ONEITA INDUSTRIES, INC.
                                   $37,500,000
                       12% Senior Secured Notes due , 2001

                             NOTE PURCHASE AGREEMENT

                               Dated [ ] __, 1998


<PAGE>
                                TABLE OF CONTENTS
                                -----------------
                                                              Page
                                                              ----
1.   AUTHORIZATION OF NOTES. . . . . . . . . . . . . . . . . . .1
2.   EXCHANGE AND ISSUANCE OF NOTES. . . . . . . . . . . . . . .1
3.   CLOSING.. . . . . . . . . . . . . . . . . . . . . . . . . .2
4.   INTEREST ON NOTES.. . . . . . . . . . . . . . . . . . . . .2
5.   CONDITIONS TO CLOSING.. . . . . . . . . . . . . . . . . . .2
     5.1. Representations and Warranties . . . . . . . . . . . .3
     5.2. Performance; No Default. . . . . . . . . . . . . . . .3
     5.3. Compliance Certificates. . . . . . . . . . . . . . . .3
     5.4. Opinions of Counsel. . . . . . . . . . . . . . . . . .3
     5.5. Exchange Permitted By Applicable Law, etc. . . . . . .4
     5.6. Payment of Special Counsel Fees. . . . . . . . . . . .4
     5.7. Private Placement Number . . . . . . . . . . . . . . .5
     5.8. Changes in Corporate Structure . . . . . . . . . . . .5
     5.9. Security Documents . . . . . . . . . . . . . . . . . .5
     5.10.Mortgage(s) and Title Insurance. . . . . . . . . . . .5
     5.11.Fayette Facilities . . . . . . . . . . . . . . . . . .6
     5.12.Intercreditor Agreement. . . . . . . . . . . . . . . .6
     5.13.Financing Statements . . . . . . . . . . . . . . . . .7
     5.14.Appraisals . . . . . . . . . . . . . . . . . . . . . .7
     5.15.Surveys and Other Reports. . . . . . . . . . . . . . .7
     5.16.Insurance. . . . . . . . . . . . . . . . . . . . . . .7
     5.17.New Revolving Credit Agreement . . . . . . . . . . . .8
     5.18.Foothill Subordinated Note . . . . . . . . . . . . . .8
     5.19.Cash Payment . . . . . . . . . . . . . . . . . . . . .8
     5.20.Issuance of New Common . . . . . . . . . . . . . . . .8
     5.21.Confirmation Order . . . . . . . . . . . . . . . . . .8
     5.22.Release of Certain Existing Liens. . . . . . . . . . .8
     5.23.Exchange of Notes. . . . . . . . . . . . . . . . . . .9
     5.24.Proceedings and Documents. . . . . . . . . . . . . . .9
6.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . .9
     6.1. Organization; Power and Authority. . . . . . . . . . .9
     6.2. Authorization, etc . . . . . . . . . . . . . . . . . .9
     6.3. Disclosure . . . . . . . . . . . . . . . . . . . . . .10
     6.4. Organization and Ownership of Shares of Subsidiaries;
          Affiliates . . . . . . . . . . . . . . . . . . . . . .10
     6.5. Title to Property; Leases. . . . . . . . . . . . . . .11
     6.6. Ownership of Certain Subsidiaries. . . . . . . . . . .11
<PAGE>
     6.7. Intentionally Left Blank . . . . . . . . . . . . . . .11
     6.8. Equipment. . . . . . . . . . . . . . . . . . . . . . .11
     6.9. Location of Inventory and Equipment. . . . . . . . . .11
     6.10.Inventory Records. . . . . . . . . . . . . . . . . . .12
     6.11.Location of Chief Executive Office; FEIN . . . . . . .12
     6.12.Solvency . . . . . . . . . . . . . . . . . . . . . . .12
     6.13.No Material Adverse Change . . . . . . . . . . . . . .12
     6.14.Intentionally Left Blank . . . . . . . . . . . . . . .12
     6.15.Compliance with Laws, Other Instruments, etc . . . . .12
     6.16.Litigation; Observance of Agreements, Statutes and 
          Orders . . . . . . . . . . . . . . . . . . . . . . . .13
     6.17.Taxes. . . . . . . . . . . . . . . . . . . . . . . . .13
     6.18.Licenses, Permits, etc . . . . . . . . . . . . . . . .13
     6.19.Compliance with ERISA. . . . . . . . . . . . . . . . .14
     6.20.Private Offering by the Company. . . . . . . . . . . .15
     6.21.Existing Indebtedness; Material Agreements; Future 
          Liens  . . . . . . . . . . . . . . . . . . . . . . . .15
     6.22.Foreign Assets Control Regulations, etc. . . . . . . .15
     6.23.Status under Certain Statutes. . . . . . . . . . . . .15
     6.24.Environmental Matters. . . . . . . . . . . . . . . . .16
7.   REPRESENTATION OF THE PURCHASERS. . . . . . . . . . . . . .16
8.   INFORMATION AS TO COMPANY.. . . . . . . . . . . . . . . . .17
     8.1. Financial Information. . . . . . . . . . . . . . . . .17
     8.2. Business Information . . . . . . . . . . . . . . . . .18
     8.3. Officer's Certificate. . . . . . . . . . . . . . . . .20
     8.4. Inspection . . . . . . . . . . . . . . . . . . . . . .20
9.   PREPAYMENT OF THE NOTES.. . . . . . . . . . . . . . . . . .21
     9.1. Special Prepayments from Average Available Cash and 
          After Sale of Assets or Change of Control. . . . . . .21
     9.2. Optional Prepayments . . . . . . . . . . . . . . . . .24
     9.3. Allocation of Partial Prepayments. . . . . . . . . . .24
     9.4. Maturity; Surrender, etc . . . . . . . . . . . . . . .24
     9.5. Purchase of Notes. . . . . . . . . . . . . . . . . . .24
10.  AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . .25
     10.1.Compliance with Law  . . . . . . . . . . . . . . . . .25
     10.2.Accounting Systems . . . . . . . . . . . . . . . . . .25
     10.3.Collateral Reporting . . . . . . . . . . . . . . . . .25
     10.4.Title to Equipment . . . . . . . . . . . . . . . . . .25
     10.5.Maintain the Equipment and Improvements  . . . . . . .26
     10.6.Insurance  . . . . . . . . . . . . . . . . . . . . . .26
     10.7.No Setoffs or Counterclaims  . . . . . . . . . . . . .27
     10.8.Location of Equipment  . . . . . . . . . . . . . . . .28
     10.9.Intentionally Left Blank . . . . . . . . . . . . . . .28

<PAGE>

     10.10.Leases. . . . . . . . . . . . . . . . . . . . . . . .28
     10.11.Payment of Taxes and Claims . . . . . . . . . . . . .28
     10.12.Corporate Existence, etc. . . . . . . . . . . . . . .28
     10.13.Certain Obligations Respecting Domestic Subsidiaries.29
     10.14.Chief Executive Officer . . . . . . . . . . . . . . .30
     10.15.Tax Returns . . . . . . . . . . . . . . . . . . . . .30
     10.16.Fayette Facilities. . . . . . . . . . . . . . . . . .30
11.  NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . .30
     11.1. Indebtedness . . . . . . . . . . . . . .  . . . . . .30
     11.2. Liens. . . . . . . . . . . . . . . . . .  . . . . . .30
     11.3. Fundamental Changes. . . . . . . . . . .  . . . . . .31
     11.4. Intentionally Left Blank . . . . . . . .  . . . . . .32
     11.5. Lines of Business. . . . . . . . . . . .  . . . . . .32
     11.6. Investments. . . . . . . . . . . . . . .  . . . . . .32
     11.7. Restricted Payments. . . . . . . . . . .  . . . . . .33
     11.8. Transactions with Affiliates . . . . . .  . . . . . .33
     11.9. Restrictive Agreements . . . . . . . . .  . . . . . .33
     11.10.Change Name. . . . . . . . . . . . . . .  . . . . . .34
     11.11.Prepayments and Amendments . . . . . . .  . . . . . .34
     11.12.Sale or Discount of Accounts  . . . . . . . . . . . .34
     11.13.Intentionally Left Blank. . . . . . . . . . . . . . .34
     11.14.Accounting Methods. . . . . . . . . . . . . . . . . .35
     11.15.Suspension. . . . . . . . . . . . . . . . . . . . . .35
     11.16.Change in Location of Chief Executive Office; 
           Inventory and Equipment with Bailees. . . . . . . . .35
     11.17.No Prohibited Transactions Under ERISA. . . . . . . .35
     11.18.Minimum Net Worth . . . . . . . . . . . . . . . . . .36
     11.19.Capital Expenditures. . . . . . . . . . . . . . . . .36
12.  EVENTS OF DEFAULT.. . . . . . . . . . . . . . . . . . . . .36
13.  REMEDIES ON DEFAULT, ETC. . . . . . . . . . . . . . . . . .40
     13.1.Acceleration . . . . . . . . . . . . . . . . . . . . .40
     13.2.Other Remedies . . . . . . . . . . . . . . . . . . . .40
     13.3.Rescission . . . . . . . . . . . . . . . . . . . . . .40
     13.4.No Waivers or Election of Remedies, Expenses, etc. . .41
14.  REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.. . . . . . .41
     14.1.  Registration  of Notes . . . . . . . . . . . . . . .41 
     14.2.  Assignment and Exchange of Notes . . . . . . . . . .41
     14.3. Replacement of Notes  . . . . . . . . . . . . . . . .42
15.  PAYMENTS ON NOTES.. . . . . . . . . . . . . . . . . . . . .42
     15.1.Place of Payment . . . . . . . . . . . . . . . . . . .42

<PAGE>
     15.2.Home Office Payment. . . . . . . . . . . . . . . . . .42
     15.3.Notification to Collateral Agent of Payment in Full. .43
16.  EXPENSES, ETC . . . . . . . . . . . . . . . . . . . . . . .43
     16.1.Survival . . . . . . . . . . . . . . . . . . . . . . .44
17.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
     AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . . . .44
18.  AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . . . . .44
     18.1.Requirements . . . . . . . . . . . . . . . . . . . . .44
     18.2.Solicitation of Holders of Notes . . . . . . . . . . .44
     18.3.Binding Effect, etc. . . . . . . . . . . . . . . . . .45
     18.4.Notes held by Company, etc . . . . . . . . . . . . . .45
19.  NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . .45
20.  REPRODUCTION OF DOCUMENTS.. . . . . . . . . . . . . . . . .46
21.  CONFIDENTIAL INFORMATION. . . . . . . . . . . . . . . . . .46
22.  WAIVERS; INDEMNIFICATION. . . . . . . . . . . . . . . . . .47
     22.1.Demand; Protest; etc . . . . . . . . . . . . . . . . .47
     22.2.Liability of Collateral Agent and Purchasers . . . . .47
     22.3.Indemnification  . . . . . . . . . . . . . . . . . . .48
23.  SUBSTITUTION OF PURCHASER . . . . . . . . . . . . . . . . .48
24.  MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .49
     24.1.Successors and Assigns . . . . . . . . . . . . . . . .49
     24.2.Payments Due on Non-Business Days. . . . . . . . . . .49
     24.3.Severability . . . . . . . . . . . . . . . . . . . . .49
     24.4.Collateral Agent . . . . . . . . . . . . . . . . . . .49
     24.5.Construction . . . . . . . . . . . . . . . . . . . . .49
     24.6.Counterparts . . . . . . . . . . . . . . . . . . . . .49
     24.7.Governing Law; Jurisdiction; Consent to Service of 
          Process. . . . . . . . . . . . . . . . . . . . . . . .50
     24.8.Waiver of Jury Trial . . . . . . . . . . . . . . . . .50

SCHEDULES
---------
SCHEDULE A --  Information Relating to Purchasers
SCHEDULE B --  Defined Terms
SCHEDULE C --  Existing Indebtedness
SCHEDULE D --  Changes in Corporate Structure
SCHEDULE E --  Real Property

<PAGE>

SCHEDULE F --  Subsidiaries of the Company and
               Ownership of Subsidiary Stock
SCHEDULE G --  Existing Liens
SCHEDULE H --  Location of Inventory and Equipment
SCHEDULE I --  Financial Statements
SCHEDULE J --  Certain Litigation
SCHEDULE K --  Intentionally Left Blank
SCHEDULE L --  Licenses, Permits, Etc.
SCHEDULE M --  Environmental Reports
SCHEDULE N --  Investments
SCHEDULE O --  Transactions with Affiliates
SCHEDULE P --  Restrictive Agreements
SCHEDULE Q --  Prohibited Transferees
SCHEDULE R --  Excluded Assets
                                    EXHIBITS
                                    --------
EXHIBIT 1  --  Form of 12% Senior  Secured  Note due [____],  2001  
EXHIBIT 2  --  Form of Opinion of South Carolina  Counsel for the Company  
EXHIBIT 3  --  Form of Opinion of Special Counsel to the Company and each of its
               Subsidiaries
EXHIBIT 4  --  Form of Opinion of Special Alabama Counsel for the Company
EXHIBIT 5  --  Form of Opinion of Special Counsel for the Purchasers
EXHIBIT 6  --  Form of Agency Agreement
EXHIBIT 7  --  Form of Foothill Subordinated Note
EXHIBIT 8  --  Form of Guaranty and Security Agreement
EXHIBIT 9  --  Form of Guaranty Assumption Agreement
EXHIBIT 10 --  Form of Intercreditor Agreement
EXHIBIT 11 --  Form of New Revolving Credit Agreement
EXHIBIT 12 --  Form of Security and Pledge Agreement
EXHIBIT 13 --  Form of Trademark Security Agreement
EXHIBIT 14 --  Form of Deposit Account Security Agreement
EXHIBIT 15 --  Form of Mortgage
<PAGE>


                             ONEITA INDUSTRIES, INC.
                                4130 Faber Place
                        Charleston, South Carolina 29405
                     12% Senior Secured Notes due [ ], 2001

                                                              [_______ __, 1998]

TO IBJ SCHRODER BANK & TRUST COMPANY,
  AS NOTE AGENT, AND EACH OF THE
  PURCHASERS LISTED IN THE ATTACHED
  SCHEDULE A 
Ladies and Gentlemen:

          Oneita  Industries,  Inc.,  a Delaware  corporation  (the  "Company"),
agrees with you as follows:

1.   AUTHORIZATION OF NOTES.

          The  Company  will  authorize  the  issue  of  $37,500,000   aggregate
principal  amount of its 12% Senior  Secured  Notes due  [_________],  2001 (the
"Notes",  such term to include any such notes  issued in  substitution  therefor
pursuant to Section 14 of this  Agreement).  The Notes shall be substantially in
the form set out in Exhibit 1, with such  changes  therefrom,  if any, as may be
approved  by you  and  the  Company.  Certain  capitalized  terms  used  in this
Agreement are defined in Schedule B;  references to a "Schedule" or an "Exhibit"
are, unless  otherwise  specified,  to a Schedule or an Exhibit attached to this
Agreement. 

2. EXCHANGE AND ISSUANCE OF NOTES.

          Subject to the terms and  conditions  set forth  herein,  the  Company
hereby  agrees  that in  exchange  for the  delivery  by each  Purchaser  of the
Existing Notes held by such  Purchaser,  it will deliver Notes to each Purchaser
in the amounts set forth  opposite  such  Purchaser's  name on Schedule A hereto
(the  "Exchange").  Upon receipt by the Purchasers of all the Notes as set forth
on Schedule A hereto, the Company shall cancel all of the Existing Notes and the
Existing Notes, and the obligations of the Obligors under the Existing Revolving
Credit  Documents and the Existing  Prudential  Documents shall be of no further
force or  effect.  The Notes are to be  entitled  ratably  to the  benefits  and
security of the Security Documents as herein and therein provided. To induce the
Purchasers to enter into this Agreement and to make the respective exchanges for
Notes to be made by them hereunder,  the Company makes the  representations  and
warranties  set  forth  in  Section  6 and in the  Security  Documents,  and the
covenants and agreements hereinafter stated.

<PAGE>
3.   CLOSING.

          The date and time for the  Exchange as  provided  herein is _______ at
10:00 A.M.,  New York City time, or on such other  Business Day thereafter on or
prior to [_______], 19[__] as may be agreed upon by the Purchasers of a majority
in principal amount of the Notes and the Company (the  "Closing").  The Exchange
will be made at the  offices  of  Milbank,  Tweed,  Hadley &  McCloy,  One Chase
Manhattan  Plaza,  New York, New York, or at such other place as shall be agreed
upon among the parties hereto.

          Subject to satisfaction of the closing  conditions listed in Section 5
hereunder,  each  Purchaser  will,  at the  Closing,  deliver to the Company its
Existing Notes, against delivery by the Company to such Purchaser of one or more
duly executed Notes in the respective  aggregate principal amounts for Notes set
forth opposite such  Purchaser's  name in Schedule A, each such Note to be dated
the date of the Closing and in the form of a Note registered in the name of such
Purchaser  or such  Purchaser's  nominee,  in any  denominations,  all as may be
specified by timely notice to the Company (or, in the absence of such notice,  a
single Note in the entire  aggregate  principal amount for Notes to be purchased
by such Purchaser, in denominations as set forth on Schedule A and registered in
such Purchaser's name). 

4. INTEREST ON NOTES.

          The Company  hereby  promises to pay interest on the unpaid  principal
amount of each Note in arrears on the last Business Day of each  calendar  month
for the period  commencing  on the date of such Note to but  excluding  the date
such Note  shall be paid in full,  at a rate per annum  equal to 12%;  provided,
however,  that the  Company  shall be  permitted  to pay  interest on the unpaid
principal  of each Note  during the period up to and  including  [date two years
from Closing] by issuing  Additional  Notes in a principal  amount equal to such
interest;  provided,  further,  however,  that in no event  shall the Company be
permitted to issue  Additional  Notes in  satisfaction  of its obligation to pay
interest in cash on the unpaid  principal amount of the Notes if the Company has
satisfied  the  EBITDA  Requirement  with  respect  to the date as of which such
interest is payable.

          Notwithstanding  the  foregoing,  upon the  occurrence  and during the
continuation of an Event of Default, the Company hereby promises to pay interest
at a rate per annum equal to 13 1/2% on any principal  payable under a Note, and
on any other  amount  payable by the  Company  hereunder  or under any  Security
Document  with  respect  to or  under a  Note,  until  the  same is paid in full
(whether before or after judgment). 

5. CONDITIONS TO CLOSING.

          Your  obligation  to accept  the Notes  hereunder  is  subject  to the
fulfillment to your satisfaction,  prior to or at the Closing,  of the following
conditions;  provided,  however, that in the event that (i) the Majority Holders
determine that modifications,  if any, to the Intercreditor  Agreement,  the New
Revolving Credit Agreement, the Foothill Subordinated Note or this Agreement are
Immaterial Changes, (ii) all of the conditions set forth in this Section 5 other
than  conditions  set forth in Sections  5.12,  5.18 and 5.19 (which  conditions
shall be governed by clause (i) above) are satisfied or waived by the Purchasers
in accordance with the terms of this Agreement and (iii) the Reorganization Plan
is confirmed in the form filed by the Company with no  modifications  other than
Immaterial  Changes,  then all of the  Class 2  Claimants  shall be bound by the
terms of this  Agreement  and shall be deemed to be  signatories  thereof:  5.1.
Representations and Warranties.
<PAGE>

          The  representations  and warranties of the Obligors in this Agreement
and the other Basic  Documents shall be correct when made and at the time of the
Closing.

5.2. Performance; No Default.

          The Obligors shall have performed and complied with all agreements and
conditions contained in this Agreement and the other Basic Documents required to
be performed or complied  with by it prior to or at the Closing and after giving
effect to the exchange and issue of the Notes no Default shall have occurred and
be continuing.  Neither the Company nor any  Subsidiary  shall have entered into
any  transaction  since the  Petition  Date that would have been  prohibited  by
Sections 11.7,  11.8, 11.12 or 11.19 hereof had such Sections applied since such
date.

5.3. Compliance Certificates.

     (a)  Officer's  Certificate.  The Company  shall have  delivered  to you an
Officer's  Certificate,  dated  the  date of the  Closing,  certifying  that the
conditions specified in Sections 5.1 and 5.2 have been fulfilled.

     (b) Secretary's  Certificate.  Each of the Obligors shall have delivered to
you a  certificate  of the  secretary or an  assistant  secretary of such Person
certifying the  resolutions  attached  thereto and other  corporate  proceedings
relating  to the  authorization,  execution  and  delivery  of the  Notes,  this
Agreement and the other Basic Documents.

     (c) Intentionally  Left Blank.  This paragraph has intentionally  been left
blank.

     (d)  Other   Certificates.   The  Purchasers  shall  have  received  (i)  a
certificate of status with respect to each Obligor,  dated within 15 days of the
Closing Date, such  certificate to be issued by the  appropriate  officer of the
jurisdiction of organization of such Obligor,  which  certificate shall indicate
that  such  Obligor  is in  good  standing  in  such  jurisdiction  and  (ii)  a
certificate of status with respect to each Obligor,  dated within 15 days of the
Closing Date, such  certificates to be issued by the appropriate  officer of the
jurisdictions in which its failure to be duly qualified or licensed would have a
Material Adverse Effect,  which certificates shall indicate that such Obligor is
in good standing in such jurisdictions.

5.4. Opinions of Counsel.

          You shall have received opinions in form and substance satisfactory to
you, dated the date of Closing,

          (a) from special South Carolina counsel for the Company, substantially
in the form set out in Exhibit 2 and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request,

<PAGE>
          (b) from special New York counsel for the  Company,  substantially  in
the form set out in Exhibit 3 and covering  such other  matters  incident to the
transactions contemplated hereby as you or your counsel may reasonably request,

          (c) from special Alabama counsel for the Company, substantially in the
form set out in  Exhibit 4 and  covering  such  other  matters  incident  to the
transactions  contemplated hereby as you or your counsel may reasonably request,
and
          (d) from  Milbank,  Tweed,  Hadley & McCloy,  your special  counsel in
connection with the transactions contemplated hereby.

          The Company  hereby  instructs  its counsel  named in (a), (b) and (c)
above to deliver such opinions to you and the Collateral Agent.

5.5. Exchange Permitted By Applicable Law, etc.

          On the date of the Closing your  acceptance  of the Notes shall (i) be
permitted  by the laws and  regulations  of each  jurisdiction  to which you are
subject,  without recourse to provisions (such as Section  1405(a)(8) of the New
York  Insurance  Law)  permitting  limited  investments  by insurance  companies
without restriction as to the character of the particular  investment,  (ii) not
violate  any  applicable  law  or  regulation  (including,  without  limitation,
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject you to any tax,  penalty or liability under or pursuant to
any applicable  law or regulation,  which law or regulation was not in effect on
the date  hereof.  If  requested  by you,  you shall have  received an Officer's
Certificate  certifying as to such matters of fact as you may reasonably specify
to enable you to determine  whether such purchase is so permitted.  

5.6. Payment f Special Counsel Fees.

          Without  limiting the  provisions of Section  16.1,  the Company shall
have paid on or before the Closing in accordance  with the  Reorganization  Plan
(a) the reasonable  fees,  charges and  disbursements  of your special  counsel,
Milbank,  Tweed,  Hadley & McCloy and local counsel for you in Delaware,  Klehr,
Harrison,  Harvey, Branzburg & Ellers, to the extent reflected in a statement of
such  counsel  rendered  to the Company at least one  Business  Day prior to the
Closing,  (b) the reasonable fees,  charges and  disbursements of the Collateral
Agent to the extent reflected in a statement of the Collateral Agent rendered to
the Company at least one Business Day prior to the date of Closing  (which fees,
charges and  disbursements  shall be consistent  with the agreement  between the
Company and the  Collateral  Agent and  acceptable  to the  Purchasers  in their
reasonable   determination),   and  (c)  the   reasonable   fees,   charges  and
disbursements  of the special  counsel of the  Collateral  Agent  reflected in a
statement  of such  counsel  rendered to the Company at least one  Business  Day
prior to the date of Closing. 
<PAGE>
5.7. Private Placement Number.

          A private  placement  number issued by Standard & Poor's CUSIP Service
Bureau (in  cooperation  with the  Securities  Valuation  Office of the National
Association of Insurance  Commissioners) shall have been obtained for the Notes.

5.8. Changes in Corporate Structure.

          Except as specified in Schedule D, the Company  shall not have changed
its jurisdiction of incorporation or been a party to any merger or consolidation
and shall not have succeeded to all or any  substantial  part of the liabilities
of any other entity, at any time following the date of the most recent financial
statements referred to in Schedule I.

5.9. Security Documents.

          The  Agency  Agreement,  the  Guaranty  and  Security  Agreement,  the
Security and Pledge Agreement,  the Trademark  Security  Agreement,  the Deposit
Account Security  Agreement and the Mortgages shall each have been duly executed
and  delivered by the Company and each other Person  contemplated  to be a party
thereto all as contemplated by the Reorganization Plan and each shall be in full
force and effect and the Purchasers shall have received evidence satisfactory to
them  of  the   perfection  and  priority  under  the  laws  of  any  applicable
jurisdiction  of the Liens  intended to be created by such  Security  Documents,
subject to the terms of the Intercreditor Agreement.

5.10.     Mortgage(s) and Title Insurance.

          The following documents shall each have been duly executed (and, where
appropriate, acknowledged) by Persons satisfactory to the Majority Holders:

          (a) one or more Mortgages as contemplated by the  Reorganization  Plan
covering the Real Property Collateral identified in Schedule E with an asterisk,
in each case duly executed and  delivered by the relevant  Obligor in recordable
form (in such number of copies as the Majority  Holders and the Collateral Agent
shall have requested);

          (b) one or more mortgagee  policies of title insurance on forms of and
issued by one or more title companies  satisfactory to the Majority  Holders and
the Collateral  Agent as  contemplated  by the  Reorganization  Plan (the "Title
Companies"),  insuring a valid first mortgage lien on the Mortgaged Property (as
defined in the  Mortgage(s));  for and in amounts  satisfactory  to the Majority
Holders in their  reasonable  determination,  subject only to such exceptions as
are reasonably  satisfactory  to the Majority  Holders and the Collateral  Agent
and, to the extent necessary under applicable law, for filing in the appropriate
county land office(s),  Uniform  Commercial Code financing  statements  covering
fixtures,  in each case  appropriately  completed and duly executed;  such title
policies  shall  contain  such  endorsements  in form and  substance  reasonably
satisfactory to the Majority Holders;

          (c) as-built  surveys of recent date of each of the  facilities  to be
covered by the Mortgages  showing such matters as may be reasonably  required by
Majority Holders,  which surveys shall be in form and content  acceptable to the

<PAGE>

ajority  Holders  in  their  reasonable  determination,  and  certified  to the
Collateral  Agent and the Title  Companies,  and shall have been  prepared  by a
registered surveyor acceptable to the Majority Holders;

          (d) certified  copies of permanent and  unconditional  certificates of
occupancy (or, if it is not the practice to issue  certificates  of occupancy in
the  jurisdiction  in which the facilities to be covered by the  Mortgage(s) are
located,  then such other evidence  satisfactory to the Majority  Holders in its
reasonable   determination)  permitting  the  fully  functioning  operation  and
occupancy of each such facility and of such other permits  necessary for the use
and  operation  of each  such  facility  issued by the  respective  governmental
authorities having jurisdiction over each such facility; and

          (e) such  Collateral  Access  Agreements  from lessors,  warehousemen,
bailees,  and other  third  persons (i) in the case of  Inventory  stored with a
bailee,  warehouseman  or  similar  party,  as  the  Majority  Holders  and  the
Collateral  Agent  reasonably  may  require,  to the extent  provided to the New
Revolving  Credit Lender by the Company under the New Revolving Credit Agreement
and (ii) in the case of Equipment stored with a bailee,  warehouseman or similar
party as the Majority Holders and the Collateral Agent may reasonably require.

          In addition,  the Company  shall have paid to the Title  Companies all
expenses and premiums of the Title  Companies in connection with the issuance of
such policies and in addition  shall have paid to the Title  Companies an amount
equal to the recording and stamp taxes payable in connection  with recording the
Mortgage(s) in the appropriate county land office(s).

          Notwithstanding the foregoing, to the extent that any of the items set
forth above in this Section  5.10(e) are not  obtainable by the Closing Date, it
shall not be a condition to the Closing  hereunder  that such items be delivered
to the Collateral Agent and the Purchasers, but such items shall be delivered to
the Collateral  Agent as promptly after the Closing Date as practicable,  but in
any event  within 30 days  thereafter,  provided  that it shall not be a Default
hereunder  if the  Obligors are unable to deliver any of such items by reason of
their  inability  to obtain a necessary  landlord or other  third-party  consent
(unless such consent is to come from an  Affiliate)  so long as the Obligors use
commercially  reasonable  efforts  to obtain  such  non-Affiliated  landlord  or
third-party consents.

5.11.      Fayette Facilities.

     The  Company  shall have  granted  the  Collateral  Agent a Mortgage on the
Company's  interests in the real Property and  Equipment  located at the Fayette
Facilities, subject only to Permitted Encumbrances.

5.12.     Intercreditor Agreement.

          The  Intercreditor   Agreement  shall  have  been  duly  executed  and
delivered by the Purchasers,  the Collateral  Agent and the New Revolving Lender
in the form of Exhibit 10 and shall be in full force and effect,  and no term or
condition  thereof shall have been  amended,  modified,  supplemented  or waived
(except for Immaterial Changes) without the prior written consent of each of the
Purchasers. 
<PAGE>
5.13. Financing Statements.

          Each financing statement required to be filed,  registered or recorded
in  connection  with the  transactions  contemplated  by this  Agreement and the
Security  Documents  shall have been properly  filed,  registered or recorded in
each  office in each  jurisdiction  required  in order to create in favor of the
Collateral  Agent,  for the ratable  benefit of the  Purchasers,  a valid and/or
perfected   first   priority  Lien  (subject  only  to  the  provisions  of  the
Intercreditor  Agreement  and  the  Permitted  Encumbrances)  on the  respective
collateral  described therein; the Collateral Agent and you shall have received,
to  the  extent  available,  acknowledgement  copies  of all  of  such  filings,
registrations and recordations  stamped by the appropriate filing,  registration
or recording  officer (or, in lieu thereof,  other evidence  satisfactory to the
Collateral Agent that all such filings, registrations and recordations have been
made); and all necessary filing, recording and other similar fees, and all taxes
and other  charges  related  to such  filings,  registrations  and  recordations
(including such other taxes and charges  requested by you), shall have been paid
in full.

          Uniform Commercial Code financing statement, judgment lien and Federal
income tax lien searches (collectively, the "UCC Searches") (a) in the office of
the Clerk for Gwinnet  County,  Georgia,  (b) in the office of the Clerk for New
York County,  New York and in the office of the  Secretary of State of New York,
(c) in the  office of the Clerk for Lenoir  County,  North  Carolina  and in the
office of the  Secretary  of State of North  Carolina,  (d) in the office of the
Secretary  of State of Alabama,  (e) in the office of the  Secretary of State of
South Carolina and (f) in the office of the Secretary of State of Florida,  each
of a recent date,  shall have been  delivered  to you or your  special  counsel.

5.14. Appraisals.

     Copies of updated appraisals of the Inventory and Real Property  Collateral
to the extent made  available to the Company by the New Revolving  Credit Lender
shall have been delivered to you or your special counsel.

5.15.     Surveys and Other Reports.

          Copies  of  recent  Phase  I  environmental  surveys  and  assessments
together  with all other  environmental  reports  prepared  within the last five
years by  Persons  (familiar  with the  identification  of toxic  and  hazardous
substances)  satisfactory  to the  Majority  Holders and set forth on Schedule M
shall have been  delivered to you or your special  counsel,  such  environmental
surveys and  assessments to be based upon physical  on-site  inspections by such
firm of each of the existing sites and facilities  owned,  operated or leased by
the Company and its Subsidiaries,  as well as a historical review of the uses of
such sites and  facilities and of the business and operations of the Company and
its Subsidiaries  (including any former Subsidiaries or divisions of the Company
or any of its Subsidiaries  that have been disposed of prior to the date of such
survey  and  assessment  and with  respect  to which the  Company  or any of its
Subsidiaries may have retained liability for Environmental  Liabilities).  
<PAGE>
5.16.     Insurance.

          Certificates  of insurance  evidencing  the existence of all insurance
required to be maintained by the Company  pursuant to Section 10.6 and,  subject
to the terms and conditions of the Intercreditor  Agreement,  the designation of
the Collateral Agent as the loss payee or additional named insured,  as the case
may be,  thereunder to the extent required by Section 10.6, such certificates to
be in such form and contain such information as is specified in Section 10.6. In
addition,  the Company shall have delivered a certificate of a Senior  Financial
Officer of the Company setting forth the insurance  obtained by it in accordance
with the requirements of Section 10.6 and stating that such insurance is in full
force and effect and that all  premiums  then due and payable  thereon have been
paid. 

5.17. New Revolving Credit Agreement.

          The New Revolving  Credit  Agreement shall have been duly executed and
delivered by the parties  thereto in the form of Exhibit 11 and shall be in full
force and effect,  and no term or  condition  thereof  shall have been  amended,
modified,  supplemented  or waived (except for Immaterial  Changes)  without the
prior written consent of each of the Purchasers.

5.18.     Foothill Subordinated Note.

          The  Foothill  Subordinated  Note  shall have been duly  executed  and
delivered  by the  Company to  Foothill in the form of Exhibit 7 and shall be in
full  force and  effect,  and no term or  condition  therefore  shall  have been
amended modified, supplemented or waived (except for Immaterial Changes) without
the prior written consent of each of the Purchasers.

5.19.     Cash Payment.

          The  Company  shall have paid to each of the  Purchasers  its pro rata
share of $15,000,000 in cash in accordance with the terms of the  Reorganization
Plan.

5.20.     Issuance of New Common.

          The Company shall have issued to each of the  Purchasers  its pro rata
portion  of  shares  of  New  Common  in  accordance   with  the  terms  of  the
Reorganization Plan.

5.21.     Confirmation Order.

          The Confirmation Order shall have been entered.

5.22.     Release of Certain Existing Liens.

          Except as contemplated by the Intercreditor Agreement,  Foothill shall
have delivered,  or shall have caused to be delivered,  to the Collateral  Agent
all  necessary  termination  statements,  satisfaction  pieces and other release
documentation  in  respect  of any  and  all  Liens  it may  have  in and to the
Equipment and the Real Property Collateral, which shall be in form and substance
satisfactory  to effect such  release  and for  recordation  in the  appropriate
recording offices.


<PAGE>
5.23.     Exchange of Notes.

          The Company  shall have  executed  and  delivered  to each  Purchaser,
against  surrender in exchange therefor by such Purchaser of any Existing Notes,
Notes in the respective  principal amounts set forth on Schedule A, in each case
dated the date of the Closing.

5.24.     Proceedings and Documents.

          All  corporate   and  other   proceedings   in  connection   with  the
transactions  contemplated  by this Agreement and all documents and  instruments
incident to such  transactions  shall be  satisfactory  to you and your  special
counsel,  and  you and  your  special  counsel  shall  have  received  all  such
counterpart  originals or certified or other copies of such  documents as you or
they may reasonably request. 

6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

          The Company represents and warrants to you that:

6.1. Organization; Power and Authority.

          Each  of the  Company  and  its  Subsidiaries  is a  corporation  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of its
jurisdiction of  incorporation,  and is duly qualified as a foreign  corporation
and is in good  standing in each  jurisdiction  in which such  qualification  is
required by law, other than those jurisdictions as to which the failure to be so
qualified  or in good  standing  could not,  individually  or in the  aggregate,
reasonably be expected to have a Material  Adverse  Effect.  Each of the Company
and its  Subsidiaries has the corporate power and authority to own or hold under
lease the  Properties  it purports to own or hold under  lease,  to transact the
business it  transacts  and  proposes to  transact,  to execute and deliver this
Agreement, the Notes and the other Basic Documents and to perform the provisions
hereof and thereof.

6.2. Authorization, etc.

          (a) This Agreement,  the Notes and the other Basic Documents have been
duly authorized by all necessary  corporate  action on the part of each Obligor,
and this Agreement  constitutes,  and upon  execution and delivery  thereof each
Note and each of the other Basic Documents will constitute,  a legal,  valid and
binding  obligation  of  each  Obligor   enforceable  against  such  Obligor  in
accordance with its terms,  except as such  enforceability may be limited by (i)
applicable bankruptcy, insolvency,  reorganization,  moratorium or other similar
laws affecting the enforcement of creditors'  rights  generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

          (b) Other than the filing of appropriate financing statements, fixture
filings, and mortgages, the execution,  delivery, and performance by each of the
Obligors of this  Agreement  and the Basic  Documents to which such Obligor is a

<PAGE>

party do not and will not require any registration  with,  consent,  or approval
of, or notice to, or other action with or by, any Federal,  State,  foreign,  or
other Governmental  Authority or other Person,  except for any necessary filings
or reports required to be made to or with the Securities and Exchange Commission
or in accordance with the Bankruptcy Code.

          (c) Except with  respect to the  perfection  and  priority of Liens on
Inventory or Equipment located outside the United States of America, as to which
this paragraph is not applicable, subject to the filing of appropriate financing
statements,  fixture  filings,  and mortgages,  the Liens granted by each of the
Obligors to the  Collateral  Agent for the ratable  benefit of the Purchasers in
and to their Properties pursuant to this Agreement and the other Basic Documents
are  validly  created,  perfected,  and  first  priority  Liens  to  the  extent
contemplated  by  the  Intercreditor   Agreement,   subject  only  to  Permitted
Encumbrances  and  Liens  permitted  by  Section  11.2(b),  (c)  and  (g).  

6.3. Disclosure.

          The  Company  has  disclosed  to  the   Purchasers   all   agreements,
instruments  and  corporate  or  other  restrictions  to  which it or any of its
Subsidiaries is subject,  and all other matters known to it, that,  individually
or in the  aggregate,  could  reasonably  be  expected  to result in a  Material
Adverse Effect. None of the reports, financial statements, certificates or other
information (including,  without limitation, the Disclosure Statement) furnished
by or on  behalf  of the  Obligors  to the  Purchasers  in  connection  with the
negotiation  of this  Agreement  and the  other  Basic  Documents  or  delivered
hereunder or thereunder  (as modified or  supplemented  by other  information so
furnished)  contains  any  material  misstatement  of fact or omits to state any
material  fact  necessary to make the  statements  therein,  in the light of the
circumstances  under which they were made, not  misleading,  provided that, with
respect to projected  financial  information,  the Company  represents only that
such information was prepared in good faith based upon  assumptions  believed to
be  reasonable  at the  time.  

6.4.  Organization  and  Ownership  of  Shares of Subsidiaries; Affiliates.

          (a) Schedule F contains (except as noted therein) complete and correct
lists of the (i) Company's  Subsidiaries,  showing,  as to each Subsidiary,  the
correct name thereof,  the jurisdiction of its organization,  and the percentage
of  shares  of each  class of its  capital  stock or  similar  equity  interests
outstanding owned by the Company and each other  Subsidiary,  (ii) Persons known
by  the  Company  to be its  Affiliates,  other  than  Subsidiaries,  and  (iii)
Company's directors and senior officers.

          (b) All of the  outstanding  shares of capital stock or similar equity
interests of each  Subsidiary  shown in Schedule F as being owned by the Company
and its Subsidiaries have been validly issued,  are fully paid and nonassessable
and are owned by the  Company or another  Subsidiary  free and clear of any Lien
(except in favor of the Collateral  Agent or as otherwise  disclosed in Schedule
G).
          (c) Each Subsidiary identified in Schedule F is a corporation or other
legal entity duly  organized,  validly  existing and in good standing  under the
laws of its  jurisdiction  of  organization,  and is duly qualified as a foreign
corporation  or other legal entity and is in good standing in each  jurisdiction

<PAGE>
in which such  qualification is required by law, other than those  jurisdictions
as to which the  failure  to be so  qualified  or in good  standing  could  not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse  Effect.  Each such  Subsidiary  has the  corporate  or other  power and
authority to own or hold under lease the  properties  it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.

          (d) No  Subsidiary  is a party to, or  otherwise  subject to any legal
restriction  or  any  agreement  (other  than  this  Agreement,  the  agreements
identified with an asterisk on Schedule C and customary  limitations  imposed by
corporate  law  statutes)  restricting  the  ability of such  Subsidiary  to pay
dividends out of profits or make any other similar  distributions  of profits to
the Company or any of its Subsidiaries  that owns outstanding  shares of capital
stock or similar equity  interests of such  Subsidiary.  

6.5. Title to Property; Leases.

          The Company and its  Subsidiaries  have good and  sufficient  title to
their respective Properties, including all such Properties reflected in the most
recent audited balance sheet referred to in Schedule I or purported to have been
acquired by the Company or any  Subsidiary  after the date of such balance sheet
(except as sold or otherwise  disposed of (i) in the ordinary course of business
or (ii) as otherwise  permitted by this Agreement),  in each case free and clear
of  Liens  prohibited  by  this  Agreement  or  deed  restrictions   related  to
environmental  contamination  or  deed  restrictions  related  to  environmental
contamination.  All  leases are valid and  subsisting  and are in full force and
effect in all Material respects. 

6.6. Ownership of Certain Subsidiaries.

          Oneita  Freeport  Holdings  Corp.,  organized  under  the  laws of the
British Virgin  Islands,  is a holding  company for a foreign  Subsidiary of the
Company,  and has no Material Property of its own. Oneita  International  Corp.,
organized under the laws of the British Virgin Islands, is a holding company for
a foreign  Subsidiary of the Company,  and has no Material  Property of its own.
Oneita Export Corp., a South Carolina corporation, has no Material Property.

6.7. Intentionally Left Blank.

          This section has intentionally been left blank.

6.8. Equipment.

          All of the Equipment issued or held for use in the Company's  business
or the businesses of its Subsidiaries is fit for such purposes.

6.9. Location of Inventory and Equipment.

          The  Equipment is not stored with a bailee,  warehouseman,  or similar
party (without the Collateral Agent's prior written consent).  The Equipment and
Inventory  are  located  only  at the  locations  identified  on  Schedule  H or
otherwise permitted by Section 10.8.
<PAGE>
6.10.     Inventory Records.

     The  Company  and  its  Subsidiaries  keep  correct  and  accurate  records
itemizing and describing the kind, type, quality, and quantity of the Inventory,
and the Company's and each of its Subsidiaries' costs therefor.

6.11.     Location of Chief Executive Office; FEIN.

          The chief  executive  office of the  Company is located at the address
indicated in the preamble to this  Agreement.  The Company's FEIN is 57-0351045.
Kinston's FEIN is 58-1514502.

6.12.     Solvency.

          Each of the Obligors is Solvent. No transfer of Property is being made
by the Company and no obligation is being  incurred by the Company in connection
with  the  transactions  contemplated  by  this  Agreement  or the  other  Basic
Documents with the intent to hinder,  delay, or defraud either present or future
creditors of the Company. 

6.13. No Material Adverse Change.

          All consolidated  financial statements relating to the Company and its
Subsidiaries  listed on  Schedule I have been  delivered  by the  Company to the
Purchasers,  have been prepared in accordance with GAAP (except,  in the case of
unaudited financial  statements,  for the lack of footnotes and being subject to
year-end  and  quarter-end  (in  the  case of  monthly  or  quarterly  financial
statements) audit adjustments) and present fairly, in all material respects, the
consolidated  financial  position of the Company and its  Subsidiaries as of the
date thereof and the  consolidated  results of operations  and cash flows of the
Company and its  Subsidiaries  for the respective  periods so specified and have
been  prepared in  accordance  with GAAP  consistently  applied  throughout  the
periods involved except as set forth in the notes thereto (subject,  in the case
of  any  interim  financial   statements,   to  normal  quarterly  and  year-end
adjustments).  There has not been a Material  Adverse Change with respect to the
Company and its Subsidiaries  since the date of the latest financial  statements
submitted to the Purchasers on or before the Closing Date.

6.14.     Intentionally Left Blank.

          This section has intentionally been left blank.

6.15.     Compliance with Laws, Other Instruments, etc.

          Except  as  otherwise  permitted  pursuant  to a  Final  Order  of the
Bankruptcy  Court,  the  execution,  delivery  and  performance  by  each of the
Obligors of this  Agreement,  the Notes,  and the other Basic Documents will not
(i)  contravene,  result in any breach of, or  constitute  a default  under,  or
result in the  creation of any Lien in respect of any Property of the Company or
any Subsidiary under, any indenture,  mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other agreement or

<PAGE>
instrument  to which  the  Company  or any  Subsidiary  is bound or by which the
Company or any Subsidiary or any of their respective  Properties may be bound or
affected,  (ii)  conflict  with  or  result  in a  breach  of any of the  terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (iii) violate any provision of any statute or other rule or regulation of any
Governmental  Authority applicable to the Company or any Subsidiary.  No Default
has occurred or is  continuing.  

6.16.  Litigation;  Observance  of  Agreements, Statutes and Orders.

          (a) Except as disclosed  in Schedule J there are no actions,  suits or
proceedings  pending or, to the knowledge of the Company,  threatened against or
affecting  the Company or any  Subsidiary  or any Property of the Company or any
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental  Authority.  None of the actions, suits or proceedings disclosed on
Schedule J,  individually or in the aggregate,  could  reasonably be expected to
have a Material Adverse Effect.

          (b) On the Effective  Date,  neither the Company nor any Subsidiary is
in default  under any term of any agreement or instrument to which it is a party
or by which it is bound, or any order, judgment,  decree or ruling of any court,
arbitrator or  Governmental  Authority or is in violation of any applicable law,
ordinance,  rule or regulation (including without limitation Environmental Laws)
of any Governmental  Authority,  which default or violation,  individually or in
the aggregate,  could  reasonably be expected to have a Material Adverse Effect.

6.17. Taxes.

          The Company and its  Subsidiaries  have filed all tax returns that are
required to have been filed in any  jurisdiction,  and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties,  assets, income or franchises, to the extent such
taxes and  assessments  have  become due and payable and before they have become
delinquent,  except for any taxes and assessments the amount,  applicability  or
validity of which is  currently  being  contested  in good faith by  appropriate
proceedings  and with respect to which the Company or a Subsidiary,  as the case
may be, has established  adequate  reserves in accordance with GAAP. The Company
knows of no basis for any other tax or  assessment.  The  charges,  accruals and
reserves on the books of the Company and its Subsidiaries in respect of Federal,
state or other taxes for all fiscal periods are adequate. The Federal income tax
liabilities  of the Company and its  Subsidiaries  have been  determined  by the
Internal  Revenue  Service and paid for all fiscal years up to and including the
fiscal year ended [September __, ____].

6.18.     Licenses, Permits, etc.

          Except as disclosed in Schedule K,
          (a) the  Company  and its  Subsidiaries  own or  possess  all of their
respective licenses, permits, franchises,  authorizations,  patents, copyrights,
service  marks,  trademarks  and trade names,  or rights  thereto,  necessary to
conduct their businesses, without known conflict with the rights of others;

<PAGE>

          (b) to the best  knowledge of the  Company,  no product of the Company
infringes  in  any  material  respect  upon  any  license,  permit,   franchise,
authorization,  patent, copyright,  service mark, trademark, trade name or other
right owned by any other Person; and

          (c) to the best knowledge of the Company, there is no violation by any
Person of any right of the Company or any of its  Subsidiaries  with  respect to
any patent, copyright,  service mark, trademark, trade name or other right owned
or used by the Company or any of its Subsidiaries.

6.19.     Compliance with ERISA.

          (a)  The  Company  and  each  ERISA   Affiliate   have   operated  and
administered  each Plan in compliance with all applicable laws,  except for such
instances of  noncompliance  as have not resulted in and would not reasonably be
expected  to result in a Material  Adverse  Effect.  Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax  provisions of the Code  relating to employee  benefit
plans (as defined in section 3 of ERISA), and no event, transaction or condition
has  occurred  or exists  that could  reasonably  be  expected  to result in the
incurrence of any such  liability by the Company or any ERISA  Affiliate,  or in
the  imposition  of any Lien on any of the rights,  properties  or assets of the
Company or any ERISA  Affiliate,  in either  case  pursuant  to Title I or IV of
ERISA or to such penalty or excise tax  provisions  or to section  401(a)(29) or
412  of the  Code,  other  than  such  liabilities  or  Liens  as  would  not be
individually or in the aggregate Material.

          (b) The present value of the aggregate benefit  liabilities under each
of the Plans (other than Multiemployer Plans),  determined as of the end of such
Plans most recently  ended plan year on the basis of the  actuarial  assumptions
specified  for funding  purposes in such Plans most recent  actuarial  valuation
report,  did not exceed the  aggregate  current value of the assets of such Plan
allocable to such benefit  liabilities  [by more than  $_________ in the case of
any single Plan and by more than $_________ in the aggregate for all Plans]. The
term "benefit  liabilities"  has the meaning  specified in section 4001 of ERISA
and the terms "current value" and "present value" have the meaning  specified in
section 3 of ERISA.

          (c) The Company and its ERISA Affiliates have not incurred  withdrawal
liabilities  (and are not subject to contingent  withdrawal  liabilities)  under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans.

          (d)  The  aggregate   expected   postretirement   benefit   obligation
(determined  as of the last day of the Company's most recently ended fiscal year
in accordance  with  Financial  Accounting  Standards  Board  Statement No. 106,
without regard to liabilities  attributable to continuation coverage mandated by
section 4980B of the Code) of the Company and its  Subsidiaries  does not exceed
$_______.

          (e) The execution and delivery of this  Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction  that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed  pursuant to section  4975(c)(1)(A)-(D)  of the Code.  

<PAGE>
6.20.  Private Offering by the Company.

          Neither the  Company  nor anyone  acting on its behalf has offered the
Notes or any similar  securities  for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any person  other than you and the other  Purchasers.  Neither  the  Company nor
anyone  acting on its  behalf has taken,  or will  take,  any action  that would
subject the issuance or sale of the Notes to the  registration  requirements  of
Section  5  of  the  Securities  Act.  

6.21.  Existing  Indebtedness;   Material Agreements; Future Liens.

          (a) Except as described therein,  Schedule C sets forth a complete and
correct list of all outstanding Indebtedness of the Company and its Subsidiaries
as of the Effective Date,  since which date there has been no Material change in
the amounts,  interest rates, sinking funds,  installment payments or maturities
of the Indebtedness of the Company or its  Subsidiaries.  After giving effect to
the  transactions  contemplated  hereby,  neither the Company nor any Subsidiary
will be in default and no waiver of default will be currently in effect,  in the
payment of any principal or interest on any  Indebtedness of the Company or such
Subsidiary and no event or condition will exist with respect to any Indebtedness
of the Company or any  Subsidiary  that would permit (or that with notice or the
lapse  of  time,  or both,  would  permit)  one or more  Persons  to cause  such
Indebtedness  to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.

          (b) Schedule G is a complete and correct list of each Lien (other than
Permitted  Encumbrances)  securing Indebtedness of any Person outstanding on the
date hereof,  the aggregate  principal or face amount of which equals or exceeds
(or may equal or exceed)  $250,000,  and covering any Property of the Company or
any of its Subsidiaries,  and the aggregate Indebtedness secured (or that may be
secured)  by each  such  Lien and the  Property  covered  by each  such  Lien is
correctly described in Schedule G.

          (c) Except as  disclosed  in Schedule  G,  neither the Company nor any
Subsidiary  has agreed or  consented  to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its Property,  whether now owned
or hereafter  acquired,  to be subject to a Lien not  permitted by Section 11.2.

6.22. Foreign Assets Control Regulations, etc.

          Neither the sale of the Notes by the Company  hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign  assets  control  regulations  of the United States  Treasury
Department  (31  CFR,  Subtitle  B,  Chapter  V,  as  amended)  or any  enabling
legislation or executive  order  relating  thereto.  

6.23.  Status under Certain Statutes.

          Neither the Company nor any Subsidiary is subject to regulation  under
the  Investment  Company Act of 1940,  as amended,  the Public  Utility  Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
<PAGE>
6.24.     Environmental Matters.

          (a) The Company has heretofore  delivered to the Purchasers  copies of
all  environmental  investigations,  studies,  audits,  tests,  reviews or other
analyses conducted by or that are in the possession of the Company or any of its
Subsidiaries in relation to facts,  circumstances  or conditions at or affecting
any site or facility now or previously owned,  operated or leased by the Company
or any of its Subsidiaries. These environmental investigations, studies, audits,
tests, reviews or other analyses are listed on Schedule L;

          (b) Neither the Company nor any  Subsidiary has knowledge of any claim
or has received any notice of any claim,  and no proceeding has been  instituted
raising any claim against the Company or any of its Subsidiaries or any of their
respective real  properties now or formerly owned,  leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental  Laws,  except,  in each  case,  such as could not  reasonably  be
expected to result in a Material Adverse Effect;

          (c) Neither the Company nor any  Subsidiary has knowledge of any facts
which  would  give  rise to any  claim,  public  or  private,  of  violation  of
Environmental Laws or damage to the environment  emanating from, occurring on or
in any way related to real properties now or formerly owned,  leased or operated
by any of them or to other assets or their use,  except,  in each case,  such as
could not reasonably be expected to result in a Material Adverse Effect;

          (d) Neither the  Company  nor any of its  Subsidiaries  has stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by any of them  and has not  disposed  of any  Hazardous  Materials  in a manner
contrary  to any  Environmental  Laws  or in a  manner  that  may  give  rise to
liability  under any  Environmental  Laws in each case in any manner  that could
reasonably be expected to result in a Material Adverse Effect; and

          (e) all  operations  and buildings on all real  properties  now owned,
leased or operated by the Company or any of its  Subsidiaries  are in compliance
with  applicable  Environmental  Laws,  except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect. 

7. REPRESENTATION OF THE PURCHASERS.

          You  represent  that you are  accepting  the Notes in exchange for the
Existing  Notes  for  your  own  account  or for one or more  separate  accounts
maintained  by you or for the account of one or more  pension or trust funds and
not with a view to the  distribution  thereof,  provided that the disposition of
your or their Property  shall at all times be within your or their control.  You
understand that the Notes have not been registered  under the Securities Act and
may be resold only if registered  pursuant to the  provisions of the  Securities
Act  or  if  an  exemption  from   registration   is  available,   except  under
circumstances  where neither such registration nor such an exemption is required
by law, and that the Company is not required to register the Notes.
<PAGE>
8.   INFORMATION AS TO COMPANY.

8.1. Financial Information.

          The  Company  shall  deliver to the Note Agent and,  upon the  written
request  (which  shall  be  required  to be  made  only a  single  time)  of any
Purchaser, to such Purchaser:

          (a)  Quarterly  Statements  --  within  60 days  after the end of each
quarterly  fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,

          (i) a consolidated  balance sheet of the Company and its  Subsidiaries
     as at the end of such quarter, and

          (ii)  consolidated  statements  of income,  changes  in  shareholders'
     equity and cash flows of the Company and its Subsidiaries, for such quarter
     and (in the case of the second and third  quarters)  for the portion of the
     fiscal  year  ending  with  such  quarter,  setting  forth in each  case in
     comparative form the figures for the  corresponding  periods in (or, in the
     case of the balance sheet,  as of the end of) the previous fiscal year, all
     in  reasonable  detail,  prepared in  accordance  with GAAP  applicable  to
     quarterly financial  statements  generally subject to year-end  adjustments
     and without  footnotes,  and  certified  by a Senior  Financial  Officer as
     presenting fairly, in all material respects,  the financial position of the
     companies being reported on and their results of operations and cash flows,
     subject to changes  resulting  from  year-end  adjustments,  provided  that
     delivery within the time period  specified above of copies of the Company's
     quarterly  report on Form 10-Q prepared in compliance with the requirements
     therefor and filed with the  Securities  and Exchange  Commission  shall be
     deemed to satisfy the requirements of this Section 8.1(a);

          (b) Annual  Statements -- within 105 days after the end of each fiscal
year of the Company, duplicate copies of,

               (i)  a  consolidated   balance  sheet  of  the  Company  and  its
          Subsidiaries, as at the end of such year, and

               (ii) consolidated  statements of income, changes in shareholders'
          equity and cash flows of the  Company and its  Subsidiaries,  for such
          year,  setting forth in each case in comparative  form the figures for
          the  previous  fiscal  year,  all in  reasonable  detail,  prepared in
          accordance with GAAP, and accompanied

                    (A) by an opinion  thereon of independent  certified  public
               accountants of recognized national standing,  which opinion shall
               state  that such  financial  statements  present  fairly,  in all
               material respects,  the financial position of the companies being
               reported upon and their results of operations  and cash flows and
               have  been  prepared  in  conformity  with  GAAP,  and  that  the
               examination of such accountants in connection with such financial
               statements has been made in accordance  with  generally  accepted
               auditing  standards,  and that such audit  provides a  reasonable
               basis for such opinion in the circumstances, and
<PAGE>
                    (B) by a certificate of such accountants  (which certificate
               may be limited  to the extent  required  by  accounting  rules or
               guidelines)  stating that they have reviewed  this  Agreement and
               stating further whether,  in making their audit, they have become
               aware of any  condition or event that then  constitutes a Default
               or an Event of  Default,  and,  if they are  aware  that any such
               condition or event then exists,  specifying the nature and period
               of  the  existence   thereof  (it  being   understood  that  such
               accountants shall not be liable, directly or indirectly,  for any
               failure to obtain  knowledge  of any  Default or Event of Default
               unless such accountants should have obtained knowledge thereof in
               making an audit in accordance  with generally  accepted  auditing
               standards or did not make such an audit),

     provided that the delivery  within the time period  specified  above of the
     Company's  annual report on Form 10-K for such fiscal year  (together  with
     the Company's annual report to shareholders,  if any,  prepared pursuant to
     Rule  14a-3  under  the  Exchange  Act)  prepared  in  accordance  with the
     requirements   therefor  and  filed  with  the   Securities   and  Exchange
     Commission,  together with the accountant's certificate described in clause
     (B) above,  shall be deemed to satisfy  the  requirements  of this  Section
     8.1(b);

          (c)  Monthly  Statements  --  within  45  days  after  the end of each
calendar  month,   duplicate  copies  of  the  consolidated   monthly  financial
statements  of the  Company  and its  Subsidiaries  in the  same  form as  those
distributed internally to the members of senior management of the Company, which
statements  shall be prepared in  accordance  with GAAP as applicable to interim
statements,  provided that such statements need not contain footnotes and may be
subject to quarterly and annual adjustments;

          (d) SEC and Other Reports -- promptly upon their  becoming  available,
one copy of (i) each financial statement, report, notice or proxy statement sent
by the Company or any Subsidiary to public  securities  holders  generally,  and
(ii) each  regular or  periodic  report  (other  than Forms S-8 and 11-K),  each
registration  statement (without exhibits except as expressly  requested by such
holder),  and each prospectus and all amendments thereto filed by the Company or
any  Subsidiary  with the  Securities  and Exchange  Commission and of all press
releases and other  statements  made  available  generally by the Company or any
Subsidiary to the public concerning developments that are Material;

          (e)  Information  Required by Rule 144A --  promptly  upon it becoming
available,  duplicate  copies of such  financial and other  information  as such
holder may  reasonably  determine to be necessary in order to permit  compliance
with the  information  requirements  of Rule 144A  under the  Securities  Act in
connection  with the  resale of Notes,  except at such  times as the  Company is
subject to the  reporting  requirements  of section 13 or 15(d) of the  Exchange
Act.

8.2. Business Information.

          (a) The Company shall deliver to each Purchaser:
<PAGE>
               (i) Notice of Default --  promptly,  and in any event within five
     days after a  Responsible  Officer  becomes  aware of the  existence of any
     Default or that any  Person  has given any notice or taken any action  with
     respect  to a claimed  Default  or that any  Person has given any notice or
     taken any action with respect to a claimed  Default of the type referred to
     in Section  12(f),  a written  notice  specifying  the nature and period of
     existence thereof and what action the Company is taking or proposes to take
     with respect thereto;

               (ii) Notices from Governmental  Authority -- promptly, and in any
     event  within  30 days of  receipt  thereof,  copies  of any  notice to the
     Company or any Subsidiary from any Federal or state Governmental  Authority
     relating  to any order,  ruling,  statute or other law or  regulation  that
     could reasonably be expected to have a Material Adverse Effect; and

               (iii) Requested Information -- with reasonable  promptness,  such
     other data and information relating to the business,  operations,  affairs,
     financial   condition,   or  Properties  of  the  Company  or  any  of  its
     Subsidiaries  or  relating  to the  ability of the  Company to perform  its
     obligations  hereunder  and  under  the  Notes as from  time to time may be
     reasonably requested by any such Purchaser.

          (b)  Employee  Benefits.  Upon the  written  request of any  Purchaser
(which shall be required to be made only a single time), the Company shall:

               (i)  Cause  to be  delivered  to  such  Purchaser,  each  of  the
     following: (A) promptly, and in any event within 10 Business Days after the
     Company  or any of its  Subsidiaries  knows or has  reason  to know that an
     ERISA Event has occurred that  reasonably  could be expected to result in a
     Material Adverse Change, a written  statement of a Senior Financial Officer
     of the  Company  describing  such ERISA  Event and any action that is being
     taken with respect  thereto by the Company,  any such  Subsidiary  or ERISA
     Affiliate,  and any action taken or  threatened  by the IRS,  Department of
     Labor,  or PBGC. The Company or such  Subsidiary,  as applicable,  shall be
     deemed to know all facts known by the  administrator of any Benefit Plan of
     which it is the plan  sponsor,  (B)  promptly,  and in any  event  within 3
     Business Days after the filing thereof with the IRS, a copy of each funding
     waiver   request   filed  with   respect  to  any  Benefit   Plan  and  all
     communications  received by the Company, any of its Subsidiaries or, to the
     knowledge of the Company, any ERISA Affiliate with respect to such request,
     and (C) promptly,  and in any event within 3 Business Days after receipt by
     the Company,  any of its  Subsidiaries or, to the knowledge of the Company,
     any ERISA Affiliate, of the PBGC's intention to terminate a Benefit Plan or
     to have a trustee  appointed to administer a Benefit  Plan,  copies of each
     such notice.

               (ii)  Cause  to be  delivered  to  such  Purchaser,  each  of the
     following:  (A) a copy of each  Plan  (or,  where  any such  plan is not in
     writing,  complete description  thereof) (and if applicable,  related trust
     agreements or other funding  instruments) and all amendments  thereto,  all
     written  interpretations thereof and written descriptions thereof that have
     been  distributed  to employees  or former  employees of the Company or its
     Subsidiaries;  (B) the most recent  determination  letter issued by the IRS

<PAGE>
     with  respect to each  Benefit  Plan;  (C) for the three most  recent  plan
     years,  annual  reports on Form 5500  Series  required to be filed with any
     governmental  agency  for each  Benefit  Plan;  (D) all  actuarial  reports
     prepared for the last three plan years for each Benefit Plan; (E) a listing
     of all  Multiemployer  Plans,  with the aggregate amount of the most recent
     annual  contributions  required  to be made  by the  Company  or any  ERISA
     Affiliate  to each  such  plan  and  copies  of the  collective  bargaining
     agreements requiring such contributions;  (F) any information that has been
     provided  to  the  Company  or any  ERISA  Affiliate  regarding  withdrawal
     liability under any Multiemployer Plan; and (G) the aggregate amount of the
     most recent annual payments made to former  employees of the Company or its
     Subsidiaries under any Retiree Health Plan.

8.3. Officer's Certificate.

          (a) Covenant  Compliance.  Each set of annual and quarterly  financial
statements delivered to a holder of Notes pursuant to Section 8.1(a) and Section
8.1(b)  hereof  shall be  accompanied  by a  certificate  of a Senior  Financial
Officer  setting forth the  information  (including  calculations  in reasonable
detail)  required in order to  establish  whether the Company was in  compliance
with the  requirements of Sections 9.1, 11.1, 11.2, 11.6, 11.7, 11.18 and 11.19,
inclusive,  during the quarterly or annual period covered by the statements then
being furnished (including with respect to each such Section,  where applicable,
the calculations of the maximum or minimum amount,  ratio or percentage,  as the
case may be,  permissible under the terms of such Sections,  and the calculation
of the amount, ratio or percentage then in existence);

          (b)  Defaults.  Each set of annual,  quarterly  and monthly  financial
statements  delivered to a holder of Notes pursuant to Section  8.1(a),  Section
8.1(b) or Section  8.1(c)  hereof shall be  accompanied  by a  certificate  of a
Senior  Financial  Officer  setting  forth a  statement  that such  officer  has
reviewed the relevant  terms thereof and has made,  or caused to be made,  under
his or her  supervision  a review  of the  transactions  and  conditions  of the
Company and the  Subsidiaries  from the  beginning of the period  covered by the
statements  then being  furnished to the date of the  certificate  and that such
review has not disclosed  the  existence  during such period of any condition or
event that  constitutes a Default or, if any such  condition or event existed or
exists (including,  without  limitation,  any such event or condition  resulting
from  the  failure  of the  Company  to  comply  with  any  Environmental  Law),
specifying  the nature  and  period of  existence  thereof  and what  action the
Company shall have taken or proposes to take with respect thereto.

8.4. Inspection.

          At the request of the Collateral  Agent or any Purchaser,  the Company
shall permit the representatives of the Collateral Agent and such Purchaser:

          (a) if no Default then exists,  at the expense of the Collateral Agent
or such Purchaser,  as the case may be, and upon reasonable  prior notice to the
Company,  to visit the principal executive office of the Company, to discuss the
affairs,  finances  and  accounts of the Company and its  Subsidiaries  with the
Company's officers, and (with the consent of the Company, which consent will not
be unreasonably  withheld) its  independent  public  accountants,  and (with the
consent of the  Company,  which  consent will not be  unreasonably  withheld) to
visit the other offices and properties of the Company and each  Subsidiary,  all
at such reasonable times and as often as may be reasonably requested in writing;
and
<PAGE>
          (b) if a Default then exists, at the expense of the Company,  to visit
and  in  respect  any  of the  offices  or  properties  of  the  Company  or any
Subsidiary,  to  examine  all of their  respective  books of  account,  records,
reports and other papers, to make copies and extracts therefrom,  and to discuss
their respective  affairs,  finances and accounts with their respective officers
and independent public accountants (and by this provision the Company authorizes
said  accountants  to discuss the affairs,  finances and accounts of the Company
and its  Subsidiaries),  all at such times and as often as may be requested.  9.
PREPAYMENT OF THE NOTES.  

9.1. Special Prepayments from Average Available Cash and After Sale of Assets or
     Change of Control.

          The Company  shall make  prepayments  of the  principal  amount of the
Notes hereunder as follows:

          (a) Average  Available  Cash.  In the event that, as at the end of any
calendar  month,  the  Average  Available  Cash for the month  (the  "Applicable
Month") during the preceding period of six consecutive  calendar months with the
lowest Average  Available Cash exceeds  $11,000,000,  the Company shall apply in
multiples of not less than $1,000,000 the amount by which the Average  Available
Cash for the Applicable Month exceeds  $11,000,000 to the pro rata prepayment of
Notes ("Available Cash Payments");  provided,  however, that the total amount of
Available  Cash  Payments  required  under  this  subsection  shall  not  exceed
$15,000,000. Not later than 10 Business Days after the last day of each calendar
month,  the Company  shall  deliver a notice to the holders of the Notes,  which
notice shall specify the amount of Average  Available Cash for each month during
the  preceding  period of six  consecutive  calendar  months  and the  resulting
Available Cash Payment,  if any, for such month, shall refer to this subsection,
shall specify the date fixed for such prepayment (which shall not be less than 5
Business  Days and not more than 10 Business  Days after the date such notice is
given) and shall  specify the  aggregate  principal  amount of the Notes held by
each holder thereof to be prepaid (with calculations in reasonable detail of how
such amounts were determined).  On the prepayment date specified in such notice,
the  Company  shall  prepay  the  Notes at 100% of the  principal  amount  to be
prepaid, together with accrued interest to the date fixed for prepayment.

          (b) Sales of  Non-Excluded  Assets  and  Worn-Out  Equipment.  Without
limiting  the  obligation  of the Company to obtain the consent of the  Required
Holders to any Disposition other than a Permitted Disposition and subject to the
terms of the  Intercreditor  Agreement,  the Company agrees,  on or prior to the
occurrence of any Disposition  other than a Disposition  described in clause (a)
of the  definition  of  Permitted  Disposition,  to  deliver to the Note Agent a
statement   certified  by  a  Senior  Financial  Officer,  in  form  and  detail
satisfactory to the Note Agent in its reasonable determination, of the estimated
amount of (i) the Net Cash Proceeds from such  Disposition  of any  Non-Excluded
Assets and (ii) any Net Cash  Proceeds in excess of  $1,600,000 in the aggregate
from  the  Disposition  of  Excluded  Assets  that  will  (on  the  date of such
Disposition) be received by the Company or any of its  Subsidiaries in cash and,
except as provided in Section  9.1(c)  below,  the Company will apply to the pro
rata prepayment of the Notes hereunder, as follows:
<PAGE>
               (i)  upon  the  date  30 days  following  such  Dispositions,  an
     aggregate  amount  equal to 75% of such  estimated  amount  of the Net Cash
     Proceeds  of  such  Dispositions,  to be  determined  at the  time  of each
     Disposition,  to  the  extent  received  by  the  Company  or  any  of  its
     Subsidiaries in cash on the date of such Disposition; and

               (ii)  thereafter,  quarterly,  on the date of the delivery by the
     Company  to the  Note  Agent  pursuant  to  Section  8.1  of the  financial
     statements  for any  quarterly  fiscal period or fiscal year, to the extent
     the Company or any of its  Subsidiaries  shall  receive  Net Cash  Proceeds
     during the quarterly  fiscal  period  ending on the date of such  financial
     statements  in cash under  deferred  payment  arrangements  or  Disposition
     Investments  entered into or received in connection with any Disposition to
     which  this  Section  9.1(b)  applies,  an  amount  equal to (a) 75% of the
     aggregate  amount  of such  Net Cash  Proceeds  minus  (b) any  transaction
     expenses  associated with such Dispositions and not previously  deducted in
     the  determination of Net Cash Proceeds plus (or minus, as the case may be)
     (c) any other  adjustment  received  or paid by the  Company  or any of its
     Subsidiaries  pursuant  to the  respective  agreements  giving rise to such
     Dispositions and not previously taken into account in the  determination of
     the Net Cash Proceeds of such  Dispositions,  provided that if prior to the
     date  upon  which  the  Company  would  otherwise  be  required  to  make a
     prepayment  under this subclause (ii) with respect to any quarterly  fiscal
     period the aggregate  amount of such Net Cash Proceeds (after giving effect
     to the  adjustments  provided  for in this  subclause  (ii))  shall  exceed
     $500,000,  then the Company  shall within 3 Business  Days from the date of
     receipt of such Net Cash  Proceeds make a prepayment  under this  subclause
     (ii) in an amount equal to such required prepayment.

          (c) Sale of Excluded Assets. The Company shall not be required to make
a prepayment  pursuant to Section  9.1(b) above with the Net Cash  Proceeds from
the  Disposition  of Excluded  Assets and shall be  permitted to retain such Net
Cash Proceeds for working capital purposes, provided that,

               (i) the Company  advises the  Purchasers at the time a prepayment
     would  otherwise be required to be made under Section  9.1(b) above that it
     intends to use such Net Cash Proceeds for working capital purposes; and

               (ii)  the  aggregate   amount  of  Net  Cash  Proceeds  from  the
     Disposition  of  Excluded  Assets not  subject to  prepayment  pursuant  to
     Section 9.1(b) does not exceed $1,600,000.

          (d) Change in Control.

               (i) Notice of Change in Control or  Control  Event.  The  Company
     will,  within 10 Business Days after any Responsible  Officer has knowledge
     of the  occurrence  of any Change in Control,  give written  notice of such
     Change in Control to each holder of Notes unless  notice in respect of such

<PAGE>

     Change in Control  shall have already  been given  pursuant to this Section
     9.1(d). If a Change in Control has occurred,  such notice shall contain and
     constitute an offer to prepay Notes as described in  subparagraph  (iii) of
     this Section 9.1(d) and shall be accompanied by the  certificate  described
     in subparagraph (vii) of this Section 9.1(d).

               (ii) Condition to Company  Action.  The Company will not take any
     action that  consummates  or  finalizes  a Change in Control  unless (i) at
     least 10 days prior to such  action it shall  have given to each  holder of
     Notes written notice  containing and  constituting an offer to prepay Notes
     as described in subparagraph  (iii) of this Section 9.1(d),  accompanied by
     the certificate described in subparagraph (vii) of this Section 9.1(d), and
     (ii)  contemporaneously  with such action, it prepays all Notes required to
     be prepaid in accordance with this Section 9.1(d).

               (iii)  Offer  to  Prepay   Notes.   The  offer  to  prepay  Notes
     contemplated  by this  Section  9.1(d)  shall  be an offer  to  prepay,  in
     accordance with and subject to this Section 9.1(d),  all, but not less than
     all, the Notes held by each holder (in this case only,  "holder" in respect
     of any Note registered in the name of a nominee for a disclosed  beneficial
     owner shall mean such  beneficial  owner) on a date specified in such offer
     (the "Proposed  Prepayment  Date"). If such Proposed  Prepayment Date is in
     connection with an offer  contemplated  by this Section  9.1(d),  such date
     shall be not less than 20 days and not more than 30 days  after the date of
     such offer.

               (iv) Acceptance. A holder of Notes may accept the offer to prepay
     made pursuant to this Section 9.1(d) by causing a notice of such acceptance
     to be  delivered  to the  Company  at least 10 days  prior to the  Proposed
     Prepayment  Date.  A failure by a holder of Notes to respond to an offer to
     prepay made  pursuant to this Section  9.1(d) shall be deemed to constitute
     an acceptance of such offer by such holder.

               (v) Prepayment. Prepayment of the Notes to be prepaid pursuant to
     this Section 9.1(d) shall be at 101% of the principal amount of such Notes,
     together with interest on such Notes accrued to the date of prepayment.

               (vi) Deferral  Pending  Change in Control.  The obligation of the
     Company to prepay Notes pursuant to the offers  required by and accepted in
     accordance  with this Section  9.1(d) is subject to the  occurrence  of the
     Change in Control in respect  of which such  offers and  acceptances  shall
     have been made.  In the event that such Change in Control does not occur on
     the Proposed  Prepayment Date in respect  thereof,  the prepayment shall be
     deferred  until  and  shall  be made on the date on which  such  Change  in
     Control occurs.  The Company shall keep each holder of Notes reasonably and
     timely  informed of (i) any such deferral of the date of  prepayment,  (ii)
     the date on which such Change in Control and the prepayment are expected to
     occur,  and (iii) any  determination  by the Company that efforts to effect
     such  Change in Control  have ceased or been  abandoned  (in which case the
     offers and  acceptances  made pursuant to this Section 9.1(d) in respect of
     such Change in Control shall be deemed rescinded).

<PAGE>
               (vii)  Officer's  Certificate.  Each  offer to  prepay  the Notes
     pursuant to this Section  9.1(d)  shall be  accompanied  by a  certificate,
     executed by a Senior Financial Officer of the Company and dated the date of
     such offer,  specifying:  (a) the Proposed  Prepayment  Date; (b) that such
     offer is made pursuant to this Section 9.1(d);  (c) the principal amount of
     each Note offered to be prepaid; (d) the interest that would be due on each
     Note offered to be prepaid, accrued to the Proposed Prepayment Date (or any
     later date resulting from the deferral thereof); (e) that the conditions of
     this Section 9.1(d) have been fulfilled;  and (f) in reasonable detail, the
     nature and date or proposed date of the Change in Control.

9.2. Optional Prepayments.

          The Company may, at its option, upon notice as provided below, prepay,
without  penalty or premium,  at any time all, or from time to time any part of,
the Notes,  in an amount not less than  $1,000,000  of the  aggregate  principal
amount of the Notes then  outstanding  in the case of a partial  prepayment,  at
100% of the  principal  amount so prepaid.  The Company will give each holder of
Notes written notice of each optional prepayment under this Section 9.2 not less
than 30 days  and not  more  than 60 days  prior  to the  date  fixed  for  such
prepayment.  Each such notice shall specify such date,  the aggregate  principal
amount of the Notes to be  prepaid on such date,  the  principal  amount of each
Note held by such holder to be prepaid  (determined  in accordance  with Section
9.3),  and the interest to be paid on the  prepayment  date with respect to such
principal amount being prepaid. 

9.3. Allocation of Partial Prepayments.

          In the  case of each  partial  prepayment  of the  Notes  pursuant  to
Section 9.1(a) or (b), the principal  amount of the Notes to be prepaid shall be
allocated  among  all of the Notes at the time  outstanding  in  proportion,  as
nearly as practicable,  to the respective  unpaid principal  amounts thereof not
theretofore called for prepayment. 

9.4. Maturity; Surrender, etc.

          In the case of each  prepayment  of Notes  pursuant to this Section 9,
the principal  amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such  prepayment,  together  with interest on such
principal  amount  accrued  to such date.  From and after such date,  unless the
Company  shall  fail to pay  such  principal  amount  when  so due and  payable,
together with the  interest,  as aforesaid,  interest on such  principal  amount
shall cease to accrue.  Any Note paid or prepaid in full shall be surrendered to
the Company and cancelled and shall not be reissued, and no Note shall be issued
in lieu of any prepaid principal amount of any Note.

9.5. Purchase of Notes.

          The  Company  will not and will not  permit  any  Affiliate  under its
control  to  purchase,   redeem,  prepay  or  otherwise  acquire,   directly  or
indirectly,  any of the outstanding  Notes except upon the payment or prepayment
of the Notes in accordance  with the terms of this Agreement and the Notes.  The
Company will promptly cancel all Notes acquired by it or any Affiliate  pursuant
to any payment,  prepayment  or purchase of Notes  pursuant to any  provision of
this  Agreement and no Notes may be issued in  substitution  or exchange for any
such Notes. 
<PAGE>
10. AFFIRMATIVE COVENANTS.

     The Company covenants that so long as any of the Notes are outstanding:

10.1.     Compliance with Law.

          The Company will comply,  and will cause each of its  Subsidiaries  to
comply, with all laws,  ordinances or governmental rules or regulations to which
each of them is subject, including, without limitation,  Environmental Laws, and
will  obtain  and  maintain  in  effect  all  licenses,  certificates,  permits,
franchises and other governmental  authorizations  necessary to the ownership of
their respective properties or to the conduct of their respective businesses.

10.2.     Accounting Systems.

          The Company will  maintain a standard and modern  system of accounting
that enables the Company to produce  financial  statements  in  accordance  with
GAAP, and maintain records pertaining to the Collateral that contain information
as from time to time may be requested by the Required Holders.  The Company also
shall keep a modern inventory reporting system that shows all additions,  sales,
claims, returns, and allowances with respect to the Inventory.

10.3.     Collateral Reporting.

          The Company  shall  provide upon the written  request  (which shall be
required  to be  given  only a  single  time)  of any  Purchaser  the  following
documents or  information  to such  Purchaser  provided that such  documents and
information are provided to the New Revolving Credit Lender by the Company under
the New Revolving  Credit Agreement at the following times in the form furnished
to the New Revolving Credit Lender: (a) on a monthly basis and, in any event, by
no later than the 10th day of each month during the term of this Agreement,  (i)
a detailed  calculation of the Borrowing  Base, (ii) a detailed aging, by total,
of the Accounts,  together with a reconciliation to the detailed  calculation of
the Borrowing Base previously  provided to Foothill,  and (iii) a report showing
the  post-Petition  Date loans and advances  outstanding from the Company to its
Jamaican and Mexican Subsidiaries,  and any changes in the balances thereof from
the last such report, (b) on a monthly basis and, in any event, by no later than
the 10th day of each month during the term of this  Agreement,  a summary aging,
by vendor,  of the Company's  accounts payable and any book overdraft,  (c) on a
quarterly basis, a detailed list of the Company's customers.

10.4.     Title to Equipment.

          Upon the request of the Collateral Agent or the Required Holders,  the
Company shall promptly deliver,  and shall cause its Subsidiaries to deliver, to
the Collateral  Agent, to the extent such items are in the possession or control
of  the  Company,  or  otherwise  reasonably  available  to the  Company  or any
Subsidiary,   properly  endorsed,   any  and  all  evidences  of  ownership  of,
certificates  of title,  or  applications  for  title to any items of  Equipment
included in the Collateral.
<PAGE>
10.5.     Maintain the Equipment and Improvements.

          The  Company  shall  maintain,  and shall  cause its  Subsidiaries  to
maintain,  the  Equipment and the  Improvements  (as such term is defined in the
Mortgages)  in good  operating  condition  and  repair  (ordinary  wear and tear
excepted),  and make all  necessary  replacements  thereto so that the value and
operating  efficiency  thereof shall at all times be maintained  and  preserved.
Other than those  items of  Equipment  that  constitute  fixtures on the Closing
Date,  neither the Company nor any Subsidiary shall permit any item of Equipment
to become a fixture to real estate or an accession to other  Property,  and such
Equipment shall at all times remain personal Property.

10.6.     Insurance.

          (a) At its  expense,  the  Company  shall keep the  Personal  Property
Collateral insured against loss or damage by fire, theft, explosion, sprinklers,
and all other hazards and risks, and in such amounts,  as are ordinarily insured
against by other owners in similar  businesses.  The Company also shall maintain
business interruption,  public liability, product liability, and Property damage
insurance  relating to the Company's  ownership and use of the Personal Property
Collateral,  as well as insurance  against larceny,  embezzlement,  and criminal
misappropriation.

          (b)  At its  expense,  the  Company  shall  obtain  and  maintain  (i)
insurance of the type  necessary to insure the  Improvements  and  Equipment (as
such terms are defined in the Mortgages), for the full replacement cost thereof,
against any loss by fire, lightning, windstorm, hail, explosion, aircraft, smoke
damage,  vehicle damage,  elevator collision,  and other risks from time to time
included under  "extended  coverage"  policies,  in such amounts as the Required
Holders  reasonably  may  require,  but in any event in  amounts  sufficient  to
prevent  the  Company  from  becoming a  co-insurer  under such  policies,  (ii)
combined single limit bodily injury and Property damages  insurance  against any
loss,  liability,  or damages  on,  about,  or  relating  to each parcel of Real
Property  Collateral,  in an  amount  of not less  than  [$_______],  and  (iii)
insurance for such other risks as the Required Holders may require.  Replacement
costs,  at the Required  Holders'  option,  may be  redetermined by an insurance
appraiser,  satisfactory to the Required Holders,  not more frequently than once
every 12 months at the Company's cost.

          (c) All such  policies of insurance  shall be in such form,  with such
companies, and in such amounts as may be satisfactory to the Purchasers in their
reasonable  determination.  All  insurance  required  herein shall be written by
companies which are authorized to do insurance business in the States of Alabama
and South  Carolina.  All  hazard  insurance  and such  other  insurance  as the
Required  Holders  shall  specify,  shall  contain a Form 438BFU (NS)  mortgagee
endorsement,  or an  equivalent  endorsement  satisfactory  to  the  Purchasers,
showing the Collateral Agent as loss payee thereof, as its interests may appear,
and shall contain a waiver of warranties.  Every policy of insurance referred to
in this Section 10.6 shall  contain an agreement by the insurer that it will not
cancel such policy except after 30 days prior written  notice to the  Collateral
Agent and that any loss payable thereunder shall be payable  notwithstanding any
act or negligence  of the Company or the  Collateral  Agent which might,  absent
such  agreement,  result  in a  forfeiture  of all or a part of  such  insurance
payment and notwithstanding (i) occupancy or use of the Real Property Collateral
for purposes more hazardous than permitted by the terms of such policy, (ii) any
foreclosure or other action or proceeding taken by the Collateral Agent pursuant

<PAGE>
to the Mortgages upon the happening of an Event of Default,  or (iii) any change
in title or ownership of the Real Property Collateral. The Company shall deliver
to the  Collateral  Agent  certified  copies of such  policies of insurance  and
evidence of the payment of all premiums therefor.

          (d) Original  policies or  certificates  thereof  satisfactory  to the
Purchasers  evidencing such insurance shall be delivered to the Collateral Agent
at least 30 days prior to the expiration of the existing or preceding  policies.
The Company shall give the Collateral Agent prompt notice of any loss covered by
such  insurance,  and the  Collateral  Agent  shall have the right to adjust any
loss. The Collateral  Agent shall have the exclusive  right to adjust all losses
payable  under any such  insurance  policies  with  respect  to the  Purchasers'
Primary Collateral without any liability to the Company whatsoever in respect of
such adjustments,  absent gross negligence or willful  misconduct on the part of
Collateral  Agent.  Any  monies  received  as  payment  for any loss  under  any
insurance policy including the insurance policies mentioned above, to the extent
it pertains to the  Purchasers'  Primary  Collateral,  shall be paid over to the
Collateral  Agent to be applied at the option of the Required  Holders either to
the  prepayment  of the Notes  without  premium,  in such order or manner as the
Required  Holders  may  elect,  but  consistent  with the terms of the  Security
Documents and the Intercreditor Agreement, to the extent applicable, or shall be
disbursed to the Company under staged payment terms  reasonably  satisfactory to
the Required  Holders for application to the cost of repairs,  replacements,  or
restorations.  All repairs, replacements, or restorations shall be effected with
reasonable promptness and shall be of a value at least equal to the value of the
items or  Property  destroyed  prior to such  damage  or  destruction.  Upon the
occurrence of an Event of Default,  the Required Holders shall have the right to
cause the Collateral Agent to apply all prepaid premiums pertaining to insurance
that relates to the Purchasers'  Primary  Collateral to the payment of the Notes
in such order or form as the Purchasers shall determine.

          (e) The Company  shall not take out separate  insurance  concurrent in
form or  contributing  in the event of loss with that  required to be maintained
under this Section  10.6,  unless the  Collateral  Agent is included  thereon as
named insured with the loss payable to the  Collateral  Agent,  as its interests
may appear,  under a standard  438BFU (NS) Mortgagee  endorsement,  or its local
equivalent.  The Company  immediately shall notify the Collateral Agent whenever
such separate insurance is taken out, specifying the insurer thereunder and full
particulars  as to the  policies  evidencing  the same,  and  originals  of such
policies immediately shall be provided to the Collateral Agent. 

10.7. No Setoffs or Counterclaims.

          The  Company  will  make   payments,   and  will  cause  each  of  its
Subsidiaries to make payments,  hereunder and under the other Basic Documents by
or on  behalf  of the  Company  or any of its  Subsidiaries  without  setoff  or
counterclaim and free and clear of, and without  deduction or withholding for or
on account of, any Federal, state, or local taxes.

10.8.     Location of Equipment.

          The  Company  will keep,  and will cause each of its  Subsidiaries  to

<PAGE>
keep,  the  Equipment  only at the  locations  identified  on Schedule H and not
further remove same from the United States of America except for ordinary course
relocation  of  Equipment  between  locations  in the United  States of America,
Mexico, and Jamaica, to meet production  requirements;  provided,  however, that
the Company  may amend  Schedule H so long as such  amendment  occurs by written
notice  to the  Purchasers  not  less  than 10 days  prior  to the date on which
Equipment  is moved to such new  location,  and so long as such new  location is
within the United States of America (unless the Purchasers consent to removal to
additional  locations outside the United States of America),  and so long as, at
the time of such written  notification (except with respect to Equipment that is
to be moved  outside the United  States of America  with the  Required  Holders'
consent or pursuant to the provisions  above that apply to certain  movements of
Equipment  and/or  Inventory  to Mexico or  Jamaica),  the Company  provides any
financing  statements  or fixture  filings  necessary  to perfect  and  continue
perfected the Purchasers'  security  interests in such Property and also, within
such 10 day period,  provides to the Purchasers a Collateral Access Agreement if
requested by the Collateral Agent or the Required Holders.  

10.9.  Intentionally Left Blank.

          This section has been intentionally left blank.

10.10.    Leases.

          The Company will pay when due, and will cause each of its Subsidiaries
to pay when due, all rents and other  amounts  payable under any leases to which
the Company or any of its  Subsidiaries is a party or by which the Properties of
the Company or any of its Subsidiaries  are bound,  unless such payments are the
subject of a Permitted Protest.

10.11.    Payment of Taxes and Claims.

          The  Company  will file,  and will cause each of its  Subsidiaries  to
file, all tax returns  required to be filed in any  jurisdiction  and to pay and
discharge  all taxes shown to be due and  payable on such  returns and all other
taxes,  assessments,  governmental  charges, or levies imposed on them or any of
their Properties, income or franchises, to the extent such taxes and assessments
have become due and payable  and before  they have  become  delinquent,  and all
claims for which sums have  become due and payable  that have or might  become a
Lien on Properties of the Company or any  Subsidiary,  provided that neither the
Company nor any Subsidiary  need pay any such tax or assessment or claims if (i)
the amount,  applicability  or validity  thereof is  contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate  proceedings,
and the Company or such Subsidiary has established adequate reserves therefor in
accordance  with GAAP on the books of the  Company  or such  Subsidiary.  

10.12.    Corporate Existence, etc.

          The  Company  will at all times  preserve  and keep in full  force and
effect its corporate existence. Subject to Section 11.3, the Company will at all
times preserve and keep in full force and effect (a) the corporate  existence of
each of its  Subsidiaries  (unless merged into the Company or a Subsidiary)  and
(b) all rights and franchises of the Company and its Subsidiaries, except to the
extent that the failure to preserve and keep such rights and  franchises in full

<PAGE>

force and effect could not,  individually  or in the  aggregate,  be  reasonably
expected to result in a Material Adverse Effect.

10.13.    Certain Obligations Respecting Domestic Subsidiaries.

          (a) Guarantors. The Company will take such action, and will cause each
of its Domestic  Subsidiaries to take such action, from time to time as shall be
necessary  to  ensure  that  all  Domestic   Subsidiaries  of  the  Company  are
"Guarantors" and "Debtors" under the Subsidiary Guaranty and Security Agreement.
Without limiting the generality of the foregoing,  in the event that the Company
or any of its  Subsidiaries  shall form or acquire any new  Domestic  Subsidiary
that shall  constitute  a Domestic  Subsidiary  hereunder,  the  Company and its
Subsidiaries will cause such new Domestic Subsidiary to

          (i) become a "Guarantor"  and "Debtor" under the  Subsidiary  Guaranty
     and Security Agreement;

          (ii)  subject  to the  rights  of  Foothill  under  the  terms  of the
     Intercreditor Agreement, cause such Domestic Subsidiary to take such action
     (including, without limitation,  delivering such shares of stock, executing
     and  delivering  such Uniform  Commercial  Code  financing  statements  and
     executing  and  delivering  mortgages  or deeds of trust  covering the real
     Property  and  fixtures  owned or  leased by such  Subsidiary)  as shall be
     necessary to create and perfect valid and enforceable  first priority Liens
     on  substantially  all of the Property of such new Domestic  Subsidiary  as
     collateral  security for the obligations of such new Subsidiary  hereunder;
     and

          (iii) deliver such proof of corporate action,  incumbency of officers,
     opinions  of  counsel  and other  documents  as is  consistent  with  those
     delivered by each Guarantor as the Collateral Agent or the Required Holders
     may reasonably request.

          (b) Ownership of  Subsidiaries.  The Company will, and will cause each
of its Subsidiaries to, take such action from time to time as shall be necessary
to ensure that each of its Subsidiaries is a Wholly Owned  Subsidiary  except as
disclosed  on  Schedule F. In the event that any shares of stock shall be issued
by any  Subsidiary,  the  Company  agrees,  and  agrees  to  cause  each  of its
Subsidiaries  to deliver  forthwith  to the  Collateral  Agent  pursuant  to the
Security and Pledge Agreement or the Subsidiary Guaranty and Security Agreement,
as  the  case  may  be,  the  certificates  evidencing  such  shares  of  stock,
accompanied  by undated  stock  powers  executed in blank and to take such other
action as the Collateral Agent or the Required Holders shall reasonably  request
to perfect the security interest created therein;  provided,  however,  that the
Company  shall not be required to, or to cause any of its Domestic  Subsidiaries
to,  grant the  Collateral  Agent a security  interest in shares of stock of any
Subsidiary  that is not a  Domestic  Subsidiary  in  excess of 66% of all of the
outstanding shares of such Subsidiary. 

10.14. Chief Executive Officer.

     The Company shall at all times cause Michael  Billingsley or another person
acceptable  to  the  Required  Holders  in  the  Required  Holders'   reasonable
discretion to be the Chief Executive Officer of the Company.
<PAGE>
10.15.    Tax Returns.

          Upon the written  request  (which  shall be required to be made only a
single  time) of any  Purchaser,  the Company  shall  deliver to such  Purchaser
copies of each of the  Company's  future  Federal  income tax  returns,  and any
amendments  thereto,  within thirty days of the filing thereof with the Internal
Revenue Service. 

10.16. Fayette Facilities.

          The  Company  shall repay all of the IDB  Indebtedness  related to the
Fayette Facilities on the dates scheduled for repayment.

11.  NEGATIVE COVENANTS.

     The Company covenants that so long as any of the Notes are outstanding:

11.1.     Indebtedness.

          The Company will not, nor will it permit any of its  Subsidiaries  to,
create,  incur or assume any  Indebtedness  unless at the date subsequent to the
Effective Date that such Indebtedness is created, incurred or assumed, and after
giving  effect  thereto and to the  application  of the  proceeds  thereof,  the
Interest Coverage Ratio is at least 2.50 to 1, except:

     (a)  Indebtedness  created  hereunder  and under the  Guaranty and Security
Agreement;

     (b)  Indebtedness  (including  Capital  Lease  Obligations)  set  forth  in
Schedule C,  including  any  extensions,  renewals or  replacements  of any such
Indebtedness;

     (c) Intentionally left blank;

     (d) Indebtedness of any Subsidiary to the Company or any other  Subsidiary;
and

     (e)  additional  Indebtedness  of the Company;  provided that the aggregate
principal  amount of Indebtedness  permitted by this clause (e) shall not exceed
$1,000,000 at any time outstanding.

11.2.     Liens.

          The Company will not, nor will it permit any of its  Subsidiaries  to,
create,  incur,  assume,  permit or suffer to exist any Lien on any Property now
owned or  hereafter  acquired  by it, or assign or sell any  income or  revenues
(including accounts receivable) or rights in respect thereof, except:

          (a)  Liens created pursuant to the Security Documents;
<PAGE>
          (b) any Lien on any Property of the Company or any of its Subsidiaries
existing on the Closing Date and set forth in Schedule G; provided that (i) such
Lien  shall  not  apply  to any  other  Property  of the  Company  or any of its
Subsidiaries  and (ii) such Lien shall  secure only those  obligations  which it
secures on the date hereof;

          (c)  Permitted Encumbrances;

          (d) any Lien  existing on any  Property  of any Person that  becomes a
Subsidiary  after  the  Closing  Date  prior to the time such  Person  becomes a
Subsidiary; provided that (i) such Lien is not created in contemplation of or in
connection  with such  Person  becoming a  Subsidiary,  (ii) such Lien shall not
apply to any other Property of the Company or any Subsidiary and (iii) such Lien
shall  secure  only those  obligations  which it secures on the date such Person
becomes a Subsidiary;

          (e) Liens on fixed or capital assets acquired, constructed or improved
by the Company or any  Subsidiary;  provided  that (i) such  security  interests
secure  Indebtedness  permitted by Section  11.1(b) or (e),  (ii) such  security
interests and the  Indebtedness  secured thereby are incurred prior to or within
90 days  after  such  acquisition  or the  completion  of such  construction  or
improvement,  (iii) the Indebtedness secured thereby does not exceed the cost of
acquiring, constructing or improving such fixed or capital assets, and (iv) such
security  interests  shall not apply to any other Property of the Company or any
Subsidiary;

          (f) Liens (other than those  permitted by  paragraphs  (a) through (e)
above)  securing  liabilities  permitted  hereunder in an  aggregate  amount not
exceeding $250,000 at any time outstanding; and

          (g) Liens existing on the Closing Date in respect of the  Indebtedness
under the New Revolving Credit Agreement.

11.3.     Fundamental Changes.

          (a) Mergers and Consolidations.  Except for the Permitted Combination,
the Company will not, nor will it permit any of its  Subsidiaries to, enter into
any  transaction  of  merger,  consolidation  or  amalgamation  other  than  the
Permitted Combination,  or liquidate,  wind up or dissolve itself (or suffer any
liquidation  or  dissolution);  provided  that,  if  at  the  time  thereof  and
immediately  after giving effect  thereto,  no Default or Event of Default shall
have occurred and be continuing hereunder, (i) any Subsidiary of the Company may
merge into or  consolidate  with the  Company or any  Subsidiary  so long as the
Company is the  continuing  or surviving  Person and has Net Worth not less than
that of the Company immediately prior to the transaction, (ii) any Subsidiary of
the Company may  liquidate or dissolve  into the Company,  (iii) any  Subsidiary
that is a Guarantor  may merge into or  consolidate  with another  Subsidiary so
long as the  Subsidiary  that is a  Guarantor  is the  continuing  or  surviving
Person, or (iv) any Subsidiary of the Company may merge into or consolidate with
any Domestic Subsidiary of the Company so long as the Domestic Subsidiary is the
continuing or surviving Person.

          (b) Dispositions.  The Company will not, nor will it permit any of its
Subsidiaries to, sell,  transfer,  lease or otherwise dispose of all or any part

<PAGE>
of  its  Property   other  than  in  a  transaction   constituting  a  Permitted
Disposition;  provided that, if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing,  any Subsidiary
may sell,  transfer,  lease or otherwise dispose of its assets to the Company or
another Subsidiary that is a Guarantor.

          (c) Acquisitions.  The Company will not, nor will it permit any of its
Subsidiaries  to,  acquire any business or Property or capital stock of, or be a
party to any acquisition of, any Person except:

               (i) purchases of Equipment and other  Property to be sold or used
          in the ordinary course of the Company's business;

               (ii) Investments  permitted under Section 11.6; and 

               (iii) Capital Expenditures  permitted under Section 11.19 of this
          Agreement.

11.4.     Intentionally Left Blank.

          This subsection has intentionally been left blank.

11.5.     Lines of Business.

          The Company will continue, and will cause each Subsidiary to continue,
to engage in business of the same general  type as now  conducted by the Company
and its  Subsidiaries,  and will  preserve,  renew  and keep in full  force  and
effect, and, subject to Section 11.3(a), will cause each Subsidiary to preserve,
renew and keep in full force and effect their respective corporate existence and
their respective rights, privileges and franchises necessary or desirable in the
normal conduct of business. 

11.6. Investments.

          The Company will not, nor will it permit any of its  Subsidiaries  to,
make or permit to remain outstanding any Investments except:

          (a) Investments  (including  Investments made by the Company in any of
its  Subsidiaries)  outstanding on the Effective Date and identified in Schedule
N;
          (b)  the  acquisition  by  the  Company  and/or  one  or  more  of its
Subsidiaries of the Strathleven Interest;

          (c) operating deposit accounts with banks; 

          (d) Permitted Investments;

          (e)  Disposition  Investments  received by the Company  upon a sale of
Property permitted under Section 11.3(b);
<PAGE>
          (f) loans by the Company to its  employees  not to exceed  $250,000 in
the aggregate at any one time outstanding; and

          (g)  intercompany  loans to the Mexican and Jamaican  Subsidiaries (i)
not to exceed  $3,000,000  in the  aggregate  during any  fiscal  quarter of the
Company and (ii) only to the extent that such loans are  necessary  to cover the
reasonable operating expenses of such Subsidiaries.

11.7.     Restricted Payments.

          The Company will not, nor will it permit any of its  Subsidiaries  to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment,  except  that so long as at the time  thereof and after  giving  effect
thereto no Default shall have occurred and be continuing:

          (a) the  Company may declare  and pay  dividends  with  respect to its
common stock payable solely in additional shares of its common stock; and

          (b) the  Company  may make a  Restricted  Payment of up to $200,000 to
acquire the Strathleven Interest.

          Nothing herein shall be deemed to prohibit the payment of dividends by
any  Subsidiary of the Company to the Company or to any other  Subsidiary of the
Company.

11.8.     Transactions with Affiliates.

          The Company will not, nor will it permit any of its  Subsidiaries  to,
sell,  lease or  otherwise  transfer  any  Property  to, or  purchase,  lease or
otherwise   acquire  any  Property  from,  or  otherwise  engage  in  any  other
transactions  (including  aircraft  leases,  self-insurance  compensation,  real
estate transactions and loans and other Investments) with any of its Affiliates,
except (a)  transactions  in the  ordinary  course of  business at prices and on
terms and conditions not less favorable to the Company or such  Subsidiary  than
could be obtained  on an  arm's-length  basis from  unrelated  third  parties as
determined in good faith by the Company's board of directors,  (b)  transactions
between or among the Company and its wholly owned Subsidiaries not involving any
other  Affiliate,  (c)  transactions  set forth on  Schedule  O hereto,  (d) any
Restricted Payment permitted by Section 11.7 and (e) transactions outside of the
ordinary  course of  business  not in  excess of  $60,000  in each  case.  

11.9.     Restrictive Agreements.

          The Company will not, and will not permit any of its  Subsidiaries to,
directly or  indirectly,  enter into,  incur or permit to exist any agreement or
other  arrangement  that prohibits,  restricts or imposes any condition upon (a)
the ability of the Company or any Subsidiary to create, incur or permit to exist
any Lien upon any of its Property,  or (b) the ability of any  Subsidiary to pay
dividends or other distributions with respect to any shares of its capital stock
or to make or repay loans or advances to the Company or any other  Subsidiary or
to Guaranty  Indebtedness of the Company or any other Subsidiary;  provided that
(i) the foregoing shall not apply to restrictions and conditions  imposed by law

<PAGE>
or by this Agreement,  (ii) the foregoing  shall not apply to  restrictions  and
conditions,  if any,  contained  in  agreements  existing on the date hereof and
identified on Schedule P (but shall apply to any extension or renewal of, or any
amendment  or  modification  expanding  the scope of,  any such  restriction  or
condition),  (iii) the foregoing shall not apply to customary  restrictions  and
conditions  contained in agreements relating to the sale of a Subsidiary pending
such  sale,  provided  such  restrictions  and  conditions  apply  only  to  the
Subsidiary that is to be sold and such sale is permitted hereunder,  (iv) clause
(a) of the foregoing  shall not apply to  restrictions  or  conditions,  if any,
imposed by any  agreement  relating to secured  Indebtedness  permitted  by this
Agreement  if such  restrictions  or  conditions  apply only to the  Property or
assets securing such  Indebtedness and (v) clause (a) of the foregoing shall not
apply to customary  provisions  in leases and other  contracts  restricting  the
assignment thereof. 

11.10. Change Name.

          The  Company  will not  change  its name,  FEIN,  corporate  structure
(within the meaning of Section 9402(7) of the Code), or identify, or add any new
fictitious name.

11.11.    Prepayments and Amendments.

          (a) Except in connection with a refinancing permitted by Section 11.1,
the Company  will not,  nor will it permit any of its  Subsidiaries  to,  prepay
(except that the Company may make  prepayments to the New Revolving  Lender from
the proceeds of Accounts and Inventory in  accordance  with the terms of the new
Revolving Credit Agreement) or redeem, retire,  defease,  purchase, or otherwise
acquire any Indebtedness  owing to any third person,  other than the obligations
under the Notes, this Agreement and the other Basic Documents; and

          (b) The Company will not, nor will permit any of its subsidiaries,  to
amend, modify, alter,  increase, or change,  directly or indirectly,  any of the
terms or conditions of any agreement,  instrument, document, indenture, or other
writing evidencing or concerning  Indebtedness  permitted under Section 11.1(b).

11.12. Sale or Discount of Accounts.

          The Company will not, nor will it permit any of its  Subsidiaries  to,
sell with  recourse,  or discount or otherwise sell for less than the face value
thereof, any of its Accounts.

11.13.    Intentionally Left Blank.

          This subsection has intentionally been left blank.

11.14.    Accounting Methods.

          The Company shall not, and shall not permit any  Subsidiary to, modify
or change its method of  accounting  or enter into,  modify,  or  terminate  any
agreement  currently  existing,  or at any time hereafter  entered into with any
third party  accounting firm or service bureau for the preparation or storage of
the Company's  accounting records without said accounting firm or service bureau
agreeing  to  provide  the  Collateral  Agent  and  the  Purchasers  information

<PAGE>
regarding  the  Collateral  or the Company's  financial  condition.  The Company
waives, both for itself and its Subsidiaries, the right to assert a confidential
relationship,  if any, it or they may have with any  accounting  firm or service
bureau in  connection  with any  information  requested by any  Purchaser or the
Collateral  Agent pursuant to or in accordance with this  Agreement,  and agrees
that the  Collateral  Agent and each  Purchaser  may contact  directly  any such
accounting  firm or service bureau in order to obtain such  information.  

11.15.    Suspension.

     Except in  connection  with the Permitted  Combination,  the Company or any
Subsidiary shall not suspend or go out of a substantial portion of its business.

11.16. Change in Location of Chief  Executive  Office;  Inventory  and Equipment
       with Bailees.

          The  Company  shall  not,  and shall not  permit  any  Subsidiary  to,
relocate its chief executive office to a new location without  providing 30 days
prior  notification  thereof to the Collateral Agent and so long as, at the time
of such written  notification,  the Company provides any financing statements or
fixture  filings  necessary to perfect and  continue  perfected  the  Collateral
Agent's  security  interests  and also  provides,  or causes such  Subsidiary to
provide,  to the Collateral Agent a Collateral  Access Agreement (a) in the case
of any Equipment stored with a bailee,  warehouseman or similar party and (b) to
the extent provided to the New Revolving  Credit Lender with respect to such new
location, in the case of Inventory stored with a bailee, warehouseman or similar
party.  The  Equipment  shall not at any time now or  hereafter be stored with a
bailee,  warehouseman,  or similar  party without the  Collateral  Agent's prior
written consent. The Purchasers consent,  both for themselves and the Collateral
Agent,  to  any  bailment,  warehousing  or  similar  arrangements  specifically
disclosed on Schedule H. 

11.17. No Prohibited Transactions Under ERISA.

          The Company shall not directly or indirectly:

          (a) engage,  or permit any Subsidiary or the Company to engage, in any
prohibited  transaction  which is reasonably likely to result in a civil penalty
or excise tax  described in Sections 406 of ERISA or 4975 of the IRC for which a
statutory or class  exemption is not  available or a private  exemption  has not
been previously obtained from the Department of Labor;

          (b) permit to exist with respect to any Benefit  Plan any  accumulated
funding  deficiency  (as defined in  Sections  302 of ERISA and 412 of the IRC),
whether or not waived;

          (c) fail,  or permit any  Subsidiary  of the  Company to fail,  to pay
timely required  contributions  or annual  installments  due with respect to any
waived funding deficiency to any Benefit Plan;

          (d)  terminate,  or permit any Subsidiary of the Company to terminate,
any Benefit Plan where such event would result in any  liability of the Company,
any of its Subsidiaries or any ERISA Affiliate under Title IV of ERISA;
<PAGE>
          (e) fail, or permit any Subsidiary of the Company to fail, to make any
required contribution or payment to any Multiemployer Plan;

          (f) fail, or permit any  Subsidiary of the Company to fail, to pay any
required  installment or any other payment required under Section 412 of the IRC
on or before the due date for such installment or other payment;

          (g) amend,  or permit any  Subsidiary of the Company to amend,  a Plan
resulting in an increase in current liability for the plan year such that either
of the Company, any Subsidiary of the Company or any ERISA Affiliate is required
to provide security to such Plan under Section 401(a)(29) of the IRC; or

          (h)  withdraw,  or permit any  Subsidiary  of the Company to withdraw,
from any Multiemployer Plan where such withdrawal is reasonably likely to result
in any liability of any such entity under Title IV of ERISA; which, individually
or in the aggregate,  results in or reasonably  would be expected to result in a
claim against or liability of the Company,  any of its Subsidiaries or any ERISA
Affiliate in excess of $100,000. 

11.18. Minimum Net Worth.

          The Company  shall not fail to maintain Net Worth (in each case of the
Company  and  its  consolidated  Subsidiaries,   on  a  consolidated  basis,  in
accordance with GAAP) in compliance with the following  requirements:  (a) as of
each Net Worth Testing Date, net worth of at least the Required Net Worth Amount
with  respect to such date;  and (b) if the Net Worth  Testing  Date occurs more
than 12 months  after  the  Effective  Date,  net worth of not less than the net
worth 12 months  prior to the Net Worth  Testing Date minus  $4,500,000.  

11.19.    Capital Expenditures.

          The  Company  shall  not  make  Capital  Expenditures  in  any  of the
Company's  fiscal  years 1998,  1999 or 2000 in excess of: (a)  $3,200,000  with
respect to 1998;  (b)  $3,200,000  with  respect to 1999;  (c)  $4,800,000  with
respect to 2000; and (d) $4,800,000 with respect to 2001.

12.  EVENTS OF DEFAULT.

          An "Event of Default"  shall exist if any of the following  conditions
or events shall occur and be continuing:
          (a)  the  Company  defaults  in the  payment  of any  principal  of or
premium,  if any, of any Note when the same becomes due and payable,  whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or

          (b) the Company  defaults  in the payment of any  interest on any Note
for more than three Business Days after the same becomes due and payable; or
<PAGE>
          (c) the Company  defaults in the performance of or compliance with any
term contained in any of Section 8.2(a)(i), Section 10.6 or Section 11; or

          (d) (i) the Company fails or neglects to perform, keep, or observe any
term,  provision,  condition,  covenant,  or agreement contained in Sections 8.1
(Financial Information),  8.2(a)(ii), (iii), 8.2(b) (Business Information), 10.1
(Compliance with Laws), 10.4 (Title to Equipment), 10.8 (Location of Equipment),
10.9  (Employee  Benefits),  10.10  (Leases),  or 10.15  (Tax  Returns)  of this
Agreement and such failure  continues for a period of 5 Business Days;  (ii) the
Company  fails or  neglects to  perform,  keep or observe  any term,  provision,
condition,   covenant  or  agreement  contained  in  Sections  10.2  (Accounting
Systems),  10.3  (Collateral  Reporting),  or 10.5  (Maintain  the Equipment and
Improvements)  of this  Agreement and such failure  continues for a period of 15
Business Days; (iii) the Company fails or neglects to perform,  keep, or observe
any term,  provision,  condition,  covenant,  or agreement  contained in Section
10.14 (Chief  Executive  Officer) and such  failure or neglect  continues  for a
period of 30 days;  or (iv) the Company  fails or  neglects to perform,  keep or
observe any term, provision,  condition, covenant, or agreement contained herein
or in any other Basic Document  (other than those referred to in paragraphs (a),
(b),  (c), (d), (i), (ii) and (iii) and (g) of this Section 12) and such default
is not remedied  within 30 days after the earlier of (i) a  Responsible  Officer
obtaining  actual  knowledge  of such  default  and (ii) the  Company  receiving
written notice of such default from any holder of a Note or the Collateral Agent
(any such written  notice to be identified as a "notice of default" and to refer
specifically to this paragraph (d) of Section 12),  provided that the occurrence
of any "event of default" under,  and as defined in, any of the Basic Documents,
after the  expiration  of any grace  period in respect  thereof as provided  for
therein,  be deemed to be an Event of  Default  under this  clause (d)  (without
giving effect to any grace period provided in this Section 12(d)); or

          (e) any  representation or warranty made in writing by or on behalf of
the  Company  or  any  Subsidiary  or by any  officer  of the  Company  in  this
Agreement,  any of the other  Basic  Documents  or in any writing  furnished  in
connection with the transactions  contemplated  hereby proves to have been false
or incorrect in any material respect on the date as of which it is made; or

          (f) (i) the Company or any  Subsidiary  is in default (as principal or
as guarantor or other  surety) in the payment of any  principal of or premium or
make-whole  amount or interest on any  Indebtedness  that is  outstanding  in an
aggregate  principal  amount of at least  $1,000,000  beyond any period of grace
provided  with  respect  thereto,  or (ii) the Company or any  Subsidiary  is in
default in the performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least $1,000,000
or of any mortgage,  indenture or other agreement  relating thereto or any other
condition  exists,  and as a  consequence  of such  default  or  condition  such
Indebtedness  has  become,  or has been  declared  (or one or more  Persons  are
entitled to declare such  Indebtedness to be), due and payable before its stated
maturity  or before its  regularly  scheduled  dates of  payment,  or (iii) as a
consequence of the occurrence or continuation  of any event or condition  (other
than the passage of time or the right of the holder of  Indebtedness  to convert
such Indebtedness into equity interests),  (x) the Company or any Subsidiary has
become obligated to purchase or repay  Indebtedness  before its regular maturity
or before  its  regularly  scheduled  dates of  payment  (except  by reason of a
mandatory   prepayment   provided  for  in  the  agreements   relating  to  such
Indebtedness)  in  an  aggregate   outstanding  principal  amount  of  at  least
$1,000,000,  or (y) one or more Persons have the right to require the Company or
any Subsidiary to so purchase or repay such Indebtedness; or
<PAGE>
          (g) any Lien created by the Security  Documents  shall at any time not
constitute a valid and perfected Lien on the  Collateral  intended to be covered
thereby  (to the extent  perfection  by  filing,  registration,  recordation  or
possession is required  herein or therein) in favor of the Collateral  Agent for
the ratable benefit of the Purchasers,  free and clear of all other Liens (other
than  Liens  permitted  under  Section  11.2 or under  the  respective  Security
Documents),  or, except for (i) expiration in accordance with its terms, (ii) as
a result  of a sale or  other  disposition  of the  applicable  Collateral  in a
transaction  permitted hereunder and (iii) as a result of the Collateral Agent's
failure to maintain  possession of any stock  certificates or other  instruments
delivered to it under the  Security  Documents,  any of the  Security  Documents
shall for whatever reason be terminated or cease to be in full force and effect,
or the enforceability thereof shall be contested by any Obligor; or

          (h)  there is a Material Adverse Change; or

          (i) any material portion of the Properties of any Obligor is attached,
seized,  subjected to a writ or distress  warrant,  or is levied upon,  or comes
into the  possession  of any  third  Person in  connection  with a claim of such
person of $100,000 or more; or

          (j) any Obligor is enjoined,  restrained,  or in any way  prevented by
court order from  continuing to conduct all or any material part of its business
affairs; or

          (k)  notices of Lien,  levy,  or  assessment  are filed of record with
respect to any of the Properties of any Obligor which have not been cured within
ten days  after  the Lien  has been  filed  which  (a)  represent  claims  in an
aggregate  amount of in excess of  $100,000  and which  have  priority  over the
security  interests of the Collateral Agent in the Collateral,  or (b) represent
claims in an  aggregate  amount of in excess of $250,000 and which are junior to
the security interests of the Collateral Agent in the Collateral; or

          (l)  the Confirmation Order is vacated; or

          (m) the Company makes any payment on account of Indebtedness  that has
been  contractually  subordinated  in right of  payment  to the  payment  of the
principal,  interest,  fees, expenses and any other amounts due under any of the
Basic Documents,  except to the extent such payment is permitted by the terms of
the subordination provisions applicable to such Indebtedness; or

          (n) the Company or any  Subsidiary  (i) is  generally  not paying,  or
admits in writing its  inability  to pay,  its debts as they  become  due,  (ii)
files,  or  consents  by answer or  otherwise  to the  filing  against  it of, a
petition for relief or  reorganization  or  arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy,  insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian,  receiver,  trustee or other  officer  with similar  powers with
respect to it or with respect to any  substantial  part of its Property,  (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
<PAGE>
          (o) a court or governmental authority of competent jurisdiction enters
an order appointing,  without consent by the Company or any of its Subsidiaries,
a custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial  part of its Property,  or constituting
an order for relief or approving a petition for relief or  reorganization or any
other  petition in bankruptcy  or for  liquidation  or to take  advantage of any
bankruptcy or insolvency law of any  jurisdiction,  or ordering the dissolution,
winding-up or liquidation of the Company or any of its Subsidiaries, or any such
petition shall be filed against the Company or any of its  Subsidiaries and such
petition shall not be dismissed within 60 days; or

          (p) a final judgment or judgments for the payment of money aggregating
in excess of $100,000  are  rendered  against one or more of the Company and its
Subsidiaries,  which  judgments  are not,  within 30 days after  entry  thereof,
bonded,  discharged or stayed pending  appeal,  or are not discharged  within 30
days after the expiration of such stay; or

          (q) if (i)  any  Plan  shall  fail  to  satisfy  the  minimum  funding
standards  of ERISA or the Code for any plan year or part thereof or a waiver of
such  standards  or extension  of any  amortization  period is sought or granted
under  section 412 of the Code,  (ii) a notice of intent to  terminate  any Plan
shall have been or is reasonably  expected to be filed with the PBGC or the PBGC
shall have  instituted  proceedings  under ERISA  section  4042 to  terminate or
appoint a trustee to  administer  any Plan or the PBGC shall have  notified  the
Company  or any ERISA  Affiliate  that a Plan may  become a subject  of any such
proceedings,  (iii) the  aggregate  "amount  of  unfunded  benefit  liabilities"
(within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined
in accordance with Title IV of ERISA, shall exceed $1,000,000,  (iv) the Company
or any ERISA  Affiliate  shall have incurred or is reasonably  expected to incur
any  liability  pursuant  to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee  benefit  plans,  (v) the Company or
any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company
or any Subsidiary  establishes or amends any employee  welfare benefit plan that
provides  post-employment  welfare  benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder.

As used in  Section  12(q),  the terms  "employee  benefit  plan" and  "employee
welfare benefit plan" shall have the respective  meanings assigned to such terms
in Section 3 of ERISA.

13.  REMEDIES ON DEFAULT, ETC.

13.1.     Acceleration.

          (a) If an Event of Default  with  respect to the Company  described in
paragraph (n) or (o) of Section 12 (other than an Event of Default  described in
clause (i) of paragraph  (n) or  described  in clause (vi) of  paragraph  (n) by
virtue of the fact that such clause encompasses clause (i) of paragraph (n)) has
occurred,  all the Notes then outstanding shall automatically become immediately
due and payable.

          (b) If any  Event of  Default  described  in  paragraph  (a) or (b) of
Section 12 has occurred and is continuing, any holder or holders of Notes at the
time  outstanding  affected by such Event of Default may at any time,  at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.
<PAGE>
          (c) If any other Event of Default has occurred and is continuing,  the
Required  Holders may at any time, at their option,  by notice or notices to the
Company,  declare  all the Notes  then  outstanding  to be  immediately  due and
payable.

          (d) Upon any Notes  becoming due and payable  under this Section 13.1,
whether  automatically  or by declaration,  such Notes will forthwith mature and
the entire unpaid  principal  amount of such Notes,  plus all accrued and unpaid
interest thereon and the Termination  Premium,  shall all be immediately due and
payable, in each and every case without presentment,  demand, protest or further
notice,  all of which are  hereby  waived.  The  Company  acknowledges,  and the
parties  hereto agree,  that each holder of a Note has the right to maintain its
investment  in the Notes free from  repayment  by the Company  (except as herein
specifically provided for).

13.2.     Other Remedies.

          If any Default has occurred and is  continuing,  and  irrespective  of
whether any Notes have become or have been declared  immediately due and payable
under Section 13.1, the holder of any Note at the time  outstanding  may proceed
to protect and  enforce  the rights of such holder by an action at law,  suit in
equity or other appropriate proceeding,  whether for the specific performance of
any agreement  contained  herein or in any Note, or for an injunction  against a
violation  of any of the terms  hereof or thereof,  or in aid of the exercise of
any power granted hereby or thereby or by law or otherwise. 

13.3. Rescission.

          At any time  after  any  Notes  have  been  declared  due and  payable
pursuant to paragraphs  (b) or (c) of Section 13.1, the holders of more than 50%
in principal amount of the Notes then outstanding, by notice to the Company, may
rescind and annul any such  declaration and its  consequences if (a) the Company
has paid all overdue  interest on the Notes,  all  principal if any, on any Note
that is due and payable and is unpaid other than by reason of such  declaration,
and all  interest on such  overdue  principal,  and (to the extent  permitted by
applicable  law) any overdue  interest  in respect of the Notes,  at the Default
Rate, (b) all Events of Default and Defaults,  other than non-payment of amounts
that have  become due solely by reason of such  declaration,  have been cured or
have been  waived  pursuant to Section  18.1,  and (c) no judgment or decree has
been entered for the payment of any monies due pursuant  hereto or to the Notes.
No rescission and annulment under this Section 13.3 will extend to or affect any
subsequent Event of Default or Default or impair any right  consequent  thereon.

13.4. No Waivers or Election of Remedies, Expenses, etc.

          No course  of  dealing  and no delay on the part of any  holder of any
Note in exercising any right,  power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy  conferred by this  Agreement  or by any Note upon any holder  thereof
shall be  exclusive of any other  right,  power or remedy  referred to herein or
<PAGE>
therein  or now or  hereafter  available  at  law,  in  equity,  by  statute  or
otherwise. Without limiting the obligations of the Company under Section 16, the
Company will pay to the  Collateral  Agent and the holder of each Note on demand
such further  amount as shall be  sufficient to cover all  reasonable  costs and
expenses of the Collateral  Agent and such holder incurred in any enforcement or
collection  under this Section 13,  including,  without  limitation,  reasonable
attorneys'  fees,  expenses  and  disbursements.  

14.  REGISTRATION;   EXCHANGE; SUBSTITUTION OF NOTES. 

14.1. Registration of Notes.

          The Company  shall keep, or shall cause the Note Agent to keep, at its
principal  executive  office (or,  in the case of the Note Agent,  at the office
where it keeps such records) a register for the registration and registration of
transfers  of Notes.  The name and  address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes  shall  be  registered  in such  register.  Prior to due  presentment  for
registration of transfer,  the Person in whose name any Note shall be registered
shall be deemed and  treated as the owner and holder  thereof  for all  purposes
hereof, and the Company (and the Note Agent) shall not be affected by any notice
or knowledge to the  contrary.  The Company  shall give, or shall cause the Note
Agent  to  give,  to any  holder  of a Note  that is an  Institutional  Investor
promptly  upon  request  therefor,  a complete and correct copy of the names and
addresses of all registered holders of Notes.

14.2.     Assignment and Exchange of Notes.

          Upon  surrender of any Note at the principal  executive  office of the
Company  (or in the case of the Note  Agent,  at the office  where it keeps such
records)  for  registration  of  transfer  or  exchange  (and  in the  case of a
surrender  for  registration  of transfer,  duly  endorsed or  accompanied  by a
written  instrument of transfer duly executed by the  registered  holder of such
Note or his attorney duly  authorized in writing and  accompanied by the address
for notices of each transferee of such Note or part thereof),  the Company shall
execute  and  deliver,  or shall  execute  and  deliver  to the Note  Agent  for
redelivery, at the Company's expense (except as provided below), one or more new
Notes (as requested by the holder thereof) in exchange therefor, in an aggregate
principal amount equal to the unpaid  principal amount of the surrendered  Note.
Each such new Note shall be payable to such  Person as such  holder may  request
and shall be substantially in the form of Exhibit 1. Each such new Note shall be
dated and bear interest from the date to which  interest shall have been paid on
the surrendered  Note or dated the date of the  surrendered  Note if no interest
shall have been paid  thereon.  The Company may  require,  or may cause the Note
Agent to  require,  payment  of a sum  sufficient  to  cover  any  stamp  tax or
governmental  charge  imposed  in  respect of any such  transfer  of Notes.  Any
Purchaser  may assign to one or more  assignees  all or a portion of its Note to
any Person  other than the Persons  listed on Schedule P (which  Schedule may be
amended by the  Company  after the date  hereof to list  additional  Competitors
without  affecting in any way the validity or  enforceability  of any assignment
made by any Purchaser  prior to the date of such  amendment),  provided that the
amount of the Note subject to such assignment shall not be less than $1,000,000,
provided  further that if necessary to enable the registration of the assignment
by a holder of its entire holding of Notes, one Note may be in a denomination of
less than  $1,000,000.  Any assignee,  by its acceptance of a Note registered in
its  name  (or the  name of its  nominee),  shall  be  deemed  to have  made the
representation set forth in Section 7. 
<PAGE>
14.3. Replacement of Notes.

          Upon  receipt by the  Company of  evidence  satisfactory  to it in its
reasonable determination of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of an Institutional
Investor,  notice from such  Institutional  Investor of such  ownership and such
loss, theft, destruction or mutilation), and

          (a) in the case of loss, theft or destruction, of indemnity reasonably
          satisfactory to it (provided that if the holder of such Note is, or is
          a nominee for, an original  Purchaser or another holder of a Note with
          a  minimum  net  worth of at least  $100,000,000,  such  Person's  own
          unsecured  agreement of indemnity shall be deemed to be satisfactory),
          or 

          (b) in  the  case  of  mutilation,  upon  surrender  and  cancellation
          thereof,

the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost,  stolen,  destroyed or mutilated  Note if no interest shall have been paid
thereon.

15.  PAYMENTS ON NOTES.

15.1.     Place of Payment.

          Subject to Section 15.2,  payments of principal and interest  becoming
due  and  payable  on the  Notes  shall  be made in New  York,  New  York at the
principal office of the Note Agent in such jurisdiction.  The Company may change
at any time,  by notice to each  holder of a Note,  the place of  payment of the
Notes so long as such place of payment shall be either the  principal  office of
the  Company in such  jurisdiction  or the  principal  office of a bank or trust
company in such jurisdiction.

15.2.     Home Office Payment.

          So long as you or your  nominee  shall be the holder of any Note,  and
notwithstanding  anything  contained  in  Section  15.1 or in  such  Note to the
contrary,  the Company will pay to you or your nominee all sums  becoming due on
such Note for principal and interest by the method and at the address  specified
for such  purpose  below your name in Schedule A, or by such other  method or at
such other address as you shall have from time to time  specified to the Company
for such  purpose,  without the  presentation  or  surrender of such Note or the
making of any  notation  thereon,  except that upon  request of the Company made
concurrently with or reasonably  promptly after payment or prepayment in full of
any Note, you shall surrender such Note for  cancellation,  reasonably  promptly
after any such request,  to the Company at its principal  executive office or at
the place of payment  designated  pursuant to Section 15.1. Prior to any sale or
other  disposition  of any Note held by you or your  nominee  you will,  at your
election,  either  endorse  thereon the amount of principal paid thereon and the
last date to which  interest has been paid thereon or surrender such Note to the
Company  in  exchange  for a new Note or Notes  pursuant  to Section  14.2.  The
Company will afford the benefits of this Section 15.2 to any  Purchaser  that is
the  direct or  indirect  transferee  of any Note  purchased  by you under  this
Agreement and that has made the same agreement relating to such Note as you have
made in this Section 15.2. 
<PAGE>
15.3.  Notification to Collateral Agent of Payment in Full.

     Each  Purchaser  will notify the  Collateral  Agent promptly after the Note
Claims (as defined in the  Intercreditor  Agreement)  relating to such Purchaser
and the Notes held by such Purchaser have been paid in full.

16.  EXPENSES, ETC.

          Except as otherwise provided in the  Reorganization  Plan with respect
to the fees and expenses of the Purchasers prior to the Effective Date,  whether
or not the transactions  contemplated  hereby are consummated,  the Company will
pay all costs and expenses  (including  reasonable  attorneys' fees of a special
counsel  (and, if reasonably  required,  local or other  counsel) for all of the
holders  of  Notes)   incurred  by  the  Purchasers  in  connection   with  such
transactions and in connection with any amendments, waivers or consents under or
in respect of this Agreement, the Notes or the other Basic Documents (whether or
not such amendment,  waiver or consent becomes  effective),  including,  without
limitation: (a) the costs and expenses (including taxes, and insurance premiums)
incurred in enforcing or defending (or determining  whether or how to enforce or
defend) any rights under this Agreement,  the Notes or the other Basic Documents
or  in   responding   to  any  subpoena  or  other  legal  process  or  informal
investigative demand issued in connection with this Agreement,  the Notes or the
other Basic Documents, or by reason of being a holder of any Note, (b) the costs
and expenses,  including  financial  advisors' fees, incurred in connection with
the  insolvency or bankruptcy of the Company or any  Subsidiary or in connection
with any work-out or restructuring of the transactions  contemplated  hereby, by
the Notes or by the other Basic Documents, (c) all transfers, stamp, documentary
or other  similar  taxes,  assessments  or  charges  levied by any  Governmental
Authority in respect of this  Agreement,  the Notes or the other Basic Documents
or any other  document  referred to herein or therein  and all costs,  expenses,
taxes,  assessments  and other charges  incurred in connection  with any filing,
registration,  recording or perfection of any security interest  contemplated by
any Basic Document or any other document referred to therein, and (d) all costs,
expenses and other charges in respect of title  insurance  and surveys  procured
with  respect to the Liens  created  pursuant  to the  Security  Documents.  The
Company  will pay,  and will save you and each other  holder of a Note  harmless
from, all claims in respect of any fees,  costs or expenses,  if any, of brokers
and finders  (other than those retained by you). The Company will pay all of the
costs,  expenses and fees of the Collateral Agent and the Note Agent,  including
the  reasonable  fees and  expenses of counsel,  as provided for in the Security
Documents. 

16.1. Survival.

     The  obligations  of the  Company  under this  Section 16 will  survive the
payment or transfer of any Note,  the  enforcement,  amendment  or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
<PAGE>
17.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
     AGREEMENT.

          All representations  and warranties  contained herein and in the other
Basic  Documents  shall survive the execution and delivery of this Agreement and
the Notes,  the  purchase or  transfer by you of any Note or portion  thereof or
interest  therein  and the  payment of any Note,  and may be relied  upon by any
subsequent holder of a Note, regardless of any investigation made at any time by
or on behalf of you or any other holder of a Note. All  statements  contained in
any  certificate  or other  instrument  delivered by or on behalf of the Company
pursuant  to any of the  Basic  Documents  shall be deemed  representations  and
warranties  of the  Company  under  this  Agreement.  Subject  to the  preceding
sentence,  the Basic  Documents  embody the entire  agreement and  understanding
between  you  and  the  Company  and   supersede   all  prior   agreements   and
understandings  relating to the subject matter hereof. 

18. AMENDMENT AND WAIVER.

18.1. Requirements.

          This  Agreement  and the Notes and the other  Basic  Documents  may be
amended,  and the  observance  of any term  hereof or of the Notes may be waived
(either  retroactively  or  prospectively),  with  (and only  with) the  written
consent of the Company and the Required Holders, except that (a) no provision of
the  Intercreditor  Agreement may be amended or waived except in accordance with
the terms of the  Intercreditor  Agreement  and (b) no such  amendment or waiver
may,  without  the  written  consent  of the  holder  of each  Note at the  time
outstanding  affected thereby,  (i) change the provisions of Section 13 relating
to  acceleration  or rescission,  change the amount or time of any prepayment or
payment  of  principal  of, or reduce  the rate or change the time of payment or
method of  computation  of interest on the Notes,  (ii) change the percentage of
the  principal  amount of the Notes the holders of which are required to consent
to any such amendment or waiver, or (iii) amend any of Sections 9, 12(a), 12(b),
13, 18 or 21. 

18.2. Solicitation of Holders of Notes.

          (a)   Solicitation.   The  Company   will   provide   each   Purchaser
(irrespective  of  the  amount  of  Notes  then  owned  by it)  with  sufficient
information,  sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and  considered  decision with respect to
any proposed  amendment,  waiver or consent in respect of any of the  provisions
hereof or of any of the other Basic Documents. The Company will deliver executed
or true and  correct  copies  of each  amendment,  waiver  or  consent  effected
pursuant to the  provisions  of this  Section 18 to each  holder of  outstanding
Notes  promptly  following the date on which it is executed and delivered by, or
receives the consent or approval of, the requisite holders of Notes.

          (b) Payment.  The Company will not directly or indirectly pay or cause
to be paid  any  remuneration,  whether  by way of  supplemental  or  additional
interest,  fee or  otherwise,  or grant any  security  to any holder of Notes as
consideration  for or as an  inducement  to the  entering  into by any holder of
Notes of any  waiver or  amendment  of any of the terms  and  provisions  hereof
unless such  remuneration  is  concurrently  paid,  or security is  concurrently
granted,  on the same terms,  ratably to each  holder of Notes then  outstanding
even if such holder did not consent to such waiver or amendment.  
<PAGE>
18.3.  Binding Effect, etc.

          Any  amendment  or waiver  consented to as provided in this Section 18
applies  equally to all holders of Notes and is binding  upon them and upon each
future  holder of any Note and upon the Company  without  regard to whether such
Note has been marked to indicate such amendment or waiver.  No such amendment or
waiver will extend to or affect any obligation,  covenant, agreement, Default or
Event of Default not expressly  amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights  hereunder or under any Note shall operate as
a waiver of any  rights of any  holder of such Note.  As used  herein,  the term
"this Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.

18.4.     Notes held by Company, etc.

          For the purpose of  determining  whether the holders of the  requisite
percentage of the aggregate principal amount of Notes then outstanding  approved
or  consented  to any  amendment,  waiver  or  consent  to be given  under  this
Agreement,  the Notes or the other Basic Documents,  or have directed the taking
of any action provided  herein,  in the Notes or the other Basic Documents to be
taken  upon the  direction  of the  holders  of a  specified  percentage  of the
aggregate  principal  amount  of  Notes  then  outstanding,  Notes  directly  or
indirectly  owned by the Company or any of its  Subsidiaries or any of its other
Affiliates controlled by it shall be deemed not to be outstanding.

19.  NOTICES.

          All notices and  communications  provided  for  hereunder  shall be in
writing  and  sent  (a) by  telecopy  if the  sender  on the  same  day  sends a
confirming  copy of such  notice  by a  recognized  overnight  delivery  service
(charges  prepaid),  or (b) by registered or certified  mail with return receipt
requested (postage prepaid),  or (c) by a recognized  overnight delivery service
(with charges prepaid).
Any such notice must be sent:

               (i) if to  you  or  your  nominee,  to  you or it at the  address
     specified for such  communications  in Schedule A, or at such other address
     as you or it shall have specified to the Company in writing, or

               (ii) if to any other  holder of any Note,  to such holder at such
     address  as such  other  holder  shall  have  specified  to the  Company in
     writing, or

               (iii) if to the Company,  to the Company at its address set forth
     at the beginning hereof to the attention of [____________________________],
     or at such other address as the Company shall have  specified to the holder
     of each Note in writing, or

               (iv) if to the Note  Agent,  to the Note Agent at its address set
     forth   on   the    signature    pages   hereof   to   the   attention   of
     [_______________________], or at such other address as the Note Agent shall
     have specified to the holder of each Note in writing, or
<PAGE>
               (v) if to the Collateral  Agent,  to the Collateral  Agent at its
     address  set  forth on the  signature  pages  hereof  to the  attention  of
     [_______________________], or at such other address as the Collateral Agent
     shall have specified to the holder of each Note in writing.

Notices under this Section 19 will be deemed given only when actually received.

20.  REPRODUCTION OF DOCUMENTS.

          This Agreement,  the Basic Documents and all documents relating hereto
or  thereto,   including,   without  limitation,   (a)  consents,   waivers  and
modifications  that may hereafter be executed,  (b) documents received by you at
the  Closing  (except  the  Notes  themselves),  and (c)  financial  statements,
certificates and other information previously or hereafter furnished to you, may
be reproduced by you by any  photographic,  photostatic,  microfilm,  microcard,
miniature photographic or other similar process and you may destroy any original
document so reproduced.  The Company  agrees and stipulates  that, to the extent
permitted  by  applicable  law, any such  reproduction  shall be  admissible  in
evidence as the  original  itself in any judicial or  administrative  proceeding
(whether  or  not  the  original  is  in  existence  and  whether  or  not  such
reproduction  was  made  by you in the  regular  course  of  business)  and  any
enlargement,  facsimile  or  further  reproduction  of such  reproduction  shall
likewise be  admissible  in  evidence.  This  Section 20 shall not  prohibit the
Company or any other holder of Notes from  contesting any such  reproduction  to
the same extent that it could contest the original, or from introducing evidence
to  demonstrate  the  inaccuracy  of any  such  reproduction.  

21.  CONFIDENTIAL INFORMATION.

          For the purposes of this Section 21, "Confidential  Information" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions  contemplated by or otherwise  pursuant to this
Agreement  that is  proprietary in nature and that was clearly marked or labeled
or otherwise  adequately  identified when received by you as being  confidential
information of the Company or such Subsidiary,  provided that such term does not
include  information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure,  (b) subsequently becomes publicly known through
no act or omission by you or any person  acting on your  behalf,  (c)  otherwise
becomes  known to you  other  than  through  disclosure  by the  Company  or any
Subsidiary  or (d)  constitutes  financial  statements  delivered  to you  under
Section  8.1 that  are  otherwise  publicly  available.  You will use your  best
efforts to maintain the  confidentiality  of such  Confidential  Information  in
accordance with procedures adopted by you in good faith to protect  confidential
information of third parties  delivered to you, provided that you may deliver or
disclose Confidential  Information to (i) your directors,  officers,  employees,
agents,  attorneys  and  affiliates  (to the extent such  disclosure  reasonably
relates to the administration of the investment represented by your Notes), (ii)

<PAGE>
your  financial  advisors  and  other  professional  advisors  who agree to hold
confidential the Confidential  Information  substantially in accordance with the
terms  of this  Section  21,  (iii)  any  other  holder  of any  Note,  (iv) any
Institutional  Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this  Section  21), (v) any Person from which you offer to purchase any security
of the  Company  (if such  Person has agreed in writing  prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 21),
(vi) any federal or state  regulatory  authority having  jurisdiction  over you,
(vii)  the  National  Association  of  Insurance  Commissioners  or any  similar
organization, or any nationally recognized rating agency that requires access to
information about your investment  portfolio or (viii) any other Person to which
such  delivery or  disclosure  may be  necessary  or  appropriate  (w) to effect
compliance  with any law,  rule,  regulation or order  applicable to you, (x) in
response to any  subpoena or other legal  process,  (y) in  connection  with any
litigation  to which you are a party or (z) if an Event of Default has  occurred
and is continuing,  to the extent you may reasonably determine such delivery and
disclosure  to be  necessary  or  appropriate  in the  enforcement  or  for  the
protection of the rights and remedies  under your Notes,  this Agreement and the
other Basic  Documents.  Each  Purchaser,  by its acceptance of a Note,  will be
deemed to have agreed to be bound by and to be entitled to the  benefits of this
Section 21 as though it were a party to this Agreement. On reasonable request by
the  Company  in  connection  with  the  delivery  to any  holder  of a Note  of
information  required to be  delivered  to such holder  under this  Agreement or
requested by such holder (other than a holder that is a party to this  Agreement
or its  nominee),  such  holder  will enter into an  agreement  with the Company
embodying the provisions of this Section 21.

22.  WAIVERS; INDEMNIFICATION.

22.1.     Demand; Protest; etc.

     The Company,  for itself and on behalf of each of its Subsidiaries,  waives
demand,  protest,  notice of protest,  notice of default or dishonor,  notice of
payment and nonpayment, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts,  documents,  instruments,  chattel paper, and
guarantees at any time held by the Purchasers or the  Collateral  Agent on which
the Company or any of its Subsidiaries may in any way be liable.

22.2.     Liability of Collateral Agent and Purchasers.

     So long as each of the Collateral Agent and the Purchasers  comply with its
obligations,  if any,  under Section 9-207 of the Uniform  Commercial  Code, the
Company,  for itself and on behalf of its Subsidiaries,  agrees that neither the
Collateral  Agent  nor any  Purchaser  shall be in any way or  manner  liable or
responsible  for: (a) the safekeeping of the Collateral;  (b) any loss or damage
thereto  occurring or arising in any manner or fashion  from any cause;  (c) any
diminution  in the value  thereof;  or (d) any act or  default  of any  carrier,
warehouseman,  bailee,  forwarding  agency,  or other Person.  All risk of loss,
damage or destruction  of the  Collateral  shall be borne by the Company and the
Subsidiaries.

22.3. Indemnification.

     The Company shall pay,  indemnify,  defend,  and hold each Purchaser,  each
Participant,  the  Collateral  Agent  and  each of  their  respective  officers,
directors,   employees,   counsel,   agents,  and  attorneys-in-fact  (each,  an
"Indemnified person") harmless (to the fullest extent permitted by law) from and

<PAGE>
against  any  and  all  claims,   demands,   suits,   actions,   investigations,
proceedings,  and damages,  and all reasonable  attorneys fees and disbursements
and other costs and expenses actually  incurred in connection  therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them in connection with or
as a result of or related to the execution, delivery, enforcement,  performance,
and  administration  of this  Agreement  and any other  Basic  Documents  or the
transactions  contemplated  herein,  and  with  respect  to  any  investigation,
litigation,  or proceeding related to this Agreement,  and other Basic Document,
or the use of the proceeds of the credit  provided  hereunder  (irrespective  of
whether any Indemnified Person is a party thereto), or any act, omission,  event
or   circumstance   in  any  manner  related  thereto  (all  of  the  foregoing,
collectively,  the  "Indemnified  Liabilities").   The  Company  shall  have  no
obligation to any Indemnified Person under this Section 22.3 with respect to any
Indemnified Liability that a court of competent  jurisdiction finally determines
to have  resulted  from the  gross  negligence  or  willful  misconduct  of such
Indemnified  Person.  This  provision  shall  survive  the  termination  of this
Agreement and the repayment of all amounts due to the Purchasers under the Notes
and the other Basic Documents. 

23. SUBSTITUTION OF PURCHASER.

          You shall have the right to substitute  any one of your  Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by notice
to the Company,  which  notice  shall be signed by both you and such  Affiliate,
shall contain such Affiliate's agreement to be bound by this Agreement and shall
contain a  confirmation  by such Affiliate of the accuracy with respect to it of
the representation set forth in Section 7. Upon receipt of such notice, wherever
the word "you" is used in this  Agreement  (other than in this Section 22), such
word  shall be deemed to refer to such  Affiliate  in lieu of you.  In the event
that  such  Affiliate  is so  substituted  as a  purchaser  hereunder  and  such
Affiliate  thereafter  transfers  to you  all of the  Notes  then  held  by such
Affiliate, upon receipt by the Company of notice of such transfer,  wherever the
word "you" is used in this Agreement  (other than in this Section 22), such word
shall no longer be deemed to refer to such  Affiliate,  but shall  refer to you,
and you shall have all the rights of an original  holder of the Notes under this
Agreement. 

24. MISCELLANEOUS. 

24.1. Successors and Assigns.

          All covenants and other  agreements  contained in this Agreement by or
on behalf of any of the  parties  hereto  bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.

24.2.     Payments Due on Non-Business Days.

          Anything   in  this   Agreement   or  the   Notes   to  the   contrary
notwithstanding,  any payment of principal of or premium or interest on any Note
that is due on a date  other  than a  Business  Day  shall  be made on the  next
succeeding  Business Day without  including the  additional  days elapsed in the
computation of the interest payable on such next succeeding Business Day.
<PAGE>
24.3.     Severability.

          Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such  prohibition  or  unenforceability   without   invalidating  the  remaining
provisions  hereof,  and  any  such  prohibition  or   unenforceability  in  any
jurisdiction  shall (to the full  extent  permitted  by law) not  invalidate  or
render unenforceable such provision in any other jurisdiction.  

24.4. Collateral Agent.

          The Purchasers  agree that the duties of the Collateral Agent shall be
governed solely by the Agency Agreement, except as otherwise expressly set forth
herein.  Notwithstanding  any  provision  contained  in  this  Agreement  or any
Security  Document,  the  Collateral  Agent  shall not be  required  to make any
determination or to take any action hereunder or thereunder unless it shall have
received timely instructions from the Required Holders. 

24.5. Construction.
 
          Each  covenant  contained  herein shall be construed  (absent  express
provision to the contrary) as being independent of each other covenant contained
herein,  so that  compliance  with any one  covenant  shall not (absent  such an
express  contrary  provision)  be  deemed to  excuse  compliance  with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which  such  Person  is  prohibited  from  taking,  such  provision  shall be
applicable  whether such action is taken  directly or indirectly by such Person.

24.6. Counterparts.

          This Agreement may be executed in any number of counterparts,  each of
which  shall be an  original  but all of which  together  shall  constitute  one
instrument.  Each  counterpart  may consist of a number of copies  hereof,  each
signed by less than all,  but  together  signed by all, of the  parties  hereto.

24.7. Governing Law; Jurisdiction; Consent to Service of Process.

          (a) This Agreement shall be construed and enforced in accordance with,
and the rights of the parties  shall be governed by, the law of the State of New
York  excluding  choice-of-law  principles  of the law of such  State that would
require the application of the laws of a jurisdiction other than such State.

          (b) The Company hereby irrevocably and  unconditionally  submits,  for
itself and its Property,  to the nonexclusive  jurisdiction of the Supreme Court
of the State of New York  sitting in New York  County  and of the United  States
District  Court of the Southern  District of New York,  and any appellate  court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement,  or for  recognition or enforcement of any judgment,  and each of the
parties hereto hereby irrevocably and unconditionally  agrees that all claims in

<PAGE>
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent  permitted by law, in such Federal  court.  Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive  and may be enforced in other  jurisdictions  by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any Purchaser  may  otherwise  have to bring any action or
proceeding relating to this Agreement in the courts of any other jurisdiction.

          (c) The Company hereby irrevocably and unconditionally  waives, to the
fullest extent it may legally and  effectively do so, any objection which it may
now or hereafter  have to the laying of venue of any suit,  action or proceeding
arising  out of or  relating  to this  Agreement  in any  court  referred  to in
paragraph  (b)  of  this  Section  24.7.  Each  of  the  parties  hereto  hereby
irrevocably  waives,  to the fullest extent  permitted by law, the defense of an
inconvenient  forum to the  maintenance of such action or proceeding in any such
court.
          (d) Each party to this  Agreement  irrevocably  consents to service of
process in the manner  provided  for  notices  in  Section  19.  Nothing in this
Agreement  will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

24.8.     Waiver of Jury Trial.

          EACH PARTY HERETO HEREBY WAIVES,  TO THE FULLEST  EXTENT  PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY  ARISING OUT OF OR RELATING TO THE BASIC DOCUMENTS OR THE
TRANSACTIONS  CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,  TORT OR ANY OTHER
THEORY).  EACH  PARTY  HERETO (A)  CERTIFIES  THAT NO  REPRESENTATIVE,  AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,  EXPRESSLY OR OTHERWISE,  THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER  AND (B)  ACKNOWLEDGES  THAT IT AND THE OTHER  PARTIES  HERETO  HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,  THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 24.8.
                      *    *    *    *    *
<PAGE>
          If you are in agreement  with the  foregoing,  please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company,  whereupon the foregoing shall become a binding  agreement  between you
and the Company.
                              Very truly yours,
                              ONEITA INDUSTRIES, INC.
                              By
                                Title:
The foregoing is hereby
agreed to as of the
date thereof.
PURCHASERS:
ALBERT FRIED & CO. L.L.C.
40 Exchange Place
New York, NY  10005
By:  ____________________________
   Title:
FOOTHILL CAPITAL CORP.
11111 Santa Monica Boulevard
Los Angeles, CA  90025
By:  _____________________________
   Title:
UBS MORTGAGE FINANCE INC.
299 Park Avenue
New York, NY  10171
By:  ____________________________
   Title:
LAZARD FRERES & CO., L.L.P.
30 Rockefeller Plaza
60th Floor
New York, NY  10020
By:  _____________________________
   Title:
THE PRUDENTIAL INSURANCE
   COMPANY OF AMERICA
100 Mulberry Street
Newark, NJ 07102
By:  ___________________________
   Title:
NOTE AGENT:
Accepted subject to the terms of
the Agency Agreement:
IBJ SCHRODER BANK & TRUST COMPANY,
   as Note Agent One State Street, 11th Floor
New York, New York  10004
By:   ____________________________
   Title:
<PAGE>


                                                        EXHIBIT 1

                             ONEITA INDUSTRIES, INC.
                        12% SENIOR SECURED NOTE DUE 2001

No. [_____]                                                               [Date]
$[_______]                                                   PPN[______________]

     FOR VALUE RECEIVED, the undersigned, ONEITA INDUSTRIES, INC. (herein called
the "Company"), a corporation organized and existing under the laws of the State
of  Delaware,  hereby  promises to pay to [ ], or its  registered  assigns,  the
principal sum of [ ] DOLLARS (or so much thereof as shall not have been prepaid)
on [ , ], with  interest  (computed  on the  basis of a  360-day  year of twelve
30-day  months) (a) on the unpaid  balance  thereof at the rate of 12% per annum
from the date hereof,  payable  monthly,  on the [___] day of  [__________]  and
[_________] in each year,  commencing with the  [_________] or [_________]  next
succeeding the date hereof, until the principal hereof shall have become due and
payable,  and (b) following the occurrence of an Event of Default (as defined in
the Note Purchase  Agreement),  the unpaid balance  thereof and all other unpaid
amounts  at the rate of 13 1/2% per  annum in  accordance  with the terms of the
Note Purchase Agreement,  payable monthly as aforesaid (or, at the option of the
registered holder hereof, on demand).

          Payments of  principal  of and interest on this Note are to be made in
lawful  money of the United  States of America  at the  principal  office of IBJ
Schroder  Bank & Trust  Company in New York,  New York or at such other place as
the Company shall have  designated by written  notice to the holder of this Note
as provided in the Note Purchase Agreement referred to below.

          This Note is one of a series of Senior  Secured Notes  (herein  called
the  "Notes")  issued  pursuant  to a  Note  Purchase  Agreement,  dated  as  of
[_______],  1998 (as from time to time amended, the "Note Purchase  Agreement"),
between  the  Company and the  Purchasers  named  therein and is entitled to the
benefits  thereof.  Each holder of this Note will be deemed,  by its  acceptance
hereof,  (i) to have  agreed  to the  confidentiality  provisions  set  forth in
Section  21  of  the  Note  Purchase   Agreement  and  (ii)  to  have  made  the
representation set forth in Section 7 of the Note Purchase Agreement.

          This Note is a registered  Note and, as provided in the Note  Purchase
Agreement,  upon  surrender  of this Note for  registration  of  transfer,  duly
endorsed,  or accompanied by a written instrument of transfer duly executed,  by
the  registered  holder  hereof or such  holder's  attorney  duly  authorized in
writing,  a new  Note  for a like  principal  amount  will  be  issued  to,  and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.
<PAGE>
          The Company will make required  prepayments  of principal on the dates
and in the amounts specified in the Note Purchase  Agreement.  This Note is also
subject to optional  prepayment,  in whole or from time to time in part,  at the
times  and on the  terms  specified  in the  Note  Purchase  Agreement,  but not
otherwise.

          This Note is secured by the  Collateral as defined and provided for in
the Security Documents (as defined in the Note Purchase Agreement).

          If an Event of  Default,  as defined in the Note  Purchase  Agreement,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise become due and payable in the manner, at the price and with the effect
provided in the Note Purchase Agreement.

          This Note shall be construed and enforced in accordance  with the laws
of the State of New York.
                                   ONEITA INDUSTRIES, INC.

                                   By_________________________
                                       Title:

<PAGE>

                                                       SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                 Principal Amount of
Name and Address of Purchaser                   Notes to be Purchased
(A)Albert Fried & Co. L.L.C.
   40 Exchange Place
   New York, NY  10005                                     $

   (1) All payments by wire transfer
       of immediately available
       funds to:
       with sufficient information
       to identify the source and
       application of such funds.

   (2) All notices of payments and
       written confirmations of such
       wire transfers:
       Mr. Albert Fried, Jr.
       Facsimile:  212-422-7282

   (3) All other communications:
       Mr. Albert Fried, Jr.
       Facsimile:  212-422-7282

(B)UBS Mortgage Finance, Inc.
   299 Park Avenue
   New York, NY  10171                                     $

   (1) All payments by wire transfer
       of immediately available
       funds to:
       with sufficient information
       to identify the source and
       application of such funds.

   (2) All notices of payments and
       written confirmations of such
       wire transfers:
       Mr. Gregory T. Hradsky
       Facsimile:  212-821-6299
       All other communications:
       Mr. Gregory T. Hradsky
       Facsimile:  212-821-6299
<PAGE>
(C)The Foothill Group, Inc.
   11111 Santa Monica Boulevard
   Los Angeles, CA  90025                                  $

   (1) All payments by wire transfer
       of immediately available
       funds to:
       with sufficient information
       to identify the source and
       application of such funds.

   (2) All notices of payments and
       written confirmations of such
       wire transfers:
       Ms. Karen Sandler
       Facsimile:  310-478-8785
       All other communications:
       Ms. Karen Sandler
       Facsimile:  310-478-8785

(D) Lazard Freres & Co., L.L.C.
   30 Rockefeller Plaza
   60th Floor
   New York, NY  10020                                     $

   (1) All payments by wire transfer
       of immediately available funds to:
       with sufficient information
       to identify the source and
       application of such funds.

   (2) All notices of payments and
       written confirmations of such
       wire transfers:
       Mr. Robert Patterson
       Facsimile:  212-632-6631
       All other communications:
       Mr. Robert Patterson
       Facsimile:  212-632-6631
<PAGE>

(E) The Prudential Insurance Company of America
   c/o Prudential Capital Group
   Four Gateway Center
   100 Mulberry Street
   Newark, New Jersey  07102                               $

   (1) All payments by wire transfer
       of immediately available funds to:
       Account No. 890-0304-391
       The Bank of New York
       New York, New York
       Prudential Managed Account
       (ABA No.:  021-000-018)

each such wire transfer shall set forth the name of the Company,  a reference to
"12% Senior Secured Notes due ______,  2001, Security No.  __________",  and the
due date and  application  (as among  principal,  interest  and  premium) of the
payment being made.

   (2) All notices of payments and
       written confirmations of such
       wire transfers:
       Attention:  Investment Operations Group
       (Attention:  Manager)
       All other communications:
       Mr. Ric Abel
       Facsimile:  973-802-2333
<PAGE>
                                                                      SCHEDULE B
                                  DEFINED TERMS

          As used herein,  the following terms have the respective  meanings set
forth below or set forth in the Section hereof following such term:

          "Accounts"  means  all  currently   existing  and  hereafter   arising
accounts,  contracts  rights,  and all other forms of  obligations  owing to the
Company or any of its Subsidiaries  arising out of the sale or lease of goods or
the rendition of services by the Company,  or such  Subsidiary,  as the case may
be,  irrespective  of  whether  earned by  performance,  and any and all  credit
insurance, guaranties, or security therefor.

          "Additional Notes" means the 12% Senior Secured Notes due ______, 2001
issued by the Company in  satisfaction  of its obligation to pay interest on the
Notes , to the extent permitted under this Agreement.

          "Affiliate"  means,  at any time, and with respect to any Person other
than a Purchaser  that is a signatory  to this  Agreement,  (a) any other Person
that at such time  directly or  indirectly  through  one or more  intermediaries
Controls,  or is  Controlled  by, or is under common  Control  with,  such first
Person,  and  (b)  any  Person  beneficially  owning  or  holding,  directly  or
indirectly,  10% or more of any  class of  voting  or  equity  interests  of the
Company  or any  Subsidiary  or any  corporation  of which the  Company  and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests.

     "Agency  Agreement" means an Agency Agreement  substantially in the form of
Exhibit 6 between IBJ, as Note Agent and Collateral Agent, and the Purchasers.

     "Availability"  has the  meaning  set  forth  in the New  Revolving  Credit
Agreement.

     "Average  Available Cash" means, for any calendar month, an amount equal to
the  sum of (i)  the  average  daily  aggregate  Availability  and  Supplemental
Availability  (taking  into  account the  Borrowing  Base) plus (ii) the average
daily amount of the Company's cash and cash equivalents.

     "Bankruptcy  Code" means the  Bankruptcy  Reform Act of 1978, as heretofore
and hereafter amended, and codified as 11 U.S.C. Sections 101 et seq.

     "Base Net Worth" means the greater of (a) $1,000,000, and (b) the Net Worth
of the Company and its Subsidiaries,  on a consolidated  basis, on the Net Worth
Covenant Commencement Date.

     "Basic  Documents"  means,  collectively,  this Agreement,  the Notes,  the
Security  Documents,  all UCC-1  financing  statements and other  instruments of
perfection  executed  in  connection  therewith  and  all  other  documents  and
instruments relating to, guaranteeing or securing the obligations of the Company
hereunder  and  under  the  Notes,  as  the  same  may  be  amended,   restated,
supplemented or otherwise made from time to time.
<PAGE>
     "Borrowing  Base" has the  meaning  set forth in the New  Revolving  Credit
Agreement.

     "Business  Day" means any day other than a  Saturday,  a Sunday or a day on
which commercial banks in New York are required or authorized to be closed.

     "Capital Expenditures" means, for any period, expenditures, whether paid in
cash or accrued as a liability  (including the aggregate amount of Capital Lease
Obligations  incurred  during  such  period)  made by the  Company or any of its
Subsidiaries  to  acquire  or  construct  fixed  assets,   plant  and  equipment
(including  renewals,  improvements  and  replacements,  but excluding  repairs)
during such period computed in accordance with GAAP.

     "Capital  Lease  Obligations"  of any Person means the  obligations of such
Person to pay rent or other  amounts  under  any lease of (or other  arrangement
conveying the right to use) real or personal Property, or a combination thereof,
which  obligations  are required to be  classified  and accounted for as capital
leases on a balance  sheet of such  Person  under  GAAP,  and the amount of such
obligations  shall be the  capitalized  amount thereof  determined in accordance
with GAAP.

     "Change  of  Control"  shall be deemed to have  occurred  at such time as a
"person" or "group"  (within the meaning of Sections  13(d) and  14(d)(2) of the
Securities  Exchange  Act of  1934)  other  than  any of the  Purchasers  or any
Affiliate of any of the Purchasers becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities  Exchange Act of 1934),  directly or indirectly,
of more  than  50% of the  total  voting  power of all  classes  of stock of the
Company then outstanding and entitled to vote in the election of directors.  The
Permitted Combination shall not constitute a Change of Control.

     "Class  2  Claims"  shall  have  the  meaning  given  to  such  term in the
Reorganization Plan.

     "Closing" has the meaning set forth in Section 3.

     "Closing Date" means the date on which the conditions  specified in Section
5 are satisfied (or waived in accordance with Section 18).

     "Code"  means the Internal  Revenue  Code of 1986,  as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.

     "Collateral"  means  the  Property  of the  Obligors  subject  to the Liens
granted  under the Security  Documents to the  Collateral  Agent for the ratable
benefit of the Purchasers.

     "Collateral  Access  Agreement" means a landlord waiver,  mortgagee waiver,
bailee letter,  or  acknowledgement  agreement of any  warehouseman,  processor,
lessor,  consignee,  or other Person in  possession  of,  having a Lien upon, or
having rights or interests in the Equipment or Inventory,  in each case, in form
and substance satisfactory to the Purchasers.

     "Collateral Agent" means IBJ, in its capacity as Collateral Agent under the
Security Documents.

     "Company" means Oneita Industries, Inc., a Delaware corporation.

     "Competitor" means any Person other than a "Qualified  Institutional Buyer"
as such term is used in Rule 144A of the  Securities  Act with whom the  Company
competes in its lines of business.

     "Confidential Information" is defined in Section 21.
<PAGE>
          "Confirmation  Order"  means  an  order of the  Court  confirming  the
Reorganization Plan under Section 1129 of the Bankruptcy Code, which order shall
be in full  force  and  effect  and  shall not have  been  stayed,  reversed  or
modified.
          "Consolidated  Assets"  means,  at any time,  the total  assets of the
Company and its  Subsidiaries  which would be shown as assets on a  consolidated
balance  sheet of the Company and its  Subsidiaries  as of such time prepared in
accordance with GAAP,  after  eliminating all amounts  properly  attributable to
minority interests, if any, in the stock and surplus of Subsidiaries.

          "Consolidated  Net Income" means the net income of the Company and its
Subsidiaries,   determined  on  a  consolidated  basis  without  duplication  in
accordance with GAAP, excluding:

           (a)  the proceeds of any life insurance policy;
           (b)  any net  gain  or  loss  arising  from  (1)  the  sale or  other
     disposition of any Property  (other than current assets) to the extent that
     the  aggregate  amount of the gain exceeds the  aggregate  amount of losses
     from the sale,  abandonment or other  disposition  of Property  (other than
     current  assets),  (2) any write-up of assets,  or (3) the  acquisition  of
     outstanding Indebtedness securities of the Company or any Subsidiary;
           (c) any net amount  representing  any  interest in the  undistributed
     earnings of any other Person (other than a Subsidiary);
           (d) any net earnings, prior to the date of acquisition, of any Person
     acquired in any manner, and any earnings of any Subsidiary accrued prior to
     becoming a Subsidiary;
           (e) any net deferred credit (or  amortization  of a deferred  credit)
     arising from the acquisition of any Person;
           (f) any net earnings  denominated  in any currency which is not fully
     convertible into Dollars,  provided that any net earnings excluded pursuant
     to this clause (G) may be  included in the year in which they are  actually
     converted into Dollars;
           (g) any net gain arising from the  termination of a Plan; and (h) any
           portion of the net income of any Subsidiary which for any reason is
     unavailable for payment of dividends to the Company.

     "Control"  means the  possession,  directly or indirectly,  of the power to
direct or cause the direction of the management or policies of a Person, whether
through  the  ability to  exercise  voting  power,  by  contract  or  otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.

     "Court"  means the  United  States  Bankruptcy  Court for the  District  of
Delaware.

     "Default"  means an event or condition the occurrence or existence of which
would,  with the lapse of time or the giving of notice or both,  become an Event
of Default.

     "Default Rate" means the rate of 13 1/2% per annum.

     "Deposit  Account  Security  Agreement"  means the Deposit Account Security
Agreement between the Company and the Collateral Agent substantially in the form
of Exhibit 15.

     "Disclosure  Statement"  shall mean the Disclosure  Statement  filed by the
Company  with the  Court  on  January  __,  1998,  as the  same may be  amended,
supplemented or otherwise modified (except for Immaterial Changes).
 
     "Disposition" means any sale, assignment,  transfer or other disposition of
any Property (whether now owned or hereafter  acquired) by the Company or any of
its Subsidiaries to any other Person.
<PAGE>
     "Disposition  Investment"  means,  with  respect  to any  Disposition,  any
promissory  notes or other evidences of Indebtedness or Investments  received by
the Company or any of its Subsidiaries in connection with such Disposition.

     "dollars" or "$" refers to lawful money of the United States of America.

     "Domestic  Subsidiary"  means any Subsidiary of the Company organized under
the laws of the United States of America or any State thereof.

     "EBITDA" means,  for any period,  Consolidated  Net Income plus all amounts
deducted  in  computing  such  Consolidated  Net Income on  account of  Interest
Expense, taxes, amortization of intangibles and depreciation.

     "EBITDA  Requirement"  shall  mean,  with  respect to any period of 12 full
consecutive  calendar  months  immediately  preceding the month during which the
Company  proposes to pay  interest on the unpaid  principal  on the Notes by the
issuance  of  Additional  Notes,  EBITDA  equal to or greater  than  $6,000,000,
determined in accordance with GAAP.

     "Effective Date" means the "effective date" of the Reorganization  Plan, as
defined therein.

     "Environmental  Laws" means any and all federal,  state, local, and foreign
statutes,  laws, regulations,  ordinances,  rules,  judgments,  orders, decrees,
permits, concessions,  grants, franchises,  licenses, agreements or governmental
restrictions  relating to pollution and the protection of the environment or the
release of any  materials  into the  environment,  including  but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

     "Environmental  Liability"  means any  liability,  contingent  or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties,  legal and expert fees or  indemnities,  and including any Lien filed
against any of the Real Property  Collateral or any part thereof in favor of any
governmental  entity),  of the Company or any Subsidiary  directly or indirectly
resulting  from or based upon (a)  violation of any  Environmental  Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened  release of any Hazardous  Materials into the  environment or (e) any
contract,  agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

     "Equipment"   means  all  of  the   Company's  and  each  of  its  Domestic
Subsidiaries'  present and hereafter acquired machinery,  machine tools, motors,
equipment, furniture, furnishings,  fixtures, vehicles (including motor vehicles
and trailers), tools, parts, goods (other than consumer goods, farm products, or
Inventory),   wherever   located,   including  all   attachments,   accessories,
accessions, replacements,  substitutions,  additions, and improvements to any of
the foregoing.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time, and the rules and regulations  promulgated thereunder
from time to time in effect.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.

     "ERISA  Event"  means (a) a  Reportable  Event with  respect to any Plan or
Multiemployer  Plan, (b) the withdrawal of the Company,  any of its Subsidiaries
or ERISA  Affiliates  from a Benefit  Plan  during a plan year in which it was a
"substantial  employer"  (as defined in Section  4001(a)(2)  of ERISA),  (c) the
<PAGE>
providing  of  notice  of  intent to  terminate  a  Benefit  Plan in a  distress
termination (as described in Section  4041(c) of ERISA),  (d) the institution by
the PBGC of proceedings to terminate a Benefit Plan or  Multiemployer  Plan, (e)
any event or condition (i) that provides a basis under Section 4042(a)(1),  (2),
or (3) of ERISA for the  termination  of,  or the  appointment  of a trustee  to
administer,  any Benefit Plan or Multiemployer  Plan, or (ii) that may result in
termination of a Multiemployer  Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete  withdrawal  within the meaning of Sections 4203 and 4205 of
ERISA,  of the  Company,  any of its  Subsidiaries  or ERISA  Affiliates  from a
Multiemployer  Plan,  or (g)  providing  any security to any Plan under  Section
401(a)(29) of the IRC by the Company or its  Subsidiaries  or any of their ERISA
Affiliates.

     "Event of Default" is defined in Section 12.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Excluded  Assets"  means the Property of the Company and its  Subsidiaries
identified on Schedule R.

     "Existing  Notes"  means the  Existing  Revolving  Notes  and the  Existing
Prudential Note.

     "Existing  Prudential  Documents"  means the Existing  Prudential Note, the
Note Agreement dated as of December 20, 1988 between the Company and Prudential,
as  amended  prior  to the  Petition  Date,  and  all of  the  related  security
agreements,  instruments  and other  documents  executed  and  delivered  by the
parties in connection therewith.

     "Existing Prudential Note" means the promissory note executed and delivered
by the Company  pursuant to that certain Note Agreement dated as of December 20,
1988 between the Company and Prudential, as amended prior to the Petition Date.

     "Existing  Revolving Credit  Agreement" means that certain Revolving Credit
Agreement,  dated as of January 26, 1996, as amended prior to the Petition Date,
by and among the Company and the institutions signatory thereto.

     "Existing  Revolving Credit Documents" means the Existing  Revolving Credit
Agreement,  the  Existing  Revolving  Credit  Notes  and  all  of  the  security
agreements,  instruments,  the and other documents executed and delivered by the
parties in connection therewith.

     "Existing  Revolving  Notes"  means,  collectively,  the  promissory  notes
executed and delivered by the Company to the institutions  party to the Existing
Revolving Credit Agreement.

     "Fair Market  Value"  means,  at any time and with respect to any Property,
the sale value of such Property that would be realized in an  arm's-length  sale
at such time between an informed  and willing  buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).

     "Fayette  Facilities"  means the apparel and textile plants operated by the
Company in Fayette, Alabama.

     "FEIN" means Federal Employer Identification Number.

     "Foothill" means Foothill Capital Corporation, a California corporation.

     "Foothill Subordinated Note" means the 10% Subordinated Promissory Note due
2008 substantially in the form of Exhibit 7 issued by the Company to Foothill.

     "GAAP" means  generally  accepted  accounting  principles as in effect from
time to time in the United States of America.

     "Governmental Authority" means
<PAGE>
           (a) the government of

               (i)  the United States of America or any State or other political
          subdivision thereof, or

               (ii) any  jurisdiction  in which the  Company  or any  Subsidiary
          conducts  all  or  any  part  of  its   business,   or  which  asserts
          jurisdiction over any properties of the Company or any Subsidiary, or


           (b)  any  entity   exercising   executive,   legislative,   judicial,
     regulatory  or  administrative  functions  of, or  pertaining  to, any such
     government.

          "Guaranty" means, with respect to any Person,  any obligation  (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness,  dividend or other  obligation  of any other Person in any manner,
whether  directly or  indirectly,  including  (without  limitation)  obligations
incurred through an agreement, contingent or otherwise, by such Person:

          (a) to  purchase  such  Indebtedness  or  obligation  or any  Property
     constituting security therefor;

           (b) to advance  or supply  funds (i) for the  purchase  or payment of
     such indebtedness or obligation, or (ii) to maintain any working capital or
     other  balance  sheet  condition or any income  statement  condition of any
     other  Person or  otherwise  to  advance  or make  available  funds for the
     purchase or payment of such Indebtedness or obligation;

           (c)  to  lease  Properties  or to  purchase  Properties  or  services
     primarily  for the purpose of assuring  the owner of such  indebtedness  or
     obligation  of the  ability  of any  other  Person to make  payment  of the
     Indebtedness or obligation; or

           (d) otherwise to assure the owner of such  Indebtedness or obligation
     against loss in respect thereof.

In any computation of the Indebtedness or other liabilities of the obligor under
any Guaranty, the Indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

          "Guaranty Assumption Agreement" means a Guaranty Assumption Agreement
substantially  in the form of  Exhibit 10 by any  Subsidiary  that  pursuant  to
Section  10.13 is required to become a  "Guarantor"  in favor of the  Collateral
Agent.

          "Hazardous Material" means any and all pollutants, petroleum products,
toxic or hazardous wastes or any other substances including Hazardous Substances
(as defined by CERCLA) that might pose a hazard to health or safety, the removal
of  which  may be  required  or  give  rise  to  liability  or  the  generation,
manufacture,  refining,  production,  processing,  treatment, storage, handling,
transportation,  transfer, use, disposal, release, discharge, spillage, seepage,
or filtration of which is or shall be restricted, prohibited or penalized by any
applicable law (including, without limitation,  asbestos, urea formaldehyde foam
insulation and polychlorinated biphenyls).

          "holder"  means,  with  respect to any Note,  the Person in whose name
such Note is registered in the register maintained by the Note Agent pursuant to
Section 14.1.

          "IBJ" means IBJ Schroder Bank & Trust Company.

          "IDB  Indebtedness"  means  Indebtedness  of the  Company  arising  in
connection with its transactions  with The Industrial  Development  Board of The
City of Fayette, Alabama.
<PAGE>
          "Immaterial Changes" shall mean, when used with respect to any motion,
order, stipulation,  document,  instrument or other writing, changes to the most
recent  draft  thereof  distributed  to the  holders of Class 2 Claims and their
special  counsel  which,  individually  and in the  aggregate,  shall  have been
determined in the reasonable  judgment of the Majority  Holders,  acting in good
faith, not to be materially adverse to the interests of the holders of the Class
2 Claims;  provided that a modification  or amendment that results in other than
uniform  treatment of all Class 2 Claims may in no event be  determined to be an
"Immaterial Change".

          "Indebtedness"  with respect to any Person means, at any time, without
           duplication,   

          (a) its liabilities for borrowed money and its redemption  obligations
     in respect of mandatorily redeemable Preferred Stock;

           (b) its  liabilities  for the  deferred  purchase  price of  Property
     acquired by such Person (excluding accounts payable arising in the ordinary
     course of business but including all  liabilities  created or arising under
     any conditional sale or other title retention agreement with respect to any
     such Property);

           (c) all Capital Lease Obligations;

           (d) all  liabilities  for  borrowed  money  secured  by any Lien with
     respect to any Property owned by such Person (whether or not it has assumed
     or otherwise become liable for such liabilities);

           (e)  all  its   liabilities  in  respect  of  letters  of  credit  or
     instruments  serving a similar  function issued or accepted for its account
     by banks and other  financial  institutions  (whether  or not  representing
     obligations for borrowed money);

           (f) Swaps of such Person; and

           (g) any Guaranty of such Person with respect to liabilities of a type
     described in any of clauses (a) through (f) hereof.

Indebtedness  of any Person shall include all  obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person remains
legally liable in respect  thereof  notwithstanding  that any such obligation is
deemed to be extinguished under GAAP.

          "Institutional  Investor" means (a) any original  purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate  principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association  or other  financial  institution,  any pension plan, any investment
company,  any  insurance  company,  any broker or dealer,  or any other  similar
financial institution or entity, regardless of legal form.

          "Intercreditor    Agreement"   means   an   Intercreditor    Agreement
substantially  in the  form  of  Exhibit  10  between  IBJ,  as Note  Agent  and
Collateral Agent, the Purchasers and the New Revolving Lender.

          "Interest  Coverage  Ratio"  means,  as at any  date of  determination
thereof,  the ratio of (a) EBITDA for the period of four fiscal  quarters ending
on, or most recently ended prior to, such date to (b) Interest  Expense for such
period.

          "Interest Expense" means, for any period, the sum, for the Company and
its  Subsidiaries  (determined  on a consolidated  basis without  duplication in
accordance with GAAP),  of all interest in respect of  Indebtedness  (including,
without limitation, the interest component of any payments in respect of Capital
Lease  Obligations)  accrued or capitalized  during such period  (whether or not
actually paid during such period) but excluding the  amortization  of loan costs
charged to interest expense.
<PAGE>
          Notwithstanding  the  foregoing,  (i) if during  any  period for which
Interest  Expense is being  determined  the Company shall have  consummated  any
Disposition then, for all purposes of this Agreement,  Interest Expense shall be
determined  on a pro  forma  basis  as if  such  Disposition  had  been  made or
consummated  (and any  Indebtedness  repaid as a result of such  Disposition had
been  incurred  or repaid) on the first day of such period and (ii) if as at any
date (a "calculation date") fewer than four complete consecutive fiscal quarters
have  elapsed  subsequent  to  the  Closing  Date,  Interest  Expense  shall  be
calculated  only for the portion of such period  commencing  on the Closing Date
and ending on the calculation  date, and then shall be annualized by multiplying
the amount of such Interest Expense by a fraction, the numerator of which is 365
and the denominator of which is the number of days during the period  commencing
on the day  immediately  following  the Closing Date through and  including  the
calculation date.

          "Inventory"  means  all  present  and  future  inventory  in which the
Company  has any  interest,  including  goods  held  for  sale or lease or to be
furnished  under a contract  of service  and all of the  Company's  present  and
future raw materials,  work in process, finished goods, and packing and shipping
materials, wherever located.

          "Investment"  means, for any Person: (a) the acquisition  (whether for
cash,  Property,  services or securities or otherwise) of capital stock,  bonds,
notes, debentures,  partnership or other ownership interests or other securities
of any other Person or any  agreement to make any such  acquisition  (including,
without  limitation,  any "short sale" or any sale of any  securities  at a time
when such securities are not owned by the Person  entering into such sale);  (b)
the making of any deposit  with, or advance,  loan or other  extension of credit
to, any other Person  (including  the purchase of Property  from another  Person
subject to an  understanding  or agreement,  contingent or otherwise,  to resell
such Property to such Person), but excluding any such advance, loan or extension
of credit  having a term not  exceeding 90 days arising in  connection  with the
sale of programming or advertising time by such Person in the ordinary course of
business;  (c) the  entering  into  of any  Guaranty  of,  or  other  contingent
obligation with respect to,  Indebtedness or other liability of any other Person
and (without duplication) any amount committed to be advanced,  lent or extended
to such Person.

          "Kinston" means Oneita-Kinston Corp.

          "Lien" means, with respect to any Person, any mortgage,  lien, pledge,
charge, security interest or other encumbrance,  or any interest or title of any
vendor,  lessor,  lender or other  secured  party to or of such Person under any
conditional  sale or other title retention  agreement or Capital Lease,  upon or
with respect to any Property or asset of such Person  (including  in the case of
stock,   stockholder  agreements,   voting  trust  agreements  and  all  similar
arrangements).

          "Majority Holders" shall mean, (a) Persons holding at least 51% in the
aggregate  principal  amount of all Class 2 Claims and (b)  Persons  (other than
Foothill and its  Affiliates)  holding at least 41% in the  aggregate  principal
amount of all Class 2 Claims.

          "Material"  means  material in relation to the  business,  operations,
affairs,  financial condition,  assets,  Properties, or prospects of the Company
and its Subsidiaries taken as a whole.

          "Material  Adverse Change" means (a) a material  adverse change in the
business, prospects,  operations,  results of operations, assets, liabilities or
condition   (financial  or  otherwise)  of  the  Company  and  its  consolidated
Subsidiaries, on a consolidated basis, occurring after the Closing Date, (b) the
<PAGE>
material  impairment  of  the  ability  of  the  Company  and  its  consolidated
Subsidiaries,  on a consolidated  basis, to perform their  obligations under the
Basic Documents to which they are a party or of the Purchasers or the Collateral
Agent to enforce the  obligations of the Obligors  under the Basic  Documents or
realize upon the Collateral, occurring after the Closing Date, or (c) a material
impairment of the priority of the  Collateral  Agent's Liens with respect to the
Collateral.  The  foregoing  notwithstanding,   if  the  Company's  consolidated
financial  results of  operations  and financial  condition  are in  substantial
compliance  with the  projections of the Company most recently  furnished to the
Purchasers prior to the Petition Date (as described in a letter from the Company
to the  Purchasers  dated  January 20,  1998),  then such  financial  results of
operations  and  financial  condition  shall not be considered as factors by the
Purchasers in determining  whether a Material  Adverse Change has occurred,  and
shall not be relevant to such determination.

     "Material  Adverse  Effect"  means a  material  adverse  effect  on (a) the
business, operations,  affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
or any of its Subsidiaries to perform its obligations under this Agreement,  the
Notes or any of the other Basic Documents or (c) the validity or  enforceability
of this Agreement, the Notes, or any of the other Basic Documents.

     "Mortgage"  means one or more  Mortgage(s)  executed by the Company and the
Subsidiaries covering the Real Property Collateral,  including the real Property
and leasehold interests identified on Schedule E hereto.

     "Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such
term is defined in section 4001(a)(3) of ERISA).

     "Net  Cash  Proceeds"  means  the  aggregate  amount  of all cash  payments
received  by  the  Company  and  its  Subsidiaries  directly  or  indirectly  in
connection  with any  Disposition,  whether at the time of such  Disposition  or
after such  Disposition  under  deferred  payment  arrangements  or  Investments
entered into or received in connection with such Disposition (including, without
limitation, Disposition Investments); provided, that

            (a) Net Cash  Proceeds  of any  Disposition  shall be net of (i) the
     amount of any legal,  title and  recording tax  expenses,  commissions  and
     other  fees  and  expenses  paid by the  Company  and its  Subsidiaries  in
     connection  with such  Disposition  and (ii) any  Federal,  state and local
     income or other  taxes  estimated  to be  payable  by the  Company  and its
     Subsidiaries as a result of such  Disposition  (but only to the extent that
     such  estimated  taxes are in fact paid to the relevant  Federal,  state or
     local  governmental  authority  within  three  months  of the  date of such
     Disposition); and

            (b)  Net  Cash  Proceeds  of  any  Disposition  shall  be net of any
     repayments by the Company or any of its Subsidiaries of Indebtedness to the
     extent that (i) such Indebtedness is secured by a Lien on the Property that
     is the subject of such Disposition and (ii) the transferee of (or holder of
     a Lien on) such  Property  requires that such  Indebtedness  be repaid as a
     condition to the purchase of such Property.

     "Net Worth" means total stockholders'  equity determined in accordance with
GAAP.

     "Net Worth Covenant  Commencement Date" means, if the Effective Date is the
last day of a fiscal month of the Company,  the Effective  Date, or,  otherwise,
the first day to occur after the Effective Date that is the last day of a fiscal
month of the Company.

     "Net Worth Testing  Dates" means the last day of each fiscal quarter of the
Company,  commencing  with the first such date to occur on or after the  Closing
Date  (which  dates,  as of the Closing  Date,  are the last days of each March,
June, September, and December ending on or after the Closing Date).
<PAGE>
     "New  Common"  means  the  shares of new  common  stock to be issued by the
Company pursuant to the Reorganization Plan.

     "New  Revolving  Credit  Agreement"  means that  certain  Revolving  Credit
Agreement  substantially  in the form of Exhibit 11 by and among the Company and
the New Revolving Credit Lender.

     "New Revolving  Credit Lender" means Foothill in its capacity as a party to
the New Revolving Credit Agreement.

     "Non-Excluded  Assets"  means any Property of the  Obligors  other than (i)
Excluded Assets and (ii) subject to Section 11.12, Accounts and Inventory of any
Obligor.

     "Notes" mean the 12% Senior Secured Notes due 2001 issued by the Company to
the Purchasers, including Additional Notes.

     "Note Agent" means IBJ, in its capacity as Note Agent under this Agreement.

     "Obligor" means,  collectively,  the Company,  each Guarantor and any other
Subsidiary that is a party to any of the Basic Documents.

     "Officer's  Certificate"  means a certificate of a Senior Financial Officer
or of any other  officer of the  Company  whose  responsibilities  extend to the
subject matter of such certificate.

     "Original Principal Amount" means $37,500,000.

     "PBGC"  means the  Pension  Benefit  Guaranty  Corporation  referred to and
defined in ERISA or any successor thereto.

     "Permitted  Combination"  means  either (a) the merger of Kinston  with and
into the  Company,  with the Company as the  surviving  corporation,  or (b) the
dissolution of Kinston and transfer of all its assets to the Company (subject to
the Liens of the Collateral Agent in such assets).

     "Permitted  Disposition"  means any  Disposition  by any Obligor of (a) any
Inventory sold or disposed of in the ordinary course of business and on ordinary
business  terms or, if otherwise  disposed of, only if ten days' prior notice of
such  disposition  in  reasonable  detail  shall  have  been  furnished  to  the
Collateral Agent and the Purchasers,  (b) any Disposition of Excluded Assets and
(c) any Disposition of obsolete or worn-out  Equipment in the ordinary course of
business.

     "Permitted Encumbrances" means:

           (a) Liens  imposed by law for taxes that are not yet due or are being
     contested in compliance with Section 10.11;

           (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
     and other like  Liens  imposed by law,  arising in the  ordinary  course of
     business and securing obligations that are not overdue by more than 60 days
     or are being contested in compliance with Section 10.11;

           (c) pledges and deposits  made in the ordinary  course of business in
     compliance  with workers'  compensation,  unemployment  insurance and other
     social security laws or regulations;

           (d)  deposits to secure the  performance  of bids,  trade  contracts,
     leases,  statutory obligations,  surety and appeal bonds, performance bonds
     and other obligations of a like nature, in each case in the ordinary course
     of business;
<PAGE>
           (e) judgment  liens in respect of judgments that do not constitute an
     Event of Default under Section 12(l); and

           (f)  easements,   zoning  restrictions,   rights-of-way  and  similar
     encumbrances  on real  Property  imposed by law or arising in the  ordinary
     course of business that do not secure any monetary  obligations  and do not
     materially  detract  from the value of the  affected  Property or interfere
     with the ordinary conduct of business of the Company or any Subsidiary.

          "Permitted Investments" means:

           (a)  direct  obligations  of, or  obligations  the  principal  of and
     interest on which are  unconditionally  guaranteed by, the United States of
     America (or by any agency thereof to the extent such obligations are backed
     by the full faith and credit of the United States of America), in each case
     maturing within one year from the date of acquisition thereof;

           (b) investments in commercial paper maturing within 365 days from the
     date of acquisition  thereof and having,  at such date of acquisition,  the
     highest  credit rating  obtainable  from Standard & Poor's Ratings Group or
     Moody's Investors Services, Inc.;

           (c) investments in certificates of deposit,  banker's acceptances and
     time deposits maturing within 365 days from the date of acquisition thereof
     issued or guaranteed by or placed with, and money market  deposit  accounts
     issued or offered by, any domestic  office of any commercial bank organized
     under the laws of the United  States of America or any State  thereof which
     has a combined  capital and surplus and undivided  profits of not less than
     $500,000,000; and

           (d) fully  collateralized  repurchase  agreements  with a term of not
     more than 30 days for securities described in clause (a) of this definition
     and  entered  into with a financial  institution  satisfying  the  criteria
     described in clause (c) of this definition.

     "Permitted  Protest" means the right of the Company and its Subsidiaries to
protest any Lien other than any such Lien that secures the obligations under the
Notes or the other basic Documents,  tax (other than payroll taxes or taxes that
are the  subject  of a United  States  federal  tax  lien),  or rental  payment,
provided that (a) a reserve with respect to such  obligations  is established on
the books of the Company in an amount  that is  reasonably  satisfactory  to the
Purchasers,  (b) any such protest is instituted and diligently prosecuted by the
Company or its  Subsidiaries in good faith, and (c) the Purchasers are satisfied
that,  while any such  protest is pending,  there will be no  impairment  of the
enforceability,  validity,  or  priority  of any of the Liens of the  Collateral
Agent in and to the Collateral.

     "Person" means an individual,  partnership,  corporation,  company, limited
liability  company,  association,   trust,  unincorporated  organization,  or  a
government or agency or political subdivision thereof.

     "Personal  Property  Collateral"  means all Collateral  other than the Real
Property Collateral.

     "Petition Date" means January __, 1998.

     "Plan"  means an  "employee  benefit  plan" (as defined in section  3(3) of
ERISA) that is or,  within the preceding  five years,  has been  established  or
maintained,  or to which  contributions are or, within the preceding five years,
have been made or are required to be made, by the Company or any ERISA Affiliate
or with  respect  to which  the  Company  or any  ERISA  Affiliate  may have any
liability.
<PAGE>
     "Preferred Stock" means any class of capital stock of a corporation that is
preferred  over any other class of capital stock of such  corporation  as to the
payment  of  dividends  or  the  payment  of  any  amount  upon  liquidation  or
dissolution of such corporation.

     "Property" or "Properties"  means, unless otherwise  specifically  limited,
real or  personal  Property  of any  kind,  tangible  or  intangible,  choate or
inchoate.

     "Prudential" means The Prudential Insurance Company of America.

     "Purchasers"  means  each  holder  of a  Note  and  any  of  such  holder's
successors and assigns.

     "Purchasers'  Primary  Collateral"  means that portion of the Collateral in
which  the  Lien  of the  Collateral  Agent,  for  the  ratable  benefit  of the
Purchasers,  has  priority  over the  Lien of the New  Revolving  Credit  Lender
pursuant to the provisions of the Intercreditor Agreement.

     "QPAM Exemption" means Prohibited  Transaction Class Exemption 84-14 issued
by the United States Department of Labor.

     "Real Property Collateral" means the parcel or parcels of real Property and
the related  improvements  thereto  identified  as Real  Property  Collateral on
Schedule ,and any real Property  hereafter acquired by the Company or any of its
Subsidiaries.

     "Reorganization Plan" means the plan of reorganization filed by the Company
and confirmed pursuant to a Final Order of the Bankruptcy Court.

     "Required  Holders"  means,  at any time,  the  holders  of at least 51% in
principal amount of the Notes at the time  outstanding  (exclusive of Notes then
owned by the Company or any of its Affiliates).

     "Required Net Worth Amount" means, as of any date of determination thereof:
(a) the Base Net Worth minus $4,500,000; plus (b) the amount that is the product
of (y)  $150,000  times (z) the number of months  that have  elapsed,  as of and
including such date of determination,  since the Effective Date (which number of
elapsed  months,  if not a whole  number,  shall be  truncated  downward  to the
nearest whole number,  e.g., if more than four, and less than five,  months have
elapsed  since the  Effective  Date,  the number "4" would be  multiplied  times
$150,000 in making the foregoing determination).

     "Responsible  Officer"  means any Senior  Financial  Officer  and any other
officer  of the  Company  with  responsibility  for  the  administration  of the
relevant portion of this agreement.

     "Restricted  Payment" means (a) any cash interest payment to Foothill under
the Foothill  Subordinated  Note prior to the  occurrence of a Cash Pay Interest
Event (as defined in the Foothill  Subordinated Note), (b) any dividend or other
distribution  (whether in cash,  securities or other  Property) in the aggregate
during any fiscal year with respect to any shares of any class of capital  stock
of the Company or any of its Subsidiaries,  or (c) any payment (whether in cash,
securities or other Property), including any sinking fund or similar deposit, on
account of the purchase, redemption,  retirement,  acquisition,  cancellation or
termination  of any such  shares of capital  stock of the  Company or any of its
Subsidiaries or any option, warrant or other right to acquire any such shares of
capital stock of the Company or any of its Subsidiaries.

     "Retiree  Health Plan" means an "employee  welfare benefit plan" within the
meaning of Section 3(1) of ERISA that  provides  benefits to  individuals  after
termination of their employment, other than as required by Section 601 of ERISA.

     "Securities  Act" means the Securities Act of 1933, as amended from time to
time.

          "Security" has the meaning set forth in section 2(1) of the Securities
Act.
<PAGE>
     "Security  and Pledge  Agreement"  means the Security and Pledge  Agreement
between  the  Company  and the  Collateral  Agent  substantially  in the form of
Exhibit 12.

     "Security   Documents"  means,   collectively,   the  Security  and  Pledge
Agreement, the Subsidiary Guaranty and Security Agreement, the Mortgage(s),  the
Agency Agreement, the Intercreditor Agreement and all UCC-1 financing statements
and other  instruments  of perfection  executed in connection  therewith and all
other  documents  and  instruments  relating  to,  guaranteeing  or securing the
obligations  of the Company  hereunder  and under the Notes,  as the same may be
amended, restated, supplemented or otherwise made from time to time.

     "Senior  Financial  Officer" means the chief financial  officer,  principal
accounting officer, treasurer or comptroller of the Company.

     "Solvent"  means,  with respect to any Person on a particular date, that on
such date (a) such Person is able to realize upon its  properties and assets and
pay  its  debts  and  other  liabilities,   contingent   obligations  and  other
commitments  as they mature in the normal  course of  business,  (b) such Person
does not intend to, and does not believe  that it will,  incur debts beyond such
Person's ability to pay as such debts mature, and (c) such Person is not engaged
in  business  or a  transaction,  and is not about to engage  in  business  or a
transaction,  for which such  Person's  properties  and assets would  constitute
unreasonably  small capital  after giving due  consideration  to the  prevailing
practices  in the  industry in which such Person is engaged.  In  computing  the
amount  of  contingent  liabilities  at  any  time,  it is  intended  that  such
liabilities  will be computed at the amount that,  in light of all the facts and
circumstances  existing at such time,  represents the amount that reasonably can
be expected to become an actual or matured liability.

     "Strathleven Interest" means the ownership interest not held by the Company
as of the date hereof in Oneita Strathleven, a Jamaican corporation.

     "Subsidiary" means, as to any Person, any corporation, association or other
business  entity in which such  Person or one or more of its  Subsidiaries  owns
sufficient  equity  or  voting  interests  to  enable  it or them  (as a  group)
ordinarily,  in the  absence  of  contingencies,  to  elect  a  majority  of the
directors (or Persons  performing  similar  functions)  of such entity,  and any
partnership  or joint  venture  if more than a 50%  interest  in the  profits or
capital  thereof  is owned  by such  Person  or one or more of its  Subsidiaries
(unless such  partnership  or joint venture can and does  ordinarily  take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.

     "Subsidiary  Guaranty and Security Agreement" means the Subsidiary Guaranty
and  Security  Agreement(s)  substantially  in the form of Exhibit 8 between the
Domestic Subsidiaries party thereto and the Collateral Agent.

     "Supplemental  Availability" has the meaning set forth in the New Revolving
Credit Agreement.

     "Swaps" means, with respect to any Person, payment obligations with respect
to interest rate swaps,  currency swaps and similar obligations  obligating such
Person  to make  payments,  whether  periodically  or upon  the  happening  of a
contingency.  For the purposes of this  Agreement,  the amount of the obligation
under any Swap shall be the amount  determined in respect  thereof as of the end
of the then most  recently  ended fiscal  quarter of such  Person,  based on the
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assumption that such Swap had terminated at the end of such fiscal quarter,  and
in making such  determination,  if any agreement  relating to such Swap provides
for the netting of amounts  payable by and to such Person  thereunder  or if any
such agreement  provides for the simultaneous  payment of amounts by and to such
Person,  then in each such case, the amount of such obligation  shall be the net
amount so determined.

     "Termination  Premium" means (i) in the case of an acceleration of any Note
on or before the first anniversary of the Closing Date, an amount equal to 4% of
the Original Principal Amount times a fraction (the "Fraction") the numerator of
which is the principal  amount of such Note and the  denominator of which is the
aggregate principal amount of all Notes at the time outstanding (excluding Notes
held directly or indirectly by the Company or any of its Subsidiaries),  (ii) in
the case of an  acceleration  of any Note  after  the first  anniversary  of the
Closing Date and on or before the second  anniversary of the Closing Date, 3% of
the Original  Principal  Amount times the Fraction,  and (iii) in the case of an
acceleration of any Note after the second anniversary of the Closing Date, 2% of
the Original Principal Amount times the Fraction.

     "Trademark  Security  Agreement"  means the  Trademark  Security  Agreement
between  the  Company  and the  Collateral  Agent  substantially  in the form of
Exhibit 14.

     "Uniform  Commercial  Code" means the Uniform  Commercial Code as in effect
from  time to time in the  State of New York;  provided,  however,  in the event
that, by reason of mandatory  provisions  of law, any or all of the  attachment,
perfection,  or priority of the security  interests  and liens  specified in the
Security  Documents is governed by the Uniform Commercial Code as in effect in a
jurisdiction  other than the State of New York,  the term  "UCC"  shall mean the
Uniform Commercial Code as in effect in such other jurisdiction.

     "Wholly-Owned  Subsidiary"  means,  at any time, any Subsidiary one hundred
percent  (100%) of all of the equity  interests  (except  directors'  qualifying
shares)  and  voting  interests  of  which  are  owned by any one or more of the
Company and the Company's other Wholly-Owned Subsidiaries at such time.