
Available Moneys Subaccount at such time as such funds meet the requirements of
the definition of Available Moneys herein, and moneys in the Available Moneys
Subaccount shall not be commingled with any other funds.

      Section 502. Payments Into Bond Fund. There shall be deposited in the
Company Payments Account of the Bond Fund, as and when received, (a) all
Revenues, (b) all payments under the Note and (c) all other moneys received by
the Trustee under and pursuant to any of the provisions of the Loan Agreement or
this Indenture which are required to be paid into the Bond Fund or which are
accompanied by directions not inconsistent with the provisions of the Loan
Agreement, the Note and this Indenture that such moneys are to be paid into the
Bond Fund. Moneys representing a drawing on the Letter of Credit for regularly
scheduled principal and interest payments shall be deposited only into the
Letter of Credit Subaccount. So long as any of the Bonds are Outstanding the
Issuer shall promptly deposit, or cause to be deposited, in the Bond Fund for
its account sufficient sums from revenues and receipts derived by it from the
sale of the Bonds (whether or not under and pursuant


                                      30
<PAGE>

to the Note or the Loan Agreement) or from payments pursuant to the Letter of
Credit or other security documents to pay the principal of, premium, if any, and
interest on the Bonds as the same become due and payable. Nothing herein shall
be construed as requiring the Issuer to operate the Project or to use any funds
or revenues from any source other than the payments derived from the loan of the
proceeds derived from the sale of the Bonds as provided in the Loan Agreement
and the Note.

      Section 503. Use of Moneys in Bond Fund. Moneys in the Bond Fund shall be
used solely for the payment of the principal of and premium, if any, and
interest on the Bonds either at maturity or at redemption prior to maturity or
upon acceleration, or to repay the Bank for draws under the Letter of Credit to
pay such principal of, premium, if any, and interest on the Bonds. In addition,
moneys in the Bond Fund shall be used in the following priority:

            (a) Moneys representing proceeds of a drawing under the Letter of
Credit;

            (b) Revenues and moneys furnished by the Company to the Trustee
pursuant to the Loan Agreement, and proceeds from the investment thereof, which
constitute Available Moneys;

            (c) Proceeds of the sale of refunding obligations, and proceeds from
the investment thereof which have been deposited in the Bond Fund; and

            (d) Other revenues and moneys furnished by the Company to the
Trustee pursuant to the Loan Agreement which have been deposited in the Company
Payments Account pursuant to Section 502.

      Section 504. Withdrawals from Bond Fund. The Bond Fund shall be in the
name of the Issuer, designated as set forth in Section 501, and the Issuer
hereby irrevocably authorizes and directs the Trustee to withdraw from the Bond
Fund sufficient funds to pay the principal of and premium, if any, and interest
on the Bonds at maturity and redemption prior to maturity, and to use such funds
for the purpose of paying principal, premium, if any, and interest in accordance
with the provisions hereof pertaining to payment, which authorization and
direction the Trustee hereby accepts; provided, however, that to the extent such
payments have been made with proceeds of a drawing under the Letter of Credit
and the Company does not reimburse the Bank, the Trustee shall promptly
reimburse the Bank from funds on deposit in the Bond Fund.

      Section 505. Non-Presentment of Bonds. In the event any Bonds shall not be
presented for payment when the principal thereof becomes due, whether at
maturity, upon acceleration, upon call for redemption, upon demand for purchase,
or otherwise, if there shall have been deposited with the Trustee for that
purpose, or left in trust if previously so deposited, funds sufficient to pay
the principal thereof, and premium, if any, together with all interest unpaid
and due thereon, to the due date thereof, for the benefit of the holder thereof,
all liability of the Issuer to the holder thereof for the payment of the
principal thereof, premium, if any, and interest thereon, shall forthwith cease,
determine and be completely discharged, and thereupon it shall be the duty of
the Trustee to hold such fund or funds, without liability for interest thereon,
for benefit of the holder of such Bond, who


                                      31
<PAGE>

shall thereafter be restricted exclusively to such fund or funds, for any claim
of whatever nature on his part under this Indenture or on, or with respect to,
the Bond.

      Any moneys deposited with the Trustee or then held by the Trustee in trust
for the payment of the principal of and redemption premium, if any, or interest
on the Bonds and remaining unclaimed for five years after such principal and
premium, if any, or interest has become due shall be treated as abandoned
property pursuant to the provisions of Section 116B-18 of the North Carolina
General Statutes and the Trustee shall report and remit this property to the
Escheat Fund according to the requirements of Article 3 of Chapter 116B of the
North Carolina General Statutes, and thereafter the Holders shall look only to
the Escheat Fund, or to any successor fund, as the case may be, for payment and
then only to the extent of the amounts so received, without any interest
thereon, and the Issuer, the Remarketing Agent, the Trustee and the Company
shall have no responsibility with respect to such money.

      Section 506. Fees, Expenses and Charges of Issuer, Trustee, Remarketing
Agent, and Paying Agent. It is understood and agreed that pursuant to the
provisions of Section 4.1(b) of the Loan Agreement, the Company agrees to pay
the fees, expenses (including fees and expenses of counsel) and charges of the
Trustee, the Remarketing Agent, and any Paying Agent as authorized and provided
by this Indenture and, pursuant to Section 4.1(c) of the Loan Agreement, the
fees, expenses and charges of the Issuer as authorized, required and provided by
this Indenture and by the Loan Agreement. All such payments under the Loan
Agreement which are received by the Trustee shall not be paid into the Bond
Fund, but shall be segregated by the Trustee and expended solely for the purpose
for which such payments are received. The Issuer may demand payment in advance,
or adequate assurance of future payment, for any and all acts or things that it
may be called upon, requested or required to do or perform in the future under
the terms hereof.

      Section 507. Moneys to be Held in Trust. All moneys required to be
deposited with or paid to the Trustee under any provision of this Indenture
shall be held by the Trustee in trust for the benefit of the Holders of the
Bonds and the Bank as herein provided, and except for (a) moneys deposited with
or paid to the Trustee for the redemption of Bonds notice of which redemption
has been duly given, (b) moneys deposited with the Trustee under Section 1202 as
the purchase price for Bonds for which notice of tender has been irrevocably
given under Section 202(e), and (c) moneys deposited with or paid to the Trustee
pursuant to Article IX hereof, shall, while held by the Trustee, constitute part
of the Trust Estate and be subject to the lien hereof. Any moneys received by or
paid to the Trustee pursuant to any provisions of the Loan Agreement calling for
the Trustee to hold, administer and disburse the same in accordance with the
specific provisions of the Loan Agreement shall be held, administered and
disbursed pursuant to such provisions, and where required by the provisions of
the Loan Agreement the Trustee shall set the same aside in a separate account.
The Issuer agrees that if it shall receive any moneys pursuant to applicable
provisions of the Loan Agreement, it will forthwith upon receipt thereof pay the
same over to the Trustee to be held, administered and disbursed by the Trustee
in accordance with the provisions of the Loan Agreement pursuant to which the
Issuer may have received the same. Furthermore, if for any reason the Loan
Agreement ceases to be in force and effect while any Bonds are outstanding, the
Issuer agrees that if it shall receive any moneys derived from the Project, it
will forthwith upon receipt thereof pay the same over to the Trustee to be held,
administered and disbursed by the Trustee in accordance with provisions of the


                                      32
<PAGE>

Loan Agreement that would be applicable if the Loan Agreement were then in force
and effect, and if there be no such provisions which would be so applicable,
then the Trustee shall hold, administer and disburse such moneys solely for the
discharge of the Issuer's obligations under this Indenture.

      Section 508. Payment of Excess Amounts. Anything herein to the contrary
notwithstanding, and provided no Event of Default has occurred, the Trustee is
authorized and directed to remit to the Bank all excess amounts in the Bond
Fund, the Bond Purchase Fund, or in special accounts thereof to the extent
necessary to reimburse the Bank for amounts owing to the Bank under the
Reimbursement Agreement; provided that, in the event there are no amounts owing
to the Bank under the Reimbursement Agreement and the Letter of Credit is no
longer outstanding, such amounts shall be paid to the Company.

      Section 509. Letter of Credit. Except with respect to any Bond held by the
Company or the Bank, the Trustee shall draw moneys under the Letter of Credit in
accordance with the terms thereof to the extent necessary:

            (a) To make timely payments of principal of and interest on the
Bonds, or to redeem Bonds, whenever and to the extent moneys are not available
therefor from the sources set forth in clauses (a) and (b) of Section 503
hereof; and

            (b) To purchase any Bonds tendered pursuant to Section 202(e) or 307
hereof whenever and to the extent moneys are not available therefor from the
sources set forth in clauses (i) and (ii) of Section 1202 (a) hereof.

            (c) To purchase any Bonds tendered pursuant to Section 202(e) hereof
whenever and to the extent moneys are not available therefor from the sources
set forth in clause (i) of Section 1202(a) hereof.

      So long as the Letter of Credit is in effect, the Trustee shall notify the
Company not later than one Business Day prior to its intended draw on the Letter
of Credit, with respect to a monthly interest payment, of its computation of the
amount of accrued interest on the Bonds. Such notice may be by telephone, but
shall be confirmed in writing, including confirmation by telecopy. The failure
of the Trustee to provide such notice to the Company shall not affect the
Trustee's obligation to draw on the Letter of Credit as provided herein. Moneys
drawn on the Letter of Credit pursuant to Section 509(a) shall be deposited in
the Letter of Credit Subaccount of the Bond Fund. Moneys drawn on the Letter of
Credit pursuant to Section 509(b) or (c) shall be deposited in the Letter of
Credit Subaccount of the Bond Purchase Fund.

      Notwithstanding anything else contained herein, the Trustee shall not make
any payment of principal, purchase price or interest with respect to Pledged
Bonds with the proceeds of a draw on the Letter of Credit.

      Section 510. Rebate Fund. (a) There is hereby created and ordered
established with the Trustee a trust fund to be designated "The Pender County
Industrial Facilities and Pollution Control Financing Authority Rebate Fund:
Leslie-Locke, Inc. Project." Any provisions in this Indenture to


                                      33
<PAGE>

the contrary notwithstanding, amounts credited to the Rebate Fund shall be free
and clear of any lien hereunder.

            The Trustee shall deposit in the Rebate Fund the amount forwarded to
the Trustee by the Company pursuant to Section 6.10 of the Loan Agreement.
Within 30 days after the end of each fifth anniversary of the date of issuance
of the Bonds, commencing on the fifth anniversary of the Issue Date, the
Trustee, acting on behalf of the Issuer, shall pay to the United States in
accordance with Section 148(f) of the Code from the moneys then on deposit in
the Rebate Fund an amount equal to 90% (or such greater percentage not in excess
of 100% as the Company may direct the Trustee to pay) of the amount certified by
the Company to be the required rebate to the United States as calculated under
Section 148(f)(2) of the Code (hereinafter called the "Rebate Amount"). Within
60 days after the payment in full of all outstanding Bonds, the Trustee shall
pay to the United States in accordance with Section 148(f) of the Code from the
moneys then on deposit in the Rebate Fund an amount equal to 100% of the Rebate
Amount and any moneys remaining in the Rebate Fund following such payment shall
be paid to the Company.

            The Trustee shall be entitled to rely on the calculations made
pursuant to this Section and neither the Issuer nor the Trustee shall be
responsible for any loss or damage resulting from any good faith action taken or
omitted to be taken in reliance upon such calculations.
      The Trustee shall obtain and keep such records of the computations made
pursuant to this Section as are required under Section 148(f) of the Code.
Moneys in the Rebate Fund may be invested as provided in Article VII for the
investment of the Bond Fund and the Construction Fund.

            (b) Notwithstanding anything to the contrary in this Indenture, the
Company shall not be required to deliver any calculation or payment under this
Section 510, and no payment shall be made by the Trustee to the United States of
America, if the Company shall furnish to the Trustee an opinion of Bond Counsel
to the effect that no payment of rebate is required under the Code in order to
prevent the Bonds from becoming "arbitrage bonds."

      Section 511. Creation of Bond Purchase Fund. (a) There is hereby created
and ordered to be established with the Trustee a trust fund of and in the name
of the Issuer to be designated "The Pender County Industrial Facilities and
Pollution Control Financing Authority Industrial Development Revenue Bond
Purchase Fund (Leslie-Locke, Inc. Project)." There is also hereby created and
ordered to be established within the Bond Purchase Fund two subaccounts,
designated the "Remarketing Proceeds Subaccount" and the "Letter of Credit
Subaccount." As provided in the granting clauses hereof, the Bond Purchase Fund
is subject to a lien and charge in favor of the Holders of the Bonds and the
Bank. The Letter of Credit Subaccount of the Bond Purchase Fund is established
as a special trust fund for the benefit of Bondholders and the Trustee shall
have the sole right of withdrawal therefrom. Neither the Company nor the Issuer
shall have any legal, equitable or beneficial right, title or interest in such
subaccount. Moneys deposited into the Letter of Credit Subaccount and the
Remarketing Proceeds Subaccount may not be commingled with moneys on deposit in
the other subaccounts of the Bond Purchase Fund or with any other moneys held
under this Indenture.

      (b) Moneys representing a drawing under the Letter of Credit to pay the
purchase price of tendered Bonds may only be deposited into the Letter of Credit
Subaccount of the Bond Purchase


                                      34
<PAGE>

Fund. Moneys representing the proceeds of a remarketing of the Bonds pursuant to
Section 1202(a)(i) or 1202(b)(ii) shall be deposited into the Remarketing
Proceeds Subaccount of the Bond Purchase Fund.

      (c) The Bond Purchase Fund shall be held in the name of the Issuer, and
the Issuer hereby irrevocably authorizes and directs the Trustee to withdraw
from the Bond Purchase Fund sufficient funds to purchase such Bonds, and to use
such funds for the purpose of paying the purchase price for the Bonds in
accordance with the provisions hereof pertaining to purchase, which
authorization and direction the Trustee hereby accepts; provided, however, that
to the extent such purchase price is paid with proceeds of a drawing under the
Letter of Credit and the Company does not reimburse the Bank, the Trustee shall
promptly reimburse the Bank from funds on deposit in the Bond Purchase Fund and
the Bond Fund for such payment.

                                  ARTICLE VI
                   CUSTODY AND APPLICATION OF BOND PROCEEDS

      Section 601. Creation of Construction Fund. There is hereby created and
ordered established with the Trustee a trust fund to be designated "The Pender
County Industrial Facilities and Pollution Control Financing Authority
Construction Fund: Leslie-Locke, Inc. Project." As provided in the granting
clauses hereof, the Construction Fund is subject to a lien and charge in favor
of the Holders of the Bonds and the Bank.

      Section 602. Payments into Construction Fund. All proceeds received by or
on behalf of the Issuer from the sale of the Bonds shall be paid into the
Construction Fund to be used by the Trustee in the manner hereinafter provided
for payment of the Cost of the Project.

      Section 603. Cost of the Project. The Cost of the Project shall include
the following:

            (a) The cost of land or interests in land constituting part of the
Project;

            (b) The actual cost of labor, materials, machinery and equipment as
payable to contractors, builders and materialmen in connection with the
acquisition, construction, installation and equipping of the Project;

            (c) Governmental charges levied or assessed during installation upon
the Project, or on any property acquired therefor, and premiums on insurance in
connection with the Project during installation;

            (d) Interest on the Bonds prior to, during and for not more than one
year after completion of the Project;

            (e) Fees and expenses of architects and engineers for estimates,
surveys and other preliminary investigations, preparation of plans, drawings and
specifications and supervision of installation, as well as for the performance
of all other duties of architects and engineers in relation to the installation
of the Project or the issuance of the Bonds;


                                      35
<PAGE>

            (f) Expenses of administration, supervision and inspection properly
chargeable to the Project, legal expenses and fees, fees and expenses of the
Trustee, fees and expenses of financial advisors or brokers in arranging for the
sale or placement of the Bonds, financing charges (including all fees and
charges of the Bank relating to the issuance of the Letter of Credit during the
construction of the Project), cost of audits, cost of preparing, issuing and
selling the Bonds, abstracts and reports on titles to real estate, title
insurance premiums and all other items of expense, including those of the
Issuer, not elsewhere specified in this section incident to the acquisition,
construction and installation of the Project; and

            (g) Reimbursement to the Company for any of such costs paid by it,
whether before or after the execution of this Indenture.

      The Issuer hereby finds it advisable to include interest on the Bonds for
not more than one year after construction of the Project within the Cost of the
Project.

      The Company agrees that it will not request any disbursement which, if
paid, would result in (i) less than substantially all (at least ninety-five
percent (95%)) of the proceeds of the Bonds being used to provide land or
property subject to the allowance for depreciation under Section 167 of the
Code, constituting the Project, (ii) less than all of the proceeds of the Bonds
being used to provide the Project under the Act, or (iii) the inclusion of the
interest on any of the Bonds in the gross income of any Holder for purposes of
federal income taxation (as long as such Holder is not a "related person" or a
"substantial user" of the Project as such terms are used in Section 144 of the
Code). To the extent permitted by law without affecting the tax exemption on
interest on the Bonds, if the Company determines that it has exceeded the
foregoing limitation, it shall immediately repay to the Construction Fund
sufficient monies to bring it into compliance with such limitation.

      Section 604. Payments from Construction Fund. The Trustee shall use moneys
in the Construction Fund solely to pay the Cost of the Project. Before any
payment shall be made from the Construction Fund, there shall be filed with the
Trustee:

            (a) A requisition, in the form attached as Exhibit C, signed by an
Authorized Representative of the Company (and consented to in writing by the
Bank), stating to whom the payment is to be made, the amount of the payment, the
purpose in reasonable detail for which the obligation to be paid was incurred,
and that the obligation stated on the requisition has been incurred by the
Company in or about the acquisition, construction or equipping of the Project,
each item is a proper charge against the Construction Fund and the obligation
has not been the basis for a prior requisition which has been paid, together
with a certificate attached to such requisition and signed by an Authorized
Representative of the Company stating that:

                  (1) there has been received no written notice of any lien
      (other than any lien in favor of the Bank), right to lien or attachment
      upon, or claim affecting the right of the payee to receive payment of, any
      of the moneys payable under such requisition to any of the persons, firms
      or corporations named therein;



                                      36
<PAGE>

                  (2) such requisition contains no items representing payment on
      account of any percentage entitled to be retained at the date of the
      certificate;

                  (3) the payment of such requisition will not result in less
      than 97% of the net proceeds of the Bonds, expended or to be expended
      under such requisition and all prior requisitions being considered as
      having been used for the acquisition, construction, reconstruction or
      improvement of land or property of a character subject to the allowance
      for depreciation under Section 167 of the Code;

                  (4) the payment of such requisition will not violate the
      prohibitions on use of proceeds set forth in Section 6.5 and Exhibit C of
      the Loan Agreement; and

                  (5) no Event of Default or event which after notice or lapse
      of time or both would constitute an Event of Default has occurred and not
      been waived or cured.

            (b) An invoice or other appropriate evidence of the obligation
described in the requisition required by subsection (a) above.

      Upon receipt of each such requisition (together with the written consent
of the Bank, as evidenced by its execution thereof) and accompanying
certificate, the Trustee shall make payment from the Construction Fund in
accordance with such requisition.

      Section 605. Disposition of Balance in Construction Fund. The Company has
certified in the Loan Agreement that the Project is complete, and that all
amounts in the Construction Fund will be used to pay Costs of the Project or
issuance expenses within thirty (30) days following the Closing Date.

      Section 606. Disposition of Balance in Construction Fund upon Default. If
the principal on the Bonds shall have become due and payable pursuant to Article
IX hereof, any balance remaining in the Construction Fund shall immediately and
without further authorization be transferred to the Bond Fund. The Trustee shall
notify the Issuer, the Company, and, if applicable, the Bank of such action.

                                  ARTICLE VII
                                  INVESTMENTS

      Section 701. Investment of Moneys. Except as otherwise provided below, any
moneys held in the Construction Fund or the Bond Fund may be separately invested
and reinvested by the Trustee, at the request of and as directed in writing by
the Company, to the extent such investments are permitted by law, in:

            (a) Government Securities, securities of the Federal National
Mortgage Association, Government National Mortgage Association, Federal
Intermediate Credit Banks, Federal Banks for Cooperatives, Federal Land Banks
and Federal Home Loan Banks, including short term money market funds comprised
either entirely of the foregoing or of a portfolio which is limited to


                                      37
<PAGE>

the foregoing and repurchase agreements fully collateralized by the foregoing.
Such money market funds may include those funds advised by the Trustee.

            (b) Commercial paper rated by Moody's Investors Service, Inc. within
its NCO/Moody's ratings of Prime 1, or by Standard & Poor's Inc. within its
ratings of A-1, or by Fitch Investors Service within its ratings of F-1.

            (c) Savings accounts, time deposits or certificates of deposit in
any bank or trust company organized under the laws of the United States of
America or any state thereof, Canada or any province thereof, or a member nation
of the European Economic Community which has, at the time of the acquisition by
the Trustee of such investments, a combined capital, surplus and undivided
profits of not less than $100,000,000 (which bank may include the Trustee),
provided that no deposits made under this subsection shall be made for any
period extending beyond the date established as the date of final payment from
the Construction Fund.

            (d) Savings accounts and certificates of (1) savings and loan
associations that are under supervision of the State of North Carolina and (2)
Federal associations organized under the laws of the United States of America
and under Federal supervision, but only to the extent that such accounts and
certificates are fully insured by the Federal Deposit Insurance Corporation or
any successor Federal agency, provided that no deposits made under this
subsection shall be made for any period extending beyond the date established as
the date of final payment from the Construction Fund.

            (e) Tax-exempt securities that are rated, or that are supported by a
letter of credit or similar credit enhancement that is rated not lower than the
second highest rating category of a Rating Agency.

            (f) Participating interests in tax-exempt mutual funds.

Any bonds, notes or other evidences of indebtedness listed in subsections (a)
and (b) above may be purchased by the Trustee pursuant to a repurchase agreement
with any bank within or without the State of Minnesota acceptable to the Trustee
and having a combined capital, surplus and undivided profits of not less than
$25,000,000 and a rating by Moody's Investor Service Inc. within its NCO/Moody's
ratings of Baa-3 or Prime 3, provided the obligation of the bank to repurchase
the underlying securities is within 30 days of the date of purchase. A
repurchase agreement for securities described in subsections (a) and (b) above
shall be considered a purchase of such securities even if title and/or
possession of such securities is not transferred to the Trustee so long as (1)
the repurchase obligation of the bank is collateralized by the securities
themselves, (2) the securities have on the date of the repurchase agreement a
fair market value equal to at least 100% of the amount of the repurchase
obligation of the bank and (3) the securities are held by a third party as agent
for the Trustee and segregated from securities owned generally by the bank.

      All such investments shall be held by or under the control of the Trustee
and while so held shall be deemed a part of the particular Fund in which held.
The interest accruing thereon and any profit realized from such investments
shall be credited to such Fund, and any loss resulting from such


                                      38
<PAGE>

investments shall be charged to such Fund. The Company shall file with the
Trustee and amend as appropriate a statement of when amounts in the Construction
Fund are expected to be requisitioned. The Trustee shall sell and reduce to cash
a sufficient amount of such investments whenever the cash balance in the
Construction Fund or Bond Fund is insufficient for its purposes, regardless of
the loss on liquidation.

      Any moneys held in the Letter of Credit Subaccount and the Bond Purchase
Subaccount shall be held uninvested.

      Since the investments permitted by this section have been included at the
request of the Company and the making of such investments from time to time will
be subject to the Company's written direction, the Issuer, without thereby
affecting the limitation of its liability set forth in the Loan Agreement and
this Indenture, specifically disclaims any obligation to the Trustee or the
Company for any loss arising from, or tax consequences of, investments pursuant
to the provisions of this section. The Trustee shall not be responsible for any
losses on investments made in accordance with this section or the tax
consequences thereof.

                                 ARTICLE VIII
                RIGHTS OF THE COMPANY UNDER THE LOAN AGREEMENT

      Section 801. Rights of Company Under Loan Agreement. Nothing herein
contained shall be deemed to impair the rights and privileges of the Company set
forth in the Loan Agreement and an Event of Default hereunder shall not
constitute an "Event of Default" under the Loan Agreement unless by the terms of
the Loan Agreement it constitutes an Event of Default thereunder.

                                  ARTICLE IX
          DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS

      Section 901. Events of Default. Each of the following events shall
constitute and is referred to in this Indenture as an "Event of Default":

            (a) Default in the due and punctual payment of any interest on any
Bond hereby secured and outstanding;

            (b) Default in the due and punctual payment of the principal of and
premium, if any, on any Bond hereby secured and outstanding, whether at the
stated maturity thereof, or upon proceedings for redemption thereof, or upon the
maturity thereof by declaration;

            (c) Default in the payment of any amount due pursuant to Section
202(e) hereof;

            (d) Default in the payment of any other amount required to be paid
under this Indenture or the performance or observance of any other of the
covenants, agreements or conditions contained in this Indenture, or in the Bonds
issued under this Indenture, and continuance thereof for a period of 30 days
after written notice specifying such failure and requesting that it be remedied,
shall have been given to the Issuer and the Company by the Trustee, which may
give such notice in


                                      39
<PAGE>

its discretion and shall give such notice at the written request of bondholders
of not less than 10% in aggregate principal amount of the Bonds then
outstanding, unless the Trustee, or the Trustee and bondholders of an aggregate
principal amount of Bonds not less than the aggregate principal amount of Bonds
the bondholders of which requested such notice, as the case may be, shall agree
in writing to an extension of such period prior to its expiration; provided,
however, if the failure stated in the notice cannot be corrected within the
applicable period, the Issuer and the Trustee will not unreasonably withhold
their consent to an extension of such time if corrective action is instituted by
the Issuer, or the Company on behalf of the Issuer, within such period and is
being diligently pursued;

            (e) The occurrence of an "Event of Default" under the Loan
Agreement;

            (f) Receipt by the Trustee of written notice from the Bank that an
"Event of Default" has occurred under the Reimbursement Agreement, accompanied
by a demand by the Bank that the Trustee declare the Bonds to be immediately due
and payable;

            (g) Receipt by the Trustee of notice from the Bank as provided in
the Letter of Credit with respect to interest to the effect that the amount
available to be drawn under the Letter of Credit will not be reinstated;

            (h) The occurrence of an Event of Bankruptcy of the Company; and

            (i) The occurrence of an Event of Bankruptcy of the Bank.

      The term "default" as used in clauses (a), (b), (c) and (d) above shall
mean default by the Issuer in the performance or observance of any of the
covenants, agreements or conditions on its part contained in this Indenture, or
in the Bonds outstanding hereunder, exclusive of any period of grace required to
constitute a default an "Event of Default" as hereinabove provided.

      Section 902. Acceleration. (a) Upon the occurrence and during the
continuation of an Event of Default, the Trustee may, and in certain events
shall, declare the principal of all Outstanding Bonds secured by the Indenture
and interest accrued thereon immediately due and payable, and such principal and
interest shall thereupon become and be immediately due and payable. Such
declarations shall be made as follows: Upon the occurrence and continuation of
an Event of Default described in clause (a), (b), (c), (f), (g), or (i) of
Section 901 hereof, the Trustee shall declare the Bonds immediately due and
payable as set forth above. Upon the occurrence and continuation of an Event of
Default described in clause (d), (e) or (h) of Section 901 hereof, the Trustee
may, and upon the written request of the holders of a majority in aggregate
principal amount of Bonds outstanding hereunder, shall, but only with the prior
written consent of the Bank so long as the Bank has not wrongfully dishonored a
draw under the Letter of Credit, declare the Bonds immediately due and payable
as set forth above. In each case, the Trustee shall declare such an Event of
Default and acceleration of the Bonds by notice in writing delivered to the
Issuer, the North Carolina Local Government Commission, the Company, and the
Bank. Upon any such declaration the Issuer shall forthwith pay to the holders of
the Bonds the entire unpaid principal of, premium, if any, and accrued interest
on the Bonds, but only from the revenues and receipts herein specifically
pledged for such purpose.


                                      40
<PAGE>

            (b) Upon the acceleration of the maturity of the Bonds, by
declaration or otherwise, the Trustee shall immediately, without requirement of
the indemnification described in Section 904 hereof, draw upon the Letter of
Credit for the aggregate unpaid principal amount of the Bonds and all interest
accrued thereon which shall be applied as set forth in Section 907. Upon such
acceleration, interest on the Bonds shall cease to accrue as of the date of
declaration of such acceleration.

      Section 903. Other Remedies; Rights of Bondholders. Upon the occurrence
and during the continuation of an Event of Default, the Trustee may, as an
alternative, pursue any available remedy by suit at law or in equity to enforce
the payment of the principal of and premium, if any, and interest on the Bonds
then Outstanding hereunder.

      If an Event of Default shall have occurred, and if it shall have been
requested so to do by the holders of a majority in aggregate principal amount of
Bonds outstanding hereunder and shall have been indemnified as provided in
Section 1101 hereof, the Trustee shall be obligated to exercise such one or more
of the rights and powers conferred upon it by this Section and by Section 902 as
the Trustee, being advised by counsel, shall deem most expedient in the
interests of the bondholders.

      No remedy by the terms of this Indenture conferred upon or reserved to the
Trustee (or to the bondholders) is intended to be exclusive of any other remedy,
but each and every such remedy shall be cumulative and shall be in addition to
any other remedy given hereunder or now or hereafter existing at law or in
equity or by statute.

      No delay or omission to exercise any right or power accruing upon any
default or Event of Default shall impair any such right or power or shall be
construed to be a waiver of any such default or Event of Default or acquiescence
therein; and every such right and power may be exercised from time to time and
as often as may be deemed expedient.

      No waiver of any default or Event of Default hereunder, whether by the
Trustee or by the bondholders, shall extend to or shall affect any subsequent
default or Event of Default or shall impair any rights or remedies consequent
thereon.

      Section 904. Right of Bondholders to Direct Proceedings. The holders of
two-thirds in aggregate principal amount of Bonds outstanding hereunder shall
have the right, at any time, by an instrument or instruments in writing executed
and delivered to the Trustee, to direct the method and place of conducting all
proceedings to be taken in connection with the enforcement of the terms and
conditions of this Indenture, or for the appointment of a receiver or any other
proceeding hereunder; provided that such direction shall not be otherwise than
in accordance with the provisions of law and of this Indenture. The Trustee is
entitled to the indemnity provided in Section 1101 hereof before taking any
action under this Section.

      Section 905. Appointment of Receiver. Upon the occurrence of an Event of
Default, and upon the filing of a suit or other commencement of judicial
proceedings to enforce the rights of the Trustee and of the bondholders under
this Indenture, the Trustee shall be entitled, as a matter of right, to the
extent permitted by law, to the appointment of a receiver or receivers of the
Trust Estate and


                                      41
<PAGE>

of the tolls, rents, revenues, issues, earnings, income, products and profits
thereof, pending such proceedings with such powers as the court making such
appointment shall confer.

      Section 906. Waiver. In case of an Event of Default on its part, as
aforesaid, to the extent that such rights may then lawfully be waived, neither
the Issuer nor anyone claiming through it or under it shall or will set up,
claim, or seek to take advantage of any appraisement, valuation, stay, extension
or redemption laws now or hereafter in force, in order to prevent or hinder the
enforcement of this Indenture, but the Issuer, for itself and all who may claim
through or under it, hereby waives, to the extent that it lawfully may do so,
the benefit of all such laws and all right of appraisement and redemption to
which it may be entitled under the laws of the State of North Carolina.

      Section 907. Application of Moneys. Following an Event of Default and
subject to Section 1102, moneys shall be applied by the Trustee as follows:

            (a) Unless the principal of all the Bonds shall have become or shall
have been declared due and payable, all such moneys shall be applied:

            First: To the payment to the persons entitled thereto of all
      installments of interest then due, in the order of the maturity of the
      installments of such interest, and, if the amount available shall not be
      sufficient to pay in full any particular installment, then to the payment
      ratably, according to the amounts due on such installment, to the persons
      entitled thereto, without any discrimination or privilege; provided that,
      payment of interest with respect to Pledged Bonds or Bonds held by the
      Company shall be paid only after payment of interest with respect to all
      other Bonds Outstanding.

            Second: To the payment to the persons entitled thereto of the unpaid
      principal of any of the Bonds which shall have become due (other than
      Bonds called for redemption for the payment of which moneys are held
      pursuant to the provisions of this Indenture), in the order of their due
      dates, with interest on such Bonds from the respective dates upon which
      they become due, and, if the amount available shall not be sufficient to
      pay in full Bonds due on any particular date, together with such interest,
      then to the payment ratably, according to the amount of principal due on
      such date, to the persons entitled thereto without any discrimination or
      privilege of any Bond over any other Bond and without preference or
      priority of principal over interest or of interest over principal;
      provided that, payments of principal and interest with respect to Bonds
      held by the Company or Pledged Bonds shall be paid only after payments of
      principal and interest with respect to all other Bonds Outstanding have
      been paid.

            Third: To the payment of the interest on and the principal of the
      Bonds, and to the redemption of Bonds, all in accordance with the
      provisions of Article V of this Indenture; and

            Fourth: To the payment of obligations due to the Bank under the
      Reimbursement Agreement.



                                      42
<PAGE>

            (b) If the principal of all the Bonds shall have become due or shall
have been declared due and payable, all such moneys shall be applied to the
payment of the principal and interest then due and unpaid upon the Bonds,
without preference or priority of principal over interest or of interest over
principal, or of any Bond over any other Bond, ratably, according to the amounts
due respectively for principal and interest, to the person entitled thereto
without discrimination or privilege provided that, payments of principal and
interest with respect to Bonds held by the Company or Pledged Bonds shall be
paid only after payments of principal and interest with respect to all other
Bonds Outstanding have been paid.

            (c) If the principal of all the Bonds shall have been declared due
and payable, and if such declaration shall thereafter have been rescinded and
annulled under the provisions of this Article then, subject to the provisions of
paragraph (b) of this Section in the event that the principal of all the Bonds
shall later become due or be declared due and payable, the moneys shall be
applied in accordance with the provisions of paragraph (a) of this Section.

      Whenever moneys are to be applied by the Trustee pursuant to the
provisions of this Section, such moneys shall be applied by it at such times,
and from time to time, as it shall determine, having due regard to the amount of
such moneys available for application and the likelihood of additional moneys
becoming available for such application in the future. Whenever the Trustee
shall apply such funds, it shall fix the date (which shall be an Interest
Payment Date unless it shall deem another date more suitable) upon which such
application is to be made and upon such date interest on the amounts of
principal to be paid on such dates shall cease to accrue. The Trustee shall give
such notice as it may deem appropriate of the deposit with it of any such moneys
and of the fixing of any such date and shall not be required to make payment to
the holder of any unpaid Bond until such Bond shall be presented to the Trustee
for appropriate endorsement or for cancellation if fully paid.

      Section 908. Remedies Vested in Trustee. All rights of action (including
the right to file proof of claim) under this Indenture or under any of the Bonds
may be enforced by the Trustee without the possession of any of the Bonds or the
production thereof in any trial or other proceeding relating thereto and any
such suit or proceeding instituted by the Trustee shall be brought in its name
as Trustee, without the necessity of joining as plaintiffs or defendants any
holders of the Bonds hereby secured, and any recovery of judgment shall be for
the equal benefit of the holders of the Outstanding Bonds.

      Section 909. Rights and Remedies of Bondholders. No holder of any Bond
shall have any right to institute any suit, action or proceeding in equity or at
law for the enforcement of this Indenture or for the execution of any trust
hereof or for the appointment of a receiver or any other remedy hereunder,
unless a default has occurred of which the Trustee has been notified as provided
in subsection (g) of Section 1101 hereof, or of which by said subsection it is
deemed to have notice, nor unless such default shall have become an Event of
Default and the holders of a majority in aggregate principal amount of Bonds
Outstanding hereunder shall have made written request to the Trustee and shall
have offered it reasonable opportunity either to proceed to exercise the powers
hereinbefore granted or to institute such action, suit or proceeding in its own
name, nor unless also they have offered to the Trustee indemnity as provided in
Section 1101 hereof nor unless the Trustee shall thereafter fail or refuse to
exercise the powers hereinbefore granted, or to institute such action,


                                      43
<PAGE>

suit or proceeding in its own name; and such notification, request and offer of
indemnity are hereby declared in every such case at the option of the Trustee to
be conditions precedent to the execution of the powers and trusts of this
Indenture, and to any action or cause of action for the enforcement of this
Indenture or for the appointment of a receiver or for any other remedy
hereunder; it being understood and intended that no one or more holders of the
Bonds shall have any right in any manner whatsoever to affect, disturb or
prejudice the lien of this Indenture by his or their action or to enforce any
right hereunder except in the manner herein provided, and that all proceedings
at law or in equity shall be instituted, held and maintained in the manner
herein provided for the equal benefit of the holders of all Bonds outstanding
hereunder. Nothing in this Indenture contained shall, however, affect or impair
the right of any bondholders to enforce the payment of the principal of and
interest on any Bonds at and after the maturity thereof, or the obligation of
the Issuer to pay the principal of and interest on each of the Bonds issued
hereunder to the respective holders thereof at the time and place set forth in
the Bonds.

      Section 910. Termination of Proceedings. In case the Trustee shall have
proceeded to enforce any right under this Indenture by the appointment of a
receiver or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the
Trustee, then and in every such case the Issuer and the Trustee shall be
restored to their former positions and rights hereunder with respect to the
property herein conveyed, and all rights, remedies and powers of the Trustee
shall continue as if no such proceedings had been taken, except to the extent
the Trustee is legally bound by such adverse determination.

      Section 911. Waivers of Events of Default. The Trustee, with the written
consent of the Bank, may in its discretion waive any Event of Default hereunder
and its consequences and rescind any declaration of maturity of principal and
shall do so, with the written consent of the Bank, upon the written request of
the holders of a majority in principal amount of all Bonds outstanding
hereunder; provided, however, that there shall not be waived any Event of
Default described in clause (a), (b) or (c) of Section 901 hereof, unless prior
to such waiver or rescission all arrears of principal (due otherwise than by
declaration) and interest and all expenses of the Trustee and Paying Agent,
shall have been paid or provided for, and in case of any such waiver or
rescission the Issuer, Trustee and the bondholders shall be restored to their
former positions and rights hereunder respectively; but no such waiver or
rescission shall extend to any subsequent or other default, or impair any right
subsequent thereon.

      Section 912. Disposition of Amounts Drawn on Letter of Credit; Assignment
of Rights to Contest.

      (a) All amounts drawn on the Letter of Credit by the Trustee in accordance
with Section 902 shall be held in the Bond Fund, shall be applied immediately to
the payment of principal of and premium, if any, and interest accrued on the
Bonds unless, prior to or with the proceeds of the draw on the Letter of Credit,
the Trustee receives written instructions from the Bank to use such proceeds to
purchase all (but not less than all) Bonds. If such instructions are received by
the Trustee, such draw proceeds shall be immediately applied to the purchase of
the Bonds, the acceleration of the Bonds shall be canceled, the Bonds shall
become Pledged Bonds and the Bonds shall be registered in the name of the
Company and pledged under the Reimbursement Agreement as additional security


                                      44
<PAGE>

for repayment of the Company's obligations under the Reimbursement Agreement.
Thereafter, such Bonds shall not be remarketed by the Remarketing Agent unless
the Letter of Credit is reinstated or a Substitute Letter of Credit is delivered
pursuant to Section 409.

      (b) The Trustee hereby assigns to the Bank all its rights to contest or
otherwise dispute in the Trustee's name, place and stead and at the Bank's sole
election and cost any claim of preferential transfer made by a bankruptcy
trustee, debtor-in-possession or other similar official with respect to any
amount paid to the Trustee by or on behalf of the Company or the Issuer to be
applied to principal of and premium, if any, or interest on or purchase price of
the Bonds, to the extent of payments made to the Trustee pursuant to a drawing
under the Letter of Credit. The Trustee shall cooperate with and assist the Bank
in any such contest or dispute as the Bank may reasonably request; provided,
however, that the Bank shall reimburse the Trustee for its reasonable costs
incurred in connection with providing such cooperation and assistance. The
Trustee shall give the Bank prompt notice of any claim of preferential transfer
of which the Trustee has knowledge. The foregoing assignment shall not be deemed
to confer upon the Bank any right to contest or otherwise dispute any claim of
preferential transfer with respect to any amount as to which there has been no
drawing under the Letter of Credit. The assignment set forth above shall in no
event be effective until the Bank shall have first furnished to the Trustee an
agreement to indemnify the Trustee and the holders of the Bonds against any
claim, liability or damage which they might suffer by reason of any such contest
or dispute.

      Section 913. Letter of Credit Bank Deemed Owner. For all purposes of this
Article IX (other than receipt of payments), the Bank shall, so long as the
Letter of Credit shall be in effect and the Bank shall not have wrongfully
dishonored any draw under the Letter of Credit (any dishonor for a reason
permitted by the Letter of Credit or pursuant to any administrative or judicial
order, ruling, finding or decision shall not be deemed "wrongful" for purposes
hereof), be deemed the holder and registered owner of all Bonds. As such, the
Bank may take all actions permitted by this Article IX to be taken by the
holders or registered owners of the Bonds, to the exclusion of the actual
holders and registered owners of the Bonds; the purpose of this Section 913
being to permit the Bank to direct the taking of actions and enforcement of
remedies permitted by this Article IX so long as the Letter of Credit shall be
in effect and the Bank shall not have wrongfully dishonored any draw under the
Letter of Credit.

      Section 914.  Subrogation Rights of the Bank.

      (a) Notwithstanding anything else contained herein, whenever the Trustee
shall make any payment to any Bondholder with funds drawn under the Letter of
Credit pursuant hereto, the Trustee shall make such payments as agent for the
Bank and not as agent for the Issuer, and the Bank and its assigns shall
thereafter, to the extent of the amount so paid, be subrogated to the rights
thereon of the Bondholders to whom such payment was made, and the Trustee shall,
in the event of the payment of principal, keep a written record of such
payments. When a Bondholder has been paid the entire principal of and interest
on his Bond with funds drawn under the Letter of Credit, such Bond shall be
surrendered to the Trustee as agent for the Bank, in lieu of cancellation
thereof, and such Bond shall be either cancelled or transferred and delivered to
the Bank as the Bank shall direct.



                                      45
<PAGE>

      (b) In the event the Bank makes any payment with respect to the payment of
the principal or purchase price of or interest on any Bond to the Trustee under
the Letter of Credit, the Bank shall be subrogated to the rights possessed under
this Indenture and in and to the Trust Estate by the Trustee, the Issuer and the
owners of such Bonds so paid, and the Bank shall be subrogated to the rights of
the Issuer and the Trustee under any other document, instrument or agreement
securing repayment of the principal or purchase price of and interest on the
Bonds. For purposes of the Bank's subrogation rights hereunder, (i) any
reference in this Indenture to the Bondholders shall include the Bank, which
shall be entitled to be treated as if the Bank were a registered owner of Bonds
in the principal amount of any principal payment made by the Bank under the
Letter of Credit, (ii) any portion of any Bond as to which the principal or
purchase price is paid with money collected pursuant to the Letter of Credit
shall be deemed to be outstanding under this Indenture and the principal amount
of such Bond, together with interest due and unpaid thereon, which shall have
been paid by the Bank pursuant to the Letter of Credit shall be deemed to be
held by and owing to the Bank, and (iii) the Bank may exercise any and all
rights and benefits it would have under this Indenture as a Holder of Bonds to
the extent of the principal amount of Bonds owned or deemed to be owned by the
Bank and any and all interest so due and unpaid thereon; provided that such
Bonds (A) shall not be taken into account in determining any deficiency for
which a claim or draw is to be made under the Letter of Credit, and (B) shall be
subordinated in right of payment as of any Interest Payment Date or upon the
redemption or acceleration of the Bonds. Subrogation rights granted to the Bank
hereunder are not intended to be exclusive of any other rights or remedies
available to the Bank, and such subrogation rights shall be cumulative and shall
be in addition to every right or remedy given hereunder or under any other
instrument or agreement with respect to reimbursement of money paid by the Bank
pursuant to the Letter of Credit, and every other right or remedy now or
hereafter existing at law or in equity or by statute.

                                   ARTICLE X
                               DISCHARGE OF LIEN

      Section 1001. Discharge of Lien. If the Issuer shall pay or cause to be
paid to the holders and owners of the Bonds the principal, premium, if any, and
interest to become due thereon at the times and in the manner stipulated
therein, and if all fees and expenses of the Trustee have been paid, and if the
Issuer shall keep, perform and observe all and singular the covenants and
promises in the Bonds and in this Indenture expressed as to be kept, performed
and observed by it on its part, then 366 days thereafter these presents and the
estate and rights hereby granted shall cease, determine and be void; provided,
however, that if the Trustee has drawn on the Letter of Credit pursuant to
Section 902 hereof this Indenture, then the rights and obligations created
hereby shall remain in full force and effect until the proceeds of such draw
have been distributed in accordance with the provisions hereof and all amounts
owing or payable hereunder, under the Reimbursement Agreement, and under the
Bonds have been paid. In the event such payments are made from (i) Available
Moneys or (ii) the proceeds of a draw under the Letter of Credit, the lien of
this Indenture shall close, determine and be terminated immediately upon such
payment, subject to the proviso set forth in the preceding sentence. Thereupon
the Trustee shall cancel and discharge the lien of this Indenture, and execute
and deliver to the Issuer such instruments in writing as shall be requisite to
satisfy the lien hereof, and reconvey to the Issuer the estate hereby conveyed,
and assign and deliver to the Issuer or the Company, as their respective
interests may appear, any property at the time subject to the lien of this


                                      46
<PAGE>

Indenture which may then be in its possession, except moneys or Government
Securities held by it for the payment of the principal of and premium, if any,
and interest on the Bonds.

      After the Conversion Date, any Bond shall be deemed to be paid within the
meaning of this Article when payment of the principal of and premium, if any,
and interest on such Bond (whether at maturity or upon redemption as provided in
this Indenture, or otherwise), either (i) shall have been made or caused to be
made in accordance with the terms thereof, or (ii) shall have been provided for
by irrevocably depositing with the Trustee, in trust and irrevocably set aside
exclusively for such payment, (1) moneys sufficient to make such payment or (2)
Government Securities (provided that such deposit will not affect the tax exempt
status of the interest on any of the Bonds or cause any of the Bonds to be
classified as arbitrage bonds within the meaning of Section 148 of the 1986
Code), maturing as to principal and interest in such amount and at such times as
will provide sufficient moneys to make such payment and to redeem such Bonds,
and all reasonable fees, compensation and expenses of the Trustee and any Paying
Agent pertaining to the Bonds with respect to which such deposit is made and all
other liabilities of the Company under the Loan Agreement shall have been paid
or the payment thereof provided for to the satisfaction of the Trustee. Any
moneys or Government Securities so held shall be held for the benefit of the
Bondholders. The Trustee shall deliver notice to the bondholders in accordance
with Section 302 that it has received moneys or Government Securities in
accordance with this Section, and that the Bonds have been defeased in
accordance with this Section.

      The Issuer or the Company may at any time surrender to the Trustee for
cancellation by it any Bonds previously authenticated and delivered hereunder,
which the Issuer or the Company may have acquired in any manner whatsoever, and
such Bonds, upon such surrender and cancellation, shall be deemed to be paid and
retired.

      If the Bonds are to be rated by a Rating Agency at or prior to the time
provision for payment shall be made there shall be delivered to the Rating
Agency the opinion of nationally recognized certified public accountants that
the amounts deposited in accordance with this section are sufficient to pay
principal and accrued interest on the Bonds when due, without reliance on any
reinvestment income, and a written opinion of counsel experienced in bankruptcy
law matters and in form satisfactory to the Rating Agency that the deposit and
use of such monies will not constitute an avoidable preferential payment
pursuant to Section 547 of the Bankruptcy Code, or an avoidable post-petition
transfer pursuant to Section 549 of the Bankruptcy Code, recoverable from
Holders of the Bonds pursuant to Section 550 of the Bankruptcy Code in the event
of an Event of Bankruptcy.

      Section 1002. Effect of Discharge on Bonds. The provisions of this
Indenture relating to the determination of the rate of interest to be borne by
the Bonds, the options of the owners of the Bonds to deliver Bonds to the
Trustee for purchase prior to or on the Conversion Date, and the related
obligations of the Company, the Trustee and the Remarketing Agent shall remain
in effect with respect to all Bonds until the principal of and interest on the
Bonds shall have been paid in full, notwithstanding that the lien of this
Indenture has been discharged pursuant to Section 1001 hereof.



                                      47
<PAGE>

                                  ARTICLE XI
                   TRUSTEE; PAYING AGENTS; REMARKETING AGENT

      Section 1101. Acceptance of Trusts. The Trustee hereby accepts the trust
imposed upon it by this Indenture, and agrees to perform said trust as an
ordinarily prudent trustee under a corporate mortgage, but only upon and subject
to the following expressed terms and conditions:

            (a) The Trustee may execute any of the trusts or powers hereof and
perform any duties required of it by or through attorneys, agents, receivers or
employees, and shall be entitled to advice of counsel concerning all matters of
trusts hereof and its duties hereunder, and may in all cases pay reasonable
compensation to all such attorneys, agents, receivers and employees as may
reasonably be employed in connection with the trusts hereof. The Trustee may act
upon the opinion or advice of any attorney, surveyor, engineer or accountant
selected by it in the exercise of reasonable care, or, if selected or retained
by the Issuer prior to the occurrence of a default of which the Trustee has been
notified as provided in subsection (g) of this Section 1101, or of which by said
subsection the Trustee is deemed to have notice, approved by the Trustee in the
exercise of such care. The Trustee shall not be responsible for any loss or
damage resulting from an action or non-action in accordance with any such
opinion or advice.

            (b) The Trustee shall not be responsible for any recital herein, or
in the Bonds (except in respect to the certificate of the Trustee endorsed on
such Bonds), or for insuring the property herein conveyed or collecting any
insurance moneys, or for the validity of the execution by the Issuer of this
Indenture or of any supplemental indentures or instrument of further assurance,
or for the sufficiency of the security for the Bonds issued hereunder or
intended to be secured hereby, or for the value of the title of the property
herein conveyed or otherwise as to the maintenance of the security hereof;
except that in the event the Trustee enters into possession of a part or all of
the property herein conveyed pursuant to any provision of this Indenture, it
shall use due diligence in preserving such property; and the Trustee shall not
be bound to ascertain or inquire as to the performance or observance of any
covenants, conditions and agreements aforesaid as to the condition of the
property herein conveyed.

            (c) The Trustee may become the owner of Bonds secured hereby with
the same rights which it would have if not Trustee.

            (d) The Trustee shall be protected in acting upon any notice,
request, consent, certificate, order, affidavit, letter, telegram or other paper
or document believed by it, in the exercise of reasonable care, to be genuine
and correct and to have been signed or sent by the proper person or persons. Any
action taken by the Trustee pursuant to this Indenture upon the request or
authority or consent of the owner of any Bond secured hereby, shall be
conclusive and binding upon all future owners of the same Bond and upon Bonds
issued in exchange therefor or in place thereof.

            (e) As to the existence or non-existence of any fact or as to the
sufficiency or validity of any instrument, paper or proceeding, the Trustee
shall be entitled to rely upon a certificate of the Issuer signed by its
Chairman or Vice Chairman and attested by its Secretary or Assistant Secretary
as sufficient evidence of the facts therein contained and prior to the
occurrence of a default


                                      48
<PAGE>

of which it has been notified as provided in subsection (g) of this Section
1101, or of which by that subsection it is deemed to have notice, and shall also
be at liberty to accept a similar certificate to the effect that any particular
dealing, transaction or action is necessary or expedient, but may at its
discretion, at the reasonable expense of the Issuer, in every case secure such
further evidence as it may think necessary or advisable but shall in no case be
bound to secure the same. The Trustee may accept a certificate of the Secretary
of the Issuer under its seal to the effect that a resolution or ordinance in the
form therein set forth has been adopted by the Issuer as conclusive evidence
that such resolution or ordinance has been duly adopted, and is in full force
and effect.

            (f) The permissive right of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty of the Trustee, and the Trustee
shall be answerable only for its own negligence or willful default.

            (g) The Trustee shall not be required to take notice or be deemed to
have notice of any default hereunder (except a default under Section 901(a),
(b), (c), (f), (g) or (i) concerning which the Trustee shall be deemed to have
notice) unless the Trustee shall be specifically notified in writing of such
default by the Issuer, the Company or the Bank or by the holders of at least a
majority in aggregate principal amount of Bonds outstanding hereunder and all
notices or other instruments required by this Indenture to be delivered to the
Trustee must, in order to be effective, be delivered to the office of the
Trustee, and in the absence of such notice so delivered, the Trustee may
conclusively assume there is no such default except as aforesaid.

            (h) The Trustee shall not be personally liable for any claims by or
on behalf of any person, firm, corporation or other legal entity arising from
the conduct or management of, or from any work or thing done on, the Project,
and shall have no affirmative duty with respect to compliance of the Project
under state or Federal laws pertaining to the transport, storage, treatment or
disposal of pollutants, contaminants, waste or hazardous materials, or
regulations, permits or licenses issued under such laws.

            (i) At any and all reasonable times the Trustee, and its duly
authorized agents, attorneys, experts, engineers, accountants and
representatives, shall have the right fully to inspect any and all of the
property herein conveyed, including all books, papers and records of the Issuer
pertaining to the Project and the Bonds, and to take such memoranda from and in
regard thereto as may be desired; provided, however, that nothing contained in
this subsection or in any other provision of this Indenture shall be construed
to entitle the above named persons to any information or inspection involving
the confidential know-how of the Company.

            (j) The Trustee shall not be required to give any bond or surety in
respect of the execution of the said trusts and powers or otherwise in respect
of the premises.

            (k) Notwithstanding anything elsewhere in this Indenture contained,
the Trustee shall have the right, but shall not be required, to demand, in
respect of the authentication of any Bonds, the withdrawal of any cash, the
release of any property, or any action whatsoever within the purview of this
Indenture, any showings, certificates, opinions, appraisals, or other
information, or corporate action or evidence thereof, in addition to that by the
terms hereof required as a condition


                                      49
<PAGE>

of such action by the Trustee, deemed desirable for the purpose of establishing
the right of the Issuer to the authentication of any Bonds, the withdrawal of
any cash, the release of any property, or the taking of any other action by the
Trustee.

            (l) Before taking such action hereunder, the Trustee may require
that it be furnished an indemnity bond satisfactory to it for the reimbursement
to it of all expenses to which it may be put and to protect it against all
liability, except liability which is adjudicated to have resulted from the
negligence or willful default of the Trustee, by reason of any action so taken
by the Trustee. No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. Notwithstanding the foregoing, the Trustee shall
not require indemnity hereunder prior to (i) making a draw on the Letter of
Credit in accordance with the terms hereof and thereof, (ii) making payments of
principal and interest on the Bonds when due, or (iii) declaring an acceleration
of the Bonds in accordance with the terms of Section 902.

      Section 1102. Fees, Charges and Expenses of Trustee and Paying Agents;
Trustee's Prior Lien. The Trustee shall be entitled to payment and/or
reimbursement for its reasonable fees for services rendered hereunder and all
advances, Reasonable Attorneys' Fees and other expenses reasonably and
necessarily made or incurred by the Trustee in and about the execution of the
trusts created by this Indenture and in and about the exercise and performance
by the Trustee of the powers and duties of the Trustee hereunder, and for all
reasonable and necessary costs and expenses incurred in defending any liability
in the premises of any character whatsoever (unless such liability is
adjudicated to have resulted from the negligence or willful default of the
Trustee). Any Paying Agent shall be paid the standard and customary fees and
charges of the Paying Agent for handling the payment of the principal of and
premium, if any, and interest on the Bonds, and funds sufficient to pay the same
shall be deposited with each Paying Agent prior to the dates on which payments
are required to be made on the Bonds. The Issuer has made provisions in the Loan
Agreement for the payment of such reasonable and necessary advances, fees, costs
and expenses and reference is hereby made to the Loan Agreement for the
provisions so made. In this regard, it is understood that the Issuer pledges no
funds or revenues other than those derived from and the avails of the Trust
Estate to the payment of any obligation of the Issuer set forth in this
Indenture, including the obligations set forth in this Section 1102, but nothing
herein shall be construed as prohibiting the Issuer from using any other funds
and revenues for the payment of any of its obligations under this Indenture.
Following the occurrence of an Event of Default, the Trustee shall have a first
lien with right of payment prior to payment on account of principal or interest
of any Bond issued hereunder upon the Trust Estate for such reasonable and
necessary advances, fees, costs and expenses incurred by the Trustee, provided
that the Trustee shall not in any event have a lien on the proceeds of a drawing
under the Letter of Credit.

      Section 1103. Notice to Bondholders of Default. If an Event of Default
occurs of which the Trustee is deemed to have notice, so long as the Trustee has
not declared an acceleration of the Bonds pursuant to Section 902, the Trustee
shall, not less than fifteen (15), nor more than thirty (30),


                                      50
<PAGE>

days after receiving notice of the occurrence of such Event of Default, give
notice to the Company, the Bank and the Holders of all Bonds Outstanding by
first-class mail.

      Section 1104. Intervention by Trustee. In any judicial proceeding to which
the Issuer is a party and which in the opinion of the Trustee and its counsel
has a substantial bearing on the interests of holders of Bonds issued hereunder,
the Trustee may intervene on behalf of bondholders and shall do so if requested
in writing by the holders of at least a majority in aggregate principal amount
of Bonds outstanding hereunder. The rights and obligations of the Trustee under
this Section 1104 are subject to the approval of the court having jurisdiction
in the premises.

      Section 1105. Merger or Consolidation of Trustee. Any bank or trust
company to which the Trustee may be merged, or with which it may be
consolidated, or to which it may sell or transfer its trust business and assets
as a whole or substantially as a whole, or any bank or trust company resulting
from any such sale, merger, consolidation or transfer to which it is a party,
ipso facto, shall be and become successor trustee hereunder and vested with all
of the title to the whole property or Trust Estate and all the trusts, powers,
discretions, immunities, privileges, and all other matters as was its
predecessor, without the execution or filing of any instrument or any further
act, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that such successor
trustee shall have capital and surplus of at least $100,000,000.

      Section 1106. Resignation by Trustee. The Trustee and any successor
trustee may at any time resign from the trusts hereby created by giving 30 days
written notice to the Issuer and the Company, and such resignation shall take
effect at the end of such 30 days (provided a successor trustee has been duly
appointed) or upon the earlier appointment of a successor trustee by the
bondholders or by the Issuer. Such notice may be served personally or sent by
certified mail.

      Section 1107. Removal of Trustee. The Trustee may be removed at any time
by an instrument or concurrent instruments in writing delivered to the Trustee
and to the Issuer, and signed by the holders of a majority in aggregate
principal amount of Bonds outstanding hereunder; provided, however, that such
removal shall not be effective until the appointment of a successor trustee as
set forth in Section 1108 hereof.

      Section 1108. Appointment of Successor Trustee. So long as no Event of
Default has occurred or is continuing, in case the Trustee hereunder shall
resign or be removed, or be dissolved, or shall be in course of dissolution or
liquidation, or otherwise become incapable of acting hereunder, or in case it
shall be taken under the control of any public officer or officers, or of a
receiver appointed by the court, a successor may be appointed by the Issuer,
with the consent of the Company, by an instrument executed and signed by its
Chairman or Vice Chairman and attested by its Secretary or Assistant Secretary
under its seal. If an Event of Default has occurred and is continuing, such
successor trustee may be appointed by the holders of a majority in aggregate
principal amount of Bonds outstanding hereunder, by an instrument or concurrent
instruments in writing signed by such holders, or by their attorneys in fact,
duly authorized; provided, nevertheless, that in case of such vacancy the
Issuer, with the consent of the Company, by an instrument executed and signed by
its Chairman or Vice Chairman and attested by its Secretary or Assistant
Secretary under its seal, shall


                                      51
<PAGE>

appoint a temporary trustee to fill such vacancy until a successor trustee shall
be appointed by the bondholders in the manner above provided; and any such
temporary trustee so appointed by the Issuer shall immediately and without
further act be superseded by the trustee. Every such successor trustee shall be
a trust company or bank in good standing, having capital and surplus of not less
than $100,000,000, and, if the Bonds are rated by a Rating Agency, it shall also
have a rating by Moody's (if the Bonds are then rated by Moody's) of at least
Baa3/P-3, or by Standard & Poor's (if the Bonds are then rated by Standard &
Poor's) of at least BBB/A3 or higher or shall otherwise be approved in writing
by Moody's or Standard & Poor's, as the case may be. Such successor Trustee
shall be satisfactory to the Company so long as no event has occurred with
respect to the Company which constitutes an Event of Default or which by notice
or lapse of time or both would constitute an Event of Default under this
Indenture or the Loan Agreement. If no successor is appointed within thirty (30)
days following the resignation or removal of the Trustee, the Trustee may
petition a court of competent jurisdiction for the appointment of a successor
Trustee.

      Section 1109. Concerning Any Successor Trustee. Every successor or
temporary trustee appointed hereunder shall execute, acknowledge and deliver to
its predecessor and also to the Issuer an instrument in writing accepting such
appointment hereunder, and thereupon such successor or temporary trustee,
without any further act or conveyance, shall become fully vested with all the
estates, properties, rights, powers, trusts, duties and obligations of its
predecessor; but such predecessor shall, nevertheless, on the written request of
the Issuer or of its successor trustee, execute and deliver an instrument
transferring to such successor all the estate, properties, rights, powers and
trusts of such predecessor hereunder; and every predecessor trustee shall, upon
payment of all amounts owed to it hereunder, deliver all securities, moneys and
any other property held by it as trustee hereunder to its successor. Should any
instrument in writing from the Issuer be required by any successor trustee for
more fully and certainly vesting in such successor the estates, rights, powers
and duties hereby vested or intended to be vested in the predecessor trustee,
any and all such instruments in writing shall, on request, be executed,
acknowledged and delivered by the Issuer. The resignation of any trustee and the
instrument or instruments removing any trustee and appointing a successor
hereunder, together with all other instruments provided for in this Article
shall, at the expense of the Issuer, be forthwith filed and/or recorded by the
successor trustee in each recording office where the Indenture shall have been
filed and/or recorded.

      Section 1110. Reliance Upon Instruments. The resolutions, opinions,
certificates and other instruments provided for in this Indenture may be
accepted and relied upon by the Trustee as conclusive evidence of the facts and
conclusions stated therein and shall be full warrant, protection and authority
to the Trustee for its actions taken hereunder.

      Section 1111. Appointment of Co-Trustee. The Issuer and the Trustee shall
have power to appoint and upon the request of the Trustee the Issuer shall for
such purpose join with the Trustee in the execution of all instruments necessary
or proper to appoint another corporation or one or more persons approved by the
Trustee, and satisfactory to the Company so long as there is no termination of
the interest of the Company by virtue of an Event of Default or otherwise,
either to act as co-trustee or co-trustees jointly with the Trustee of all or
any of the property subject to the lien hereof, or to act as separate trustee or
trustee of all or any such property, with such powers as may be provided in the
instrument of appointment and to vest in such corporation or person or persons


                                      52
<PAGE>

as such separate trustee or co-trustee any property, title, right or power
deemed necessary or desirable. In the event that the Issuer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Trustee alone shall have the power to make such appointment.
Should any deed, conveyance or instrument in writing from the Issuer be required
by the separate trustee or co-trustee so appointed for more fully and certainly
vesting in and confirming to him or to it such properties, rights, powers,
trusts, duties and obligations, any and all such deeds, conveyances and
instruments in writing shall, on request, be executed, acknowledged and
delivered by the Issuer. Every such co-trustee and separate trustee shall, to
the extent permitted by law, be appointed subject to the following provisions
and conditions, namely:

                  (1) The Bonds shall be authenticated and delivered, and all
      powers, duties, obligations and rights conferred upon the Trustee in
      respect of the custody of all money and securities pledged or deposited
      hereunder, shall be exercised solely by the Trustee; and

                  (2) The Trustee, at any time by an instrument in writing, may
      remove any such separate Trustee or co-trustee.

      Every instrument, other than this Indenture, appointing any such
co-trustee or separate trustee, shall refer to this Indenture and the conditions
of this Article XI expressed, and upon the acceptance in writing by such
separate trustee or co-trustee, he, they or it shall be vested with the estate
or property specified in such instrument, jointly with the Trustee (except
insofar as local law makes it necessary for any separate trustee to act alone),
subject to all the trusts, conditions and provisions of this Indenture. Any such
separate trustee or co-trustee may at any time, by an instrument in writing,
constitute the Trustee as his, their or its agent or attorney-in-fact with full
power and authority, to the extent authorized by law, to do all acts and things
and exercise all discretion authorized or permitted by him, them or it, for and
on behalf of him, them or it and in his, their or its name. In case any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all the estate, properties, rights, powers, trusts, duties and
obligations of said separate trustee or co-trustee shall vest in and be
exercised by the Trustee until the appointment of a new trustee or a successor
to such separate trustee or co-trustee. Any such co-trustee shall meet the
requirements set forth in Section 1108 for a substitute trustee.

      Section 1112. Designation and Succession of Paying Agents. The Trustee and
any other banks or trust companies, if any, designated as Paying Agent or Paying
Agents in any supplemental indenture or in an instrument appointing a successor
Trustee, shall be the Paying Agent or Paying Agents for the Bonds. Any Paying
Agent appointed hereunder shall meet the requirements set forth in Section 1108
for a substitute trustee.

      Any bank or trust company with which or into which any Paying Agent may be
merged or consolidated, or to which the assets and business of such Paying Agent
may be sold, shall be deemed the successor of such Paying Agent for the purposes
of this Indenture. If the position of Paying Agent shall become vacant for any
reason, the Issuer shall, within 30 days thereafter, appoint such bank or trust
company as shall be specified by the Company as such Paying Agent to fill such
vacancy; provided, however, that, if the Issuer shall fail to appoint such
Paying Agent within said period, the Trustee shall make such appointment.


                                      53
<PAGE>

      The Paying Agents shall enjoy the same protective provisions in the
performance of their duties hereunder as are specified in Section 1101 hereof
with respect to the Trustee insofar as such provisions may be applicable.

      Section 1113. Remarketing Agent. The Issuer shall, with the approval of
the Company, appoint the Remarketing Agent for the Bonds, subject to the
conditions set forth in Section 1114 hereof. The Remarketing Agent shall
designate to the Trustee its principal office and signify its acceptance of the
duties and obligations imposed upon it hereunder by a written instrument of
acceptance delivered to the Issuer and the Trustee under which the Remarketing
Agent will agree, particularly:

            (a) at the direction of the Company and subject to the provisions of
Article XII hereof, to offer for sale, and use its best efforts to sell, Bonds
delivered to the Trustee for purchase pursuant to Section 202(e) hereof at a
price equal to the principal amount thereof plus accrued interest to the
Purchase Date specified in the applicable tender notice, any such sale to be
made on the Purchase Date; and

            (b) to keep such books and records as shall be consistent with
prudent industry practice and to make such books and records available for
inspection by the Issuer, the Trustee and the Company at all reasonable times.

      Section 1114. Qualifications of Remarketing Agent. The Remarketing Agent
shall be a member of the National Association of Securities Dealers, Inc., or a
commercial bank having a capitalization of at least $50,000,000 and authorized
by law to perform all the duties imposed upon it by this Indenture. If the Bonds
are rated by a Rating Agency, any successor Remarketing Agent shall be a bank or
trust company whose outstanding bank deposit obligations are rated at least Baa-
3/P-3 or otherwise be acceptable to such Rating Agency. The Remarketing Agent
may at any time resign and be discharged of the duties and obligations created
by this Indenture by giving at least 60 days' notice to the Issuer, the Company,
the Paying Agent and the Trustee; provided that such resignation shall not be
effective until a successor is appointed. The Remarketing Agent may be removed
at any time, at the direction of the Company (with the prior written consent of
the Bank), by an instrument filed with the Remarketing Agent and the Trustee.
Upon resignation or removal of the Remarketing Agent, the Company shall, with
the consent of the Bank, appoint a substitute Remarketing Agent.

      In the event of the resignation or removal of the Remarketing Agent, the
Remarketing Agent shall pay over, assign and deliver any moneys and Bonds held
by it in such capacity to its successor or, if there be no successor, to the
Trustee.

                                  ARTICLE XII
                       PURCHASE AND REMARKETING OF BONDS

      Section 1201. Remarketing of Bonds. (a) By the end of the Business Day on
which the Trustee receives any notice in accordance with Section 202(e) hereof,
the Trustee shall give telephonic or telegraphic notice, promptly confirmed by
written notice, to the Remarketing Agent


                                      54
<PAGE>

specifying the principal amount of Bonds stated in such notice to be delivered
to it for purchase pursuant to Section 202(e) and the Purchase Date selected in
such notice.

            (b) In the event the Bonds are subject to mandatory purchase under
Section 307 hereof, the Trustee shall send notice to the Company and the
Remarketing Agent of such mandatory purchase, including the Mandatory Purchase
Date, at the time it delivers notice thereof to the holders. The Remarketing
Agent shall use its best efforts to remarket the Bonds to be purchased on the
Mandatory Purchase Date at a price of par plus accrued interest.

            (c) No later than 3:00 p.m., Central Time, on the Business Day next
preceding any Purchase Date or Mandatory Purchase Date, the Remarketing Agent
shall give telegraphic or telephonic notice, promptly confirmed by written
notice, to the Trustee specifying the principal amount of Bonds, if any, sold by
it. Such notice shall include notice of the amount of Bonds it has not sold
hereunder. Bonds to be purchased on the Purchase Date or the Mandatory Purchase
Date must be delivered to the Trustee not later than 10:00 a.m., Central Time,
on the Purchase Date. Any Bond subject to purchase on the Purchase Date or the
Mandatory Purchase Date that is not tendered by 10:00 a.m., Central Time, on the
Purchase Date will be deemed tendered, and the holder of such Bond shall not be
entitled to interest thereon other than the interest accrued to the Purchase
Date.

            (d) On any Purchase Dates or Mandatory Purchase Date, the Trustee
shall give telegraphic or telephonic notice, promptly confirmed by written
notice, to the Company and the Remarketing Agent specifying any Bond which have
not been delivered to the Trustee pursuant to Section 202(e) or 307.

            (e) The Remarketing Agent shall use its best efforts to arrange for
the sale, at par plus accrued interest, if any, of any Bonds for which a tender
notice has been received under Section 202(e) or which are subject to mandatory
purchase pursuant to Section 307 for settlement on the Purchase Date. Not later
than 10:00 a.m., Central Time, on the Purchase Date, the Remarketing Agent shall
transfer to the Trustee the proceeds of the remarketing of the Bonds remarketed
on such Purchase Date, and the Trustee shall deposit such amounts in the
Remarketing Proceeds Subaccount of the Bond Purchase Fund. In the event (i) the
Remarketing Agent notifies the Trustee that it has failed to remarket any Bonds
for which it has received notice of tender under Section 202(e) or any Bonds
subject to mandatory purchase, or (ii) the Trustee does not receive the proceeds
of the remarketing from the Remarketing Agent by 10:00 a.m., Central Time, the
Trustee shall take all action necessary to draw on the Letter of Credit for an
amount sufficient, when added to any remarketing proceeds delivered by the
Remarketing Agent, to pay the purchase price of the Bonds to be purchased. Any
Bonds purchased with the proceeds of a draw on the Letter of Credit shall be
held by the Trustee as agent and bailee of the Bank subject to the lien of the
Bank provided under the Reimbursement Agreement.

            (f) Any Bond purchased by the Trustee pursuant to the terms of this
Indenture after notice of redemption or mandatory purchase has been given as
provided in Section 302 or 307(b) hereof shall not be remarketed unless the
notice of redemption or mandatory purchase, as the case may be, is
simultaneously delivered to the Purchaser of the remarketed Bond.



                                      55
<PAGE>

            (g) The Remarketing Agent shall not sell or remarket any Bonds to
the Company, the Issuer, or any affiliate or the Company or the Issuer.

      Section 1202. Purchase of Bonds. (a) On any Purchase Date the Trustee
shall purchase on behalf of the Company, but only from the funds listed below,
such Bonds from the registered owners thereof at a purchase price equal to the
principal amount thereof plus accrued interest, if any, to the date of purchase.
Funds for the payment of such purchase price shall be derived from the following
sources in the order of priority indicated:

            (i) proceeds of the remarketing of such Bonds pursuant to Section
      1201(e) hereof;

            (ii) moneys representing proceeds of a drawing under the Letter of
      Credit;

            (iii) revenues and moneys furnished by the Company to the Trustee,
      and proceeds from the investment thereof, which constitute Available
      Moneys; and

            (iv) revenues and moneys furnished by the Company pursuant to the
      Loan Agreement.

      (b) On any Mandatory Purchase Date the Trustee shall purchase on behalf of
the Company, but only from the funds listed below, such Bonds from the
registered owners thereof at a purchase price equal to the principal amount
thereof plus accrued interest, if any, to the date of purchase. Funds for the
payment of such purchase price shall be derived from the following sources in
the order of priority indicated:

            (i) moneys representing proceeds of a drawing under the Letter of
      Credit;

            (ii) proceeds of the remarketing of such Bonds pursuant to Section
      1201(b) and (e) hereof;

            (iii) revenues and moneys furnished by the Company to the Trustee,
      and proceeds from the investment thereof, which constitute Available
      Moneys; and

            (iv) revenues and moneys furnished by the Company pursuant to the
      Loan Agreement.

      Section 1203. Delivery of Bonds. Bonds purchased by the Trustee pursuant
to Section 1202 shall be delivered by the Trustee as follows:

            (a) Bonds sold by the Remarketing Agent pursuant to Section 1201
hereof shall be delivered to the purchasers thereof upon payment therefor.

            (b) Bonds purchased by the Trustee with moneys described in clause
(iii) of Section 1202(a) or clause (iii) of 1202(b) hereof shall be canceled.


                                      56
<PAGE>

            (c) Bonds purchased by the Trustee with moneys described in clause
(ii) of Section 1202(a) or clause (i) or 1202(b) hereof shall be Pledged Bonds
and shall be registered in the name of the Company and held by the Bank or its
designee (including the Trustee) as agent and bailee for the Bank pending
remarketing in accordance with the Pledge and Security Agreement dated as of
November 1, 1995, between the Bank and the Company. The Trustee shall not
release Pledged Bonds until it has received written notice from the Bank that
the Letter of Credit has been fully reinstated with respect to such Pledged
Bonds.

            (d) Bonds purchased by the Trustee with moneys described in clause
(iv) of Section 1202(a) hereof shall, at the direction of the Company, be (i)
delivered to the Trustee for the account of the Company, (ii) canceled, or (iii)
delivered to the Company; provided, however, that any Bonds so purchased after
the selection thereof by the Trustee for redemption shall be canceled.

            (e) The due-bill checks, if any, delivered to the Trustee in
accordance with Section 202(e) hereof shall be delivered to the person to whom
the Trustee is to deliver the related Bonds.

            Bonds delivered as provided in this Section 1203 shall be registered
in the manner directed by the recipient thereof.

      Section 1204. Drawings on Letter of Credit. The Trustee shall draw moneys
under the Letter of Credit to the extent necessary to make timely payments
required to be made pursuant to, and in accordance with, Section 1202 hereof.

      Section 1205. Delivery of Proceeds of Sale. The proceeds of the sale by
the Remarketing Agent of any Bond shall be delivered to the Bondholder selling
such Bond (or to the Company if the Bonds remarketed are held by or for the
benefit of the Company, or to the Bank if the proceeds are from the sale of
Pledged Bonds).

      Section 1206. Issuer to Cooperate. The Issuer shall cooperate with the
Trustee and the Company to cause the necessary arrangements to be made and to be
thereafter continued whereby funds from the sources specified herein and in the
Loan Agreement will be made available for the purchase of Bonds delivered to the
Trustee and whereby Bonds, executed by the Issuer and authenticated by the
Trustee, shall be made available to the extent necessary for delivery pursuant
to Section 1203 hereof.

      Section 1207. No Remarketing After Default. Anything in this Indenture to
the contrary notwithstanding there shall be no remarketing of Bonds pursuant to
this Article XII if there shall have occurred and be continuing an Event of
Default described in clause (a), (b) or (c) of the first paragraph of Section
901 hereof or if any event shall have occurred and be continuing which with the
lapse of time would constitute such an Event of Default.

      Section 1208. Duties of Trustee. The Trustee hereby agrees that in
performing its duties referred to in this Article XII that the Trustee is acting
as the agent and representative of the Company, the Bank and the holders of the
Bonds and not the agent or representative of the Issuer.


                                      57
<PAGE>

      Section 1209. No Remarketing Under Certain Conditions. Notwithstanding
anything to the contrary herein provided, the Bonds shall not be remarketed
unless a Letter of Credit providing for the payment of the principal of, premium
in the amount of 3%, and interest on, and purchase price of, the Bonds will be
in effect following the remarketing of such Bonds.


                                 ARTICLE XIII
                            SUPPLEMENTAL INDENTURES

      Section 1301. Supplemental Indentures Not Requiring Consent of
Bondholders. The Issuer and the Trustee may, from time to time and at any time,
but without the consent of or notice to the bondholders, enter into supplemental
indentures as follows:

            (a) to cure any formal defect, omission, inconsistency or ambiguity
in this Indenture;

            (b) to grant to or confer or impose upon the Trustee for the benefit
of the bondholders any additional rights, remedies, powers, authority, security,
liabilities or duties which may lawfully be granted, conferred or imposed and
which are not contrary to or inconsistent with this Indenture as theretofore in
effect, provided that no such additional liabilities or duties shall be imposed
upon the Trustee without its consent;

            (c) to add to the covenants and agreements of, and limitations and
restrictions upon, the Issuer in this Indenture other covenants, agreements,
limitations and restrictions to be observed by the Issuer which are not contrary
to or inconsistent with this Indenture as theretofore in effect;

            (d) to confirm, as further assurance, any pledge under, and the
subjection to any claim, lien or pledge created or to be created by, this
Indenture, of the Revenues of the Issuer from the Loan Agreement or of any other
moneys, securities or funds;

            (e) to comply with the requirements of the Trust Indenture Act of
1939, as from time to time amended;

            (f) to obtain an investment rating on the Bonds from a nationally
recognized rating agency equal to or comparable to the rating assigned to long
term or short term paper issued by the Bank;

            (g) to provide for the issuance, sale and delivery of Additional
Bonds as provided in and upon compliance with Section 213 to provide for (1) the
deposit and disbursement of the proceeds of such Additional Bonds to pay the
expenses of the issuance of such Additional Bonds and the cost of all or any
part of the facilities to be financed by means of such Additional Bonds or to
refund another series of Bonds, as the case may be, (2) the payment of the
principal of, premium, if any, and interest on such Additional Bonds, and (3)
such other changes necessary in connection with


                                      58
<PAGE>

the issuance of such Additional Bonds as shall not, in the opinion of the
Trustee, prejudice in any material respect the rights of the holders of the
Bonds then outstanding; or

            (h) to modify, alter, amend or supplement this Indenture in any
other respect which is not materially adverse to the bondholders and which does
not involve a change described in clause (a), (b), (c), (d), (e) or (f) of
Section 1302 hereof and which, in the judgment of the Trustee, is not to the
prejudice of the Trustee.

      Section 1302. Supplemental Indentures Requiring Consent of Bondholders.
Subject to the terms and provisions contained in this Section, and not
otherwise, the holders of not less than two-thirds in aggregate principal amount
of the Bonds then outstanding shall have the right, from time to time, anything
contained in this Indenture to the contrary notwithstanding, to consent to and
approve the execution by the Issuer and the Trustee of such indenture or
indentures supplemental hereto as shall be deemed necessary and desirable by the
Issuer for the purpose of modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or provisions contained in this
Indenture or in any supplemental indenture; provided, however, that nothing
herein contained shall permit, or be construed as permitting (a) an extension of
the maturity (or mandatory sinking fund or other mandatory redemption date) of
the principal of or the interest on or purchase price of any Bond issued
hereunder, or (b) a reduction in the principal amount of or redemption premium
or rate of interest on or purchase price on any Bond issued hereunder, or (c)
the creation of any lien ranking prior to or on a parity with the lien of this
Indenture on the Trust Estate or any part thereof, except as hereinbefore
expressly permitted, or (d) a privilege or priority of any Bond or Bonds over
any other Bond or Bonds, or (e) a reduction in the aggregate principal amount of
the Bonds required for consent to such supplemental indenture, or (f) deprive
the holder of any Bond then outstanding of the lien hereby created on the Trust
Estate. Nothing herein contained, however, shall be construed as making
necessary the approval of bondholders of the execution of any supplemental
indenture as provided in Section 1301 of this Article.

      If at any time the Issuer or the Company shall request the Trustee to
enter into any supplemental indenture for any of the purposes of this Section,
the Trustee shall, at the expense of the Company, cause notice of the proposed
execution of such supplemental indenture to be mailed by first class mail to
each registered owner of the Bonds. Such notice shall briefly set forth the
nature of the proposed supplemental indenture and shall state that copies
thereof are on file at the principal office of the Trustee for inspection by
bondholders. The Trustee shall not, however, be subject to any liability to any
bondholder by reason of its failure to mail such notice, and any such failure
shall not affect the validity of such supplemental indenture when consented to
and approved as provided in this Section. If the holders of not less than
two-thirds in aggregate principal amount of the Bonds outstanding at the time of
the execution of any such supplemental indenture have consented thereto, as
herein provided, no holder of any Bond shall have any right to object to any of
the terms and provisions contained therein, or the operation thereof, or in any
manner to question the propriety of the execution thereof, or to enjoin or
restrain the Trustee or the Issuer from executing the same or from taking any
action pursuant to the provisions thereof. Upon the execution of any such
supplemental indenture, this Indenture shall be deemed to be modified and
amended in accordance therewith.



                                      59
<PAGE>

      Section 1303. Consent of Company and Bank; Bond Counsel Opinion. Anything
herein to the contrary notwithstanding, a supplemental indenture under this
Article XIII shall not become effective unless and until the Company and the
Bank shall have consented to the execution and delivery of such supplemental
indenture. In this regard, the Trustee shall cause notice of the proposed
execution and delivery of any such supplemental indenture together with a copy
of the proposed supplemental indenture to be mailed by certified or registered
mail to the Company and the Bank at least 15 days prior to the proposed date of
execution and delivery of any such supplemental indenture. The Company and the
Bank shall be deemed to have consented to the execution and delivery of any such
supplemental indenture if the Trustee receives a letter or other instrument
signed by an authorized officer of the Company and the Bank expressing consent.
In addition, the Trustee shall not execute and deliver any supplemental
indenture hereunder unless and until the Trustee has received an opinion of Bond
Counsel stating that the execution and delivery of such supplemental indenture
is authorized under this Indenture and complies with the terms hereof and that
the execution and delivery thereof will not have an adverse effect on the
exclusion of interest on the Bonds from gross income for Federal income tax
purposes.

                                  ARTICLE XIV
                       AMENDMENT TO LOAN AGREEMENT, NOTE
                             AND LETTER OF CREDIT

      Section 1401. Amendments Not Requiring Consent of Bondholders. The Trustee
may from time to time (with the prior written consent of the Bank), and at any
time, consent to any amendment, change or modification of the Loan Agreement,
Note and Letter of Credit (a) for the purpose of curing any ambiguity or formal
defect or omission, (b) in connection with the Project described in the Loan
Agreement so as to identify the same more precisely or substitute or add
additional property acquired with the proceeds of the Bonds; (c) in connection
with any reinstatement or reduction of the Letter of Credit as permitted by its
original terms; (d) in connection with obtaining a short term or long term
investment rating on the Bonds from a nationally recognized rating agency equal
to or comparable with the short term or long term rating then associated with
the Bank's letters of credit; (e) in connection with the issuance, sale and
delivery of Additional Bonds as provided in and in compliance with Section 213
to provide for payments of additional amounts sufficient to pay the principal
of, premium, if any, and interest on such Additional Bonds and such other
charges necessary in connection with the issuance of such Additional Bonds as
shall not, in the opinion of the Trustee, prejudice in any material respect the
rights of the holders of the Bonds then outstanding; or (f) to make any other
change therein, which in the reasonable judgment of the Trustee is not to the
prejudice of the Trustee or the holders of the Bonds. The Trustee shall not
consent to any other amendment, change or modification of the Loan Agreement,
Note and Letter of Credit without the approval or consent of the holders of not
less than two-thirds in aggregate principal amount of the Bonds at the time
outstanding, evidenced in the manner provided in Section 1501 hereof. No
amendment, change or modification may decrease the obligation of the Company
under the Note to pay amounts sufficient to pay the principal of, premium, if
any, and interest on the Bonds as the same become due or the obligation of the
Bank under the Letter of Credit.

      Section 1402. Amendments Requiring Consent of Bondholders. If at any time
the Issuer or the Company shall request the Trustee's consent to a proposed
amendment, change or modification


                                      60
<PAGE>

requiring bondholder approval under Section 1401 hereof, the Trustee, shall, at
the expense of the requesting party, cause notice of such proposed amendment,
change or modification to be mailed in the same manner as provided by Section
1302 hereof with respect to supplemental indentures. Such notice shall briefly
set forth the nature of such proposed amendment, change or modification and
shall state that copies of the instrument embodying the same are on file in the
principal office of the Trustee for inspection by any interested bondholder. The
Trustee shall not, however, be subject to any liability to any bondholder by
reason of its failure to publish or mail such notice, and any such failure shall
not affect the validity of such amendment, change or modification when consented
to by the Trustee in the manner hereinabove provided. Anything contained in this
Indenture to the contrary notwithstanding, the Issuer and the Trustee may
consent to any amendment, change or modification of the Loan Agreement, the Note
or the Letter of Credit upon receipt of the consent of the holders of all Bonds
then outstanding and the Bank.

                                  ARTICLE XV
                                 MISCELLANEOUS

      Section 1501. Consents, etc. of Bondholders. Any request, direction,
objection or other instrument required by this Indenture to be signed and
executed by the bondholders may be in any number of concurrent writings of
similar tenor and may be signed or executed by such bondholders in person or by
agent appointed in writing. Proof of the execution of any such request,
direction, objection or other instrument or of the writing appointing any such
agent and of the ownership of Bonds, if made in the following manner, shall be
sufficient for any of the purposes of this Indenture, and shall be conclusive in
favor of the Trustee with regard to any action taken by it under such request or
other instrument, namely:

            (a) The fact and date of the execution by any person of any such
writing may be proved by the certificate of any officer in any jurisdiction who
by law has power to take acknowledgments within such jurisdiction that the
person signing such writing acknowledged before him the execution thereof, or by
an affidavit of any witness to such execution.

            (b) The fact of ownership of Bonds and the amount or amounts,
numbers and other identification of such Bonds, and the date of holding the same
shall be proved by the registration books of the Issuer maintained by the
Trustee as Bond Registrar.

      Section 1502. Notices. Except as otherwise provided in this Indenture, all
notices, certificates or other communications shall be sufficiently given and
shall be deemed given three Business Days after they have been mailed by
registered or certified mail, postage prepaid, to the Issuer, the Company, the
Trustee, the Remarketing Agent, or any Paying Agent other than the Trustee.
Facsimiles of each notice, certificate or other communication given hereunder to
the Company shall, in addition to mailing, be telecopied to the Company, and
copies of each notice, certificate or other communication given hereunder by or
to the Company shall be mailed by registered or certified mail, postage prepaid,
to the Trustee; provided, however, that the effectiveness of any such notice
shall not be affected by the failure to telecopy any such facsimiles or to send
any such copies. Notices, certificates or other communications shall be sent to
the following addresses:



                                      61
<PAGE>

      Company:                      Leslie-Locke, Inc.
                                    4501 Circle 75 Parkway
                                    Suite F-6300
                                    Atlanta, Georgia  30339
                                    Attention: President
                                    Telephone: (770) 953-6366 x206
                                    Telecopy: (770) 988-8158

      Issuer:                 The Pender County Industrial Facilities
                                    and Pollution Control Financing Authority
                                    c/o Clerk, Pender County Board
                                        of Commissioners
                                    The York House
                                    Burgaw, North Carolina 28425
                                    Attention: Chairman
                                    Telephone: (910) 259-1200
                                    Telecopy:  (910) 259-1402

      With copy to:           Pender County Attorney
                                    Courthouse
                                    Post Office Box 5
                                    Burgaw, North Carolina  28425
                                    Attention:  C. David Morison
                                    Telephone:  (910) 259-1200
                                    Telecopy:   (910) 259-1402

      Trustee and Paying Agent:     Norwest Bank Minnesota, National Association
                                    Sixth and Marquette
                                    Minneapolis, Minnesota 55479-0069
                                    Attention:  Corporate Trust Department
                                    Telephone:  (612) 667-8058
                                    Telecopy:   (612) 667-9825

      Remarketing Agent:      Blount Parrish & Roton, Inc.
                                    10 Court Square
                                    Montgomery, Alabama 36104
                                    Attention:  James D. Reynolds, Jr.
                                    Telephone:  (205) 264-8410
                                    Telecopy:   (205) 264-7608

      Bank:                         Branch Banking and Trust Company
                                    202 North Third Street
                                    Wilmington, North Carolina 28402
                                    Attention: Brett A. Barnes
                                    Telephone: (910) 815-2770
                                    Telecopy:  (910) 815-2799


                                      62
<PAGE>

      with a copy to:               Smith Helms Mulliss & Moore, L.L.P.
                                    227 N. Tryon Street
                                    Charlotte, North Carolina 28202
                                    Attention:  J. Richard Hazlett, Esq.
                                    Telephone:  (704) 343-2008
                                    Telecopy:   (704) 334-8467

Any of the foregoing may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates or other
communications shall be sent.

      Section 1503. Limitation of Rights. With the exception of rights herein
expressly conferred, nothing expressed or mentioned in or to be implied from
this Indenture, or the Bonds issued hereunder, is intended or shall be construed
to give to any person or company other than the parties hereto, and the holders
of the Bonds secured by this Indenture any legal or equitable rights, remedy or
claim under or in respect to this Indenture or any covenants, conditions and
provisions hereof being intended to be and being for the sole exclusive benefit
of the parties hereto and the holders of the Bonds hereby secured as herein
provided.

      Section 1504. Severability. If any provisions of this Indenture shall be
held or deemed to be or shall, in fact, be inoperative or unenforceable as
applied in any particular case in any jurisdiction or jurisdictions or in all
jurisdictions or in all cases because it conflicts with any provisions or any
constitution or statute or rule of public policy, or for any other reason, such
circumstances shall not have the effect of rendering the provision in question
inoperative or unenforceable in any other case or circumstance, or of rendering
any other provision or provisions herein contained invalid, inoperative or
unenforceable to any extent whatever.

      The invalidity of any one or more phrases, sentences, clauses or
paragraphs in this Indenture contained shall not affect the remaining portions
of this Indenture or any part thereof.

      Section 1505. Applicable Provisions of Law. This Indenture shall be
considered to have been executed in the State of North Carolina and it is the
intention of the parties that the substantive law of the State of North Carolina
shall govern as to all questions of interpretation, validity and effect.

      Section 1506. Counterparts. This Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.

      Section 1507. Successors and Assigns. All the covenants, stipulations,
provisions, agreements, rights, remedies and claims of the parties hereto in
this Indenture contained shall bind and inure to the benefit of their successors
and assigns.

      Section 1508. Captions. The captions or headings in this Indenture are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or sections of this Indenture.



                                      63
<PAGE>

      Section 1509. Photocopies and Reproductions. If permitted by applicable
law, a photocopy or other reproduction of this Indenture may be filed as a
financing statement pursuant to the Uniform Commercial Code as adopted in the
State of North Carolina, although the signatures of the Issuer and the Trustee
on such reproduction are not original manual signatures.

      Section 1510. Bonds Owned by the Issuer or the Company. In determining
whether bondholders of the requisite aggregate principal amount of the Bonds
have concurred in any direction, consent or waiver under this Indenture, Bonds
which are owned by the Issuer or the Company or by any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company shall be disregarded and deemed not to be outstanding
for the purpose of any such determination, except that, for the purpose of
determining whether the Trustee shall be protected in relying on any such
direction, consent or waiver, only Bonds which the Trustee knows are so owned
shall be so disregarded. Bonds so owned which have been pledged in good faith
may be regarded as outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Bonds and that
the pledgee is not the Issuer or the Company or any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company. In case of a dispute as to such right, any decision by
the Trustee taken upon the advice of counsel shall be full protection to the
Trustee.

      Section 1511. Limitation of Liability of Directors, Officers of Issuer and
the Trustee. No covenant, agreement or obligation contained herein shall be
deemed to be a covenant, agreement or obligation of any present or future
commissioner, director, officer, employee, attorney or agent of the Issuer or
the Pender County Board of Commissioners in his individual capacity, and neither
the directors of the Issuer nor any officer thereof executing the Bonds shall be
liable personally on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof. No commissioner, director,
officer, employee, attorney or agent of the Issuer shall incur any personal
liability with respect to any other action taken by him pursuant to this
Indenture or the Act. Notwithstanding anything herein to the contrary, no
provision, covenant or agreement contained in this Indenture or in the Bonds or
any obligations herein or therein imposed upon the Issuer or the breach thereof,
shall constitute or give rise to or impose upon the Issuer or the Pender County
Board of Commissioners a pecuniary liability or a charge upon its general credit
or taxing powers. In making the agreements, provisions and covenants set forth
in this Indenture, the Issuer has not obligated itself except with respect to
its rights and interest in the Loan Agreement and the Note, as hereinabove
provided. The issuance of the Bonds under this Indenture shall not be considered
a misfeasance in office.

      Section 1512. Bank as Third Party Beneficiary. The Issuer and the Trustee
acknowledge that this Indenture is also for the benefit of the Bank, so long as
the Letter of Credit is outstanding, by virtue of the Bank's obligations under
the Letter of Credit and the Company's obligations under the Reimbursement
Agreement; provided, however, that the Bank's rights hereunder, including its
right to give its consents hereunder, shall be suspended as long as there is
continuing a wrongful dishonor by the Bank of a draw under the Letter of Credit.

      Section 1513. Expiration of Letter of Credit. Upon the expiration or
earlier termination of the Letter of Credit and the full payment and performance
by the Company of its obligations under


                                      64
<PAGE>

the Reimbursement Agreement, then references in this Indenture to the Bank's
right of consent and to receive notices shall be ineffective except to the
extent that the context requires otherwise.

      Section 1514. Trustee Books Open for Inspection. The Issuer and the
Company may, following a written request therefor, inspect the books of the
Trustee relating to the Bonds during the regular business hours of the Trustee.


                                      65
<PAGE>

      IN WITNESS WHEREOF, the Issuer has caused these presents to be signed in
its name and behalf by its Chairman or Vice Chairman, to evidence its acceptance
of the trust hereby created, the Trustee has caused these presents to be signed
in its behalf by its duly authorized officer.

                   THE PENDER COUNTY INDUSTRIAL FACILITIES AND
                              POLLUTION CONTROL FINANCING AUTHORITY



                  By: ________________________________________
(SEAL)                                Chairman

ATTEST:



By:_____________________________
           Secretary



                              NORWEST BANK MINNESOTA, NATIONAL
                              ASSOCIATION, as Trustee



                              By:_____________________________
                                    Corporate Trust Officer



                                      66
<PAGE>

                                   EXHIBIT A

                          Form of Variable Rate Bond

No. VR-                                                           $___________

                           UNITED STATES OF AMERICA
                           STATE OF NORTH CAROLINA
                   THE PENDER COUNTY INDUSTRIAL FACILITIES
                  AND POLLUTION CONTROL FINANCING AUTHORITY
                     INDUSTRIAL DEVELOPMENT REVENUE BONDS
                  (LESLIE-LOCKE, INC. PROJECT), SERIES 1997


Date of Bond: June 13, 1997                        Maturity Date: June 1, 2010

Interest Rate:  Variable (subject to conversion to a Fixed Rate as
                set forth herein)

                                                       CUSIP: ________________

Registered Owner:


Principal Amount:


KNOW ALL MEN BY THESE PRESENTS:

      That The Pender County Industrial Facilities and Pollution Control
Financing Authority, a political subdivision of the State of North Carolina (the
"Issuer"), for value received, promises to pay to the registered owner shown
above, or registered assigns, but solely from the source and in the manner
hereinafter set forth, on the maturity date shown above, the principal amount
shown above and in like manner to pay interest on said amount from the date
hereof shown above until payment of such principal amount has been made or duly
provided for, at the rates and on the dates set forth herein, except as the
provisions hereinafter set forth with respect to redemption of this Bond prior
to maturity may become applicable hereto. This Bond shall be purchased on the
demand of the registered owner as hereinafter described. The principal of this
Bond is payable in lawful money of the United States of America upon the
presentation and surrender hereof at the principal corporate trust office of
Norwest Bank Minnesota, National Association, or its successor or successors, as
Trustee (the "Trustee"), and interest on this Bond is payable on each Interest
Payment Date in like money to the registered owner hereof by check or draft
drawn upon the Trustee and mailed to the person in whose name this Bond is
registered at the close of business one Business Day (as hereinafter defined)
prior to such Interest Payment Date (the "Record Date"), provided that, owners
of Bonds in the aggregate principal amount of not less than $500,000 may, by
written instruction filed with the Trustee on or before the Record Date next
preceding such Interest Payment Date, direct that


                                     A-1
<PAGE>

interest payments be transmitted by wire transfer to an account in the
continental United States (which wire transfer shall be at the expense of the
holder).

      This Bond, designated "The Pender County Industrial Facilities and
Pollution Control Financing Authority Industrial Development Revenue Bonds
(Leslie-Locke, Inc. Project), Series 1997" is one of a series of Bonds in the
aggregate principal amount of Seven Million Dollars ($7,000,000) (the "Bonds"),
issued for the purpose of financing the cost of the construction of an expansion
to an existing facility and to acquire and install equipment therein for the
manufacture of building products (the "Project") for Leslie-Locke, Inc., a
Delaware corporation (the "Company"), and paying expenses of issuing such Bonds.
The Bonds are all issued under and are all equally and ratably secured and
entitled to the protection given by an Indenture of Trust dated as of June 1,
1997 (the "Indenture"), duly executed and delivered by the Issuer to the
Trustee. Reference is hereby made to the Indenture and all indentures
supplemental thereto for the provisions, among others, with respect to the
nature and extent of the security, the rights, duties and obligations of the
Issuer, the Trustee and the registered owners of the Bonds, and the terms upon
which the Bonds are issued and secured. The terms and conditions of the
financing of the Project, the use of the proceeds of the Bonds by the Company
for such purpose, and the payment of certain amounts thereunder, are contained
in a Loan Agreement dated as of June 1, 1997 (the "Loan Agreement"), by and
between the Issuer and the Company. Pursuant to the Loan Agreement, the Company
has caused Branch Banking and Trust Company (the "Bank") to issue an irrevocable
Letter of Credit (the "Letter of Credit"), issued in favor of the Trustee dated
the date of the issuance of the Bonds, in an amount sufficient to pay the
outstanding principal amount of, premium, if any, and unpaid interest on the
Bonds, but not to exceed $7,466,666, which Letter of Credit expires on June 15,
2000. Substitute letters of credit may be delivered in accordance with Section
409 of the Indenture. Reference is hereby made to the Indenture, the Loan
Agreement, the Note and the Letter of Credit and to all amendments and
supplements thereto for a description of the provisions, among others, with
respect to the nature and extent of the security, the default provisions, the
rights, duties and obligations of the Issuer and the Trustee or the rights of
the holders of the Bonds and the terms upon which the Bonds are issued and
secured. All capitalized terms not defined herein shall have the meanings given
them in the Indenture.

      The Bonds are issued pursuant to and in full compliance with the laws of
the State of North Carolina, particularly the Industrial Facilities and
Pollution Control Financing Act, Chapter 159C of the North Carolina General
Statutes, as amended (hereinafter called the "Act"), and pursuant to a
resolution of the Issuer, which authorized the execution and delivery of the
Indenture. This Bond is a limited obligation of the Issuer payable solely from
the Revenues, as defined in the Indenture, which Revenues have been pledged and
assigned to the Trustee for the benefit of the Bondholders to secure payment of
this Bond, and from the Letter of Credit. THIS BOND AND THE ISSUE OF WHICH IT IS
A PART AND THE PREMIUM, IF ANY, AND INTEREST THEREON AND PURCHASE PRICE THEREFOR
ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE REVENUES AND
RECEIPTS DERIVED FROM THE LOAN AGREEMENT, INCLUDING PAYMENTS RECEIVED UNDER THE
NOTE AND THE LETTER OF CREDIT, WHICH REVENUES AND RECEIPTS HAVE BEEN PLEDGED AND
ASSIGNED TO THE TRUSTEE TO SECURE PAYMENT OF THE BONDS. THE BONDS, THE PREMIUM,
IF ANY, AND THE INTEREST THEREON, AND PURCHASE PRICE THEREFOR, SHALL NOT BE


                                     A-2
<PAGE>

DEEMED TO CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF
NORTH CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE ISSUER.
NEITHER THE STATE OF NORTH CAROLINA NOR ANY POLITICAL SUBDIVISION THEREOF,
INCLUDING THE ISSUER, SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF
ANY, OR INTEREST ON OR PURCHASE PRICE OF THE BONDS OR OTHER COSTS INCIDENT
THERETO EXCEPT FROM THE REVENUES AND RECEIPTS PLEDGED THEREFOR, AND NEITHER THE
FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF NORTH CAROLINA OR ANY
POLITICAL SUBDIVISION THEREOF, INCLUDING THE ISSUER, IS PLEDGED TO THE PAYMENT
OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON OR PURCHASE PRICE OF THE
BONDS OR OTHER COSTS INCIDENT THERETO.

The Bonds are not general obligations of the Issuer but are special obligations
payable solely from revenues derived from the Loan Agreement.

      The Loan Agreement provides for payments by the Company in amounts
sufficient to provide for the payment of the principal of and interest on the
Bonds as due and payable. Provision has been made in the Loan Agreement for such
payments to be paid directly to the Trustee and deposited in a special account
of the Issuer and held by the Trustee designated "Industrial Development Revenue
Bond Fund (Leslie-Locke, Inc. Project)," and such payments have been duly
assigned to the Trustee for that purpose.

      The Company shall have the option to convert the rate of interest payable
on the Bonds from the variable rate set forth herein to a fixed rate determined
as set forth in the Indenture on any Interest Payment Date (the date of such
conversion being herein referred to as the "Conversion Date"), by giving written
notice to the Issuer, the Trustee and the Remarketing Agent and upon the terms
and conditions set forth in the Indenture. The Trustee is required to give
written notice of the exercise of such option by mail to the registered owner of
this Bond not less than 30 days prior to the Conversion Date. Subject to the
obligation of the Remarketing Agent (hereinafter identified) to remarket the
Bonds, as set forth in the Indenture, all Bonds shall be purchased by the
Trustee on behalf of the Company on the Conversion Date at a purchase price
equal to the principal amount thereof plus accrued interest, if any, to the date
of purchase. If the owner of this Bond does not tender the same for purchase
prior to the Conversion Date in accordance with the Indenture and the provisions
hereinafter set forth, this Bond shall be deemed to have been so tendered for
purchase on the Conversion Date and no further interest hereon at the variable
rate set forth herein shall thereafter accrue. After the Conversion Date, the
Bonds shall no longer be subject to certain provisions of the Indenture,
including the provisions relating to the right of the owner to demand purchase
of the Bonds. Reference is hereby made to the Indenture and all indentures
supplemental thereto for all of the provisions with respect to the conversion of
the rate payable on the Bonds to the Fixed Rate.

      On or prior to the Conversion Date, any Bond shall be purchased, on the
demand of the owner thereof, on any Business Day (as hereinafter defined) at a
purchase price equal to the principal amount thereof plus accrued interest, if
any, to the date of purchase, upon:



                                     A-3
<PAGE>

            (a) delivery to the Trustee at its principal corporate trust office
of telephonic notice followed within two days by written notice (which may be
delivered by telecopy) which (i) states the name of the registered holder and
the principal amount of such Bond to be tendered and (ii) states the date on
which such Bond shall be so purchased, which date shall be a Business Day not
prior to the seventh day next succeeding the date of the delivery of such notice
to the Trustee; and

            (b) delivery of such Bond (with an appropriate transfer of
registration form executed in blank acceptable to the Trustee) and, in the case
of a Bond to be purchased prior to the Interest Payment Date for any Rate Period
and after the Record Date in respect thereof, a due-bill check, in form
satisfactory to the Trustee, for interest due on such Interest Payment Date, at
the principal corporate trust office of the Trustee at or prior to 10:00 a.m.,
Central time, on the date specified in the aforesaid notice; provided, however,
that such Bond shall be so purchased only if the Bond so delivered to the
Trustee shall conform in all respects to the description thereof in the
aforesaid notice.

      The term "Business Day" shall mean a day of the year, other than a
Saturday or a Sunday, on which banks located in the cities in which the
principal corporate trust office of the Trustee, the principal office of any
Paying Agent and the principal office of the Bank are located are not required
or authorized to remain closed and on which the New York Stock Exchange is not
closed.

      Interest on the Bonds shall be paid on September 1, 1997, and on the first
day (or, if such day shall not be a Business Day, the next succeeding Business
Day with the same force and effect as if paid on such day) of each March, June,
September and December thereafter prior to and including the Conversion Date (an
"Interest Payment Date"), and shall be computed on the basis of a year of 365 or
366 days, as appropriate, for the actual number of days elapsed. Interest on the
Bonds shall first accrue from and including the date of the first authentication
and delivery of Bonds to and including September 1, 1997, and commencing
September 1, 1997, and until the Conversion Date, interest on the Bonds shall
accrue from and including each Interest Payment Date to and including the day
next preceding the following Interest Payment Date.

      For the period from and including the day of the first authentication and
delivery of Bonds to and including the Wednesday of the next succeeding calendar
week, the Bonds shall bear interest at a rate equal to the rate set on the date
prior to the issuance of the Bonds in the manner set forth in subparagraphs (a),
(b) and (c) of this paragraph. Thereafter and prior to the Conversion Date, for
each period from and including the first Thursday following a Rate Computation
Date to and including the next succeeding Wednesday (each such period, including
the first period described in the immediately preceding sentence, being
hereinafter called a "Rate Period"), the interest rate on the Bonds shall be
determined as follows:

            (a) On the Rate Computation Date of each calendar week the
Remarketing Agent shall determine that interest rate which, if borne by the
Bonds, would, in its judgment having due regard to prevailing financial market
conditions and the yields at which comparable securities are then being sold, be
the interest rate necessary, but which would not exceed the interest rate
necessary, to enable the Remarketing Agent to sell the Bonds at the principal
amount thereof, and the interest rate so determined shall be the interest rate
on the Bonds for the next succeeding Rate Period; provided,


                                     A-4
<PAGE>

however, such rate may be adjusted by the Remarketing Agent on any date during
such Rate Period if such an adjustment is needed in order to enable the
Remarketing Agent to remarket a Bond which has been tendered for purchase in
accordance with the Indenture and the provisions hereinabove set forth. Such
determination or adjustment shall be based on the knowledge of the Remarketing
Agent of actual sales or pricing during the prior 105 days of securities which
in the judgment of the Remarketing Agent are comparable to the Bonds and
prevailing market conditions, or the marketing efforts with, or solicitation of
proposals from, not less than three institutional or money fund investors or
other entities or individuals who customarily purchase industrial development
bonds or other tax-exempt securities in denominations of $100,000 or more. Any
such adjustment of the rate occurring during a Rate Period shall apply to all of
the Bonds outstanding at the time that such adjustment is made, and shall be
effective beginning on the date immediately following the date on which such
rate is announced by the Remarketing Agent and thereafter to the beginning of
the next Rate Period. On the same Business Day the Remarketing agent shall give
telegraphic or telephonic notice, promptly confirmed in writing, to the Trustee
and the Company specifying the interest rate so determined.

            (b) In the event that no person is serving as the Remarketing Agent
on the applicable Rate Computation Date, or if at any time the Remarketing Agent
fails to establish the Variable Rate in accordance with the procedure described
in the preceding paragraph, then the Variable Rate for the Rate Period affected
shall be the same as for the preceding Rate Period. If no Variable Rate has been
established for the two immediately preceding Rate Periods, then the Variable
Rate for such Rate Period shall be determined by the Trustee and shall be a
percentage per annum (not to exceed the Maximum Rate) equal to eighty percent
(80%) of the bond equivalent yield (calculated in accordance with standard
practice in the banking industry) applicable to 91-day United States Treasury
bills determined on the basis of the average per annum discount rate at which
such 91-day Treasury bills shall have been sold at the most recent Treasury
auction of such 91-day Treasury bills as quoted or published by the Federal
Reserve Board of any department or agency of the United States of America;
provided further, that in the event that there shall not have been a Treasury
auction of such 91-day Treasury bills on any date during the ten (10) Business
Days immediately preceding such date of determination of the Variable Rate, or
in the event that such discount rates for any Treasury auction of such 91-day
Treasury bills during such ten (10) Business Day period shall not be quoted or
published by the Federal Reserve Board or any department or agency of the United
States of America, the Variable Rate for the immediately preceding Rate Period
shall remain in effect for such Rate Period.

            (c) Notwithstanding the foregoing the interest rate on the Bonds
shall never exceed a rate which would cause the net effective interest rate for
the Bonds as of any date, computed in accordance with applicable usury law, to
exceed 12%. All calculations of the Variable Rate shall be rounded to the
nearest one-hundredth of one percent (.01%).

      The determination of the Variable Rate by the Remarketing Agent of the
Trustee shall be conclusive and binding upon the owners of the Bonds.

      The term "Rate Computation Date" shall mean (i) the Business Day next
preceding the date of the first authentication and delivery of the Bonds, and
(ii) the Wednesday of each calendar week


                                     A-5
<PAGE>

thereafter, provided that if any Wednesday is not a Business Day then the Rate
Computation Date shall be the first Business Day preceding such Wednesday.

      The Issuer has appointed Blount Parrish & Roton, Inc., Montgomery,
Alabama, as Remarketing Agent under the Indenture. The Issuer may from time to
time, at the direction of the Company, remove or replace the Remarketing Agent.

      The owner of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the covenants therein, or to
take any action with respect to any event of default under the Indenture, or to
institute, appear in and defend any suit or other proceeding with respect
thereto, except as provided in the Indenture. In certain events, on the
conditions, in the manner and with the effect set forth in the Indenture, the
principal of this Bond may be declared and may become due and payable before the
stated maturity thereof, together with accrued interest thereon.

      Modifications or alterations of the Indenture, or of any indenture
supplemental thereto, may be made only to the extent and in the circumstances
permitted by the Indenture.

      Prior to the Conversion Date, the Bonds are subject to redemption prior to
maturity as follows:

            (a) The Bonds shall be redeemed in the event the Company shall elect
to exercise its option set forth in Section 9.2 of the Loan Agreement to prepay
installments payable under the Loan Agreement upon the occurrence of any of the
events specified in such section, in whole but not in part, at any time, at a
redemption price equal to the principal amount being redeemed plus accrued
interest to the redemption date. Such redemption shall be made only with the
prior written consent of the Bank.

            (b) The Bonds shall be redeemed in the event the Company shall
become obligated to prepay installments payable under the Loan Agreement upon
the occurrence of a "Determination of Taxability," as such term is defined in
Section 9.3 of the Loan Agreement, in whole at any time, at a redemption price
equal to 103% of the principal amount thereof plus accrued interest to the
redemption date. Fewer than all of the Bonds may be redeemed if, in the opinion
of Bond Counsel, redemption of fewer than all the Bonds would result in the
interest payable on the Bonds remaining Outstanding being excluded from gross
income for Federal income tax purposes. Notice of a redemption pursuant to this
Section shall be sent to the Holders within thirty days after the occurrence of
a Determination of Taxability.

            (c) The Bonds may be redeemed at the option of the Issuer, to be
exercised as directed by the Company, with the prior written consent of the
Bank, in whole at any time or in part (in denominations of $100,000 or any
integral multiple thereof) on any Interest Payment Date (and if in part, by lot
or in such other manner as may be determined by the Trustee to be fair and
equitable), at a redemption price equal to the principal amount being redeemed
plus accrued interest to the redemption date in the event the Company exercises
its right to prepay installments on the Note in order to redeem Bonds as set
forth in Section 9.1 of the Loan Agreement.


                                     A-6
<PAGE>

            (d) The Bonds are subject to mandatory sinking fund redemption prior
to their scheduled maturity on June 1, 1999, and on each succeeding June 1 to
and including June 1, 2009, in the principal amount of $600,000. The remaining
$400,000 in principal amount of Bonds shall be redeemed on June 1, 2010.

            (e) The Bonds shall be redeemed, in whole or in part, and without
premium, at the direction of the Bank following the occurrence of an "Event of
Default" under the Letter of Credit and Reimbursement Agreement under which the
Letter of Credit was issued at a redemption price equal to the principal amount
thereof to be redeemed plus accrued interest to, but not including, the
redemption date.

            (f) Bonds purchased on the Mandatory Purchase Date described in
subsection (c) below of the provisions relating to mandatory purchase of Bonds
shall not be remarketed but rather shall be deemed to have been redeemed and
shall be canceled.

            (g) The Bonds are subject to mandatory redemption after the
Completion Date with respect to the Project, to the extent of any excess
proceeds remaining in the Construction Fund and transferred to the Bond Fund
under Section 605 of the Indenture.

            (h) The Bonds shall be redeemed in whole prior to their scheduled
maturity at a redemption price equal to the principal amount thereof, without
premium, plus accrued interest to the redemption date on the first Interest
Payment Date which is not less than 90 days after the Issuer has notified the
Trustee and the Bank in writing that the Company has, in the opinion of the
Issuer, ceased to operate the Project as an "industrial project for industry"
within the meaning of the Act. A cessation of operation shall not be deemed to
have occurred until 90 days shall have elapsed after written notice has been
given to the Company and the Bank by the Issuer that operations at the Project
shall have ceased and the Company shall not have demonstrated to the
satisfaction of the Issuer that the Company has resumed the operations of the
Project as an "industrial project for industry" within the meaning of the Act or
that the Company is, in good faith, seeking to arrange resumption of an
economically reasonable operation of the Project by the Company or, if permitted
under the Loan Agreement, by an assignee or purchaser of the Project as such an
"industrial project for industry"; provided that a temporary shutdown due to a
strike or other labor dispute, lack of fuel or similar occurrence shall not be
deemed a cessation of operation.

      In the event any of the Bonds or portions thereof (which shall be $100,000
or any integral multiple of $5,000 in excess thereof) are called for redemption,
notice thereof shall be given by the Trustee by first class mail to the
registered owner of each such Bond addressed to such registered owner at his
registered address and placed in the mails not less than twenty (20) days prior
to the date fixed for redemption; provided, however, that failure to give such
notice by mailing, or any defect therein, shall not affect the validity of the
proceedings for the redemption of any Bond with respect to which no such failure
or defect has occurred. Each notice shall identify the Bonds or portions thereof
being called, and the date on which they shall be presented for payment. After
the date specified in such call, the Bond or Bonds so called will cease to bear
interest provided funds sufficient for their redemption have been deposited with
the Trustee, and, except for the purpose of payment, shall no longer be
protected by the Indenture and shall not be deemed to be outstanding under the


                                     A-7
<PAGE>

provisions of the Indenture. If Bonds are redeemed in part, a portion of a Bond
may be redeemed only if the holder of such Bond will hold, following such
partial redemption, Bonds in a denomination of at least $100,000; provided that,
if a redemption cannot be effected to result in denominations of $100,000 for
all holders, the Trustee shall select Bonds for redemption so that one holder
owns Bonds with a principal amount that is less $100,000.

      The Bonds are subject to mandatory purchase on the following dates (each
of which is designated a Mandatory Purchase Date):

      (a) on the Conversion Date, at a purchase price equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon to but not
including the date of purchase, and shall be paid from the proceeds of a draw
under the Letter of Credit in accordance with Section 509 hereof;

      (b) on any Credit Modification Date, at a purchase price equal to 100% of
the principal amount thereof, plus interest accrued to the Mandatory Purchase
Date, and shall be paid from the proceeds of a draw under the Letter of Credit
in accordance with Section 509 hereof; and

      (c) on the Business Day that is fifteen days prior to the expiration or
termination date of the Letter of Credit then in effect (or if such date is not
a Business Day, on the next preceding Business Day) in the event the Company has
not provided notice that a Substitute Letter of Credit will be provided in
accordance with Section 409.

      A Credit Modification Date shall mean a Substitution Date if either of the
following occurs:

            (i) if the Bonds are then rated by a Rating Agency, the Company
      provides notice that a Substitute Letter of Credit will be provided in
      accordance with Section 409 of the Indenture but fails to deliver to the
      Trustee the letter from any Rating Agency then rating the Bonds as
      required by Section 409(c), or (2) the Company delivers such notice and
      the letter required by Section 409(c) but prior to the Substitution Date
      such Rating Agency revokes such letter, or (3) the Company delivers such
      notice and letter but such Substitute Letter of Credit is not delivered
      to, and accepted by, the Trustee on or prior to the Substitution Date; or

            (ii) the Bonds are not then rated and (1) the Company provides
      notice that a Substitute Letter of Credit will be provided in accordance
      with Section 409 of the Indenture but fails to deliver to the Trustee the
      evidence required by Section 409(d), or (2) the Company delivers such
      notice and evidence but such Substitute Letter of Credit is not delivered
      to, and accepted by, the Trustee on or prior to the Substitution Date.

      Notice of mandatory purchase shall be given as set forth above in
connection with a redemption of Bonds at least 30 days prior to the Mandatory
Purchase Date; provided that in the event of a Credit Modification Date
resulting from a failure by the Company to deliver a Substitute Letter of Credit
on the Substitution Date, such mandatory purchase shall occur as soon as
practicable after such failure, but in all events no later than two Business
Days preceding the termination or expiration of the Letter of Credit then in
effect, and notice thereof shall be given as soon as practicable to the holders.


                                     A-8
<PAGE>

      In the event the Trustee does not receive the Substitute Letter of Credit
required for a mandatory purchase under section (c) above by 5:00 p.m., Central
Time, on the Business Day preceding the Mandatory Purchase Date designated
thereunder, the Bonds shall be purchased on the Mandatory Purchase Date, and the
Trustee shall draw on the Letter of Credit to pay the Purchase Price of such
Bonds.

      This Bond may be transferred on the books of registration kept by the
Trustee by the registered owner or by his duly authorized attorney upon
surrender hereof, together with a written instrument of transfer duly executed
by the registered owner or his duly authorized attorney.

      Prior to the Conversion Date, the Bonds are issuable as registered Bonds
without coupons in denominations of $100,000 or any integral multiple of $5,000
in excess thereof, except as otherwise provided in the Indenture. Subject to the
limitations and upon payment of the charges provided in the Indenture, Bonds may
be exchanged for a like aggregate principal amount of Bonds of other authorized
denominations.

      This Bond is issued with the intent that the laws of the State of North
Carolina will govern its construction.

      IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required to exist, happen and be performed precedent to and in the
issuance of the Bonds do exist, have happened and have been performed in due
time, form and manner as required by law; that the indebtedness represented by
the Bonds, together with all obligations of the Issuer, does not exceed any
constitutional or statutory limitation.

      This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the Certificate of
Authentication hereon shall have been signed by the Trustee.



                                     A-9
<PAGE>

      IN WITNESS WHEREOF, The Pender County Industrial Facilities and Pollution
Control Financing Authority has caused this Bond to be signed by the manual or
facsimile signature of its Chairman or Vice Chairman, its seal to be affixed
hereto or a facsimile of its seal to be printed hereon or affixed hereto and
attested by its Secretary or Assistant Secretary, and this Bond to be dated June
__, 1997.

                               THE PENDER COUNTY INDUSTRIAL FACILITIES AND
                               POLLUTION CONTROL FINANCING AUTHORITY



                               By:____________________________________
(SEAL)                            Chairman

ATTEST:



By:_________________________________
      Secretary



                                     A-10
<PAGE>

               (Form of Trustee's Certificate of Authentication)


Date of Authentication: __________________________

      This Bond is one of the Bonds described in the within-mentioned Indenture.


                               NORWEST BANK MINNESOTA, NATIONAL
                               ASSOCIATION, as Trustee



                               By:____________________________________
                                        Authorized Officer



                             (Form of Assignment)

ASSIGNMENT

      FOR VALUE RECEIVED, ____________________________________ ("Transferor"),
hereby sells, assigns and transfers unto
________________________________________, the within Bond and all rights
thereunder, and hereby irrevocably constitutes and appoints
_____________________________ ("Transferee") as attorney to transfer the within
Bond on the books kept for registration thereof with full power of substitution
in the premises.

      DATE:  ___________, _____

                                        _____________________________
                                                  Transferor


GUARANTEED BY:



_________________________________________________
NOTICE:  Signature(s) must be guaranteed
by a member firm of the New York Stock
Exchange or a commercial bank or a trust
company.


                                     A-11
<PAGE>

                                   EXHIBIT B

                            Form of Fixed Rate Bond

No. _____                                                      $______________

                           UNITED STATES OF AMERICA
                           STATE OF NORTH CAROLINA
                   THE PENDER COUNTY INDUSTRIAL FACILITIES
                  AND POLLUTION CONTROL FINANCING AUTHORITY
                     INDUSTRIAL DEVELOPMENT REVENUE BONDS
                  (LESLIE-LOCKE, INC. PROJECT), SERIES 1997


Date of Bond:                                     Maturity Date:  June 1, 2010

Interest Rate:  ____% per annum

                                                          CUSIP:  ____________

Registered Owner:

Principal Amount:


KNOWN ALL MEN BY THESE PRESENTS:

      That The Pender County Industrial Facilities and Pollution Control
Financing Authority, a political subdivision of the State of North Carolina (the
"Issuer"), for value received, promises to pay to the registered owner shown
above, or registered assigns, but solely from the source and in the manner
hereinafter set forth, on the maturity date shown above, the principal amount
shown above and in like manner to pay interest on said amount from the date
hereof shown above until payment of such principal amount has been made or duly
provided for, at the rate per annum shown above, semiannually on June 1 and
December 1 of each year commencing on the June 1 or December 1 next succeeding
the date of this Bond (an "Interest Payment Date"), except as the provisions
hereinafter set forth with respect to the redemption of which Bond prior to
maturity may become applicable hereto. The principal of and premium, if any, on
this Bond are payable in lawful money of the United States of America upon the
presentation and surrender hereof at the principal corporate trust office of
Norwest Bank Minnesota, National Association, or its successor or successors, as
Trustee (the "Trustee"), and interest on this Bond is payable in like money to
the registered owner hereof by check or draft drawn upon the Trustee and mailed
to the person in whose name this Bond is registered at the close of business on
the fifteenth day of the calendar month preceding each Interest Payment Date
(the "Record Date"), irrespective of any transfer or exchange of this Bond
subsequent to such Record Date and prior to such Interest Payment Date.



                                     B-1
<PAGE>

      This Bond, designated "The Pender County Industrial Facilities and
Pollution Control Financing Authority Industrial Development Revenue Bonds
(Leslie-Locke, Inc. Project), Series 1997," is one of a series of Bonds in the
aggregate principal amount of Seven Million Dollars ($7,000,000) (the "Bonds"),
issued for the purpose of financing the cost of construction of an expansion to
an existing facility and of acquisition and installation of equipment therein
for the manufacture of building products (the "Project") for Leslie-Locke, Inc.,
a North Carolina corporation (the "Company"), and paying expenses of issuing
such bonds. The Bonds are all issued under and are all equally and ratably
secured and entitled to the protection given by an Indenture of Trust dated as
of June 1, 1997 (the "Indenture"), duly executed and delivered by the Issuer to
the Trustee. Reference is hereby made to the Indenture and all indentures
supplemental thereto for the provisions, among others, with respect to the
nature and extent of the security, the rights, duties and obligations of the
Issuer, the Trustee and the registered owners of the Bonds, and the terms upon
which the Bonds are issued and secured. The terms and conditions of the
financing of the Project, the use of the proceeds of the Bonds by the Company
for such purpose, and the payment of certain amounts thereunder, are contained
in a Loan Agreement dated as of June 1, 1997 (the "Loan Agreement"), by and
between the Issuer and the Company. Pursuant to the Loan Agreement, the Company
has caused Branch Banking and Trust Company (the "Bank") to issue an irrevocable
Letter of Credit (the "Letter of Credit"), issued in favor of the Trustee dated
_______________, _____, in an amount sufficient to pay the outstanding principal
amount of, premium, if any, and unpaid interest on the Bonds, but not to exceed
$_________________, which Letter of Credit expires on _______________, _____.
Substitute letters of credit may be delivered in accordance with Section 409 of
the Indenture. Reference is hereby made to the Indenture, the Loan Agreement,
the Note and the Letter of Credit and to all amendments and supplements thereto
for a description of the provisions, among others, with respect to the nature
and extent of the security, the default provisions, the rights, duties and
obligations of the Issuer and the Trustee or the rights of the holders of the
Bonds and the terms upon which the Bonds are issued and secured. All capitalized
terms not defined herein shall have the meanings given them in the Indenture.

      The Bonds are issued pursuant to and in full compliance with the laws of
the State of North Carolina, particularly the Industrial Facilities and
Pollution Control Financing Act, Chapter 159C of the North Carolina General
Statutes, as amended (the "Act"), and pursuant to a resolution of the Issuer,
which authorized the execution and delivery of the Indenture. This Bond is a
limited obligation of the Issuer payable solely from the Revenues, as defined in
the Indenture, which Revenues have been pledged and assigned to the Trustee for
the benefit of the Bondholders to secure payment of this Bond. THIS BOND AND THE
ISSUE OF WHICH IT IS A PART AND THE PREMIUM, IF ANY, AND INTEREST THEREON AND
PURCHASE PRICE THEREFOR ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY
FROM THE REVENUES AND RECEIPTS DERIVED FROM THE LOAN AGREEMENT, INCLUDING
PAYMENTS RECEIVED UNDER THE NOTE AND THE LETTER OF CREDIT, WHICH REVENUES AND
RECEIPTS HAVE BEEN PLEDGED AND ASSIGNED TO THE TRUSTEE TO SECURE PAYMENT OF THE
BONDS. THE BONDS, THE PREMIUM, IF ANY, AND THE INTEREST THEREON SHALL NOT BE
DEEMED TO CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF
NORTH CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE ISSUER.
NEITHER THE STATE OF NORTH CAROLINA NOR ANY POLITICAL SUBDIVISION THEREOF,
INCLUDING THE ISSUER,


                                     B-2
<PAGE>

SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE
BONDS OR OTHER COSTS INCIDENT THERETO EXCEPT FROM THE REVENUES AND RECEIPTS
PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE
STATE OF NORTH CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE
ISSUER, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR
INTEREST ON THE BONDS OR OTHER COSTS INCIDENT THERETO.

The Bonds are not general obligations of the Issuer but are special obligations
payable solely from revenues derived from the Loan Agreement.

      The Loan Agreement provides for payments by the Company in amounts
sufficient to provide for the payment of the principal of and interest on the
Bonds as due and payable. Provision has been made in the Loan Agreement for such
payments to be paid directly to the Trustee and deposited in a special account
of the Issuer designated "Industrial Development Revenue Bond Fund
(Leslie-Locke, Inc. Project)," and such payments have been duly assigned to the
Trustee for that purpose.

      The owner of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the covenants therein, or to
take any action with respect to any event of default under the Indenture, or to
institute, appear in and defend any suit or other proceeding with respect
thereto, except as provided in the Indenture. In certain events, on the
conditions, in the manner and with the effect set forth in the Indenture, the
principal of this Bond may be declared and may become due and payable before the
stated maturity thereof, together with accrued interest thereon.

      Modifications or alterations of the Indenture, or of any indenture
supplemental thereto, may be made only to the extent and in the circumstances
permitted by the Indenture.

      The Bonds are subject to redemption prior to maturity as follows:

            (a) The Bonds shall be redeemed in the event the Company shall elect
to exercise its option set forth in Section 9.2 of the Loan Agreement to prepay
installments payable under the Loan Agreement upon the occurrence of any of the
events set forth in such section, in whole but not in part, at any time, at a
redemption price equal to the principal amount being redeemed plus accrued
interest to the redemption date. Such redemption shall be made only with the
prior written consent of the Bank.

            (b) The Bonds shall be redeemed in the event the Company shall
become obligated to prepay installments payable under the Loan Agreement upon
the occurrence of a "Determination of Taxability," as such term is defined in
Section 9.3 of the Loan Agreement, in whole but not in part, at any time, at a
redemption price equal to 103% of the principal amount thereof plus accrued
interest to the redemption date. Fewer than all of the Bonds may be redeemed if
redemption of fewer than all the Bonds would result in the interest payable on
the Bonds remaining outstanding being excluded from gross income for Federal
income tax purposes. Such redemption shall occur within thirty days after the
occurrence of a determination of taxability.


                                     B-3
<PAGE>

            (c) The Bonds shall be subject to redemption, at the direction of
the Company, with the prior written consent of the Bank, in whole or in part (in
denominations of $100,000 or any integral multiple thereof) on any Interest
Payment Date occurring after the applicable period of Call Protection set forth
below at a price equal to the principal amount thereof plus a redemption premium
(expressed as a percentage of principal amount) plus accrued interest thereon to
the redemption date as follows:


<TABLE>
<CAPTION>
                              Redemption Prices as a
                              Percentage of Principal          Call Protection (Length of
Length of Period from the     Amount (measured from and        time (measured from the
Interest Payment Date         including the Interest           Interest Payment Date
immediately succeeding the    Payment Date immediately         immediately succeeding
Conversion Date to June       succeeding the Conversion        the Conversion Date) before
1, 2010                       Date)                            Bonds may be called)
-----------------------       -------------------------        ---------------------------
<S>                           <C>                              <C>
Greater than 10 years         After 5 years (less one day)     5 years (less one day)
                              at 102%, declining 1/2% per 6
                              months

Less than or equal to 10 and  After 3 years (less one day)     3 years (less one day)
greater than 7 years          at 101-1/2%, declining 1/2%
                              per 6 months


Less than or equal to 7 and   After 2 years (less one day) at  2 years (less one day)
greater than 4 years          101%, declining 1/2% per
                              6 months


Less than or equal to 4 and   After 2 years (less one day) at  2 years (less one day)
greater than 3 years          100-1/2%, declining 1/2% per
                              6 months


Less than or equal to 3 and   After 1 year (less one day) at   1 year (less one day)
greater than 2 years          100-1/2%, declining 1/2% per
                              6 months


Less than or equal to 2 and   After 1 year (less one day) at   1 year (less one day)
greater than 1 year           100%

Less than or equal to 1 year  On or after the first Interest   The portion of such period
                              Payment Date during such         prior to the first Interest
                              period at 100%                   Payment Date therein
</TABLE>



                                     B-4
<PAGE>


If Bonds are redeemed in part, a portion of a Bond may be redeemed only if the
holder of such Bond will hold, following such partial redemption, Bonds in a
denomination of at least $100,000.

            (d) The Bonds are subject to mandatory sinking fund redemption prior
to their scheduled maturity on June 1, 1999, and on each succeeding June 1 to
and including June 1, 2009, in the principal amount of $600,000. The remaining
$400,000 in principal amount of Bonds shall be redeemed on June 1, 2010.

            (e) The Bonds shall be redeemed, in whole or in part, and without
premium, at the direction of the Bank following the occurrence of an "Event of
Default" under the Letter of Credit and Reimbursement Agreement under which the
Letter of Credit was issued at a redemption price equal to the principal amount
thereof to be redeemed plus accrued interest to, but not including, the
redemption date.

            (f) Bonds purchased on the Mandatory Purchase Date described the
provisions hereof relating to mandatory purchase of Bonds shall not be
remarketed but rather shall be deemed to have been redeemed and shall be
canceled.

            (g) The Bonds are subject to mandatory redemption after the
Completion Date with respect to the Project, to the extent of any excess
proceeds remaining in the Construction Fund and transferred to the Bond Fund
under Section 605 of the Indenture. If Bonds are redeemed in part, a portion of
a Bond may be redeemed only if the holder of such Bond will hold, following such
partial redemption, Bonds in a denomination of at least $100,000; provided that,
if a redemption cannot be effected to result in denominations of $100,000 for
all holders, the Trustee shall select Bonds for redemption so that one holder
owns Bonds with a principal amount that is less $100,000.

      In the event the Bonds are called for redemption, notice thereof shall be
given by the Trustee by first-class mail to the registered owner of each such
Bond addressed to such registered owner at his registered address and placed in
the mails not less than 30 days prior to the date fixed for redemption;
provided, however, that failure to give such notice by mailing, or any defect
therein, shall not affect the validity of the proceedings for the redemption of
any Bond with respect to which no such failure or defect has occurred. Each
notice shall identify the Bonds being called, and the date on which they shall
be presented for payment. After the date specified in such call, the Bond or
Bonds so called will cease to bear interest provided funds sufficient for their
redemption have been deposited with the Trustee, and, except for the purpose of
payment, shall no longer be protected by the Indenture and shall not be deemed
to be outstanding under the provisions of the Indenture.



                                     B-5
<PAGE>

      The Bonds are subject to mandatory purchase on the following dates (each
of which is designated a Mandatory Purchase Date):

      (a) on any Credit Modification Date, at a purchase price equal to 100% of
the principal amount thereof, plus interest accrued to the Mandatory Purchase
Date, and shall be paid from the proceeds of a draw under the Letter of Credit
in accordance with Section 509 of the Indenture; and

      (b) on the Business Day that is fifteen days prior to the expiration or
termination date of the Letter of Credit then in effect (or if such date is not
a Business Day, on the next preceding Business Day) in the event the Company has
not provided notice that a Substitute Letter of Credit will be provided in
accordance with Section 409.

      A Credit Modification Date shall mean a Substitution Date if either of the
following occurs:

            (i) if the Bonds are then rated by a Rating Agency, the Company
      provides notice that a Substitute Letter of Credit will be provided in
      accordance with Section 409 of the Indenture but fails to deliver to the
      Trustee the letter from any Rating Agency then rating the Bonds as
      required by Section 409(c), or (2) the Company delivers such notice and
      the letter required by Section 4009(c) but prior to the Substitution Date
      the Rating Agency revokes such letter, or (3) the Company delivers such
      notice and letter but such Substitute Letter of Credit is not delivered
      to, and accepted by, the Trustee on or prior to the Substitution Date; or

            (ii) the Bonds are not then rated and (1) the Company provides
      notice that a Substitute Letter of Credit will be provided in accordance
      with Section 409 of the Indenture but fails to deliver to the Trustee the
      evidence required by Section 409(d), or (2) the Company delivers such
      notice and evidence but such Substitute Letter of Credit is not delivered
      to, and accepted by, the Trustee on or prior to the Substitution Date.

      Notice of mandatory purchase shall be given as set forth above in
connection with a redemption of Bonds at least thirty (30) days prior to the
Mandatory Purchase Date; provided that in the event of a Credit Modification
Date resulting from a failure by the Company to deliver a Substitute Letter of
Credit on the Substitution Date, such mandatory purchase shall occur as soon as
practicable after such failure, but in all events no later than two Business
Days preceding the termination or expiration of the Letter of Credit then in
effect, and notice thereof shall be given as soon as practicable to the holders.

      In the event that the Trustee does not receive the opinion of Bond Counsel
and the Substitute Letter of Credit required for a mandatory purchase on a
Conversion Date under the Indenture by 5:00 p.m. Central time on the Business
Day preceding the Conversion Date, the interest rate on the Bonds shall not be
converted, the Bonds shall be purchased on such date and shall thereafter bear
interest at the Variable Rate.

      This Bond may be transferred on the books of registration kept by the
Trustee by the registered owner or by his duly authorized attorney upon
surrender hereof, together with a written instrument of transfer duly executed
by the registered owner or his duly authorized attorney.


                                     B-6
<PAGE>

      The Bonds are issuable as registered Bonds without coupons in
denominations of $100,000 and any integral multiple of $5,000 in excess thereof;
provided that, if the Bonds are rated A or better by a nationally recognized
rating agency, the Bonds may, at the direction of the Company, be issued in the
denomination of $5,000, or any integral multiple of $5,000 in excess thereof.
Subject to the limitations and upon payment of the charges provided in the
Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds
of other authorized denominations.

      This Bond is issued with the intent that the laws of the State of North
Carolina will govern its construction.

      IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required to exist, happen and be performed precedent to and in the
issuance of the Bonds do exist, have happened and have been performed in due
time, form and manner as required by law; that the indebtedness represented by
the Bonds, together with all obligations of the Issuer, does not exceed any
constitutional or statutory limitation.

      This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the Certificate of
Authentication hereon shall have been signed by the Trustee.

      IN WITNESS WHEREOF, The Pender County Industrial Facilities and Pollution
Control Financing Authority has caused this Bond to be signed by the manual or
facsimile signature of its Chairman or Vice Chairman, its seal to be affixed
hereto or a facsimile of its seal to be printed hereon or affixed hereto and
attested by its Secretary or Assistant Secretary and this Bond to be dated
____________ ___, ____.

                   THE PENDER COUNTY INDUSTRIAL FACILITIES AND
                               POLLUTION CONTROL FINANCING AUTHORITY



                               By:______________________________________
(SEAL)                                          Chairman


ATTEST:


_____________________________
Secretary


                                     B-7
<PAGE>

               (Form of Trustee's Certificate of Authentication)

Date of Authentication:  _______________________

      This Bond is one of the Bonds described in the within-mentioned Indenture.

                              NORWEST BANK MINNESOTA, NATIONAL
                              ASSOCIATION, as Trustee



                               By:______________________________________
                                          Authorized Officer




                                     B-8
<PAGE>

                                   EXHIBIT C

                                  REQUISITION

Requisition No. ______________________                        __________, 199_

Norwest Bank Minnesota, National
  Association, as Trustee
Sixth and Marquette
Minneapolis, Minnesota 55479-0069
Attention: ___________________________

Sirs:

      On behalf of The Pender County Industrial Facilities and Pollution Control
Financing Authority (the Issuer), I hereby requisition pursuant to Section 604
of an Indenture of Trust dated as of June 1, 1997 (the Indenture), between the
Issuer and you as Trustee the sum of $_________ to be paid by check or wire
transfer at the following address or in accordance with the following wire
instructions:

_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________



      I hereby certify that (a) such obligation has been incurred by
Leslie-Locke, Inc. (the Company) in or about the acquisition, construction and
installing of the Project, as defined in the Indenture, (b) each item is a
proper charge against the Construction Fund, as defined in the Indenture, (c)
such obligation has not been the basis for a prior requisition which has been
paid, and (d) attached hereto is the certificate required by Section 604 of the
Indenture. Evidence of the obligation referred to hereinabove is attached
hereto.



                           _____________________________________________________
                           Authorized Representative of Leslie-Locke, Inc.



Consented to and approved by:

BRANCH BANKING AND TRUST COMPANY


By:_______________________________
   Its:___________________________


                                     C-1
<PAGE>

                                  CERTIFICATE



      I hereby certify that (a) no written notice of any lien (other than any
lien in favor of the Bank), right to lien or attachment upon, or claim affecting
the right to receive payment of, any of the moneys payable under the requisition
above has been received, (b) such requisition contains no items representing
payment on account of any retained percentages entitled to be retained at this
date, (c) the payment of such requisitions will not result in less than 97% of
the net proceeds of the Bonds, as defined in the Indenture, expended or to be
expended under such requisition and all prior requisitions, being considered as
having been used for the acquisition, construction, reconstruction or
improvement of land or property of a character subject to the allowance for
depreciation within the meaning of Section 144(a) of the Internal Revenue Code
of 1986, as amended, (d) the payment of such requisition will not violate the
prohibitions or requirements relating to the use of proceeds set forth in
Exhibit C and Section 6.5 of the Loan Agreement, as defined in the Indenture,
and (e) no Event of Default, as defined in the Indenture, or event which after
notice or lapse of time or both would constitute an Event of Default has
occurred and not been waived or cured.


                              ______________________________________________
                              Authorized Representative of
                              Leslie-Locke, Inc.



                                     C-2