EXHIBIT 3.1

                      RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                             BRAZOS SPORTSWEAR, INC.

                                     I. NAME

      The name of the corporation is Brazos Sportswear, Inc.

                                  II. DURATION

      The corporation is organized under the General Corporation Law of Delaware
and shall have perpetual existence.

                        III. REGISTERED OFFICE AND AGENT

      The corporation's registered office in the state of Delaware shall be
located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Zip Code 19801. The registered agent in charge
thereof shall be The Corporation Trust Company.

                                   IV. PURPOSE

      The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.

                            V. STOCK AND STOCKHOLDERS

      5.1 The aggregate number of shares of stock that the corporation is
authorized to issue is forty million (40,000,000), consisting of fifteen million
(15,000,000) shares of Common Stock with a par value of one-tenth of one cent
($.001) per share (the "Common Stock") and twenty-five million (25,000,000)
shares of Preferred Stock with a par value of one-tenth of one cent ($.001) per
share (the "Preferred Stock"), consisting of 650,000 shares of Series A-1
Preferred Stock, par value $.001 per share, 300,000 shares of Series A-2
Preferred Stock, par value $.001 per share, 8,000,000 shares of Series B-1
Convertible Preferred Stock, par value $.001 per share, 4,000,000 shares of
Series B-2 Convertible Preferred Stock, par value $.001 per share, and 3,500,000
shares of Series B-3 Convertible Preferred Stock, par value $.001 per share,
having such voting powers, 

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preferences and relative, participating, optional and other rights, and the
qualifications, limitations or restrictions set forth in Section VI below.

      The corporation may issue one or more series of Preferred Stock. The
Preferred Stock of each such series shall have such voting powers, full or
limited, or no voting powers, and such designations, preferences and relative,
participating, optional, redemption, conversion, exchange or other special
rights, and qualifications, limitations or restrictions thereof, as shall be
stated and expressed by the Board of Directors in the resolution or resolutions
providing for the issuance of such series of Preferred Stock pursuant to the
authority to do so which is hereby expressly vested in the Board of Directors.

      Except as otherwise provided in any resolution or resolutions of the Board
of Directors providing for the issuance of any series of Preferred Stock, the
number of shares of stock of any such series set forth in such resolution or
resolutions may be increased or decreased (but not below the number of shares of
such series then outstanding) by a resolution or resolutions of the Board of
Directors.

      Except as otherwise provided in any resolution or resolutions of the Board
of Directors providing for the issuance of any series of Preferred Stock,
Preferred Stock redeemed or otherwise acquired by the corporation shall assume
the status of authorized but unissued Preferred Stock and shall be unclassified
as to series and may thereafter, subject to the provisions of this Article V and
to any restrictions contained in any resolution or resolutions of the Board of
Directors providing for the issuance of any such series of Preferred Stock, be
reissued in the same manner as other authorized but unissued Preferred Stock.

      Except as otherwise required by law or as provided in any resolution or
resolutions of the Board of Directors providing for the issuance of any series
of Preferred Stock, the voting power of the corporation shall be vested in the
Common Stock of the corporation and the holders of the Preferred Stock shall
have no right or power to vote on any question or in any proceeding involving
the corporation. Each share of Common Stock entitles the holder thereof to one
vote at all meetings of the stockholders of the corporation.

      5.2 Stockholders of the corporation shall not have the right to cumulate
votes with respect to elections of directors in the manner prescribed by Title
8, Section 214, of the General Corporation Law of Delaware.

      5.3 A quorum shall exist at any meeting of stockholders if a majority of
the votes entitled to be cast is represented in person or by proxy. In the case
of 

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any meeting of stockholders that is adjourned more than once because of the
failure of a quorum to attend, those who attend the third convening of such
meeting, although less than a quorum, shall nevertheless constitute a quorum for
the purpose of electing directors, provided that the percentage of shares
represented at the third convening of such meeting shall not be less than one
third of the shares entitled to vote.

      5.4 Except in circumstances where special stockholder voting requirements
are prescribed by applicable law or as otherwise provided in this Certificate,
any contract, transaction, or act of the corporation or of any director or
officer of the corporation that shall be authorized, approved or ratified by the
affirmative vote of a majority of shares shall, insofar as permitted by law, be
as valid and as binding as though ratified by every stockholder of the
corporation.

      5.5 No stockholder of the corporation shall have, solely by reason of
being a stockholder, any preemptive or preferential right or subscription right
to any stock of the corporation or to any obligations convertible into stock of
the corporation, or to any warrant or option for the purchase thereof, except to
the extent provided by written agreement with the corporation or as otherwise
provided in this Certificate.

      5.6 Special meetings of the stockholders for any purpose or purposes may
be called at any time only by a majority of the Board of Directors or the
Chairman of the Board (if one be appointed) or the President or one or more
stockholders holding not less than twenty-five percent (25%) of all the shares
entitled to be cast on any issue proposed to be considered at that meeting.

      5.7 The Board of Directors shall have the authority to issue shares of the
capital stock of the corporation and the certificates therefor subject to such
transfer restrictions and other limitations as it may deem necessary to promote
compliance with applicable federal and state securities laws, and to regulate
the transfer thereof in such manner as may be calculated to promote such
compliance or for any other reasonable purpose.

                               VI. PREFERRED STOCK

      6.1 DESIGNATION. Six Hundred Fifty Thousand (650,000) shares of Preferred
Stock shall be designated "Series A-1 Preferred Stock" (herein referred to as
"Series A-1 Preferred Stock), each of the par value of $.001 per share, and
having the voting powers, preferences and relative, participating, optional and
other rights, and the qualifications, limitations or restrictions set forth
below:

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            6.1.1 DEFINITIONS. For purposes of Section 6.1 hereof, the following
terms shall have the following definitions or shall be subject to the following
rules of construction:

                  a. "Board of Directors" means the Board of Directors of the
Corporation.


                  b. "Common Stock" means shares of the Corporation's Common
Stock, no par value per share.

                  c. "Major Transaction" means a single transaction or a series
of transactions having the effect of (i) the sale, transfer, lease or conveyance
of all or substantially all of the properties and assets of the Corporation to
any other corporation or corporations or other person or persons (other than a
subsidiary of the Corporation), (ii) the sale, transfer or conveyance (other
than in a merger or consolidation of the Corporation) of all or substantially
all of the issued and outstanding voting securities of the Corporation to any
other corporation or corporations or other person or persons or (iii) the merger
or consolidation of the Corporation with or into any other corporation or
corporations or entity or entities in which the Corporation is not the sole
surviving corporation or continuing corporation, other than a consolidation or
merger in which the holders of shares of the Common Stock immediately preceding
such consolidation or merger receive, directly or indirectly, (A) 50% or more of
the common stock of the sole surviving or continuing corporation outstanding
immediately following the consummation of such merger or consolidation and (B)
securities representing 50% or more of the combined voting power of the voting
stock of the sole surviving or continuing corporation outstanding immediately
following the consummation of such merger or consolidation.

                  d. "Mandatory Redemption Date" means the later of (i) the
redemption or conversion of all of the shares of Senior Preferred Stock or (ii)
December 31, 2003.

                  e. The term "outstanding", when used with reference to shares
of capital stock, shall mean issued shares, excluding shares held by the
Corporation or a subsidiary of the Corporation.

                  f. "Preferred Stock" means shares of any series of the
Corporation's Preferred Stock, $.001 par value per share.

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                  g. "Qualified Public Offering" means the underwritten public
offering of Common Stock by the Corporation for cash for its own account
pursuant to a registration statement filed under the Securities Act (other than
any registration statement relating to warrants, options or shares of capital
stock of the Corporation granted or to be granted or sold primarily to
employees, directors, or officers of the Corporation, a registration statement
filed pursuant to Rule 145 under the Securities Act or any successor rule, a
registration statement relating to employee benefit plans or interests therein
or any registration statement covering securities issued in connection with any
debt financing of the Corporation), in which the net offering proceeds to be
received by the Corporation are at least $15,000,000.

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

                  i. "Senior Loan Agreement" means (i) any loan, credit or other
similar agreement, together with all notes, debentures, security agreements and
other loan documents executed and delivered in connection therewith, evidencing
any indebtedness of the Corporation or any successor entity for money
heretofore, now or hereafter borrowed by the Corporation or any successor entity
(or by any subsidiary of the Corporation or any successor entity and guaranteed
by the Corporation or any successor entity) from one or more banks, financial
institutions or other institutional lenders and (ii) upon consummation of the
merger contemplated under that certain Plan and Agreement of Merger dated
November 13, 1996 ("Merger Agreement"), between the Corporation and BSI
Holdings, Inc. ("BSI"), (A) any item set forth in clause (i) above with respect
to BSI or any successor entity (or by any subsidiary of BSI or any successor
entity and guaranteed by BSI) including, without limitation, (x) the Second
Amended and Restated Loan and Security Agreement dated as of August 9, 1996,
among Brazos Sportswear, Inc., a Texas corporation and subsidiary of BSI
("Brazos") and Fleet Capital Corporation, as agent for itself and The First
National Bank of Boston, as such Agreement may thereafter from time to time be
amended, supplemented or restated and (y) those certain Debentures of Brazos
dated August 9, 1996, payable to Allied Investment Corporation and Allied
Investment Corporation II, in the original maximum principal amount of
$3,500,000, (B) the Company's Junior Subordinated Debenture dated as of August
2, 1996, payable to the order of Plymouth Mills, Inc., in the original principal
balance of $4,000,000 and (C) the Company's Junior Subordinated Debenture dated
as of September 30, 1996, payable to the order of Plymouth Mills, Inc., with
respect to 50% of the Earnout Amount determined pursuant to Section 1.2(d) of
that certain Asset Purchase Agreement, dated August 2, 1996, between, among
others, Brazos and Plymouth Mills, Inc.

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                  j. "Senior Preferred Stock" means, collectively, the Series
B-1 Preferred Stock, the Series B-2 Preferred Stock and the Series B-3 Preferred
Stock.

                  k. "Series A-1 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series A-1 Preferred Stock, $.001 par
value per share.

                  l. "Series A-2 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series A-2 Preferred Stock, $.001 par
value per share.

                  m. "Series B-1 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-1 Preferred Stock, $.001 par
value per share.

                  n. "Series B-2 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-2 Preferred Stock, $.001 par
value per share.

                  o. "Series B-3 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-3 Preferred Stock, $.001 par
value per share.

            6.1.2 DIVIDENDS. The holders of shares of Series A-1 Preferred Stock
shall be entitled to receive dividends on account of such shares only when and
as declared by the Board of Directors out of funds legally available therefor.
The declaration or payment of dividends in respect of any other class or series
of the Corporation's stock by authority of the Board of Directors shall not
confer upon the holders of the Series A-1 Preferred Stock any right or
preference to receive any dividend in respect of such shares. If the Corporation
declares or pays any dividend in respect of any shares of its Series A-2
Preferred Stock, the Corporation shall simultaneously therewith declare or pay a
dividend in respect of the Series A-1 Preferred Stock in the same form and the
same amount per share as declared or paid in respect of the Series A-2 Preferred
Stock.

            6.1.3 REDEMPTION.

                  a. MANDATORY REDEMPTION. On the earliest to occur of (i)
consummation of (x) a Major Transaction or (y) a Qualified Public Offering or
(ii) the 

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Mandatory Redemption Date, the Corporation shall redeem, out of funds legally
available therefor, all of the shares of Series A-1 Preferred Stock then
outstanding, at a redemption price of $1.00 per share.


                  b. OPTIONAL REDEMPTION. At any time while any shares of Series
A-1 Preferred Stock are outstanding, and provided that no shares of Series A-2
Preferred Stock or Senior Preferred Stock are then outstanding, the Corporation,
at the option of the Board of Directors, may redeem from the holders of Series
A-1 Preferred Stock, out of funds legally available therefor, at a redemption
price of $1.00 per share, all or any portion of the shares of Series A-1
Preferred Stock outstanding on such date. Written notice of such redemption of
the shares of Series A-1 Preferred Stock to be so redeemed shall be mailed,
postage prepaid, to the holders of record of the shares to be so redeemed at
their respective addresses then appearing on the stock books of the Corporation,
not less than ten nor more than 60 days prior to the date designated for such
redemption. In case less than all of the outstanding shares of Series A-1
Preferred Stock are to be redeemed under this Section 6.1.3(b), the
Corporation's notice shall state and such redemption shall be made on a pro rata
basis in accordance with each holder's respective holdings of Series A-1
Preferred Stock. Notwithstanding any provision contained in this Section
6.1.3(b) to the contrary, in no event shall the Corporation redeem any shares of
Series A-1 Preferred Stock under this Section 6.1.3(b), nor shall any holders of
such shares accept payment upon such redemption, if at the time of such
redemption there exists a default or event of default within the meaning of any
Senior Loan Agreement or such redemption would cause a default or event of
default under any Senior Loan Agreement.

                  c. GENERAL. From and after the effective date of redemption
and the setting aside of the funds necessary for redemption, notwithstanding
that any certificate for shares of Series A-1 Preferred Stock so called for
redemption shall not have been surrendered for cancellation, the shares to be
redeemed shall no longer be deemed outstanding, and the holders of certificates
representing such shares shall have with respect to such shares no rights in or
with respect to the Corporation except the right to receive, upon the surrender
of such certificates, the redemption price therefor. Shares of Series A-1
Preferred Stock redeemed by the Corporation pursuant to this Section 6.1.3, or
shares of Series A-1 Preferred Stock otherwise purchased by the Corporation,
shall not be reissued and shall be canceled and retired.

            6.1.4 PREFERENCE ON LIQUIDATION, DISSOLUTION OR WINDING UP.

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                  a. DEFINITION. A consolidation or merger of the Corporation, a
sale or transfer of substantially all of its assets as an entirety, or any
purchase or redemption of capital stock of the Corporation of any class, shall
not be regarded as "liquidation, dissolution or winding up of the affairs of the
Corporation" within the meaning of this Section 6.1.4.

                  b. SERIES A-1 PREFERRED STOCK. During any proceedings for the
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation and subject to the rights of the Senior Preferred Stock, the
holders of the Series A-1 Preferred Stock shall be entitled to receive, PARI
PASSU with the holders of the Series A-2 Preferred Stock in accordance with
their respective interests (subject to offset as provided under the Purchase
Agreement as defined in Section 6.1.8), but before any distribution of the
assets of the Corporation shall be made in respect of the outstanding Common
Stock, an amount in cash for each share of Series A-1 Preferred Stock equal to
$1.00, or funds necessary for such payment shall have been set aside in trust
for the account of the holders of the outstanding Series A-1 Preferred Stock so
as to be and continue available therefor. If upon such liquidation, dissolution
or winding up, the assets distributable to the holders of the Series A-1
Preferred Stock as aforesaid shall be insufficient to permit the payment to them
of $1.00 per share and the payment to the holders of the Series A-2 Preferred
Stock as aforesaid, the assets of the Corporation shall be distributed to the
holders of the Series A-1 Preferred Stock and the Series A-2 Preferred Stock
ratably (subject to such offset provisions) until they shall have received the
full amount to which they would otherwise be entitled. If the assets of the
Corporation are sufficient to permit the payment of such amounts to the holders
of the Series A-1 Preferred Stock and the Series A-2 Preferred Stock as
aforesaid, the remainder of the assets of the Corporation, if any, after the
distribution as aforesaid shall be distributed and divided ratably among the
holders of the Common Stock then outstanding according to their respective
shares.

            6.1.5 NO CONVERSION.  The Series A-1 Preferred Stock shall not be
convertible into Common Stock or any other stock or other securities of the
Corporation.

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            6.1.6 VOTING RIGHTS.

                  a. The Corporation shall not, without the consent of the
holders of at least a majority of the shares of the outstanding Series A-1
Preferred Stock, adopt any amendment to this Certificate which would alter or
change the powers, preferences or special rights of the Series A-1 Preferred
Stock so as to affect them adversely, PROVIDED that no such consent shall be
required with respect to (i) any amendment to this Certificate that increases or
decreases the number of shares of Series A-1 Preferred Stock which the
Corporation is authorized to issue (provided that no such amendment shall reduce
the number of authorized shares to below the number of shares then outstanding),
or (ii) the establishment or issuance of any other series of Preferred Stock or
any other class of stock of the Corporation that has any powers, preferences or
rights that are different from, greater than, superior to or in preference of
the Series A-1 Preferred Stock.

                  b. Except as provided in paragraph (a) above or otherwise
required by law, the holders of Series A-1 Preferred Stock shall have no right
or power to vote on the election of directors or on any other question or in any
proceedings involving the Corporation.

            6.1.7 FINANCIAL STATEMENTS. For so long as any shares of Series A-1
Preferred Stock are outstanding, the Corporation shall deliver to each holder of
Series A-1 Preferred Stock, at such holder's address then appearing on the books
of the Corporation, a copy of the following financial statements of the
Corporation:

                  a. Within 45 days after the end of each fiscal quarter of the
Corporation, the unaudited interim consolidated financial statements of the
Corporation and its consolidated subsidiaries at the end of such fiscal quarter
and for the period of operations then ended; and 

                  b. Within 120 days after the end of each fiscal year of the
Corporation, the audited consolidated financial statements of the Corporation
and its consolidated subsidiaries at the end of such fiscal year and for the
period of operations then ended, together with the audit report of the
Corporation's independent certified public accountants thereon.

            6.1.8 OFFSET. All shares of Series A-1 Preferred Stock shall (unless
otherwise expressly indicated in any resolution of the Board of Directors
authorizing the issuance of any such shares, which fact shall be noted on any
certificate representing such shares) be issued pursuant to an Asset Purchase
Agreement dated effective December 1, 1995 (the "Purchase Agreement") among
Brazos 

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Embroidery, Inc., a Pennsylvania corporation, Needleworks, Inc., a Pennsylvania
corporation, and Old Mill Holdings, Inc., a Delaware corporation, reference to
which is made herein for all pertinent purposes. The redemption price per share
determined pursuant to Section 6.1.3 of this Certificate, and the amount per
share to which each holder of the Series A-1 Preferred Stock is entitled to
receive upon any liquidation, dissolution or winding up of the affairs of the
Corporation pursuant to Section 6.1.4 of this Certificate, are subject to a
right of offset in favor of the Corporation to the extent and in the manner set
forth in Section 10.4 of the Purchase Agreement.

            6.1.9 EXCLUSION OF OTHER RIGHTS. Unless otherwise required by law,
the shares of Series A-1 Preferred Stock shall not have any voting powers,
preferences or relative, participating, optional or other special rights other
than those specifically set forth herein.

      6.2 DESIGNATION. Three Hundred Thousand (300,000) shares of Preferred
Stock shall be designated "Series A-2 Preferred Stock" (herein referred to as
"Series A-2 Preferred Stock"), each of the par value of $.001 per share, and
having the voting powers, preferences and relative, participating, optional and
other rights, and the qualifications, limitations or restrictions set forth
below:

            6.2.1 DEFINITIONS. For purposes of Section 6.2 hereof, the following
terms shall have the following definitions or shall be subject to the following
rules of construction:

                  (a) "Board of Directors" means the Board of Directors of the
Corporation.

                  b. "Common Stock" means shares of the Corporation's Common
Stock, no par value per share.

                  c. "Major Transaction" means a single transaction or a series
of transactions having the effect of (i) the sale, transfer, lease or conveyance
of all or substantially all of the properties and assets of the Corporation to
any other corporation or corporations or other person or persons (other than a
subsidiary of the Corporation), (ii) the sale, transfer or conveyance (other
than in a merger or consolidation of the Corporation) of all or substantially
all of the issued and outstanding voting securities of the Corporation to any
other corporation or corporations or other person or persons or (iii) the merger
or consolidation of the Corporation with or into any other corporation or
corporations or entity or entities in which the Corporation is not the sole
surviving corporation or continuing 

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corporation, other than a consolidation or merger in which the holders of shares
of the Common Stock immediately preceding such consolidation or merger receive,
directly or indirectly, (A) 50% or more of the common stock of the sole
surviving or continuing corporation outstanding immediately following the
consummation of such merger or consolidation and (B) securities representing 50%
or more of the combined voting power of the voting stock of the sole surviving
or continuing corporation outstanding immediately following the consummation of
such merger or consolidation.

                  d. "Mandatory Redemption Date" means the later of (i) the
redemption or conversion of all of the shares of Senior Preferred Stock or (ii)
December 31, 2003.

                  e. The term "outstanding", when used with reference to shares
of capital stock, shall mean issued shares, excluding shares held by the
Corporation or a subsidiary of the Corporation.

                  f. "Preferred Stock" means shares of any series of the
Corporation's Preferred Stock, $.001 par value per share.

                  g. "Qualified Public Offering" means the underwritten public
offering of Common Stock by the Corporation for cash for its own account
pursuant to a registration statement filed under the Securities Act (other than
any registration statement relating to warrants, options or shares of capital
stock of the Corporation granted or to be granted or sold primarily to
employees, directors, or officers of the Corporation, a registration statement
filed pursuant to Rule 145 under the Securities Act or any successor rule, a
registration statement relating to employee benefit plans or interests therein
or any registration statement covering securities issued in connection with any
debt financing of the Corporation), in which the net offering proceeds to be
received by the Corporation are at least $15,000,000.

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

                  i. "Senior Preferred Stock" means, collectively, the Series
B-1 Preferred Stock, the Series B-2 Preferred Stock and the Series B-3 Preferred
Stock.

                  j. "Senior Loan Agreement" means (i) any loan, credit or other
similar agreement, together with all notes, debentures, security agreements 

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and other loan documents executed and delivered in connection therewith,
evidencing any indebtedness of the Corporation or any successor entity for money
heretofore, now or hereafter borrowed by the Corporation or any successor entity
(or by any subsidiary of the Corporation or any successor entity and guaranteed
by the Corporation or any successor entity) from one or more banks, financial
institutions or other institutional lenders and (ii) upon consummation of the
merger contemplated under that certain Plan and Agreement of Merger dated
November 13, 1996 ("Merger Agreement"), between the Corporation and BSI
Holdings, Inc. ("BSI"), (A) any item set forth in clause (i) above with respect
to BSI or any successor entity (or by any subsidiary of BSI or any successor
entity and guaranteed by BSI) including, without limitation, (x) the Second
Amended and Restated Loan and Security Agreement dated as of August 9, 1996,
among Brazos Sportswear, Inc., a Texas corporation and subsidiary of BSI
("Brazos") and Fleet Capital Corporation, as agent for itself and The First
National Bank of Boston, as such Agreement may thereafter from time to time be
amended, supplemented or restated and (y) those certain Debentures of Brazos
dated August 9, 1996, payable to Allied Investment Corporation and Allied
Investment Corporation II, in the original maximum principal amount of
$3,500,000, (B) the Company's Junior Subordinated Debenture dated as of August
2, 1996, payable to the order of Plymouth Mills, Inc., in the original principal
balance of $4,000,000 and (C) the Company's Junior Subordinated Debenture dated
as of September 30, 1996, payable to the order of Plymouth Mills, Inc., with
respect to 50% of the Earnout Amount determined pursuant to Section 1.2(d) of
that certain Asset Purchase Agreement, dated August 2, 1996, between, among
others, Brazos and Plymouth Mills, Inc.

                  k. "Series A-1 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series A-1 Preferred Stock, $.001 par
value per share.

                  l. "Series A-2 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series A-2 Preferred Stock, $.001 par
value per share.

                  m. "Series B-1 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-1 Preferred Stock, $.001 par
value per share.

                  n. "Series B-2 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-2 Preferred Stock, $.001 par
value per share.

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                  o. "Series B-3 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-3 Preferred Stock, $.001 par
value per share.

            6.2.2 DIVIDENDS. The holders of shares of Series A-2 Preferred Stock
shall be entitled to receive dividends on account of such shares only when and
as declared by the Board of Directors out of funds legally available therefor.
The declaration or payment of dividends in respect of any other class or series
of the Corporation's stock by authority of the Board of Directors shall not
confer upon the holders of the Series A-2 Preferred Stock any right or
preference to receive any dividend in respect of such shares. If the Corporation
declares or pays any dividend in respect of any shares of its Series A-1
Preferred Stock, the Corporation shall simultaneously therewith declare or pay a
dividend in respect of the Series A-2 Preferred Stock in the same form and the
same amount per share as declared or paid in respect of the Series A-1 Preferred
Stock.

            6.2.3 REDEMPTION.

                  a. MANDATORY REDEMPTION. On the earliest to occur of (i)
consummation of a (x) Major Transaction or (y) a Qualified Public Offering or
(ii) the Mandatory Redemption Date, the Corporation shall redeem, out of funds
legally available therefor, all of the shares of Series A-2 Preferred Stock then
outstanding, at a redemption price of $1.00 per share.

                  b. OPTIONAL REDEMPTION. At any time while any shares of Series
A-2 Preferred Stock are outstanding, and provided that no shares of Senior
Preferred Stock are then outstanding, the Corporation, at the option of the
Board of Directors, may redeem from the holders of Series A-2 Preferred Stock,
out of funds legally available therefor, at a redemption price of $1.00 per
share, all or any portion of the shares of Series A-2 Preferred Stock
outstanding on such date. Written notice of such redemption of the shares of
Series A-2 Preferred Stock to be so redeemed shall be mailed, postage prepaid,
to the holders of record of the shares to be so redeemed at their respective
addresses then appearing on the stock books of the Corporation, not less than
ten nor more than 60 days prior to the date designated for such redemption. In
case less than all of the outstanding shares of Series A-2 Preferred Stock are
to be redeemed under this Section 6.2.3(b), the Corporation's notice shall state
and such redemption shall be made on a pro rata basis in accordance with each
holder's respective holdings of Series A-2 Preferred Stock. Notwithstanding any
provision contained in this Section 6.2.3(b) to the contrary, in no event shall
the Corporation redeem any shares of Series A-2 Preferred Stock under this
Section 6.2.3(b), nor shall any holders of such shares 

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accept payment upon such redemption, if at the time of such redemption there
exists a default or event of default within the meaning of any Senior Loan
Agreement or such redemption would cause a default or event of default under any
Senior Loan Agreement.

                  c. GENERAL. From and after the effective date of redemption
and the setting aside of the funds necessary for redemption, notwithstanding
that any certificate for shares of Series A-2 Preferred Stock so called for
redemption shall not have been surrendered for cancellation, the shares to be
redeemed shall no longer be deemed outstanding, and the holders of certificates
representing such shares shall have with respect to such shares no rights in or
with respect to the Corporation except the right to receive, upon the surrender
of such certificates, the redemption price therefor. Shares of Series A-2
Preferred Stock redeemed by the Corporation pursuant to this Section 6.2.3, or
shares of Series A-2 Preferred Stock otherwise purchased by the Corporation,
shall not be reissued and shall be canceled and retired.

            6.2.4 PREFERENCE ON LIQUIDATION, DISSOLUTION OR WINDING UP.

                  a. DEFINITION. A consolidation or merger of the Corporation, a
sale or transfer of substantially all of its assets as an entirety, or any
purchase or redemption of capital stock of the Corporation of any class, shall
not be regarded as "liquidation, dissolution or winding up of the affairs of the
Corporation" within the meaning of this Section 6.2.4.

                  b. SERIES A-2 PREFERRED STOCK. During any proceedings for the
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation and subject to the rights of the Senior Preferred Stock, the
holders of the Series A-2 Preferred Stock shall be entitled to receive, PARI
PASSU with the holders of the Series A-1 Preferred Stock in accordance with
their respective interests (subject to offset as provided under the Purchase
Agreement as defined in Section 6.2.8), but before any distribution of the
assets of the Corporation shall be made in respect of the outstanding Common
Stock, an amount in cash for each share of Series A-2 Preferred Stock equal to
$1.00, or funds necessary for such payment shall have been set aside in trust
for the account of the holders of the outstanding Series A-2 Preferred Stock so
as to be and continue available therefor. If upon such liquidation, dissolution
or winding up, the assets distributable to the holders of the Series A-2
Preferred Stock as aforesaid shall be insufficient to permit the payment to them
of $1.00 per share and the payment to the holders of the Series A-1 Preferred
Stock as aforesaid, the assets of the Corporation shall be distributed to the
holders of the Series A-2 Preferred Stock and the Series A-1 Preferred Stock
ratably (subject to such offset provisions) until they shall have received the
full amount to which they would otherwise be entitled. If the assets of the
Corporation are sufficient to permit the payment of such amounts to the holders
of the Series A-2 Preferred Stock and the Series A-1 

                                       14
<PAGE>
Preferred Stock as aforesaid, the remainder of the assets of the Corporation, if
any, after the distribution as aforesaid shall be distributed and divided
ratably among the holders of the Common Stock then outstanding according to
their respective shares.

            6.2.5 NO CONVERSION.  The Series A-2 Preferred Stock shall not be
convertible into Common Stock or any other stock or other securities of the
Corporation.

            6.2.6 VOTING RIGHTS.

                  a. The Corporation shall not, without the consent of the
holders of at least a majority of the shares of the outstanding Series A-2
Preferred Stock, adopt any amendment to this Certificate which would alter or
change the powers, preferences or special rights of the Series A-2 Preferred
Stock so as to affect them adversely, PROVIDED that no such consent shall be
required with respect to (i) any amendment to this Certificate that increases or
decreases the number of shares of Series A-2 Preferred Stock which the
Corporation is authorized to issue (provided that no such amendment shall reduce
the number of authorized shares to below the number of shares then outstanding),
or (ii) the establishment or issuance of any other series of Preferred Stock or
any other class of stock of the Corporation that has any powers, preferences or
rights that are different from, greater than, superior to or in preference of
the Series A-2 Preferred Stock.

                  b. Except as provided in paragraph (a) above or otherwise
required by law, the holders of Series A-2 Preferred Stock shall have no right
or power to vote on the election of directors or on any other question or in any
proceedings involving the Corporation.

            6.2.7 FINANCIAL STATEMENTS. For so long as any shares of Series A-2
Preferred Stock are outstanding, the Corporation shall deliver to each holder of
Series A-2 Preferred Stock, at such holder's address then appearing on the books
of the Corporation, a copy of the following financial statements of the
Corporation:

                  a. Within 45 days after the end of each fiscal quarter of the
Corporation, the unaudited interim consolidated financial statements of the
Corporation and its consolidated subsidiaries at the end of such fiscal quarter
and for the period of operations then ended; and

                                       15
<PAGE>
                  b. Within 120 days after the end of each fiscal year of the
Corporation, the audited consolidated financial statements of the Corporation
and its consolidated subsidiaries at the end of such fiscal year and for the
period of operations then ended, together with the audit report of the
Corporation's independent certified public accountants thereon.

            6.2.8 OFFSET. All shares of Series A-2 Preferred Stock shall (unless
otherwise expressly indicated in any resolution of the Board of Directors
authorizing the issuance of any such shares, which fact shall be noted on any
certificate representing such shares) be issued pursuant to an Asset Purchase
Agreement dated effective December 1, 1995 (the "Purchase Agreement") among
Brazos Embroidery, Inc., a Pennsylvania corporation, Needleworks, Inc., a
Pennsylvania corporation, and Old Mill Holdings, Inc., a Delaware corporation,
reference to which is made herein for all pertinent purposes. The redemption
price per share determined pursuant to Section 6.2.3 of this Certificate, and
the amount per share to which each holder of the Series A-2 Preferred Stock is
entitled to receive upon any liquidation, dissolution or winding up of the
affairs of the Corporation pursuant to Section 6.2.4 of this Certificate, are
subject to a right of offset in favor of the Corporation to the extent and in
the manner set forth in Section 10.4 of the Purchase Agreement.

            6.2.9 EXCLUSION OF OTHER RIGHTS. Unless otherwise required by law,
the shares of Series A-2 Preferred Stock shall not have any voting powers,
preferences or relative, participating, optional or other special rights other
than those specifically set forth herein.

      6.3 DESIGNATION. Eight Million (8,000,000) shares of Preferred Stock shall
be designated "Series B-1 Preferred Stock" (herein after referred to as "Series
B-1 Preferred Stock"), each of the par value of $.001 per share, and having the
voting powers, preferences and relative, participating, optional and other
rights, and the qualifications, limitations or restrictions set forth below:

            6.3.1 DEFINITIONS. For purposes of Section 6.3 hereof, the following
terms shall have the following definitions or shall be subject to the following
rules of construction:

                  a. "Board of Directors" means the Board of Directors of the
Corporation.

                                       16
<PAGE>
                  b. "Brazos" means Brazos Sportswear, Inc., a Texas corporation
and subsidiary of the Corporation.

                  c. "Common Stock" means shares of the Corporation's Common
Stock, no par value per share.

                  d. "Junior Stock" means, collectively, the Common Stock, the
Series A-1 Preferred Stock and the Series A-2 Preferred Stock.

                  e. "Mandatory Redemption Date" means the earlier to occur of
(i) the date of consummation of a Qualified Public Offering, but only to the
extent the offering price per share of Common Stock is less than $17.50 (as
adjusted for stock splits, combinations and other similar corporate events),
(ii) the date of consummation of a Sale, or (iii) December 31, 2003.

                  f. "Market Price" of a share of Common Stock on any given date
means (i) the closing sales price of a share of Common Stock as reported on the
principal securities exchange on which shares of Common Stock are then listed or
admitted to trading or (ii) if not so reported, the average of the closing bid
and asked prices for a share of Common Stock as quoted on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or (iii)
if not quoted on NASDAQ, the average of the closing bid and asked prices for a
share of Common Stock as quoted by the National Quotation Bureau's "Pink Sheets"
or the National Association of Securities Dealers OTC Bulletin Board System. If
the price of a share of Common Stock shall not be so reported, the Market Price
of a share of Common Stock shall be determined by the Board in its absolute
discretion.

                  g. The term "outstanding," when used with reference to shares
of capital stock, shall mean issued shares, excluding shares held by the
Corporation or a subsidiary of the Corporation.

                  h. "Preferred Stock" means shares of any series of the
Corporation's Preferred Stock, $.001 par value per share.

                  i. "Qualified Public Offering" means the underwritten public
offering of Common Stock by the Corporation for cash for its own account
pursuant to a registration statement filed under the Securities Act (other than
any registration statement relating to warrants, options or shares of capital
stock of the Corporation granted or to be granted or sold primarily to
employees, directors, or officers of the Corporation, a registration statement
filed pursuant to Rule 145 under the Securities Act or any successor rule, a
registration statement relating to 

                                       17
<PAGE>
employee benefit plans or interests therein or any registration statement
covering securities issued in connection with any debt financing of the
Corporation), in which the net offering proceeds to be received by the
Corporation are at least $15,000,000.

                  j. "Quarterly Dividend Date" means the last day of each March,
June, September and December in each year in which any shares of Series B-1
Preferred Stock are outstanding.

                  k. "Sale" means a single transaction or a series of related
transactions having the effect of (i) the sale, transfer, lease or conveyance of
all or substantially all of the properties and assets of the Corporation to any
other corporation or corporations or other person or persons (other than a
subsidiary of the Corporation), (ii) the sale, transfer or conveyance (other
than in a merger or consolidation of the Corporation) of all or substantially
all of the issued and outstanding voting securities of the Corporation to any
other corporation or corporations or other person or persons or (iii) the merger
or consolidation of the Corporation with or into any other corporation or
corporations or entity or entities in which the Corporation is not the sole
surviving corporation or continuing corporation, other than a consolidation or
merger in which the holders of shares of the Common Stock immediately preceding
such consolidation or merger receive, directly or indirectly, (A) 50% or more of
the common stock of the sole surviving or continuing corporation outstanding
immediately following the consummation of such merger or consolidation and (B)
securities representing 50% or more of the combined voting power of the voting
stock of the sole surviving or continuing corporation outstanding immediately
following the consummation of such merger or consolidation.

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

                  m. "Senior Loan Agreement" means (i) any loan, credit or other
similar agreement, together with all notes, debentures, security agreements and
other loan documents executed and delivered in connection therewith, evidencing
any indebtedness of the Corporation or any successor entity for money
heretofore, now or hereafter borrowed by the Corporation or any successor entity
(or by any subsidiary of the Corporation or any successor entity and guaranteed
by the Corporation or any successor entity) from one or more banks, financial
institutions or other institutional lenders and (ii) upon consummation of the
merger contemplated under that certain Plan and Agreement of Merger dated
November 13, 1996 ("Merger Agreement"), between the Corporation and BSI
Holdings, Inc. 

                                       18
<PAGE>
("BSI"), (A) any item set forth in clause (i) above with respect to BSI or any
successor entity (or by any subsidiary of BSI or any successor entity and
guaranteed by BSI) including, without limitation, (x) the Second Amended and
Restated Loan and Security Agreement dated as of August 9, 1996, among Brazos
Sportswear, Inc., a Texas corporation and subsidiary of BSI ("Brazos") and Fleet
Capital Corporation, as agent for itself and The First National Bank of Boston,
as such Agreement may thereafter from time to time be amended, supplemented or
restated and (y) those certain Debentures of Brazos dated August 9, 1996,
payable to Allied Investment Corporation and Allied Investment Corporation II,
in the original maximum principal amount of $3,500,000, (B) the Company's Junior
Subordinated Debenture dated as of August 2, 1996, payable to the order of
Plymouth Mills, Inc., in the original principal balance of $4,000,000 and (C)
the Company's Junior Subordinated Debenture dated as of September 30, 1996,
payable to the order of Plymouth Mills, Inc., with respect to 50% of the Earnout
Amount determined pursuant to Section 1.2(d) of that certain Asset Purchase
Agreement, dated August 2, 1996, between, among others, Brazos and Plymouth
Mills, Inc.

                  n. "Senior Preferred Stock" means, collectively, the Series
B-2 Preferred Stock and the Series B-3 Preferred Stock.

                  o. "Series A-1 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series A-1 Preferred Stock, $.001 par
value per share.

                  p. "Series A-2 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series A-2 Preferred Stock, $.001 par
value per share.

                  q. "Series B-1 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-1 Preferred Stock, $.001 par
value per share.

                  r. "Series B-2 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-2 Preferred Stock, $.001 par
value per share.

                  s. "Series B-3 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-3 Preferred Stock, $.001 par
value per share.

                                       19
<PAGE>
                  t. All accounting terms used herein and not expressly defined
herein shall have the meanings given to them in accordance with generally
accepted accounting principles consistently applied and in effect as of the date
of the relevant calculation.

            6.3.2 DIVIDENDS. The holders of Series B-1 Preferred Stock, in
preference to the holders of Junior Stock, shall be entitled to receive, but
only to the extent of funds legally available therefor, cumulative, preferential
dividends at the annual rate of $.08 per share, payable as hereafter described.
Such dividends shall commence to accrue on the shares of Series B-1 Preferred
Stock and be cumulative from and after the date of issuance of such shares of
Series B-1 Preferred Stock and shall be deemed to accumulate and accrue from day
to day thereafter. Dividends under this Section 6.3.2 shall be payable quarterly
in arrears so long as the Series B-1 Preferred Stock is outstanding, on or
before each Quarterly Dividend Date. Other than dividends payable incident to a
redemption of the Series B-1 Preferred Stock under Section 6.3.3 below or a
conversion of the Series B-1 Preferred Stock under Section 6.3.5 below or in
respect of fractional shares as described below, all dividends on the Series B-1
Preferred Stock hereunder shall be payable not in cash, but rather by the
Corporation's issuance and delivery to each record holder of Series B-1
Preferred Stock of a number of additional shares of Series B-1 Preferred Stock
determined by dividing the amount of each such dividend by $1.00. Within 30 days
after each Quarterly Dividend Date, the Corporation shall issue and deliver to
each record holder of Series B-1 Preferred Stock on such Quarterly Dividend Date
one or more certificates evidencing the number of whole shares of Series B-1
Preferred Stock payable as a dividend to such holder as provided above, and such
shares, when so issued and delivered, shall be deemed fully paid and
nonassessable shares of the Corporation's Series B-1 Preferred Stock. No
fractional shares of Series B-1 Preferred Stock or scrip will be issued in
respect of fractional interests resulting from any dividend hereunder; in lieu
of any fractional shares of Series B-1 Preferred Stock which may be issued as
aforesaid, the holders thereof instead shall receive a cash payment in an amount
equal to the product of such fraction multiplied by $1.00. So long as any of the
Series B-1 Preferred Stock remains outstanding, no dividends or distributions
(other than dividends or distributions on Common Stock payable in Common Stock)
shall be paid upon, or declared or set apart for, any Junior Stock, nor shall
any Junior Stock (other than Common Stock acquired in exchange for, or out of
the cash proceeds of, the issue of other Common Stock or out of cash
contributions to the capital of the Corporation) be purchased, redeemed, retired
or otherwise acquired by the Corporation, unless and until in either case all
cumulative dividends on the then outstanding shares of Series B-1 Preferred
Stock shall have been or concurrently shall be paid.

                                       20
<PAGE>
            6.3.3 REDEMPTION.

                  a. MANDATORY REDEMPTION. Subject to the provisions of Section
6.3.3(d), on the Mandatory Redemption Date, the Corporation shall redeem, out of
funds legally available therefor, all of the shares of Series B-1 Preferred
Stock then outstanding, at a redemption price of $1.00 per share (plus all
accrued and unpaid dividends thereon through such date as provided in Section
6.3.3(c) below).

                  b. OPTIONAL REDEMPTION.


                        i. Subject to the provisions of Section 6.3.3(d) and
provided no shares of Senior Preferred Stock are then outstanding, at any time
while any shares of Series B-1 Preferred Stock are outstanding, the Corporation,
at the option of the Board of Directors, may redeem from the holders of the
Series B-1 Preferred Stock, at a redemption price of $1.00 per share (plus all
accrued and unpaid dividends thereon through the date designated for redemption
as provided in Section 6.3.3(c) below), all or any portion of Series B-1
Preferred Stock outstanding on the date designated for such redemption. In case
less than all of the outstanding shares of Series B-1 Preferred Stock are to be
redeemed under this Section 6.3.3(b)(i), such redemption shall be made on a pro
rata basis in accordance with each holder's respective holdings of such shares
as of the date designated for redemption.

                        ii. In addition to the optional redemption pursuant to
Section 6.3.3(b)(i) and subject to the provisions of Section 6.3.3(d), at any
time while any shares of Series B-1 Preferred Stock are outstanding, the
Corporation, at the option of the Board of Directors, may redeem from the
holders of Series B-1 Preferred Stock, out of funds legally available therefor,
at a redemption price of $.001 per share (plus all accrued and unpaid dividends
thereon through the date designated for redemption as provided in Section
6.3.3(c) below), all but not less than all, of the shares of Series B-1
Preferred Stock outstanding on the date set for redemption, provided that the
right of the Corporation to redeem the shares of Series B-1 Preferred Stock
under this Section 6.3.3(b)(ii) is subject to the Company mailing the redemption
notice in accordance with Section 6.3.3(d) within 30 days following any period
of 20 consecutive trading days during which the Market Price per share of the
Common Stock is at or above $17.50 per share (as adjusted for stock splits,
combinations and other similar corporate events).

                        iii. Notwithstanding any provision contained in this
Section 6.3.3(b) to the contrary, in no event shall the Corporation redeem any

                                       21
<PAGE>
shares of Series B-1 Preferred Stock under this Section 6.3.3(b), nor shall any
holders of such shares accept payment upon such redemption, if at the time of
such redemption there exists a default or event of default within the meaning of
any Senior Loan Agreement or such redemption would cause a default or event of
default under any Senior Loan Agreement.

                  c. ACCRUED DIVIDENDS. Upon any mandatory or optional
redemption under paragraph (a) or (b) above, the Corporation shall,
simultaneously with the making of any such redemption, pay to the holders of the
Series B-1 Preferred Stock being redeemed all dividends accrued and unpaid on
the shares being redeemed through the date of redemption; provided, however,
that in case of the payment of dividends under this paragraph (c), such
dividends shall be paid in cash, and not in shares of Series B-1 Preferred Stock
as provided in Section 6.3.2 above.

                  d. GENERAL.

                        i. The Corporation shall provide written notice of any
mandatory or optional redemption under this Section 6.3.3, not less than 30 days
prior to the date fixed or designated for such redemption, to the holders of
record as of the relevant record date of the shares of Series B-1 Preferred
Stock to be so redeemed at their respective addresses then appearing on the
stock books of the Corporation. Each redemption notice to be provided under this
Section 6.3.3 shall be by certified mail, return receipt requested and shall
specify (i) the redemption date, (ii) the redemption price per share and (iii)
the place for payment and for delivering necessary transfer instruments to be
executed by the holder in order for the holder to receive the redemption price.
No holder of shares of Series B-1 Preferred Stock redeemed in accordance with
this Section 6.3.3 shall be entitled to receive payment of the redemption price
for such shares until such holder causes to be delivered in accordance with the
redemption notice the stock certificate representing the shares so redeemed and
transfer instructions satisfactory to the Company.

                        ii. From and after the effective date of redemption and
the setting aside of the funds necessary for redemption, notwithstanding that
any certificate for shares of Series B-1 Preferred Stock so called for
redemption shall not have been surrendered for cancellation, the shares to be
redeemed shall no longer be deemed outstanding, and the holders of certificates
representing such shares shall have with respect to such shares no rights in or
with respect to the Corporation except the right to receive, upon the surrender
of such certificates, the redemption price therefor. Shares of Series B-1
Preferred Stock redeemed by the 

                                       22
<PAGE>
Corporation pursuant to this Section 6.3.3 shall not be reissued and shall be
canceled and retired.

            6.3.4 PREFERENCE ON LIQUIDATION, DISSOLUTION OR WINDING UP.

                  a. DEFINITION. A consolidation or merger of the Corporation, a
sale or transfer of substantially all of its assets as an entirety, or any
purchase or redemption of capital stock of the Corporation of any class, shall
not be regarded as "liquidation, dissolution or winding up of the affairs of the
Corporation" within the meaning of this Section 6.3.4.

                  b. SERIES B-1 PREFERRED STOCK. During any proceedings for the
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation and subject to the rights of the Senior Preferred Stock, the
holders of the Series B-1 Preferred Stock shall be entitled to receive $1.00 in
cash for each share of Series B-1 Preferred Stock (together with all accrued and
unpaid dividends on each share of Series B-1 Preferred Stock), before any
distribution of the assets of the Corporation shall be made in respect of the
outstanding Junior Stock, or funds necessary for such payment shall have been
set aside in trust for the account of the holders of the outstanding Series B-1
Preferred Stock so as to be and continue available therefor. If upon such
liquidation, dissolution or winding up, the assets distributable to the holders
of the Series B-1 Preferred Stock as aforesaid shall be insufficient to permit
the payment to them of such $1.00 per share (plus such accrued and unpaid
dividends), the assets of the Corporation shall be distributed to the holders of
the Series B-1 Preferred Stock ratably until they shall have received the full
amount to which they would otherwise be entitled. If the assets of the
Corporation are sufficient to permit the payment of such amounts to the holders
of the Series B-1 Preferred Stock, the remainder of the assets of the
Corporation, if any, after the distribution as aforesaid shall be distributed
and divided ratably among the holders of the Junior Stock then outstanding
according to their respective shares, interests and priorities.

            6.3.5 CONVERSION RIGHTS.  The Series B-1 Preferred Stock shall be
convertible as follows:

                  a. OPTIONAL CONVERSION. Subject to and upon compliance with
the provisions of this Section 6.3.5, the holder of any shares of Series B-1
Preferred Stock shall have the right at such holder's option, at any time prior
to the close of business on the date fixed for redemption, and without the
payment of any additional consideration therefor, to convert any of such shares
of Series B-1 Preferred Stock into fully paid and nonassessable shares of Common
Stock at the 

                                       23
<PAGE>
Conversion Ratio (as defined in Section 6.3.5(d) below) in effect on any
Conversion Date (as defined in Section 6.3.5(e) below) upon the terms
hereinafter set forth.

                  b. AUTOMATIC CONVERSION. Each outstanding share of Series B-1
Preferred Stock shall automatically convert, without any further act of the
Corporation or its stockholders, at the Conversion Ratio then in effect, into
fully paid and nonassessable shares of Common Stock upon the consummation of a
Qualified Public Offering, provided that the per share offering price to the
public is not less than $3.50 per share (as adjusted for stock splits,
combinations and similar corporate events).

                  c. ACCRUED DIVIDENDS. Upon any optional or automatic
conversion under paragraph (a) or (b) above, the Corporation shall
simultaneously with such conversion, pay to the holders of the Series B-1
Preferred Stock being converted all dividends accrued and unpaid on the shares
being converted through the date of conversion; provided, however, that in case
of payment of dividends under this paragraph (c), such dividends shall be paid
in cash, and not in shares of Series B-1 Preferred Stock as provided in Section
6.3.2 above.

                  d. CONVERSION RATIO. Each share of Series B-1 Preferred Stock
shall be convertible pursuant to Sections 6.3.5(a) and 6.3.5(b) into a number of
shares of Common Stock determined by dividing (x) $1.00 (the liquidation value
per share) by (y) the Conversion Factor in effect on any Conversion Date (the
"Conversion Ratio"). For the purposes of this Section 6.3.5, the term
"Conversion Factor" initially shall mean $11.00.

                  e. MECHANICS OF CONVERSION. The holder of any shares of Series
B-1 Preferred Stock may exercise the conversion right specified in Section
6.3.5(a) by surrendering to the Corporation or any transfer agent of the
Corporation the certificate or certificates for the shares to be converted,
accompanied by written notice specifying the number of shares to be converted.
Upon the occurrence of automatic conversion pursuant to Section 6.3.5(b), the
outstanding shares of Series B-1 Preferred Stock shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Corporation or its transfer agent; provided that the Corporation shall not be
obligated to issue to any holder certificates evidencing the shares of Common
Stock issuable upon such conversion unless certificates evidencing such shares
of Series B-1 Preferred Stock are delivered either to the Corporation or any
transfer agent of the Corporation. Conversion shall be deemed to have been
effected on the date when delivery of notice of an election to convert and of
certificates for shares being converted is 

                                       24
<PAGE>
made or on the date specified in Section 6.3.5(b), as the case may be, and such
date is referred to herein as the "Conversion Date." Subject to the provisions
of Section 6.3.5(g)(iii), as promptly as practicable thereafter (and after
surrender of the certificate or certificates representing shares of Series B-1
Preferred Stock to the Corporation or any transfer agent of the Corporation in
the case of conversion pursuant to Section 6.3.5(b)) the Corporation shall issue
and deliver to or upon the written order of such holder a certificate or
certificates for the number of full shares of Common Stock to which such holder
is entitled and a check or cash with respect to any fractional interest in a
share of Common Stock as provided in Section 6.3.5(f). Subject to the provisions
of Section 6.3.5(g)(iii), the person in whose name the certificate or
certificates for Common Stock are to be issued shall be deemed to have become a
holder of record of such Common Stock on the applicable Conversion Date. Upon
conversion of only a portion of the number of shares covered by a certificate
representing shares of Series B-1 Preferred Stock surrendered for conversion (in
the case of conversion pursuant to Section 6.3.5(a)), the Corporation shall
issue and deliver to or upon the written order of the holder of the certificate
so surrendered for conversion, at the expense of the Corporation, a new
certificate covering the number of shares of Series B-1 Preferred Stock
representing the unconverted portion of the certificate so surrendered.

                  f. FRACTIONAL SHARES. No fractional shares of Common Stock or
scrip shall be issued upon conversion of shares of Series B-1 Preferred Stock.
If more than one share of Series B-1 Preferred Stock is surrendered for
conversion at any one time by the same holder or is held by the same holder at
the time of any automatic conversion, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares so surrendered or held, as the case may be. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon
conversion of any shares of Series B-1 Preferred Stock, the Corporation shall
pay out of funds legally available therefor a cash adjustment in respect of such
fractional interest, rounded to the nearest one hundredth (1/100th) of a share,
in an amount equal to that fractional interest of the then Market Price, rounded
to the nearest cent ($.01), of one share of Common Stock.

                  g. CONVERSION FACTOR ADJUSTMENTS. The Conversion Factor shall
be subject to adjustment from time to time as follows:

                            i. STOCK DIVIDENDS, SUBDIVISIONS, RECLASSIFICATIONS
OR COMBINATIONS. If the Corporation shall (x) declare a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (y) subdivide or
reclassify the 

                                       25
<PAGE>
outstanding shares of Common Stock into a greater number of shares of Common
Stock or (z) combine or reclassify the outstanding shares of Common Stock into a
smaller number of shares of Common Stock, the Conversion Factor in effect at the
time of the record date for such dividend or distribution or the effective date
of such subdivision, combination or reclassification shall be adjusted to that
number determined by multiplying the Conversion Factor in effect by a fraction
(x) the numerator of which shall be the total number of issued and outstanding
shares of Common Stock immediately prior to such dividend, distribution,
subdivision, combination or reclassification and (y) the denominator of which
shall be the total number of issued and outstanding shares of Common Stock
immediately after such dividend, distribution, subdivision, combination or
reclassification. Successive adjustments in the Conversion Factor shall be made
whenever any event specified above shall occur.

                            ii. ROUNDING OF CALCULATIONS: MINIMUM ADJUSTMENT.
All calculations under this Section 6.3.5(g) shall be made to the nearest cent
($.01) or to the nearest one hundredth (1/100th) of a share, as the case may be.
Any provision of this Section 6.3.5 to the contrary notwithstanding, no
adjustment in the Conversion Factor shall be made if the amount of such
adjustment would be less than 1% of the then current Conversion Factor until the
end of one year after such adjustment otherwise would have been required; but
any such amount shall be carried forward and an adjustment with respect thereto
shall be made at the time of and together with any subsequent adjustment which,
together with such amount and any other amount or amounts so carried forward,
shall aggregate 1% of the then current Conversion Factor or more, provided that
if the events giving rise to such adjustments occur within three months of each
other, then such adjustments shall be calculated as if the events giving rise to
them had occurred simultaneously on the date of the first such event.

                            iii. TIMING OF ISSUANCE OF ADDITIONAL COMMON STOCK
UPON CERTAIN ADJUSTMENTS. In any case in which the provisions of this Section
6.3.5(g) provide that an adjustment shall become effective immediately after a
record date for an event, the Corporation may defer until the occurrence of such
event (x) issuing to the holder of any share of Series B-1 Preferred Stock
converted after such record date and before the occurrence of such event, the
additional shares of Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the shares of Common Stock
issuable upon such conversion before giving effect to such adjustment and (y)
paying to such holder any amount of cash in lieu of a fractional share of Common
Stock pursuant to Section 6.3.5(f); provided that the Corporation upon request
shall deliver to such holder a due bill or other appropriate instrument
evidencing 

                                       26
<PAGE>
such holder's right to receive such additional shares, and such cash, upon the
occurrence of the event requiring such adjustment.

                  h. COSTS. The Corporation shall pay all documentary, stamp,
transfer or other transactional taxes attributable to the issuance or delivery
of shares of Common Stock upon conversion of any shares of Series B-1 Preferred
Stock; provided that the Corporation shall not be required to pay any taxes
which may be payable in respect of any transfer involved in the issuance or
delivery of any certificate for such shares in the name other than that of the
holder of the shares of Series B-1 Preferred Stock in respect of which such
shares are being issued.

            6.3.6 VOTING RIGHTS.

                  a. The Corporation shall not, without the consent of the
holders of at least a majority of the shares of the outstanding Series B-1
Preferred Stock, adopt any amendment to this Certificate which would alter or
change the powers, preferences or special rights of the Series B-1 Preferred
Stock so as to affect them adversely, PROVIDED that except as otherwise required
by law, no such consent shall be required with respect to (i) any amendment to
this Certificate that increases or decreases the number of shares of Series B-1
Preferred Stock which the Corporation is authorized to issue (provided that no
such amendment shall reduce the number of authorized shares to below the number
of shares then outstanding), or (ii) the establishment or issuance of any other
series of Preferred Stock or any other class of stock of the Corporation that
has any powers, preferences or rights that are different from, greater than,
superior to or in preference of the Series B-1 Preferred Stock. 

                  b. Except as provided in paragraph (a) above or otherwise
required by law, the holders of Series B-1 Preferred Stock shall have no right
or power to vote on the election of directors or on any other question or in any
proceedings involving the Corporation.

            6.3.7 RIGHT OF FIRST REFUSAL. If any holder of Series B-1 Preferred
Stock desires to sell, assign, transfer or otherwise dispose of any shares of
Series B-1 Preferred Stock, then such holder (for purposes of this Section
6.3.7, the "Selling Stockholder"), prior to making any such sale, shall first
offer such shares of Series B-1 Preferred Stock (for purposes of this Section
6.3.7, the "Option Shares") for sale to the Corporation and then to the other
holders of the Series B-1 Preferred Stock on a pro rata basis as hereafter
provided, in accordance with the following provisions of this Section 6.3.7.

                                       27
<PAGE>
                  a. OPTION PRICE, TERMS; OFFERING NOTICES. The price per Option
Share at which the Selling Stockholder shall be required to offer the Option
Shares (for purposes of this Section 6.3.7, the "Option Price") and the terms of
such offer, shall be the price at which and the terms upon which any proposed
third party purchaser shall have offered to purchase the Option Shares from the
Selling Stockholder and which the Selling Stockholder is prepared to accept.
Each offer required to be made by the Selling Stockholder pursuant to this
Section 6.3.7 shall be made by a written notice (for purposes of this Section
6.3.7, the "Offering Notice") which shall state that the offer is being made
pursuant to this Section 6.3.7 and which shall set forth the number of Option
Shares, the name or names of the proposed purchaser or purchasers of the Option
Shares, the price per share offered by such proposed purchaser or purchasers for
the Option Shares, the method of payment of the purchase price and the scheduled
date of consummation of such proposed sale. A copy of the written offer from any
proposed third-party purchaser shall be attached to each Offering Notice.

                  b. OFFER TO THE CORPORATION. The Selling Stockholder shall
offer the option Shares to the Corporation by delivering an offering Notice to
the Corporation. Within 30 days following the Corporation's receipt of such
Offering Notice, the Corporation shall deliver to the Selling Stockholder a
reply notice accepting the offer of the Selling Stockholder with respect to all
(but not less than all) of the Option Shares or rejecting such offer. If by such
reply notice the Corporation accepts the offer made by the Selling Stockholder,
the reply notice shall constitute an agreement binding on the Selling
Stockholder and the Corporation to sell and purchase the option Shares at a
price per share equal to the option Price. If within such 30-day period, the
Corporation shall have failed to deliver a reply notice accepting the offer of
the Selling Stockholder as to all of the Option Shares, the Corporation shall be
deemed to have rejected such offer. If the Corporation rejects or intends to
reject such offer, it shall mail a notice to such effect to every record holder
(other than the Selling Stockholder) of the Series B-1 Preferred Stock as of the
date of the Corporation's receipt of the Offering Notice. (collectively,
"Remaining Stockholders"); which notice of the Corporation shall also include a
copy of the Offering Notice.

                  c. OFFER TO REMAINING STOCKHOLDERS. If the Corporation rejects
or is deemed to have rejected the foregoing offer under paragraph (b) above,
then the Selling Stockholder shall thereupon be deemed to have offered the
Option Shares to the Remaining Stockholders on the same price and terms set
forth in the Offering Notice. Such offer shall be made on a pro rata basis in
accordance with each Remaining Stockholder's holdings of Series B-1 Preferred
Stock on the date of 

                                       28
<PAGE>
the Offering Notice; provided, however, that prior to acceptance of such offer,
any one or more Remaining Stockholders may agree among themselves as to a
different allocation for purposes of accepting such offer. Within 30 days
following the date of the Corporation's notice referred to in paragraph (b)
above, each Remaining Stockholder desiring to accept such offer shall deliver to
the Selling Stockholder a reply notice accepting the offer of the Selling
Stockholder with respect to all (but not less than all) of such Remaining
Stockholder's pro rata portion of the Option Shares, or rejecting such offer;
provided, however, that prior to expiration of such 30-day period, the Selling
Stockholder shall have received reply notices from Remaining Stockholders as to
all (but not less than all) of all Option Shares being offered. If by such reply
notice(s) the Remaining Stockholders collectively accept the offer made by the
Selling Stockholder, such reply notice(s) shall constitute an agreement binding
on the Selling Stockholder and each such Remaining Stockholder (severally, but
not jointly) to sell and purchase the Option Shares at a price per share equal
to the Option Price. If within such 30-day period, the Remaining Stockholders
collectively shall have failed to deliver one or more reply notices accepting
the offer of the Selling Stockholder as to all of the Option Shares, the
Remaining Stockholders shall be deemed to have rejected such offer.

                  d. LAPSE OF OPTION. If the foregoing offer to sell Option
Shares has been made by the Selling Stockholder and has not been accepted by the
Corporation or the Remaining Stockholders, then the Selling Stockholder may sell
not less than all of the Option Shares at any time within, but not subsequent
to, 60 days after the lapse of the option granted pursuant to this Section
6.3.7; provided, however, that no sale of the option Shares shall be made at any
price lower than the Option Price or on terms materially different from those
specified in the Offering Notice or to any person or persons other than the
persons specified in the Offering Notice. If after the lapse of such 60-day
period the Option Shares shall not have been sold, all of the provisions of this
Section 6.3.7 shall apply to any future sale or other disposition of shares of
Series B-1 Preferred Stock owned by the Selling Stockholder.

                  e. CONSUMMATION OF PURCHASES. Each transaction of purchase and
sale of Option Shares pursuant to this Section 6.3.7 shall be completed by
delivery of the stock certificates representing the Option Shares endorsed in
blank, or accompanied by duly executed stock powers, and by actual registration
of the transfer of the Option Shares on the books of the Corporation upon
payment of the purchase price to the Selling Stockholder. Any such transaction
shall be closed at such time and place as shall be agreed upon by the parties
thereto, or, if no such agreement is reached, at the principal office of the
Corporation on the 30th day following the date of delivery of the last reply
notice 

                                       29
<PAGE>
given in connection with such transaction or, if such day shall not be a
business day, on the first business day thereafter during normal business hours.

            6.3.8 EXCLUSION OF OTHER RIGHTS. Unless otherwise required by law,
the shares of Series B-1 Preferred Stock shall not have any voting powers,
preferences or relative, participating, optional or other special rights other
than those specifically set forth herein.

      6.4 DESIGNATION. Four Million (4,000,000) shares of Preferred Stock shall
be designated "Series B-2 Preferred Stock" (herein referred to as "Series B-2
Preferred Stock"), each of the par value of $.001 per share, and having the
voting powers, preferences and relative, participating, optional and other
rights, and the qualifications, limitations or restrictions set forth below:

            6.4.1 DEFINITIONS. For purposes of Section 6.4 hereof, the following
terms shall have the following definitions or shall be subject to the following
rules of construction:


                  (a)         "Board of Directors" means the Board of
Directors of the Corporation.

                  b. "Brazos" means Brazos Sportswear, Inc., a Texas corporation
and subsidiary of the Corporation.

                  c. "Common Stock" means shares of the Corporation's Common
Stock, no par value per share.

                  d. "Junior Stock" means, collectively, the Common Stock, the
Series A-1 Preferred Stock, the Series A-2 Preferred Stock and the Series B-1
Preferred Stock.

                  e. "Mandatory Redemption Date" means the earlier to occur of
(i) the date of consummation of a Qualified Public Offering, but only to the
extent the offering price per share of Common Stock is less than $17.50 (as
adjusted for stock splits, combinations and other similar corporate events),
(ii) the date of consummation of a Sale, or (iii) December 31, 2003.

                  f. "Market Price" of a share of Common Stock on any given date
means (i) the closing sales price of a share of Common Stock as reported on the
principal securities exchange on which shares of Common Stock are then listed or
admitted to trading or (ii) if not so reported, the average of the closing bid
and asked prices for a share of Common Stock as quoted on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or (iii)
if not quoted on NASDAQ, the average of the closing bid 

                                       30
<PAGE>
and asked prices for a share of Common Stock as quoted by the National Quotation
Bureau's "Pink Sheets" or the National Association of Securities Dealers OTC
Bulletin Board System. If the price of a share of Common Stock shall not be so
reported, the Market Price of a share of Common Stock shall be determined by the
Board in its absolute discretion.

                  g. The term "outstanding," when used with reference to shares
of capital stock, shall mean issued shares, excluding shares held by the
Corporation or a subsidiary of the Corporation.

                  h. "Preferred Stock" means shares of any series of the
Corporation's Preferred Stock, $.001 par value per share.

                  i. "Qualified Public Offering" means the underwritten public
offering of Common Stock by the Corporation for cash for its own account
pursuant to a registration statement filed under the Securities Act (other than
any registration statement relating to warrants, options or shares of capital
stock of the Corporation granted or to be granted or sold primarily to
employees, directors, or officers of the Corporation, a registration statement
filed pursuant to Rule 145 under the Securities Act or any successor rule, a
registration statement relating to employee benefit plans or interests therein
or any registration statement covering securities issued in connection with any
debt financing of the Corporation), in which the net offering proceeds to be
received by the Corporation are at least $15,000,000.

                  j. "Quarterly Dividend Date" means the last day of each March,
June, September and December in each year in which any shares of Series B-2
Preferred Stock are outstanding.

                  k. "Sale" means a single transaction or a series of related
transactions having the effect of (i) the sale, transfer, lease or conveyance of
all or substantially all of the properties and assets of the Corporation to any
other corporation or corporations or other person or persons (other than a
subsidiary of the Corporation), (ii) the sale, transfer or conveyance (other
than in a merger or consolidation of the Corporation) of all or substantially
all of the issued and outstanding voting securities of the Corporation to any
other corporation or corporations or other person or persons or (iii) the merger
or consolidation of the Corporation with or into any other corporation or
corporations or entity or entities in which the Corporation is not the sole
surviving corporation or continuing 

                                       31
<PAGE>
corporation, other than a consolidation or merger in which the holders of shares
of the Common Stock immediately preceding such consolidation or merger receive,
directly or indirectly, (A) 50% or more of the common stock of the sole
surviving or continuing corporation outstanding immediately following the
consummation of such merger or consolidation and (B) securities representing 50%
or more of the combined voting power of the voting stock of the sole surviving
or continuing corporation outstanding immediately following the consummation of
such merger or consolidation.

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

                  m. "Senior Loan Agreement" means (i) any loan, credit or other
similar agreement, together with all notes, debentures, security agreements and
other loan documents executed and delivered in connection therewith, evidencing
any indebtedness of the Corporation or any successor entity for money
heretofore, now or hereafter borrowed by the Corporation or any successor entity
(or by any subsidiary of the Corporation or any successor entity and guaranteed
by the Corporation or any successor entity) from one or more banks, financial
institutions or other institutional lenders and (ii) upon consummation of the
merger contemplated under that certain Plan and Agreement of Merger dated
November 13, 1996 ("Merger Agreement"), between the Corporation and BSI
Holdings, Inc. ("BSI"), (A) any item set forth in clause (i) above with respect
to BSI or any successor entity (or by any subsidiary of BSI or any successor
entity and guaranteed by BSI) including, without limitation, (x) the Second
Amended and Restated Loan and Security Agreement dated as of August 9, 1996,
among Brazos Sportswear, Inc., a Texas corporation and subsidiary of BSI
("Brazos") and Fleet Capital Corporation, as agent for itself and The First
National Bank of Boston, as such Agreement may thereafter from time to time be
amended, supplemented or restated and (y) those certain Debentures of Brazos
dated August 9, 1996, payable to Allied Investment Corporation and Allied
Investment Corporation II, in the original maximum principal amount of
$3,500,000, (B) the Company's Junior Subordinated Debenture dated as of August
2, 1996, payable to the order of Plymouth Mills, Inc., in the original principal
balance of $4,000,000 and (C) the Company's Junior Subordinated Debenture dated
as of September 30, 1996, payable to the order of Plymouth Mills, Inc., with
respect to 50% of the Earnout Amount determined pursuant to Section 1.2(d) of
that certain Asset Purchase Agreement, dated August 2, 1996, between, among
others, Brazos and Plymouth Mills, Inc.

                                       32
<PAGE>
                  n. "Series A-1 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series A-1 Preferred Stock, $.001 par
value per share.

                  o. "Series A-2 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series A-2 Preferred Stock, $.001 par
value per share.

                  p. "Series B-1 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-1 Preferred Stock, $.001 par
value per share.

                  q. "Series B-2 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-2 Preferred Stock, $.001 par
value per share.

                  r. "Series B-3 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-3 Preferred Stock, $.001 par
value per share.

                  s. All accounting terms used herein and not expressly defined
herein shall have the meanings given to them in accordance with generally
accepted accounting principles consistently applied and in effect as of the date
of the relevant calculation.

            6.4.2 DIVIDENDS. The holders of Series B-2 Preferred Stock, in
preference to the holders of Series A-2 Preferred Stock, Series A-1 Preferred
Stock and the Common Stock, shall be entitled to receive, but only to the extent
of funds legally available therefor, cumulative, preferential dividends at the
annual rate of $.08 per share, payable as hereafter described. Such dividends
shall commence to accrue on the shares of Series B-2 Preferred Stock and be
cumulative from and after the date of issuance of such shares of Series B-2
Preferred Stock and shall be deemed to accumulate and accrue from day to day
thereafter. Dividends under this Section 6.4.2 shall be payable quarterly in
arrears so long as the Series B-2 Preferred Stock is outstanding, on or before
each Quarterly Dividend Date. Other than dividends payable incident to a
redemption of the Series B-2 Preferred Stock under Section 6.4.3 below or a
conversion of the Series B-2 Preferred Stock under Section 6.4.5 below or in
respect of fractional shares as described below, all dividends on the Series B-2
Preferred Stock hereunder shall be payable not in cash, but rather by the
Corporation's issuance and delivery to each record holder of Series B-2
Preferred Stock of a number of additional shares of Series B-2 Preferred 

                                       33
<PAGE>
Stock determined by dividing the amount of each such dividend by $1.00. Within
30 days after each Quarterly Dividend Date, the Corporation shall issue and
deliver to each record holder of Series B-2 Preferred Stock on such Quarterly
Dividend Date one or more certificates evidencing the number of whole shares of
Series B-2 Preferred Stock payable as a dividend to such holder as provided
above, and such shares, when so issued and delivered, shall be deemed fully paid
and nonassessable shares of the Corporation's Series B-2 Preferred Stock. No
fractional shares of Series B-2 Preferred Stock or scrip will be issued in
respect of fractional interests resulting from any dividend hereunder; in lieu
of any fractional shares of Series B-2 Preferred Stock which may be issued as
aforesaid, the holders thereof instead shall receive a cash payment in an amount
equal to the product of such fraction multiplied by $1.00. So long as any of the
Series B-2 Preferred Stock remains outstanding, no dividends or distributions
(other than dividends or distributions on Common Stock payable in Common Stock)
shall be paid upon, or declared or set apart for, any Series A-2 Preferred
Stock, Series A-1 Preferred Stock and Common Stock, nor shall any of such stock
(other than Common Stock acquired in exchange for, or out of the cash proceeds
of, the issue of other Common Stock or out of cash contributions to the capital
of the Corporation) be purchased, redeemed, retired or otherwise acquired by the
Corporation, unless and until in either case all cumulative dividends on the
then outstanding shares of Series B-2 Preferred Stock shall have been or
concurrently shall be paid.

            6.4.3 REDEMPTION.

                  a. MANDATORY REDEMPTION. Subject to the provisions of Section
6.4.3(d), on the Mandatory Redemption Date, the Corporation shall redeem, out of
funds legally available therefor, all of the shares of Series B-2 Preferred
Stock then outstanding, at a redemption price of $1.00 per share (plus all
accrued and unpaid dividends thereon through such date as provided in Section
6.4.3(c) below).

                  b. OPTIONAL REDEMPTION.

                        i. Subject to the provisions of Section 6.4.3(d) and
provided no shares of Series B-3 Preferred Stock are then outstanding, at any
time while any shares of Series B-2 Preferred Stock are outstanding, the
Corporation, at the option of the Board of Directors, may redeem from the
holders of the Series B-2 Preferred Stock, at a redemption price of $1.00 per
share (plus all accrued and unpaid dividends thereon through the date designated
for redemption as provided in Section 6.4.3(c) below), all or any portion of
Series B-2 Preferred Stock outstanding on the date designated for such
redemption. In case less than all of the 

                                       34
<PAGE>
outstanding shares of Series B-2 Preferred Stock are to be redeemed under this
Section 6.4.3(b)(i), such redemption shall be made on a pro rata basis in
accordance with each holder's respective holdings of such shares as of the date
designated for redemption.

                        ii. In addition to the optional redemption pursuant to
Section 6.4.3(b)(i) and subject to the provisions of Section 6.4.3(d), at any
time while any shares of Series B-2 Preferred Stock are outstanding, the
Corporation, at the option of the Board of Directors, may redeem from the
holders of Series B-2 Preferred Stock, out of funds legally available therefor,
at a redemption price of $.001 per share (plus all accrued and unpaid dividends
thereon through the date designated for redemption as provided in Section
6.4.3(c) below), all but not less than all, of the shares of Series B-2
Preferred Stock outstanding on the date set for redemption, provided that the
right of the Corporation to redeem the shares of Series B-2 Preferred Stock
under this Section 6.4.3(b)(ii) is subject to the Company mailing the redemption
notice in accordance with Section 6.4.3(d) within 30 days following any period
of 20 consecutive trading days during which the Market Price per share of the
Common Stock is at or above $17.50 per share (as adjusted for stock splits,
combinations and other similar corporate events).

                        iii. Notwithstanding any provision contained in this
Section 6.4.3(b) to the contrary, in no event shall the Corporation redeem any
shares of Series B-2 Preferred Stock under this Section 6.4.3(b), nor shall any
holders of such shares accept payment upon such redemption, if at the time of
such redemption there exists a default or event of default within the meaning of
any Senior Loan Agreement or such redemption would cause a default or event of
default under any Senior Loan Agreement.

                  c. ACCRUED DIVIDENDS. Upon any mandatory or optional
redemption under paragraph (a) or (b) above, the Corporation shall,
simultaneously with the making of any such redemption, pay to the holders of the
Series B-2 Preferred Stock being redeemed all dividends accrued and unpaid on
the shares being redeemed through the date of redemption; provided, however,
that in case of the payment of dividends under this paragraph (c), such
dividends shall be paid in cash, and not in shares of Series B-2 Preferred Stock
as provided in Section 6.4.2 above.

                                       35
<PAGE>
                  d. GENERAL.

                        i. The Corporation shall provide written notice of any
mandatory or optional redemption under this Section, not less than 30 days prior
to the date fixed or designated for such redemption, to the holders of record as
of the relevant record date of the shares of Series B-2 Preferred Stock to be so
redeemed at their respective addresses then appearing on the stock books of the
Corporation. Each redemption notice to be provided under this Section 6.4.3
shall be by certified mail, return receipt requested and shall specify (i) the
redemption date, (ii) the redemption price per share and (iii) the place for
payment and for delivering necessary transfer instruments to be executed by the
holder in order for the holder to receive the redemption price. No holder of
shares of Series B-2 Preferred Stock redeemed in accordance with this Section
6.4.3 shall be entitled to receive payment of the redemption price for such
shares until such holder causes to be delivered in accordance with the
redemption notice the stock certificate representing the shares so redeemed and
transfer instructions satisfactory to the Company.

                        ii. From and after the effective date of redemption and
the setting aside of the funds necessary for redemption, notwithstanding that
any certificate for shares of Series B-2 Preferred Stock so called for
redemption shall not have been surrendered for cancellation, the shares to be
redeemed shall no longer be deemed outstanding, and the holders of certificates
representing such shares shall have with respect to such shares no rights in or
with respect to the Corporation except the right to receive, upon the surrender
of such certificates, the redemption price therefor. Shares of Series B-2
Preferred Stock redeemed by the Corporation pursuant to this Section 6.4.3 shall
not be reissued and shall be canceled and retired.

            6.4.4 PREFERENCE ON LIQUIDATION, DISSOLUTION OR WINDING UP.

                  a. DEFINITION. A consolidation or merger of the Corporation, a
sale or transfer of substantially all of its assets as an entirety, or any
purchase or redemption of capital stock of the Corporation of any class, shall
not be regarded as "liquidation, dissolution or winding up of the affairs of the
Corporation" within the meaning of this Section 6.4.4. a.

                  b. SERIES B-2 PREFERRED STOCK. During any proceedings for the
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation and subject to the rights of the Series B-3 Preferred Stock,
the 

                                       36
<PAGE>
holders of the Series B-2 Preferred Stock shall be entitled to receive $1.00 in
cash for each share of Series B-2 Preferred Stock (together with all accrued and
unpaid dividends on each share of Series B-2 Preferred Stock), before any
distribution of the assets of the Corporation shall be made in respect of the
outstanding Junior Stock, or funds necessary for such payment shall have been
set aside in trust for the account of the holders of the outstanding Series B-2
Preferred Stock so as to be and continue available therefor. If upon such
liquidation, dissolution or winding up, the assets distributable to the holders
of the Series B-2 Preferred Stock as aforesaid shall be insufficient to permit
the payment to them of such $1.00 per share (plus such accrued and unpaid
dividends), the assets of the Corporation shall be distributed to the holders of
the Series B-2 Preferred Stock ratably until they shall have received the full
amount to which they would otherwise be entitled. If the assets of the
Corporation are sufficient to permit the payment of such amounts to the holders
of the Series B-2 Preferred Stock, the remainder of the assets of the
Corporation, if any, after the distribution as aforesaid shall be distributed
and divided ratably among the holders of the Junior Stock then outstanding
according to their respective shares, interests and priorities.

            6.4.5 CONVERSION RIGHTS.  The Series B-2 Preferred Stock shall be
convertible as follows:
                  a. OPTIONAL CONVERSION. Subject to and upon compliance with
the provisions of this Section 6.4.5, the holder of any shares of Series B-2
Preferred Stock shall have the right at such holder's option, at any time prior
to the close of business on the date fixed for redemption, and without the
payment of any additional consideration therefor, to convert any of such shares
of Series B-2 Preferred Stock into fully paid and nonassessable shares of Common
Stock at the Conversion Ratio (as defined in Section 6.4.5(d) below) in effect
on any Conversion Date (as defined in Section 6.4.5(e) below) upon the terms
hereinafter set forth.

                  b. AUTOMATIC CONVERSION. Each outstanding share of Series B-2
Preferred Stock shall automatically convert, without any further act of the
Corporation or its stockholders, at the Conversion Ratio then in effect, into
fully paid and nonassessable shares of Common Stock upon the consummation of a
Qualified Public Offering, provided that the per share offering price to the
public is not less than $3.50 per share (as adjusted for stock splits,
combinations and similar corporate events).

                  c. ACCRUED DIVIDENDS. Upon any optional or automatic
conversion under paragraph (a) or (b) above, the Corporation shall
simultaneously with such conversion, pay to the holders of the Series B-2
Preferred Stock being converted all dividends accrued and unpaid on the shares
being converted through 

                                       37
<PAGE>
the date of conversion; provided, however, that in case of payment of dividends
under this paragraph (c), such dividends shall be paid in cash, and not in
shares of Series B-2 Preferred Stock as provided in Section 6.4.2 above.

                  d. CONVERSION RATIO. Each share of Series B-2 Preferred Stock
shall be convertible pursuant to Sections 6.4.5(a) and 6.4.5(b) into a number of
shares of Common Stock determined by dividing (x) $1.00 (the liquidation value
per share) by (y) the Conversion Factor in effect on any Conversion Date (the
"Conversion Ratio"). For the purposes of this Section 6.4.5, the term
"Conversion Factor" initially shall mean $11.00.

                  e. MECHANICS OF CONVERSION. The holder of any shares of Series
B-2 Preferred Stock may exercise the conversion right specified in Section
6.4.5(a) by surrendering to the Corporation or any transfer agent of the
Corporation the certificate or certificates for the shares to be converted,
accompanied by written notice specifying the number of shares to be converted.
Upon the occurrence of automatic conversion pursuant to Section 6.4.5(b), the
outstanding shares of Series B-2 Preferred Stock shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Corporation or its transfer agent; provided that the Corporation shall not be
obligated to issue to any holder certificates evidencing the shares of Common
Stock issuable upon such conversion unless certificates evidencing such shares
of Series B-2 Preferred Stock are delivered either to the Corporation or any
transfer agent of the Corporation. Conversion shall be deemed to have been
effected on the date when delivery of notice of an election to convert and of
certificates for shares being converted is made or on the date specified in
Section 6.4.5(b), as the case may be, and such date is referred to herein as the
"Conversion Date." Subject to the provisions of Section 6.4.5(g)(iii), as
promptly as practicable thereafter (and after surrender of the certificate or
certificates representing shares of Series B-2 Preferred Stock to the
Corporation or any transfer agent of the Corporation in the case of conversion
pursuant to Section 6.4.5(b)) the Corporation shall issue and deliver to or upon
the written order of such holder a certificate or certificates for the number of
full shares of Common Stock to which such holder is entitled and a check or cash
with respect to any fractional interest in a share of Common Stock as provided
in Section 6.4.5(f). Subject to the provisions of Section 6.4.5(g)(iii), the
person in whose name the certificate or certificates for Common Stock are to be
issued shall be deemed to have become a holder of record of such Common Stock on
the applicable Conversion Date. Upon conversion of only a portion of the number
of shares covered by a certificate representing shares of Series B-2 Preferred
Stock surrendered for conversion (in the case of conversion pursuant to Section
6.4.5(a)),

                                       38
<PAGE>
the Corporation shall issue and deliver to or upon the written order of the
holder of the certificate so surrendered for conversion, at the expense of the
Corporation, a new certificate covering the number of shares of Series B-2
Preferred Stock representing the unconverted portion of the certificate so
surrendered.

                  f. FRACTIONAL SHARES. No fractional shares of Common Stock or
scrip shall be issued upon conversion of shares of Series B-2 Preferred Stock.
If more than one share of Series B-2 Preferred Stock is surrendered for
conversion at any one time by the same holder or is held by the same holder at
the time of any automatic conversion, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares so surrendered or held, as the case may be. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon
conversion of any shares of Series B-2 Preferred Stock, the Corporation shall
pay out of funds legally available therefor a cash adjustment in respect of such
fractional interest, rounded to the nearest one hundredth (1/100th) of a share,
in an amount equal to that fractional interest of the then Market Price, rounded
to the nearest cent ($.01), of one share of Common Stock.

                  g. CONVERSION FACTOR ADJUSTMENTS. The Conversion Factor shall
be subject to adjustment from time to time as follows:

                        i. STOCK DIVIDENDS, SUBDIVISIONS, RECLASSIFICATIONS OR
COMBINATIONS. If the Corporation shall (x) declare a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (y) subdivide or
reclassify the outstanding shares of Common Stock into a greater number of
shares of Common Stock or (z) combine or reclassify the outstanding shares of
Common Stock into a smaller number of shares of Common Stock, the Conversion
Factor in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be adjusted to that number determined by multiplying the
Conversion Factor in effect by a fraction (x) the numerator of which shall be
the total number of issued and outstanding shares of Common Stock immediately
prior to such dividend, distribution, subdivision, combination or
reclassification and (y) the denominator of which shall be the total number of
issued and outstanding shares of Common Stock immediately after such dividend,
distribution, subdivision, combination or reclassification. Successive
adjustments in the Conversion Factor shall be made whenever any event specified
above shall occur.

                        ii. ROUNDING OF CALCULATIONS: MINIMUM ADJUSTMENT. All
calculations under this Section 6.4.5(g) shall be made to the nearest cent
($.01) 

                                       39
<PAGE>
or to the nearest one hundredth (1/100th) of a share, as the case may be. Any
provision of this Section 6.4.5 to the contrary notwithstanding, no adjustment
in the Conversion Factor shall be made if the amount of such adjustment would be
less than 1% of the then current Conversion Factor until the end of one year
after such adjustment otherwise would have been required; but any such amount
shall be carried forward and an adjustment with respect thereto shall be made at
the time of and together with any subsequent adjustment which, together with
such amount and any other amount or amounts so carried forward, shall aggregate
1% of the then current Conversion Factor or more, provided that if the events
giving rise to such adjustments occur within three months of each other, then
such adjustments shall be calculated as if the events giving rise to them had
occurred simultaneously on the date of the first such event.

                        iii. TIMING OF ISSUANCE OF ADDITIONAL COMMON STOCK UPON
CERTAIN ADJUSTMENTS. In any case in which the provisions of this Section
6.4.5(g) provide that an adjustment shall become effective immediately after a
record date for an event, the Corporation may defer until the occurrence of such
event (x) issuing to the holder of any share of Series B-2 Preferred Stock
converted after such record date and before the occurrence of such event, the
additional shares of Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the shares of Common Stock
issuable upon such conversion before giving effect to such adjustment and (y)
paying to such holder any amount of cash in lieu of a fractional share of Common
Stock pursuant to Section 6.4.5(f); provided that the Corporation upon request
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares, and such cash,
upon the occurrence of the event requiring such adjustment.

                  h. COSTS. The Corporation shall pay all documentary, stamp,
transfer or other transactional taxes attributable to the issuance or delivery
of shares of Common Stock upon conversion of any shares of Series B-2 Preferred
Stock; provided that the Corporation shall not be required to pay any taxes
which may be payable in respect of any transfer involved in the issuance or
delivery of any certificate for such shares in the name other than that of the
holder of the shares of Series B-2 Preferred Stock in respect of which such
shares are being issued.

            6.4.6 VOTING RIGHTS. Such share of Series B-2 Preferred Stock shall
have the right to one vote for each share of Common Stock into which such share
of Series B-2 Preferred Stock could then be converted (with any fractional
shares determined on an aggregate conversion basis being rounded to the nearest
whole 

                                       40
<PAGE>
share), and with respect to such vote such holder shall have full voting rights
and powers equal to the voting rights and powers of the holders of Common Stock,
and shall be entitled to notice of any stockholders' meeting in accordance with
the bylaws of the Corporation, and shall be entitled to vote, together with
holders of Common Stock, with respect to any questions or action upon which
holders of Common Stock have the right to vote and shall not vote as a separate
class except as required by law.

            6.4.7 RIGHT OF FIRST REFUSAL. If any holder of Series B-2 Preferred
Stock desires to sell, assign, transfer or otherwise dispose of any shares of
Series B-2 Preferred Stock, then such holder (for purposes of this Section
6.4.7, the "Selling Stockholder"), prior to making any such sale, shall first
offer such shares of Series B-2 Preferred Stock (for purposes of this Section
6.4.7, the "Option Shares") for sale to the Corporation and then to the other
holders of the Series B-2 Preferred Stock on a pro rata basis as hereafter
provided, in accordance with the following provisions of this Section 6.4.7.

                  a. OPTION PRICE, TERMS; OFFERING NOTICES. The price per Option
Share at which the Selling Stockholder shall be required to offer the Option
Shares (for purposes of this Section 6.4.7, the "Option Price") and the terms of
such offer, shall be the price at which and the terms upon which any proposed
third party purchaser shall have offered to purchase the Option Shares from the
Selling Stockholder and which the Selling Stockholder is prepared to accept.
Each offer required to be made by the Selling Stockholder pursuant to this
Section 6.4.7 shall be made by a written notice (for purposes of this Section
6.4.7, the "Offering Notice") which shall state that the offer is being made
pursuant to this Section 6.4.7 and which shall set forth the number of Option
Shares, the name or names of the proposed purchaser or purchasers of the Option
Shares, the price per share offered by such proposed purchaser or purchasers for
the Option Shares, the method of payment of the purchase price and the scheduled
date of consummation of such proposed sale. A copy of the written offer from any
proposed third-party purchaser shall be attached to each Offering Notice.

                  b. OFFER TO THE CORPORATION. The Selling Stockholder shall
offer the option Shares to the Corporation by delivering an offering Notice to
the Corporation. Within 30 days following the Corporation's receipt of such
Offering Notice, the Corporation shall deliver to the Selling Stockholder a
reply notice accepting the offer of the Selling Stockholder with respect to all
(but not less than all) of the Option Shares or rejecting such offer. If by such
reply notice the Corporation accepts the offer made by the Selling Stockholder,
the reply notice shall constitute an agreement binding on the Selling
Stockholder and the 

                                       41
<PAGE>
Corporation to sell and purchase the option Shares at a price per share equal to
the option Price. If within such 30-day period, the Corporation shall have
failed to deliver a reply notice accepting the offer of the Selling Stockholder
as to all of the Option Shares, the Corporation shall be deemed to have rejected
such offer. If the Corporation rejects or intends to reject such offer, it shall
mail a notice to such effect to every record holder (other than the Selling
Stockholder) of the Series B-2 Preferred Stock as of the date of the
Corporation's receipt of the Offering Notice. (collectively, "Remaining
Stockholders"); which notice of the Corporation shall also include a copy of the
Offering Notice.

                  c. OFFER TO REMAINING STOCKHOLDERS. If the Corporation rejects
or is deemed to have rejected the foregoing offer under paragraph (b) above,
then the Selling Stockholder shall thereupon be deemed to have offered the
Option Shares to the Remaining Stockholders on the same price and terms set
forth in the Offering Notice. Such offer shall be made on a pro rata basis in
accordance with each Remaining Stockholder's holdings of Series B-2 Preferred
Stock on the date of the Offering Notice; provided, however, that prior to
acceptance of such offer, any one or more Remaining Stockholders may agree among
themselves as to a different allocation for purposes of accepting such offer.
Within 30 days following the date of the Corporation's notice referred to in
paragraph (b) above, each Remaining Stockholder desiring to accept such offer
shall deliver to the Selling Stockholder a reply notice accepting the offer of
the Selling Stockholder with respect to all (but not less than all) of such
Remaining Stockholder's pro rata portion of the Option Shares, or rejecting such
offer; provided, however, that prior to expiration of such 30-day period, the
Selling Stockholder shall have received reply notices from Remaining
Stockholders as to all (but not less than all) of all Option Shares being
offered. If by such reply notice(s) the Remaining Stockholders collectively
accept the offer made by the Selling Stockholder, such reply notice(s) shall
constitute an agreement binding on the Selling Stockholder and each such
Remaining Stockholder (severally, but not jointly) to sell and purchase the
Option Shares at a price per share equal to the Option Price. If within such
30-day period, the Remaining Stockholders collectively shall have failed to
deliver one or more reply notices accepting the offer of the Selling Stockholder
as to all of the Option Shares, the Remaining Stockholders shall be deemed to
have rejected such offer.

                  d. LAPSE OF OPTION. If the foregoing offer to sell Option
Shares has been made by the Selling Stockholder and has not been accepted by the
Corporation or the Remaining Stockholders, then the Selling Stockholder may sell
not less than all of the Option Shares at any time within, but not subsequent
to, 60 days after the lapse of the option granted pursuant to this Section
6.4.7; provided, however, that no sale of the option Shares shall be made at any
price lower than 

                                       42
<PAGE>
the Option Price or on terms materially different from those specified in the
Offering Notice or to any person or persons other than the persons specified in
the Offering Notice. If after the lapse of such 60-day period the Option Shares
shall not have been sold, all of the provisions of this Section 6.4.7 shall
apply to any future sale or other disposition of shares of Series B-2 Preferred
Stock owned by the Selling Stockholder.

                  e. CONSUMMATION OF PURCHASES. Each transaction of purchase and
sale of Option Shares pursuant to this Section 6.4.7 shall be completed by
delivery of the stock certificates representing the Option Shares endorsed in
blank, or accompanied by duly executed stock powers, and by actual registration
of the transfer of the Option Shares on the books of the Corporation upon
payment of the purchase price to the Selling Stockholder. Any such transaction
shall be closed at such time and place as shall be agreed upon by the parties
thereto, or, if no such agreement is reached, at the principal office of the
Corporation on the 30th day following the date of delivery of the last reply
notice given in connection with such transaction or, if such day shall not be a
business day, on the first business day thereafter during normal business hours.

            6.4.8 EXCLUSION OF OTHER RIGHTS. Unless otherwise required by law,
the shares of Series B-2 Preferred Stock shall not have any voting powers,
preferences or relative, participating, optional or other special rights other
than those specifically set forth herein.

      6.5 DESIGNATION. Three Million Five Hundred Thousand (3,500,000) shares of
Preferred Stock shall be designated "Series B-3 Preferred Stock" (herein
referred to as "Series B-3" Preferred Stock"), each of the par value of $.001
per share, and having the voting powers, preferences and relative,
participating, optional and other rights, and the qualifications, limitations or
restrictions set forth below:

            6.5.1 DEFINITIONS. For purposes of Section 6.5 hereof, the following
terms shall have the following definitions or shall be subject to the following
rules of construction:


                  (a) "Board of Directors" means the Board of Directors of the
Corporation.

                  b. "Brazos" means Brazos Sportswear, Inc., a Texas corporation
and subsidiary of the Corporation.

                                       43
<PAGE>
                  c. "Common Stock" means shares of the Corporation's Common
Stock, no par value per share.

                  d. "Junior Stock" means, collectively, the Common Stock, the
Series A-1 Preferred Stock, the Series A-2 Preferred Stock, the Series B-1
Preferred Stock and the Series B-2 Preferred Stock.

                  e. "Mandatory Redemption Date" means the earlier to occur of
(i) the date of consummation of a Qualified Public Offering, but only to the
extent the offering price per share of Common Stock is less than $17.50 (as
adjusted for stock splits, combinations and other similar corporate events),
(ii) the date of consummation of a Sale, or (iii) December 31, 2003.

                  f. "Market Price" of a share of Common Stock on any given date
means (i) the closing sales price of a share of Common Stock as reported on the
principal securities exchange on which shares of Common Stock are then listed or
admitted to trading or (ii) if not so reported, the average of the closing bid
and asked prices for a share of Common Stock as quoted on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or (iii)
if not quoted on NASDAQ, the average of the closing bid and asked prices for a
share of Common Stock as quoted by the National Quotation Bureau's "Pink Sheets"
or the National Association of Securities Dealers OTC Bulletin Board System. If
the price of a share of Common Stock shall not be so reported, the Market Price
of a share of Common Stock shall be determined by the Board in its absolute
discretion.

                  g. The term "outstanding," when used with reference to shares
of capital stock, shall mean issued shares, excluding shares held by the
Corporation or a subsidiary of the Corporation.

                  h. "Preferred Stock" means shares of any series of the
Corporation's Preferred Stock, $.001 par value per share.

                  i. "Qualified Public Offering" means the underwritten public
offering of Common Stock by the Corporation for cash for its own account
pursuant to a registration statement filed under the Securities Act (other than
any registration statement relating to warrants, options or shares of capital
stock of the Corporation granted or to be granted or sold primarily to
employees, directors, or officers of the Corporation, a registration statement
filed pursuant to Rule 145 under the Securities Act or any successor rule, a
registration statement relating to employee benefit plans or interests therein
or any registration statement covering securities issued in connection with any
debt financing of the Corporation), in 

                                       44
<PAGE>
which the net offering proceeds to be received by the Corporation are at least
$15,000,000.

                  j. "Quarterly Dividend Date" means the last day of each March,
June, September and December in each year in which any shares of Series B-3
Preferred Stock are outstanding.

                  k. "Sale" means a single transaction or a series of related
transactions having the effect of (i) the sale, transfer, lease or conveyance of
all or substantially all of the properties and assets of the Corporation to any
other corporation or corporations or other person or persons (other than a
subsidiary of the Corporation), (ii) the sale, transfer or conveyance (other
than in a merger or consolidation of the Corporation) of all or substantially
all of the issued and outstanding voting securities of the Corporation to any
other corporation or corporations or other person or persons or (iii) the merger
or consolidation of the Corporation with or into any other corporation or
corporations or entity or entities in which the Corporation is not the sole
surviving corporation or continuing corporation, other than a consolidation or
merger in which the holders of shares of the Common Stock immediately preceding
such consolidation or merger receive, directly or indirectly, (A) 50% or more of
the common stock of the sole surviving or continuing corporation outstanding
immediately following the consummation of such merger or consolidation and (B)
securities representing 50% or more of the combined voting power of the voting
stock of the sole surviving or continuing corporation outstanding immediately
following the consummation of such merger or consolidation.

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

                  m. "Senior Loan Agreement" (i) any loan, credit or other
similar agreement, together with all notes, debentures, security agreements and
other loan documents executed and delivered in connection therewith, evidencing
any indebtedness of the Corporation or any successor entity for money
heretofore, now or hereafter borrowed by the Corporation or any successor entity
(or by any subsidiary of the Corporation or any successor entity and guaranteed
by the Corporation or any successor entity) from one or more banks, financial
institutions or other institutional lenders and (ii) upon consummation of the
merger contemplated under that certain Plan and Agreement of Merger dated
November 13, 1996 ("Merger Agreement"), between the Corporation and BSI
Holdings, Inc. ("BSI"), (A) any item set forth in clause (i) above with respect
to BSI or any successor entity (or by any subsidiary of BSI or any successor
entity and 

                                       45
<PAGE>
guaranteed by BSI) including, without limitation, (x) the Second Amended and
Restated Loan and Security Agreement dated as of August 9, 1996, among Brazos
Sportswear, Inc., a Texas corporation and subsidiary of BSI ("Brazos") and Fleet
Capital Corporation, as agent for itself and The First National Bank of Boston,
as such Agreement may thereafter from time to time be amended, supplemented or
restated and (y) those certain Debentures of Brazos dated August 9, 1996,
payable to Allied Investment Corporation and Allied Investment Corporation II,
in the original maximum principal amount of $3,500,000, (B) the Company's Junior
Subordinated Debenture dated as of August 2, 1996, payable to the order of
Plymouth Mills, Inc., in the original principal balance of $4,000,000 and (C)
the Company's Junior Subordinated Debenture dated as of September 30, 1996,
payable to the order of Plymouth Mills, Inc., with respect to 50% of the Earnout
Amount determined pursuant to Section 1.2(d) of that certain Asset Purchase
Agreement, dated August 2, 1996, between, among others, Brazos and Plymouth
Mills, Inc.

                  n. "Series A-1 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series A-1 Preferred Stock, $.001 par
value per share.

                  o. "Series A-2 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series A-2 Preferred Stock, $.001 par
value per share.

                  p. "Series B-1 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-1 Preferred Stock, $.001 par
value per share.

                  q. "Series B-2 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-2 Preferred Stock, $.001 par
value per share.

                  r. "Series B-3 Preferred Stock" means the series of Preferred
Stock designated by the Corporation as its Series B-3 Preferred Stock, $.001 par
value per share.

                  s. All accounting terms used herein and not expressly defined
herein shall have the meanings given to them in accordance with generally
accepted accounting principles consistently applied and in effect as of the date
of the relevant calculation.

                                       46
<PAGE>
            6.5.2 DIVIDENDS. The holders of Series B-3 Preferred Stock, in
preference to the holders of Series A-2 Preferred Stock, Series A-1 Preferred
Stock and the Common Stock, shall be entitled to receive, but only to the extent
of funds legally available therefor, cumulative, preferential dividends at the
annual rate of $.08 per share, payable as hereafter described. Such dividends
shall commence to accrue on the shares of Series B-3 Preferred Stock and be
cumulative from and after the date of issuance of such shares of Series B-3
Preferred Stock and shall be deemed to accumulate and accrue from day to day
thereafter. Dividends under this Section 6.5.2 shall be payable quarterly in
arrears so long as the Series B-3 Preferred Stock is outstanding, on or before
each Quarterly Dividend Date. Other than dividends payable incident to a
redemption of the Series B-3 Preferred Stock under Section 6.5.3 below or a
conversion of the Series B-3 Preferred Stock under Section 6.5.5 below or in
respect of fractional shares as described below, all dividends on the Series B-3
Preferred Stock hereunder shall be payable not in cash, but rather by the
Corporation's issuance and delivery to each record holder of Series B-3
Preferred Stock of a number of additional shares of Series B-3 Preferred Stock
determined by dividing the amount of each such dividend by $1.00. Within 30 days
after each Quarterly Dividend Date, the Corporation shall issue and deliver to
each record holder of Series B-3 Preferred Stock on such Quarterly Dividend Date
one or more certificates evidencing the number of whole shares of Series B-1
Preferred Stock payable as a dividend to such holder as provided above, and such
shares, when so issued and delivered, shall be deemed fully paid and
nonassessable shares of the Corporation's Series B-3 Preferred Stock. No
fractional shares of Series B-3 Preferred Stock or scrip will be issued in
respect of fractional interests resulting from any dividend hereunder; in lieu
of any fractional shares of Series B-3 Preferred Stock which may be issued as
aforesaid, the holders thereof instead shall receive a cash payment in an amount
equal to the product of such fraction multiplied by $1.00. So long as any of the
Series B-3 Preferred Stock remains outstanding, no dividends or distributions
(other than dividends or distributions on Common Stock payable in Common Stock)
shall be paid upon, or declared or set apart for, any Series A-2 Preferred
Stock, Series A-1 Preferred Stock and Common Stock, nor shall any of such stock
(other than Common Stock acquired in exchange for, or out of the cash proceeds
of, the issue of other Common Stock or out of cash contributions to the capital
of the Corporation) be purchased, redeemed, retired or otherwise acquired by the
Corporation, unless and until in either case all cumulative dividends on the
then outstanding shares of Series B-3 Preferred Stock shall have been or
concurrently shall be paid.

                                       47
<PAGE>
            6.5.3 REDEMPTION.

                  a. MANDATORY REDEMPTION. Subject to the provisions of Section
6.5.3(d), on the Mandatory Redemption Date, the Corporation shall redeem, out of
funds legally available therefor, all of the shares of Series B-3 Preferred
Stock then outstanding, at a redemption price of $1.00 per share (plus all
accrued and unpaid dividends thereon through such date as provided in Section
6.5.3(c) below).

                  b.          OPTIONAL REDEMPTION.

                        i. Subject to the provisions of Section 6.5.3(d), at any
time while any shares of Series B-3 Preferred Stock are outstanding, the
Corporation, at the option of the Board of Directors, may redeem from the
holders of the Series B-3 Preferred Stock, at a redemption price of $1.00 per
share (plus all accrued and unpaid dividends thereon through the date designated
for redemption as provided in Section 6.5.3(c) below), all or any portion of
Series B-3 Preferred Stock outstanding on the date designated for such
redemption. In case less than all of the outstanding shares of Series B-3
Preferred Stock are to be redeemed under this Section 6.5.3(b)(i), such
redemption shall be made on a pro rata basis in accordance with each holder's
respective holdings of such shares as of the date designated for redemption.

                        ii. In addition to the optional redemption pursuant to
Section 6.5.3(b)(i) and subject to the provisions of Section 6.5.3(d), at any
time while any shares of Series B-3 Preferred Stock are outstanding, the
Corporation, at the option of the Board of Directors, may redeem from the
holders of Series B-3 Preferred Stock, out of funds legally available therefor,
at a redemption price of $.001 per share (plus all accrued and unpaid dividends
thereon through such date as provided in Section 6.5.3(c) below), all but not
less than all, of the shares of Series B-3 Preferred Stock outstanding on the
date set for redemption provided that the right of the Corporation to redeem the
shares of Series B-3 Preferred Stock under this Section 6.5.3(b)(ii) is subject
to the Company mailing the redemption notice in accordance with Section 6.5.3(d)
within 30 days following any period of 20 consecutive trading days during which
the Market Price per share of the Common Stock is at or above $17.50 per share
(as adjusted for stock splits, combinations and other similar corporate events).

                        iii. Notwithstanding any provision contained in this
Section 6.5.3(b) to the contrary, in no event shall the Corporation redeem any

                                       48
<PAGE>
shares of Series B-3 Preferred Stock under this Section 6.5.3(b), nor shall any
holders of such shares accept payment upon such redemption, if at the time of
such redemption there exists a default or event of default within the meaning of
any Senior Loan Agreement or such redemption would cause a default or event of
default under any Senior Loan Agreement.

                  c. ACCRUED DIVIDENDS. Upon any mandatory or optional
redemption under paragraph (a) or (b) above, the Corporation shall,
simultaneously with the making of any such redemption, pay to the holders of the
Series B-3 Preferred Stock being redeemed all dividends accrued and unpaid on
the shares being redeemed through the date of redemption; provided, however,
that in case of the payment of dividends under this paragraph (c), such
dividends shall be paid in cash, and not in shares of Series B-3 Preferred Stock
as provided in Section 6.5.2 above.

                  d. GENERAL.

                        i. The Corporation shall provide written notice of any
mandatory or optional redemption under this Section 6.5.3 not less than 30 days
prior to the date fixed or designated for such redemption, to the holders of
record as of the relevant record date of the shares of Series B-3 Preferred
Stock to be so redeemed as the case may be, at their respective addresses then
appearing on the stock books of the Corporation. Each redemption notice to be
provided under this Section 6.5.3 shall be by certified mail, return receipt
requested and shall specify (i) the redemption date, (ii) the redemption price
per share and (iii) the place for payment and for delivering necessary transfer
instruments to be executed by the holder in order for the holder to receive the
redemption price. No holder of shares of Series B-3 Preferred Stock redeemed in
accordance with this Section 6.5.3 shall be entitled to receive payment of the
redemption price for such shares until such holder causes to be delivered in
accordance with the redemption notice the stock certificate representing the
shares so redeemed and transfer instructions satisfactory to the Company.

                        ii. From and after the effective date of redemption and
the setting aside of the funds necessary for redemption, notwithstanding that
any certificate for shares of Series B-3 Preferred Stock so called for
redemption shall not have been surrendered for cancellation, the shares to be
redeemed shall no longer be deemed outstanding, and the holders of certificates
representing such shares shall have with respect to such shares no rights in or
with respect to the Corporation except the right to receive, upon the surrender
of such certificates, the redemption price therefor. Shares of Series B-3
Preferred Stock redeemed by the 

                                       49
<PAGE>
Corporation pursuant to this Section 6.5.3 shall not be reissued and shall be
canceled and retired.

            6.5.4 PREFERENCE ON LIQUIDATION, DISSOLUTION OR WINDING UP.

                  a. DEFINITION. A consolidation or merger of the Corporation, a
sale or transfer of substantially all of its assets as an entirety, or any
purchase or redemption of capital stock of the Corporation of any class, shall
not be regarded as "liquidation, dissolution or winding up of the affairs of the
Corporation" within the meaning of this Section 6.5.4.

                  b. SERIES B-3 PREFERRED STOCK. During any proceedings for the
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, the holders of the Series B-3 Preferred Stock shall be
entitled to receive $1.00 in cash for each share of Series B-3 Preferred Stock
(together with all accrued and unpaid dividends on each share of Series B-3
Preferred Stock), before any distribution of the assets of the Corporation shall
be made in respect of the outstanding Junior Stock, or funds necessary for such
payment shall have been set aside in trust for the account of the holders of the
outstanding Series B-3 Preferred Stock so as to be and continue available
therefor. If upon such liquidation, dissolution or winding up, the assets
distributable to the holders of the Series B-3 Preferred Stock as aforesaid
shall be insufficient to permit the payment to them of such $1.00 per share
(plus such accrued and unpaid dividends), the assets of the Corporation shall be
distributed to the holders of the Series B-3 Preferred Stock ratably until they
shall have received the full amount to which they would otherwise be entitled.
If the assets of the Corporation are sufficient to permit the payment of such
amounts to the holders of the Series B-3 Preferred Stock, the remainder of the
assets of the Corporation, if any, after the distribution as aforesaid shall be
distributed and divided ratably among the holders of the Junior Stock then
outstanding according to their respective shares, interests and priorities.

            6.5.5 CONVERSION RIGHTS.  The Series B-3 Preferred Stock shall be
convertible as follows:

                  a. OPTIONAL CONVERSION. Subject to and upon compliance with
the provisions of this Section 6.5.5, the holder of any shares of Series B-3
Preferred Stock shall have the right at such holder's option, at any time prior
to the close of business on the date fixed for redemption, and without the
payment of any additional consideration therefor, to convert any of such shares
of Series B-3 Preferred Stock into fully paid and nonassessable shares of Common
Stock at the Conversion Ratio (as defined in Section 6.5.5(d) below) in effect
on any 

                                       50
<PAGE>
Conversion Date (as defined in Section 6.5.5(e) below) upon the terms
hereinafter set forth.

                  b. AUTOMATIC CONVERSION. Each outstanding share of Series B-3
Preferred Stock shall automatically convert, without any further act of the
Corporation or its stockholders, at the Conversion Ratio then in effect, into
fully paid and nonassessable shares of Common Stock upon the consummation of a
Qualified Public Offering, provided that the per share offering price to the
public is not less than $3.50 per share (as adjusted for stock splits,
combinations and similar corporate events).

                  c. ACCRUED DIVIDENDS. Upon any optional or automatic
conversion under paragraph (a) or (b) above, the Corporation shall
simultaneously with such conversion, pay to the holders of the Series B-3
Preferred Stock being converted all dividends accrued and unpaid on the shares
being converted through the date of conversion; provided, however, that in case
of payment of dividends under this paragraph (c), such dividends shall be paid
in cash, and not in shares of Series B-3 Preferred Stock as provided in Section
6.5.2 above.

                  d. CONVERSION RATIO. Each share of Series B-3 Preferred Stock
shall be convertible pursuant to Sections 6.5.5(a) and 6.5.5(b) into a number of
shares of Common Stock determined by dividing (x) $1.00 (the liquidation value
per share) by (y) the Conversion Factor in effect on any Conversion Date (the
"Conversion Ratio"). For the purposes of this Section 6.5.5, the term
"Conversion Factor" initially shall mean $11.00.

                  e. MECHANICS OF CONVERSION. The holder of any shares of Series
B-3 Preferred Stock may exercise the conversion right specified in Section
6.5.5(a) by surrendering to the Corporation or any transfer agent of the
Corporation the certificate or certificates for the shares to be converted,
accompanied by written notice specifying the number of shares to be converted.
Upon the occurrence of automatic conversion pursuant to Section 6.5.5(b), the
outstanding shares of Series B-3 Preferred Stock shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Corporation or its transfer agent; provided that the Corporation shall not be
obligated to issue to any holder certificates evidencing the shares of Common
Stock issuable upon such conversion unless certificates evidencing such shares
of Series B-3 Preferred Stock are delivered either to the Corporation or any
transfer agent of the Corporation. Conversion shall be deemed to have been
effected on the date when delivery of notice of an election to convert and of
certificates for shares being converted is 

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made or on the date specified in Section 6.5.5(b), as the case may be, and such
date is referred to herein as the "Conversion Date." Subject to the provisions
of Section 6.5.5(g)(iii), as promptly as practicable thereafter (and after
surrender of the certificate or certificates representing shares of Series B-3
Preferred Stock to the Corporation or any transfer agent of the Corporation in
the case of conversion pursuant to Section 6.5.5(b)) the Corporation shall issue
and deliver to or upon the written order of such holder a certificate or
certificates for the number of full shares of Common Stock to which such holder
is entitled and a check or cash with respect to any fractional interest in a
share of Common Stock as provided in Section 6.5.5(f). Subject to the provisions
of Section 6.5.5(g)(iii), the person in whose name the certificate or
certificates for Common Stock are to be issued shall be deemed to have become a
holder of record of such Common Stock on the applicable Conversion Date. Upon
conversion of only a portion of the number of shares covered by a certificate
representing shares of Series B-3 Preferred Stock surrendered for conversion (in
the case of conversion pursuant to Section 6.5.5(a)), the Corporation shall
issue and deliver to or upon the written order of the holder of the certificate
so surrendered for conversion, at the expense of the Corporation, a new
certificate covering the number of shares of Series B-3 Preferred Stock
representing the unconverted portion of the certificate so surrendered.

                  f. FRACTIONAL SHARES. No fractional shares of Common Stock or
scrip shall be issued upon conversion of shares of Series B-3 Preferred Stock.
If more than one share of Series B-3 Preferred Stock is surrendered for
conversion at any one time by the same holder or is held by the same holder at
the time of any automatic conversion, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares so surrendered or held, as the case may be. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon
conversion of any shares of Series B-3 Preferred Stock, the Corporation shall
pay out of funds legally available therefor a cash adjustment in respect of such
fractional interest, rounded to the nearest one hundredth (1/100th) of a share,
in an amount equal to that fractional interest of the then Market Price, rounded
to the nearest cent ($.01), of one share of Common Stock.

                  g. CONVERSION FACTOR ADJUSTMENTS. The Conversion Factor shall
be subject to adjustment from time to time as follows:

                        i. STOCK DIVIDENDS, SUBDIVISIONS, RECLASSIFICATIONS OR
COMBINATIONS. If the Corporation shall (x) declare a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (y) subdivide or
reclassify the outstanding shares of Common 

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<PAGE>
Stock into a greater number of shares of Common Stock or (z) combine or
reclassify the outstanding shares of Common Stock into a smaller number of
shares of Common Stock, the Conversion Factor in effect at the time of the
record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted to that number
determined by multiplying the Conversion Factor in effect by a fraction (x) the
numerator of which shall be the total number of issued and outstanding shares of
Common Stock immediately prior to such dividend, distribution, subdivision,
combination or reclassification and (y) the denominator of which shall be the
total number of issued and outstanding shares of Common Stock immediately after
such dividend, distribution, subdivision, combination or reclassification.
Successive adjustments in the Conversion Factor shall be made whenever any event
specified above shall occur.

                        ii. ROUNDING OF CALCULATIONS: MINIMUM ADJUSTMENT. All
calculations under this Section 6.5.5(g) shall be made to the nearest cent
($.01) or to the nearest one hundredth (1/100th) of a share, as the case may be.
Any provision of this Section 6.5.5 to the contrary notwithstanding, no
adjustment in the Conversion Factor shall be made if the amount of such
adjustment would be less than 1% of the then current Conversion Factor until the
end of one year after such adjustment otherwise would have been required; but
any such amount shall be carried forward and an adjustment with respect thereto
shall be made at the time of and together with any subsequent adjustment which,
together with such amount and any other amount or amounts so carried forward,
shall aggregate 1% of the then current Conversion Factor or more, provided that
if the events giving rise to such adjustments occur within three months of each
other, then such adjustments shall be calculated as if the events giving rise to
them had occurred simultaneously on the date of the first such event.

                        iii. TIMING OF ISSUANCE OF ADDITIONAL COMMON STOCK UPON
CERTAIN ADJUSTMENTS. In any case in which the provisions of this Section
6.5.5(g) provide that an adjustment shall become effective immediately after a
record date for an event, the Corporation may defer until the occurrence of such
event (x) issuing to the holder of any share of Series B-3 Preferred Stock
converted after such record date and before the occurrence of such event, the
additional shares of Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the shares of Common Stock
issuable upon such conversion before giving effect to such adjustment and (y)
paying to such holder any amount of cash in lieu of a fractional share of Common
Stock pursuant to Section 6.5.5(f); provided that the Corporation upon request
shall deliver to such holder a due bill or other appropriate instrument
evidencing 

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<PAGE>
such holder's right to receive such additional shares, and such cash, upon the
occurrence of the event requiring such adjustment.

                  h. COSTS. The Corporation shall pay all documentary, stamp,
transfer or other transactional taxes attributable to the issuance or delivery
of shares of Common Stock upon conversion of any shares of Series B-3 Preferred
Stock; provided that the Corporation shall not be required to pay any taxes
which may be payable in respect of any transfer involved in the issuance or
delivery of any certificate for such shares in the name other than that of the
holder of the shares of Series B-3 Preferred Stock in respect of which such
shares are being issued.

            6.5.6 VOTING RIGHTS.

                  a. The Corporation shall not, without the consent of the
holders of at least a majority of the shares of the outstanding Series B-3
Preferred Stock, adopt any amendment to this Certificate which would alter or
change the powers, preferences or special rights of the Series B-3 Preferred
Stock so as to affect them adversely, PROVIDED that except as otherwise required
by law, no such consent shall be required with respect to (i) any amendment to
this Certificate that increases or decreases the number of shares of Series B-3
Preferred Stock which the Corporation is authorized to issue (provided that no
such amendment shall reduce the number of authorized shares to below the number
of shares then outstanding), or (ii) the establishment or issuance of any other
series of Preferred Stock or any other class of stock of the Corporation that
has any powers, preferences or rights that are different from, greater than,
superior to or in preference of the Series B-3 Preferred Stock.

                  b. Except as provided in paragraph (a) above or otherwise
required by law, the holders of Series B-3 Preferred Stock shall have no right
or power to vote on the election of directors or on any other question or in any
proceedings involving the Corporation.

            6.5.7 RIGHT OF FIRST REFUSAL. If any holder of Series B-3 Preferred
Stock desires to sell, assign, transfer or otherwise dispose of any shares of
Series B-3 Preferred Stock, then such holder (for purposes of this Section
6.5.7, the "Selling Stockholder"), prior to making any such sale, shall first
offer such shares of Series B-3 Preferred Stock (for purposes of this Section
6.5.7, the "Option Shares") for sale to the Corporation and then to the other
holders of the Series B-3 Preferred Stock on a pro rata basis as hereafter
provided, in accordance with the following provisions of this Section 6.5.7.

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<PAGE>
                  a. OPTION PRICE, TERMS; OFFERING NOTICES. The price per Option
Share at which the Selling Stockholder shall be required to offer the Option
Shares (for purposes of this Section 6.5.7, the "Option Price") and the terms of
such offer, shall be the price at which and the terms upon which any proposed
third party purchaser shall have offered to purchase the Option Shares from the
Selling Stockholder and which the Selling Stockholder is prepared to accept.
Each offer required to be made by the Selling Stockholder pursuant to this
Section 6.5.7 shall be made by a written notice (for purposes of this Section
6.5.7, the "Offering Notice") which shall state that the offer is being made
pursuant to this Section 6.5.7 and which shall set forth the number of Option
Shares, the name or names of the proposed purchaser or purchasers of the Option
Shares, the price per share offered by such proposed purchaser or purchasers for
the Option Shares, the method of payment of the purchase price and the scheduled
date of consummation of such proposed sale. A copy of the written offer from any
proposed third-party purchaser shall be attached to each Offering Notice.

                  b. OFFER TO THE CORPORATION. The Selling Stockholder shall
offer the option Shares to the Corporation by delivering an offering Notice to
the Corporation. Within 30 days following the Corporation's receipt of such
Offering Notice, the Corporation shall deliver to the Selling Stockholder a
reply notice accepting the offer of the Selling Stockholder with respect to all
(but not less than all) of the Option Shares or rejecting such offer. If by such
reply notice the Corporation accepts the offer made by the Selling Stockholder,
the reply notice shall constitute an agreement binding on the Selling
Stockholder and the Corporation to sell and purchase the option Shares at a
price per share equal to the option Price. If within such 30-day period, the
Corporation shall have failed to deliver a reply notice accepting the offer of
the Selling Stockholder as to all of the Option Shares, the Corporation shall be
deemed to have rejected such offer. If the Corporation rejects or intends to
reject such offer, it shall mail a notice to such effect to every record holder
(other than the Selling Stockholder) of the Series B-3 Preferred Stock as of the
date of the Corporation's receipt of the Offering Notice. (collectively,
"Remaining Stockholders"); which notice of the Corporation shall also include a
copy of the Offering Notice.

                  c. OFFER TO REMAINING STOCKHOLDERS. If the Corporation rejects
or is deemed to have rejected the foregoing offer under paragraph (b) above,
then the Selling Stockholder shall thereupon be deemed to have offered the
Option Shares to the Remaining Stockholders on the same price and terms set
forth in the Offering Notice. Such offer shall be made on a pro rata basis in
accordance with each Remaining Stockholder's holdings of Series B-3 Preferred
Stock on the date of 

                                       55
<PAGE>
the Offering Notice; provided, however, that prior to acceptance of such offer,
any one or more Remaining Stockholders may agree among themselves as to a
different allocation for purposes of accepting such offer. Within 30 days
following the date of the Corporation's notice referred to in paragraph (b)
above, each Remaining Stockholder desiring to accept such offer shall deliver to
the Selling Stockholder a reply notice accepting the offer of the Selling
Stockholder with respect to all (but not less than all) of such Remaining
Stockholder's pro rata portion of the Option Shares, or rejecting such offer;
provided, however, that prior to expiration of such 30-day period, the Selling
Stockholder shall have received reply notices from Remaining Stockholders as to
all (but not less than all) of all Option Shares being offered. If by such reply
notice(s) the Remaining Stockholders collectively accept the offer made by the
Selling Stockholder, such reply notice(s) shall constitute an agreement binding
on the Selling Stockholder and each such Remaining Stockholder (severally, but
not jointly) to sell and purchase the Option Shares at a price per share equal
to the Option Price. If within such 30-day period, the Remaining Stockholders
collectively shall have failed to deliver one or more reply notices accepting
the offer of the Selling Stockholder as to all of the Option Shares, the
Remaining Stockholders shall be deemed to have rejected such offer.

                  d. LAPSE OF OPTION. If the foregoing offer to sell Option
Shares has been made by the Selling Stockholder and has not been accepted by the
Corporation or the Remaining Stockholders, then the Selling Stockholder may sell
not less than all of the Option Shares at any time within, but not subsequent
to, 60 days after the lapse of the option granted pursuant to this Section
6.5.7; provided, however, that no sale of the option Shares shall be made at any
price lower than the Option Price or on terms materially different from those
specified in the Offering Notice or to any person or persons other than the
persons specified in the Offering Notice. If after the lapse of such 60-day
period the Option Shares shall not have been sold, all of the provisions of this
Section 6.5.7 shall apply to any future sale or other disposition of shares of
Series B-3 Preferred Stock owned by the Selling Stockholder.

                  e. CONSUMMATION OF PURCHASES. Each transaction of purchase and
sale of Option Shares pursuant to this Section 6.5.7 shall be completed by
delivery of the stock certificates representing the Option Shares endorsed in
blank, or accompanied by duly executed stock powers, and by actual registration
of the transfer of the Option Shares on the books of the Corporation upon
payment of the purchase price to the Selling Stockholder. Any such transaction
shall be closed at such time and place as shall be agreed upon by the parties
thereto, or, if no such agreement is reached, at the principal office of the
Corporation on the 30th day following the date of delivery of the last reply
notice 

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<PAGE>
given in connection with such transaction or, if such day shall not be a
business day, on the first business day thereafter during normal business hours.

            6.5.8 EXCLUSION OF OTHER RIGHTS. Unless otherwise required by law,
the shares of Series B-3 Preferred Stock shall not have any voting powers,
preferences or relative, participating, optional or other special rights other
than those specifically set forth herein.

                                       1.   BOARD OF DIRECTORS

      7.1 The initial Board of Directors of the corporation shall consist of the
following persons, who shall serve as the directors until the first annual
meeting of stockholders or until their successors are elected and qualified:

            NAME                    MAILING ADDRESS

            Kevin C. James          6520 South 190th Street
                                    Kent, Washington 98032

      7.2 The number of directors of the corporation shall be fixed as provided
in the Bylaws and may be changed from time to time by amending the Bylaws.

      7.3 The election of directors need not be by written ballot unless the
Bylaws so provide.

      7.4 Subject to the limitations of the General Corporation Law of Delaware,
and subject to the power of the stockholders of the corporation to change or
repeal the Bylaws, the Board of Directors is expressly authorized to make,
amend, or repeal the Bylaws of the corporation unless the stockholders in
adopting, amending or repealing a particular bylaw have provided expressly that
the Board of Directors may not amend or repeal that bylaw.

                                       II. INDEMNIFICATION

      8.1 The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he or she is or was a director or officer of the corporation, or if
such director or officer is or was serving at the request of the corporation as
a director, officer, trustee, employee or 

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<PAGE>
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner in which he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.

      8.2 The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he or she is or was a director or
officer of the corporation, or if such director or officer is or was serving at
the request of the corporation as a director, officer, trustee, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action, suit or proceeding if he or she acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his or her duty to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action, suit or proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.

      8.3 To the extent that a director or officer of the corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 8.1 and 8.2, or in defense of any claim,
issue or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith.

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<PAGE>
      8.4 Any indemnification under Section 8.1 or 8.2 (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director or officer is proper
in the circumstances because he or she has met the applicable standard of
conduct set forth in Section 8.1 or 8.2. Such determination shall be made (a) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (b) if such a quorum
is not obtainable, or, even if obtainable, a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (c) by the
stockholders.

      8.5 Expenses (including attorneys' fees) incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be paid
by the corporation in advance of the final disposition of such action, suit or
proceeding as authorized in the manner provided in Section 8.4 upon receipt of
an undertaking by or on behalf of such officer or director to repay such amount
if it should be ultimately determined that such person is not entitled to be
indemnified by the corporation as authorized in this Article or otherwise. Such
expenses incurred by other employees and agents shall be so paid upon such terms
and conditions, if any, as the Board of Directors deems appropriate.

      8.6 The indemnification and advancement of expenses provided by or granted
pursuant to the other Sections of this Article shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person. The indemnification powers of the corporation shall be as broad as is
allowed under applicable law.

      8.7 Upon the majority vote of a quorum of the Board of Directors, the
corporation may purchase and maintain insurance on behalf of any person who is
or was a director or officer of the corporation, or if such director or officer
is or was serving at the request of the corporation as a director, officer,
trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against any liability asserted against him or her and
incurred by him or her in any such capacity, or arising out of his or her status
as such, whether or not the corporation shall have indemnified him or her
against such liability under the provisions of this Article. Upon a majority
vote of a quorum of the Board of Directors, the corporation may indemnify a
person who is or was an employee or agent of the corporation, or if such
employee or agent is or was serving at the 

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<PAGE>
request of the corporation as a director, officer, trustee, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
pursuant to and in accordance with the provisions of this Article.

                             IX. DIRECTOR LIABILITY

      To the fullest extent permitted by the General Corporation Law of
Delaware, as it exists on the date hereof or may hereafter be amended, a
director of this corporation shall not be personally liable to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director. Any amendment to or repeal of this Article shall not adversely affect
a director of the corporation with respect to any conduct of such director
occurring prior to such amendment or repeal.

                  X. TRANSACTIONS WITH INTERESTED STOCKHOLDERS

      The corporation hereby elects not to be governed by Section 203 of Title 8
of the General Corporation Law of Delaware.

                                XI. INCORPORATOR

      The name and mailing address of the incorporator is Kevin C. James, 6520
South 190th Street, Kent, Washington 98032. The powers and liabilities of the
incorporator shall terminate upon the filing of the Certificate of
Incorporation.

                               XII. MISCELLANEOUS

      12.1 Except as otherwise provided in this Certificate, as amended from
time to time, the corporation reserves the right to amend, alter, change, or
repeal any provision contained in this Certificate in any manner now or
hereafter prescribed or permitted by statute. All rights, powers, privileges and
discretionary authority granted or conferred upon stockholders or directors in
this Certificate are granted subject to this reservation. A stockholder of the
corporation does not have a vested property right resulting from any provision
of this Certificate of Incorporation.

      12.2 The corporation shall have authority to correct clerical errors in
any documents filed with the Secretary of State of Delaware, including this
Certificate or any amendments hereto, without the necessity of special
stockholder approval of such corrections.

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<PAGE>
      THE UNDERSIGNED, for the purpose of forming a corporation under the laws
of the State of Delaware, does make, file and record this Certificate, and does
certify that the facts herein stated are true, and have accordingly hereunto set
his hand this _____ day of February, 1997.



                                          _____________________________________
                                          Kevin C. James

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