<PAGE>
 
                                                                    Exhibit 10.3

                                        
                                        

                                _______________


                       WILSONS THE LEATHER EXPERTS INC.


                          SERIES A AND SERIES B NOTES
                         11 1/4% SENIOR NOTES DUE 2004


                                _______________


                                   INDENTURE

                          Dated as of August 18, 1997

                                        
                                _______________


                 Norwest Bank Minnesota, National Association

                                        
                                _______________


                                    Trustee
<PAGE>
 
                             CROSS-REFERENCE TABLE*

<TABLE>
<CAPTION>
Trust Indenture
  Act Section                             Indenture Section
<S>                                       <C>
310 (a)(1)..............................  7.10
(a)(2)..................................  7.10
(a)(3)..................................  N.A.
(a)(4)..................................  N.A.
(a)(5)..................................  7.10
(b).....................................  7.10
(c).....................................  N.A.
311 (a).................................  7.11
(b).....................................  7.11
(c).....................................  N.A.
312 (a).................................  2.05
(b).....................................  11.03
(c).....................................  11.03
313 (a).................................  7.06
(b)(1)..................................  N.A.
(b)(2)..................................  7.07
(c).....................................  7.06;11.02
(d).....................................  7.06
314 (a).................................  4.03;11.02
(b).....................................  N.A.
(c)(1)..................................  11.04
(c)(2)..................................  11.04
(c)(3)..................................  N.A.
(d).....................................  N.A.
(e).....................................  11.05
(f).....................................  N.A.
315 (a).................................  7.01
(b).....................................  7.05,11.02
(c).....................................  7.01
(d).....................................  7.01
(e).....................................  6.11
316 (a)(last sentence)..................  2.09
(a)(1)(A)...............................  6.05
(a)(1)(B)...............................  6.04
(a)(2)..................................  N.A.
(b).....................................  6.07
(c).....................................  2.12
317 (a)(1)..............................  6.08
(a)(2)..................................  6.09
(b).....................................  2.04
318 (a).................................  11.01
(b).....................................  N.A.
(c).....................................  11.01
</TABLE>

N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
 
                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                                 Page
                                                                                 ----
<S>                                                                              <C>
ARTICLE 1   DEFINITIONS AND INCORPORATION BY REFERENCE............................  1

          Section 1.01  Definitions...............................................  1
          Section 1.02  Other Definitions......................................... 12
          Section 1.03  Incorporation by Reference of Trust Indenture Act......... 13
          Section 1.04  Rules of Construction..................................... 13

ARTICLE 2   THE SENIOR NOTES...................................................... 14

          Section 2.01  Form and Dating........................................... 14
          Section 2.02  Execution and Authentication.............................. 14
          Section 2.03  Registrar and Paying Agent................................ 15
          Section 2.04  Paying Agent to Hold Money in Trust....................... 15
          Section 2.05  Holder Lists.............................................. 15
          Section 2.06  Transfer and Exchange..................................... 15
          Section 2.07  Replacement Senior Notes.................................. 21
          Section 2.08  Outstanding Senior Notes.................................. 22
          Section 2.09  Treasury Senior Notes..................................... 22
          Section 2.10  Temporary Senior Notes.................................... 22
          Section 2.11  Cancellation.............................................. 22
          Section 2.12  Defaulted Interest........................................ 23

ARTICLE 3   REDEMPTION AND PREPAYMENT............................................. 23

          Section 3.01  Notices to Trustee........................................ 23
          Section 3.02  Selection of Senior Notes to Be Redeemed.................. 23
          Section 3.03  Notice of Redemption...................................... 24
          Section 3.04  Effect of Notice of Redemption............................ 24
          Section 3.05  Deposit of Redemption Price............................... 24
          Section 3.06  Senior Notes Redeemed in Part............................. 25
          Section 3.07  Optional Redemption....................................... 25
          Section 3.08  Mandatory Redemption...................................... 25
          Section 3.09  Offer to Purchase by Application of Excess Proceeds....... 26

ARTICLE 4   COVENANTS............................................................. 27

          Section 4.01  Payment of Senior Notes................................... 27
          Section 4.02  Maintenance of Office or Agency........................... 28
          Section 4.03  Reports................................................... 28
          Section 4.04  Compliance Certificate.................................... 29
          Section 4.05  Taxes..................................................... 29
          Section 4.06  Stay, Extension and Usury Laws............................ 29
          Section 4.07  Restricted Payments....................................... 30
          Section 4.08  Dividend and Other Payment Restrictions Affecting
                         Subsidiaries............................................. 32
          Section 4.09  Incurrence of Indebtedness and Issuance of Preferred
                         Stock.................................................... 32
          Section 4.10  Asset Sales............................................... 35
          Section 4.11  Transactions with Affiliates.............................. 35
          Section 4.12  Liens..................................................... 36
</TABLE>

                                       i
<PAGE>
 
<TABLE>
<S>                                                                                <C> 
          Section 4.13  Line of Business.......................................... 36
          Section 4.14  Corporate Existence....................................... 36
          Section 4.15  Offer to Repurchase Upon Change of Control................ 36
          Section 4.16  Limitation On Issuances And Sales Of Capital Stock Of
                         Wholly Owned Restricted Subsidiaries..................... 37
          Section 4.17  Limitations on Issuances of Guarantees of Indebtedness.... 37
          Section 4.18  Payments For Consent...................................... 38

ARTICLE 5   SUCCESSORS............................................................ 38

          Section 5.01  Merger, Consolidation, or Sale of Assets.................. 38
          Section 5.02  Successor Corporation Substituted......................... 38

ARTICLE 6   DEFAULTS AND REMEDIES................................................. 39

          Section 6.01  Events of Default......................................... 39
          Section 6.02  Acceleration.............................................. 40
          Section 6.03  Other Remedies............................................ 41
          Section 6.04  Waiver of Past Defaults................................... 41
          Section 6.05  Control by Majority....................................... 42
          Section 6.06  Limitation on Suits....................................... 42
          Section 6.07  Rights of Holders of Senior Notes to Receive Payment...... 42
          Section 6.08  Collection Suit by Trustee................................ 42
          Section 6.09  Trustee May File Proofs of Claim.......................... 43
          Section 6.10  Priorities................................................ 43
          Section 6.11  Undertaking for Costs..................................... 43

ARTICLE 7   TRUSTEE............................................................... 44

          Section 7.01  Duties of Trustee......................................... 44
          Section 7.02  Rights of Trustee......................................... 45
          Section 7.03  Individual Rights of Trustee.............................. 45
          Section 7.04  Trustee's Disclaimer...................................... 45
          Section 7.05  Notice of Defaults........................................ 46
          Section 7.06  Reports by Trustee to Holders of the Senior Notes......... 46
          Section 7.07  Compensation and Indemnity................................ 46
          Section 7.08  Replacement of Trustee.................................... 47
          Section 7.09  Successor Trustee by Merger, etc.......................... 48
          Section 7.10  Eligibility; Disqualification............................. 48
          Section 7.11  Preferential Collection of Claims Against Company......... 48

ARTICLE 8   LEGAL DEFEASANCE AND COVENANT DEFEASANCE.............................. 48

          Section 8.01  Option to Effect Legal Defeasance or Covenant
                         Defeasance............................................... 48
          Section 8.02  Legal Defeasance and Discharge............................ 48
          Section 8.03  Covenant Defeasance....................................... 49
          Section 8.04  Conditions to Legal or Covenant Defeasance................ 49
          Section 8.05  Deposited Money and Government Securities to be Held in
                         Trust;
                        Other Miscellaneous Provisions............................ 50
          Section 8.06  Repayment to Company...................................... 51
          Section 8.07  Reinstatement............................................. 51

ARTICLE 9   AMENDMENT, SUPPLEMENT AND WAIVER...................................... 51
</TABLE>

                                      ii
<PAGE>
 
<TABLE>
<S>                                                                                <C>
          Section 9.01   Without Consent of Holders of Senior Notes............... 51
          Section 9.02   With Consent of Holders of Senior Notes.................. 52
          Section 9.03   Compliance with Trust Indenture Act...................... 53
          Section 9.04   Revocation and Effect of Consents........................ 53
          Section 9.05   Notation on or Exchange of Senior Notes.................. 54
          Section 9.06   Trustee to Sign Amendments, etc.......................... 54

ARTICLE 10  GUARANTEES............................................................ 54

          Section 10.01  Unconditional Guarantee.................................. 54
          Section 10.02  Severability............................................. 55
          Section 10.03  Release of a Guarantor................................... 55
          Section 10.04  Limitation of Guarantor's Liability...................... 55
          Section 10.05  Guarantors May Consolidate, Etc on Certain Terms......... 56
          Section 10.06  Contribution............................................. 56
          Section 10.07  Waiver of Subrogation.................................... 57
          Section 10.08  Execution of Guarantee................................... 57
          Section 10.09  Obligations of Each Guarantor Unconditional.............. 57
          Section 10.10  Notice to Trustee........................................ 58
          Section 10.11  Reliance on Judicial Order of Certificate of
                          Liquidating Agent....................................... 58

ARTICLE 11  MISCELLANEOUS......................................................... 58

          Section 11.01  Trust Indenture Act Controls............................. 58
          Section 11.02  Notices.................................................. 58
          Section 11.03  Communication by Holders of Senior Notes with Other
                          Holders of Senior Notes................................. 60
          Section 11.04  Certificate and Opinion as to Conditions Precedent....... 60
          Section 11.05  Statements Required in Certificate or Opinion............ 60
          Section 11.06  Rules by Trustee and Agents.............................. 60
          Section 11.07  No Personal Liability of Directors, Officers, Employees
                          and Stockholders........................................ 60
          Section 11.08  Governing Law............................................ 61
          Section 11.09  No Adverse Interpretation of Other Agreements............ 61
          Section 11.10  Successors............................................... 61
          Section 11.11  Severability............................................. 61
          Section 11.12  Counterpart Originals.................................... 61
          Section 11.13  Table of Contents, Headings, etc......................... 61
</TABLE>

                                      iii
<PAGE>
 
                                    EXHIBITS

Exhibit A   FORM OF SENIOR NOTE
Exhibit A-1 FORM OF SENIOR GUARANTEE
Exhibit B   CERTIFICATE OF TRANSFEROR

                                      iv
<PAGE>
 
     INDENTURE dated as of August 18, 1997 among Wilsons The Leather Experts
Inc., a Minnesota corporation (the "Company"), the other corporations listed on
the signature pages hereof (each a "Guarantor" and collectively, the
"Guarantors"), and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee").

     The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 11 1/4% Series A Senior Notes due 2004 (the "Series A Senior Notes") and the
11 1/4% Series B Senior Notes due 2004 (the "Series B Senior Notes" or the
"Exchange Notes" and, together with the Series A Senior Notes, the "Senior
Notes"):

                                  ARTICLE 1.

                  DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01.   Definitions.

     "Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.

     "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided  that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.

     "Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of
(i) the amount by which the fair value of the property of such Guarantor exceeds
the total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date), but excluding liabilities under the
Guarantee, of such Guarantor at such date and (ii) the amount by which the
present fair salable value of the assets of such Guarantor at such date exceeds
the amount that will be required to pay the probable liability of such Guarantor
on its debts (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date and after giving effect to any collection from
any Subsidiary of such Guarantor in respect of the obligations of such
Subsidiary under the Guarantee), excluding debt in respect of the Guarantee, as
they become absolute and matured.

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

     "Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory in the ordinary course of business
consistent with past practices; (provided that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole shall be governed by Section 4.15 hereof
and/or Section 5.01 hereof and not by Section 4.10 hereof), and (ii) the issue
or sale by the Company or any of its Restricted Subsidiaries of Equity Interests
of any of the Company's Restricted Subsidiaries, in the case of either clause
(i) or (ii), whether in a single transaction or a series of related transactions
(a) that have a fair market value in excess of $1.0 million or (b) for net

                                       1
<PAGE>
 
proceeds in excess of $1.0 million. Notwithstanding the foregoing: (i) a
transfer of assets by the Company to a Wholly Owned Restricted Subsidiary or by
a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned
Restricted Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned
Restricted Subsidiary to the Company or to another Wholly Owned Restricted
Subsidiary, and (iii) a Restricted Payment that is permitted by Section 4.07
hereof shall not be deemed to be Asset Sales.

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

     "Board of Directors" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.

     "Borrowing Base" means, as of any date, an amount equal to the sum of (i)
sixty-five percent (65%) of the book value of Eligible Inventory, other than Lay
Away Inventory (as such terms are defined in the Senior Credit Facility on the
Issue Date) valued on a first-in, first-out basis (at the lower of cost or
market), plus (ii) sixty-five percent (65%) of Lay Away Inventory valued as
follows: (unpaid purchase price / .625) x .50, minus (iii) Reserves (as defined
in the Senior Credit Facility on the Issue Date). To the extent that information
is not available to calculate the amount of Eligible Inventory, Lay Away
Inventory or Reserves, as of a specific date, the Company may utilize the most
recent available information for purposes of calculating the Borrowing Base.

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

     "Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.

     "Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership (whether general or limited)
or limited liability company, partnership or membership interests and (iv) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person, other than interests or participations in the nature of compensation.

     "Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one year from the date of acquisition thereof, (ii) commercial
paper maturing no more than one year from the date of creation thereof and
having an investment rating of A-2 or P-2 or better from either Standard &
Poor's Corporation or Moody's Investors Service, Inc., (iii) time deposits,
demand deposits and certificates of deposit, maturing no more than one year from
the date of creation thereof, issued by commercial banks incorporated under the
laws of the United States of America, each having combined capital, surplus and
undivided profits of not less than $300,000,000 and having a senior secured
rating of "A" or better by a nationally recognized rating agency (an "A Bank"),
(iv) time deposits, maturing no more than 30 days from the date of creation
thereof with an A Bank, and (v) overnight repurchase obligations issued by an A
Bank.

     "Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation or the grant of mortgages, security interests or liens),
in one or a series of related transactions, of all or substantially all of the
assets of the Company and its Subsidiaries taken as a whole to any "person" (as
such term is used in Section 

                                       2
<PAGE>
 
13(d)(3) of the Exchange Act) other than the Company and/or one or more
Subsidiaries, (ii) the adoption of a plan relating to the complete liquidation
or dissolution of the Company, (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above except that no two or more individuals or
entities shall be deemed to be a single "person" solely by reason of being
parties to the Shareholder Agreement), other than the Principals and their
Related Parties, becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is currently exercisable or is exercisable
only upon the occurrence of a subsequent condition and except that no individual
or entity shall be deemed to "beneficially own" any Voting Stock beneficially
owned by any other individual or entity solely by reason of being a party to the
Shareholder Agreement), directly or indirectly, of more than 40% of the Voting
Stock of the Company (measured by voting power rather than number of shares),
provided that a Change of Control shall not occur as a result of a merger,
consolidation or other transaction in which the persons who beneficially owned
the Voting Stock of the Company immediately prior to the transaction continue to
own, directly or indirectly, at least 60% of the Voting Stock of the corporation
surviving such transaction or its parent corporation (measured by voting power
rather than number of shares) in substantially the same percentage relative to
each other as they owned before the transaction (except as affected by cashing
out fractional shares or dissenting shareholders) or (iv) the first day on which
a majority of the members of the Board of Directors of the Company are not
Continuing Directors.

     "Code" means the Internal Revenue Code of 1986, as amended (or any
successor statute thereto), and the regulations promulgated thereunder, all as
in effect from time to time.

     "Company" means Wilsons The Leather Experts Inc., a Minnesota corporation.

     "Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (including non-cash compensation
expenses associated with vesting of restricted stock or other equity
compensation but excluding any non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of such Person and
its Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income, minus (v) non-cash items increasing such Consolidated
Net Income for such period, in each case, on a consolidated basis and determined
in accordance with GAAP.

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

                                       3
<PAGE>
 
determined in accordance with GAAP; provided that (i) the Net Income (but not
loss) of any Person that is not a Restricted Subsidiary or that is accounted for
by the equity method of accounting shall be included only to the extent of the
amount of dividends or distributions paid in cash to the referent Person or a
Wholly Owned Restricted Subsidiary thereof that is a Guarantor, (ii) the Net
Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded, (iii) the
cumulative effect of a change in accounting principles shall be excluded and,
(iv) solely with respect to clause (i) of paragraph (c) of Section 4.07 hereof,
the Net Income of any Restricted Subsidiary shall be excluded to the extent that
the declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (that has not been obtained),
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders.

     "Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its Restricted Subsidiaries as of such date plus (ii) the respective amounts
reported on such Person's balance sheet as of such date with respect to any
series of preferred stock (other than Disqualified Stock) that by its terms is
not entitled to the payment of dividends unless such dividends may be declared
and paid only out of net earnings in respect of the year of such declaration and
payment, but only to the extent of any cash received by such Person upon
issuance of such preferred stock, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets of
a going concern business made within 12 months after the acquisition of such
business) subsequent to the date of this Indenture in the book value of any
asset owned by such Person or a Restricted Subsidiary of such Person, (y) all
Investments as of such date in unconsolidated Restricted Subsidiaries and in
Persons that are not Restricted Subsidiaries (except, in each case, Permitted
Investments), and (z) all unamortized debt discount and expense and unamortized
deferred charges as of such date, all of the foregoing determined in accordance
with GAAP.

     "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of this Indenture or (ii) was nominated for election or
elected or appointed to such Board of Directors by the Board of Directors at a
time when a majority of the Board consisted of Continuing Directors.

     "Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.

     "Custodian" means any receiver, trustee, assignee, liquidatory
sequestration or similar official under any Bankruptcy Law.

     "Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.

     "Definitive Senior Notes" means Senior Notes that are in the form of the
Senior Notes attached hereto as Exhibit A, that do not include the information
called for by footnotes 1 and 2 thereof.

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

                                       4
<PAGE>
 
     "Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Senior Notes mature.

     "Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

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

     "Exchange Offer" means the offer that may be made by the Company pursuant
to the Registration Rights Agreement to exchange Exchange Notes for Series A
Senior Notes.

     "Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Senior Credit Facility) in
existence on the date of this Indenture, until such amounts are repaid.

     "Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated
interest expense of such Person and its Restricted Subsidiaries that was
capitalized during such period, and (iii) any interest expense on Indebtedness
of another Person that is guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or one of its
Restricted Subsidiaries (whether or not such guarantee or Lien is called upon),
and (iv) the product of (a) all dividend payments, whether or not in cash, on
any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable solely in
Equity Interests of the Company, times (b) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of such Person, expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP.

     "Fixed Charge Coverage Ratio" means with respect to any Person and its
Restricted Subsidiaries for any period, the ratio of the Consolidated Cash Flow
of such Person and its Restricted Subsidiaries for such period to the Fixed
Charges of such Person and its Restricted Subsidiaries for such period. In the
event that the Company or any of its Restricted Subsidiaries incurs, assumes,
guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been made by the Company or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be deemed to have 

                                       5
<PAGE>
 
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (ii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of (including, without limitation, in any Asset Sale) prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.

     "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.

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

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

     "Guarantee" means, individually and collectively, the guarantees given by
the Guarantors pursuant to Article 10 hereof, including a notation in the Senior
Notes substantially in the form attached hereto as Exhibit A-1.

     "Guarantors" means each of (i) Subsidiaries of the Company in existence on
the date of this Indenture (except Wilsons (UK) Limited, Wilsons Leather Gatsair
Limited and Wilsons Leather Gatsland Limited) and listed on the signature pages
hereof and (ii) any other Subsidiary that executes a Guarantee in accordance
with the provisions of this Indenture, and their respective successors and
assigns to the extent not released pursuant to the terms of this Indenture.

     "Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.

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

     "Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the

                                       6
<PAGE>
 
Guarantee by such Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.

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

     "Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Restricted Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of Section 4.07 hereof.

     "Issue Date" means August 18, 1997.

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

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

     "Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.

     "Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).

     "Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct 

                                       7
<PAGE>
 
costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness (other than the Senior Credit Facility) secured by
a Lien on the asset or assets that were the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.

     "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender, and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Senior Credit Facility) of the Company or any of its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the payment thereof to
be accelerated or payable prior to its stated maturity; and (iii) as to which
the lenders have been notified in writing that they will not have any recourse
to the stock or assets of the Company or any of its Restricted Subsidiaries.

     "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

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

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

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

     "Permitted Business" means any business conducted by the Company or any of
its Subsidiaries on the Issue Date and any other clothing or accessories
retailing or wholesaling business.

     "Permitted Investments" means (a) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company that is a Guarantor; (b) any
Investment in Cash Equivalents; (c) any Investment by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment (i) such Person becomes a Wholly Owned Restricted Subsidiary of the
Company and a Guarantor that is engaged in a Permitted Business, or (ii) such
Person is merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its assets to, or is liquidated into, the Company
or a Wholly Owned Restricted Subsidiary of the Company that is a Guarantor and
that is engaged in the same or a similar line of business as the Company and its
Restricted Subsidiaries were engaged in on the date of this Indenture; (d) any
Restricted Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with Section 4.10
hereof; (e) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than 

                                       8
<PAGE>
 
Disqualified Stock) of the Company; and (f) other Investments in any Person
having an aggregate fair market value (measured on the date each such Investment
was made and without giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this clause (f) that are at
the time outstanding, not to exceed $5.0 million.

     "Permitted Liens" means (i) Liens securing Obligations of the Company or
any Restricted Subsidiary under the Senior Credit Facility; (ii) Liens in favor
of the Company and liens by any store Subsidiary in favor of Wilsons Leather
Holdings Inc. deemed to arise by reason of the consignment of inventory to such
store Subsidiary; (iii) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Company or any Restricted
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company, provided that such
Liens were in existence prior to the contemplation of such acquisition; (v)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature including pledges
or deposits to secure bids, tender contracts (other than contracts for the
payment of money) or leases incurred in the ordinary course of business; (vi)
Liens to secure Indebtedness (including Capital Lease Obligations) permitted by
clause (iv) of the third paragraph of Section 4.09 hereof covering only the
assets acquired with such Indebtedness; (vii) Liens existing on the date of this
Indenture; (viii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (ix) zoning restrictions,
easements, licenses or other restrictions on the use of any real estate or other
minor irregularities in the title thereto, so long as the same do not materially
impair the use, value or marketability of such real estate; (x) Liens on assets
of Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted
Subsidiaries and (xi) Liens incurred in the ordinary course of business of the
Company or any Restricted Subsidiary of the Company with respect to obligations
that do not exceed $5.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Company or
such Restricted Subsidiary.

     "Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than under the Senior Credit Facility, the extension, refinancing,
renewal, replacement, defeasance or refunding of which is governed by the
definition of such term); provided that: (i) the principal amount (or accreted
value, if applicable) of such Permitted Refinancing Indebtedness does not exceed
the principal amount of (or accreted value, if applicable), plus accrued
interest on, the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of reasonable expenses incurred in
connection therewith); (ii) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Senior
Notes, such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and is subordinated in right of payment to, the
Senior Notes on terms at least as favorable to the Holders of Senior Notes as
those contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) 

                                       9
<PAGE>
 
such Indebtedness is incurred either by the Company or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.

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

     "Principals" means Joel N. Waller and David L. Rogers.

     "Registration Rights Agreement" means the Registration Rights Agreement,
dated as of August 18, 1997, by and among the Company and the other parties
named on the signature pages thereof, as such agreement may be amended, modified
or supplemented from time to time.

     "Related Party" with respect to any Principal means (A) any spouse or
immediate family member of such Principal or (B) any trust, corporation,
partnership, limited liability company or other entity, a majority of the
beneficial interest or voting interest in which is held, directly or indirectly,
by such Principal and/or such other Persons referred to in the immediately
preceding clause (A) with respect to such Principal.

     "Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Services department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.

     "Restricted Investment" means an Investment other than a Permitted
Investment.

     "Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.

     "SEC" means the Securities and Exchange Commission.

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

     "Senior Credit Facility" means that certain Senior Credit Facility, dated
as of May 25, 1996, by and among Wilsons Leather Holdings Inc. (as borrower),
the Company and certain of its Subsidiaries (as guarantors) and the lenders
party thereto, providing for up to $150.0 million of revolving credit borrowings
and a $90.0 million letter of credit subfacility (as such amount may be
increased as permitted under Section 4.09) hereof, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, extended, renewed,
refunded, replaced or refinanced from time to time (including, without
limitation, any refinancing in which the Company replaces Wilsons Leather
Holdings Inc. as borrower). Indebtedness under the Senior Credit Facility
outstanding on the date on which Senior Notes are first issued and authenticated
under this Indenture shall be deemed to have been incurred on such date in
reliance on the exception provided by clause (i) of the third paragraph of
Section 4.09 hereof.

     "Senior Note Custodian" means the Trustee, as custodian with respect to the
Senior Notes in global form, or any successor entity thereto.

                                       10
<PAGE>
 
     "Shareholder Agreement" means the shareholder agreement dated as of May 25,
1996 among the Company, Leather Investors Limited Partnership I, Leather
Investors Limited Partnership II and certain other shareholders of the Company
and partners of such partnerships, as amended.

     "Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.

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

     "Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).

     "TIA" means the Trustee Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.

     "Transfer Restricted Securities" means securities that bear or are required
to bear the legend set forth in Section 2.06 hereof.

     "Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.

     "Unrestricted Subsidiary" means (i) any Subsidiary (other than Wilsons
Leather Holdings Inc. or any of its parents or any successor to any of them)
that is designated by the Board of Directors as an Unrestricted Subsidiary
pursuant to a resolution of the Board of Directors; but only to the extent that
such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is
not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company; (c) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries has
any direct or indirect obligation (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; (d) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e)
has at least one director on its board of directors that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the resolution of the Board of Directors giving effect to
such designation and an Officers' Certificate certifying that such designation

                                       11
<PAGE>
 
complied with the foregoing conditions and was permitted by Section 4.07 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described in Section 4.09 hereof,
the Company shall be in default of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.09 hereof,
calculated on a pro-forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, and (ii) no Default or Event of
Default would be in existence following such designation.

     "Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the board of
directors of such Person.

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

     "Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person and/or by one or more Wholly Owned Subsidiaries
of such Person.

Section 1.02.    Other Definitions.

<TABLE> 
<CAPTION> 
                                                    Defined in
                         Term                         Section
     <S>                                            <C>
     "Affiliate Transaction".....................      4.11
     "Asset Sale Offer"..........................      3.09
     "Change of Control Offer"...................      4.15
     "Change of Control Payment".................      4.15
     "Change of Control Payment Date"............      4.15
     "Covenant Defeasance".......................      8.03
     "Event of Default"..........................      6.01
     "Excess Proceeds"...........................      4.10
     "incur".....................................      4.09
     "Legal Defeasance"..........................      8.02
     "Offer Amount"..............................      3.09
     "Offer Period"..............................      3.09
     "Paying Agent"..............................      2.03
     "Permitted Debt"............................      4.09
     "Purchase Date".............................      3.09
     "Registrar".................................      2.03
</TABLE> 

                                       12
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                    Defined in
                         Term                         Section
     <S>                                            <C>
     "Restricted Payments".......................      4.07
</TABLE>

Section 1.03.   Incorporation by Reference of Trust Indenture Act.

     Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.

     The following TIA terms used in this Indenture have the following meanings:

     "indenture securities" means the Senior Notes and the Guarantees;

     "indenture security Holder" means a Holder of a Senior Note;

     "indenture to be qualified" means this Indenture;

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

     "obligor" on the Senior Notes means the Company and any successor obligor
upon the Senior Notes or any Guarantor.

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

Section 1.04.   Rules of Construction.

     Unless the context otherwise requires:

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

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

          (3)    "or" is not exclusive;

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

          (5)    provisions apply to successive events and transactions; and

          (6)    references to sections of or rules under the Securities Act
     shall be deemed to include substitute, replacement or successor sections or
     rules adopted by the SEC from time to time.

                                       13
<PAGE>
 
                                  ARTICLE  2.

                               THE SENIOR NOTES

Section 2.01.   Form and Dating.

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

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

     Senior Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the text referred to in footnotes 1 and 2
thereto).  Senior Notes issued in definitive form shall be substantially in the
form of Exhibit A attached hereto (but without including the text referred to in
footnotes 1 and 2 thereto).  Each Global Senior Note shall represent such of the
outstanding Senior Notes as shall be specified therein and each shall provide
that it shall represent the aggregate amount of outstanding Senior Notes from
time to time endorsed thereon and that the aggregate amount of outstanding
Senior Notes represented thereby may from time to time be reduced or increased,
as appropriate, to reflect exchanges and redemptions.  Any endorsement of a
Global Senior Note to reflect the amount of any increase or decrease in the
amount of outstanding Senior Notes represented thereby shall be made by the
Trustee or the Senior Note Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.06 hereof.

Section 2.02.   Execution and Authentication.

     Two Officers shall sign the Senior Notes for the Company by manual or
facsimile signature.

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

     A Senior Note shall not be valid until authenticated by the manual
signature of the Trustee.  The signature shall be conclusive evidence that the
Senior Note has been authenticated under this Indenture.

     The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Senior Notes for original issue up to the aggregate
principal amount stated in paragraph 4 of the Senior Notes.  The aggregate
principal amount of Senior Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.

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

                                       14
<PAGE>
 
Section 2.03.   Registrar and Paying Agent.

     (a)  The Company shall maintain an office or agency where Senior Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Senior Notes may be presented for payment ("Paying
Agent").  The Registrar shall keep a register of the Senior Notes and of their
transfer and exchange.  The Company may appoint one or more co-registrars and
one or more additional paying agents.  The term "Registrar" includes any co-
registrar and the term "Paying Agent" includes any additional paying agent.  The
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company shall notify the Trustee in writing of the name and address of any
Agent not a party to this Indenture.  If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such.  The Company or any of its Subsidiaries may act as Paying Agent or
Registrar.

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

     The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Senior Note Custodian with respect to the Global
Senior Notes.

Section 2.04.   Paying Agent to Hold Money in Trust.

     The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Liquidated Damages, if any, or interest on the Senior Notes, and will
notify the Trustee of any default by the Company or any Guarantor in making any
such payment.  While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee.  The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other than the Company or
a Subsidiary) shall have no further liability for the money.  If the Company or
a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Company or a
Guarantor, the Trustee shall serve as Paying Agent for the Senior Notes.

Section 2.05.   Holder Lists.

     The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a).  If the Trustee is
not the Registrar, the Company and/or the Guarantors shall furnish to the
Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Senior Notes and the Company and the Guarantors shall
otherwise comply with TIA (S) 312(a).

Section 2.06.   Transfer and Exchange.

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

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

                                       15
<PAGE>
 
          (y)    to exchange such Definitive Senior Notes for an equal principal
                 amount of Definitive Senior Notes of other authorized
                 denominations,

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

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

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

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

                 (B)  if such Transfer Restricted Security is being transferred
                      to a "qualified institutional buyer" (as defined in Rule
                      144A under the Securities Act) in accordance with Rule
                      144A under the Securities Act or pursuant to an exemption
                      from registration in accordance with Rule 144 or Rule 904
                      under the Securities Act or pursuant to an effective
                      registration statement under the Securities Act, a
                      certification to that effect from such Holder (in
                      substantially the form of Exhibit B hereto); or

                 (C)  if such Transfer Restricted Security is being transferred
                      in reliance on another exemption from the registration
                      requirements of the Securities Act, a certification to
                      that effect from such Holder (in substantially the form of
                      Exhibit B hereto) and an Opinion of Counsel from such
                      Holder or the transferee reasonably acceptable to the
                      Company and to the Registrar to the effect that such
                      transfer is in compliance with the Securities Act.

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

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

          (ii)   whether or not such Definitive Senior Note is a Transfer
                 Restricted Security, written instructions from the Holder
                 thereof directing the Trustee to make, or to

                                       16
<PAGE>
 
                 direct the Senior Note Custodian to make, an endorsement on the
                 Global Senior Note to reflect an increase in the aggregate
                 principal amount of the Senior Notes represented by the Global
                 Senior Note,

in which case the Trustee shall cancel such Definitive Senior Note in accordance
with Section 2.11 hereof and cause, or direct the Senior Note Custodian to
cause, in accordance with the standing instructions and procedures existing
between the Depository and the Senior Note Custodian, the aggregate principal
amount of Senior Notes represented by the Global Senior Note to be increased
accordingly.  If no Global Senior Notes are then outstanding, the Company shall
issue and, upon receipt of an authentication order in accordance with Section
2.02 hereof, the Trustee shall authenticate a new Global Senior Note in the
appropriate principal amount.

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

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

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

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

                 (B)  if such beneficial interest is being transferred to a
                      "qualified institutional buyer" (as defined in Rule 144A
                      under the Securities Act) in accordance with Rule 144A
                      under the Securities Act or pursuant to an exemption from
                      registration in accordance with Rule 144 or Rule 904 under
                      the Securities Act or pursuant to an effective
                      registration statement under the Securities Act, a
                      certification to that effect from the transferor (in
                      substantially the form of Exhibit B hereto); or

                 (C)  if such beneficial interest is being transferred in
                      reliance on another exemption from the registration
                      requirements of the Securities Act, a certification to
                      that effect from the transferor (in substantially the form
                      of Exhibit B hereto) and an Opinion of Counsel from the
                      transferee or transferor reasonably acceptable to the
                      Company and to the Registrar to the effect that such
                      transfer is in compliance with the Securities Act,

                 in which case the Trustee or the Senior Note Custodian, at the
                 direction of the Trustee, shall, in accordance with the
                 standing instructions and procedures existing between the
                 Depository and the Senior Note Custodian, cause the

                                       17
<PAGE>
 
                 aggregate principal amount of Global Senior Notes to be reduced
                 accordingly and, following such reduction, the Company shall
                 execute and, upon receipt of an authentication order in
                 accordance with Section 2.02 hereof, the Trustee shall
                 authenticate and deliver to the transferee a Definitive Senior
                 Note in the appropriate principal amount.

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

     (e)  Restrictions on Transfer and Exchange of Global Senior Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Senior Note may not
be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.

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

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

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

then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Senior Notes in an aggregate principal amount equal to the
principal amount of the Global Senior Notes in exchange for such Global Senior
Notes.

     (g)  Legends.

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

                 "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
                 ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
                 UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933
                 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY
                 NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
                 SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
                 PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY

                                       18
<PAGE>
 
                 NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
                 THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
                 RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
                 HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
                 SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
                 (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
                 QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
                 THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
                 OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
                 RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
                 STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
                 REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN
                 ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
                 REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
                 OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR
                 (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
                 EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
                 ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
                 JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
                 HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
                 SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
                 IN (A) ABOVE."

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

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

                 (B)  in the case of any Transfer Restricted Security
                      represented by a Global Senior Note, such Transfer
                      Restricted Security shall not be required to bear the
                      legend set forth in (i) above, but shall continue to be
                      subject to the provisions of Section 2.06(c) hereof;
                      provided, however, that with respect to any request for an
                      exchange of a Transfer Restricted Security that is
                      represented by a Global Senior Note for a Definitive
                      Senior Note that does not bear the legend set forth in (i)
                      above, which request is made in reliance upon Rule 144,
                      the Holder thereof shall certify in writing to the
                      Registrar that such request is being made pursuant to Rule
                      144 (such certification to be substantially in the form of
                      Exhibit B hereto).

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

                                       19
<PAGE>
 
                 exchange for Series A Senior Notes accepted for exchange in the
                 Exchange Offer, which Exchange Notes shall not bear the legend
                 set forth in (i) above, and the Registrar shall rescind any
                 restriction on the transfer of such Senior Notes, in each case
                 unless the Holder of such Series A Senior Notes is either (A) a
                 broker-dealer, (B) a Person participating in the distribution
                 of the Series A Senior Notes or (C) a Person who is an
                 affiliate (as defined in Rule 144A) of the Company.

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

     (i)  General Provisions Relating to Transfers and Exchanges.

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

          (ii)   No service charge shall be made to a Holder for any
                 registration of transfer or exchange, but the Company may
                 require payment of a sum sufficient to cover any transfer tax
                 or similar governmental charge payable in connection therewith
                 (other than any such transfer taxes or similar governmental
                 charge payable upon exchange or transfer pursuant to Sections
                 3.07, 4.10, 4.15 and 9.05 hereto).

          (iii)  The Registrar shall not be required to register the transfer of
                 or exchange any Senior Note selected for redemption in whole or
                 in part, except the unredeemed portion of any Senior Note being
                 redeemed in part.

          (iv)   All Definitive Senior Notes and Global Senior Notes issued upon
                 any registration of transfer or exchange of Definitive Senior
                 Notes or Global Senior Notes shall be the valid obligations of
                 the Company, evidencing the same debt, and entitled to the same
                 benefits under this Indenture, as the Definitive Senior Notes
                 or Global Senior Notes surrendered upon such registration of
                 transfer or exchange.

          (v)    Prior to the issuance of any Exchange Notes in the Exchange
                 Offer, counsel to the Company and the Guarantors shall deliver
                 an Opinion of Counsel to the Trustee to the effect that:

                 (A)  the Exchange Notes have been duly authorized and, when
                      executed and authenticated in accordance with the
                      provisions of this Indenture and delivered in exchange for
                      Series A Notes in accordance with the Indenture and the
                      Exchange Offer, will be entitled to the benefits of the
                      Indenture and will be valid and binding obligations of the
                      Company, enforceable in accordance with their terms; and

                                       20
<PAGE>
 
                 (B)  when the Exchange Notes are executed and authenticated in
                      accordance with the provisions of the Indenture and
                      delivered in exchange for Series A Notes in accordance
                      with the Indenture and the Exchange Offer, the Guarantees
                      endorsed thereon will be entitled to the benefits of the
                      Indenture and will be valid and binding obligations of the
                      Guarantors, enforceable in accordance with their terms,

                 in each case, subject to such exceptions and limitations as
                 were contained in the opinion delivered by such counsel with
                 respect to the Series A Notes.

          (vi)   The Company shall not be required:

                 (A)  to issue, to register the transfer of or to exchange
                      Senior Notes during a period beginning at the opening of
                      business 15 days before the day of any selection of Senior
                      Notes for redemption under Section 3.02 hereof and ending
                      at the close of business on the day of selection; or

                 (B)  to register the transfer of or to exchange any Senior Note
                      so selected for redemption in whole or in part, except the
                      unredeemed portion of any Senior Note being redeemed in
                      part; or

                 (C)  to register the transfer of or to exchange a Senior Note
                      between a record date and the next succeeding interest
                      payment date.

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

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

Section 2.07.   Replacement Senior Notes.

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

     Every replacement Senior Note is an obligation of the Company and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Senior Notes duly issued hereunder.

                                       21
<PAGE>
 
Section 2.08.  Outstanding Senior Notes.

     The Senior Notes outstanding at any time are all the Senior Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Senior Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding.  Except as set forth in Section
2.09 hereof, a Senior Note does not cease to be outstanding (unless canceled by
the Trustee at the direction of the Company) because the Company or an Affiliate
of the Company holds the Senior Note.

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

     If the principal amount of any Senior Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

     If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Senior Notes payable on that date, then on and after that date such
Senior Notes shall be deemed to be no longer outstanding and shall cease to
accrue interest.

Section 2.09.  Treasury Senior Notes.

     In determining whether the Holders of the required principal amount of
Senior Notes have concurred in any direction, waiver or consent, Senior Notes
owned by the Company, any Guarantor or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company, shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Senior Notes that a Trustee knows are so
owned shall be so disregarded.

Section 2.10.  Temporary Senior Notes.

     Until definitive Senior Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Senior Notes upon a written
order of the Company signed by two Officers of the Company.  Temporary Senior
Notes shall be substantially in the form of definitive Senior Notes but may have
variations that the Company considers appropriate for temporary Senior Notes and
as shall be reasonably acceptable to the Trustee.  Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive Senior
Notes in exchange for temporary Senior Notes.

     Holders of temporary Senior Notes shall be entitled to all of the benefits
of this Indenture.

Section 2.11.  Cancellation.

     The Company at any time may deliver Senior Notes to the Trustee for
cancellation.  The Registrar and Paying Agent shall forward to the Trustee any
Senior Notes surrendered to them for registration of transfer, exchange or
payment.  The Trustee and no one else shall cancel all Senior Notes surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
shall destroy canceled Senior Notes (subject to the record retention requirement
of the Exchange Act).  Certification of the destruction of all canceled Senior
Notes shall be delivered to the Company.  The Company may not issue new Senior
Notes to replace Senior Notes that it has paid or that have been delivered to
the Trustee for cancellation.

                                       22
<PAGE>
 
Section 2.12.  Defaulted Interest.

     If the Company defaults in a payment of interest on the Senior Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Senior Notes and in Section 4.01 hereof.  The Company shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Senior Note and the date of the proposed payment.  The Company  shall fix
or cause to be fixed each such special record date and payment date, provided
that no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest.  At least 15 days before the special
record date, the Company (or, upon the written request of the Company, the
Trustee in the name and at the expense of the Company) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.

                                  ARTICLE 3.

                           REDEMPTION AND PREPAYMENT

Section 3.01.  Notices to Trustee.

     If the Company elects to redeem Senior Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Senior Notes to be redeemed and (iv) the redemption price.

Section 3.02.  Selection of Senior Notes to be Redeemed.

     If less than all of the Senior Notes are to be redeemed at any time, the
Trustee shall select the Senior Notes to be redeemed among the Holders of the
Senior Notes in compliance with the requirements of the principal national
securities exchange, if any, on which the Senior Notes are listed or, if the
Senior Notes are not so listed, on a pro rata basis, by lot or in accordance
with any other method the Trustee considers fair and appropriate.  In the event
of partial redemption by lot, the particular Senior Notes to be redeemed shall
be selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Senior
Notes not previously called for redemption.

     The Trustee shall promptly notify the Company in writing of the Senior
Notes selected for redemption and, in the case of any Senior Note selected for
partial redemption, the principal amount thereof to be redeemed.  Senior Notes
selected shall be in amounts equal to or greater than $1,000 and portions of
Senior Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Senior Notes of a Holder are to be redeemed,
the entire outstanding amount of Senior Notes held by such Holder, even if not a
multiple of $1,000, shall be redeemed.  Except as provided in the preceding
sentence, provisions of this Indenture that apply to Senior Notes called for
redemption also apply to portions of Senior Notes called for redemption.

                                       23
<PAGE>
 
Section 3.03.  Notice of Redemption.

     Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Senior Notes are to be redeemed at its registered address.

     The notice shall identify the Senior Notes to be redeemed and shall state:

          (a)  the redemption date;

          (b)  the redemption price;

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

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

          (e)  that Senior Notes called for redemption must be surrendered to
     the Paying Agent to collect the redemption price;

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

          (g)  the paragraph of the Senior Notes and/or Section of this
     Indenture pursuant to which the Senior Notes called for redemption are
     being redeemed; and

          (h)  that no representation is made as to the correctness or accuracy
     of the CUSIP number, if any, listed in such notice or printed on the Senior
     Notes.

     At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.

Section 3.04.  Effect of Notice of Redemption.

     Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Senior Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price.  A notice of redemption may not be
conditional.

Section 3.05.  Deposit of Redemption Price.

     One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Senior Notes to be redeemed on that date.
The Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Senior Notes to be redeemed.

                                       24
<PAGE>
 
     If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Senior
Notes or the portions of Senior Notes called for redemption.  If a Senior Note
is redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid to the
Person in whose name such Senior Note was registered at the close of business on
such record date.  If any Senior Note called for redemption shall not be so paid
upon surrender for redemption because of the failure of the Company to comply
with the preceding paragraph, interest shall be paid on the unpaid principal,
from the redemption date until such principal is paid, and to the extent lawful
on any interest not paid on such unpaid principal, in each case at the rate
provided in the Senior Notes and in Section 4.01 hereof.

Section 3.06.  Senior Notes Redeemed in Part.

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

Section 3.07.  Optional Redemption.

     (a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Senior Notes pursuant to this Section
3.07 prior to August 15, 2001. Thereafter, the Company shall have the option to
redeem the Senior Notes, in whole or in part, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month period beginning on August
15 of the years indicated below:

<TABLE> 
<CAPTION> 
          YEAR                                             PERCENTAGE
          ----                                             ----------
          <S>                                              <C> 
          2001......................................         105.625%
          2002......................................         102.813%
          2003 (and thereafter).....................         100.000%
</TABLE> 

     (b)  Notwithstanding the provisions of clause (a) of this Section 3.07, on
any one occasion prior to August 15, 2000, the Company may redeem up to 25% of
the aggregate principal amount of Senior Notes originally issued pursuant to
this Indenture with the net proceeds of a public offering of its common stock at
a redemption price equal to 111.25% of the principal amount thereof plus accrued
and unpaid interest and Liquidated Damages thereon, if any; provided that at
least 75% in aggregate principal amount of the Senior Notes originally issued
remains outstanding immediately after the occurrence of such redemption and that
such redemption occurs within 45 days of the date of the closing of such public
offering.

     (c)  Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.

Section 3.08.  Mandatory Redemption.

     Except as set forth under Sections 4.10 and 4.15 hereof, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Senior Notes.

                                       25
<PAGE>
 
Section 3.09.  Offer to Purchase by Application of Excess Proceeds.

     In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders to purchase Senior Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.

     The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period").  No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Senior Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Senior Notes tendered in response to the
Asset Sale Offer.  Payment for any Senior Notes so purchased shall be made in
the same manner as interest payments are made.

     If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Senior Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Senior Notes pursuant to the Asset Sale Offer.

     Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee.  The notice shall contain all instructions and materials
necessary to enable such Holders to tender Senior Notes pursuant to the Asset
Sale Offer.  The Asset Sale Offer shall be made to all Holders.  The notice,
which shall govern the terms of the Asset Sale Offer, shall state:

          (a)  that the Asset Sale Offer is being made pursuant to this Section
     3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
     shall remain open;

          (b)  the Offer Amount (including a description of any pari passu
     Indebtedness that is the subject of a concurrent Asset Sale Offer to be
     paid from such Offer Amount), the purchase price and the Purchase Date;

          (c)  that any Senior Note not tendered or accepted for payment shall
     continue to accrue interest;

          (d)  that, unless the Company defaults in making such payment, any
     Senior Note accepted for payment pursuant to the Asset Sale Offer shall
     cease to accrue interest after the Purchase Date;

          (e)  that Holders electing to have a Senior Note purchased pursuant
     to an Asset Sale Offer may only elect to have all of such Senior Note
     purchased and may not elect to have only a portion of such Senior Note
     purchased;

          (f)  that Holders electing to have a Senior Note purchased pursuant
     to any Asset Sale Offer shall be required to surrender the Senior Note,
     with the form entitled "Option of Holder to Elect Purchase" on the reverse
     of the Senior Note completed, or transfer by book-entry transfer, to the
     Company, the Depository, or a Paying Agent at the address specified in the
     notice at least three days before the Purchase Date;

                                       26
<PAGE>
 
          (g)  that Holders shall be entitled to withdraw their election if the
     Company, the Depository or the Paying Agent, as the case may be, receives,
     not later than the expiration of the Offer Period, a telegram, telex,
     facsimile transmission or letter setting forth the name of the Holder, the
     principal amount of the Senior Note the Holder delivered for purchase and a
     statement that such Holder is withdrawing his election to have such Senior
     Note purchased;

          (h)  that, if the aggregate principal amount of Senior Notes
     surrendered by Holders exceeds the Offer Amount, the Company shall select
     the Senior Notes to be purchased on a pro rata basis (with such adjustments
     as may be deemed appropriate by the Company so that only Senior Notes in
     denominations of $1,000, or integral multiples thereof, shall be purchased,
     giving effect to any pari passu Indebtedness subject to an Asset Sale
     Offer); and

          (i)  that Holders whose Senior Notes were purchased only in part
     shall be issued new Senior Notes equal in principal amount to the
     unpurchased portion of the Senior Notes surrendered (or transferred by
     book-entry transfer).

     On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis (giving effect to any pari passu
Indebtedness subject to an Asset Sale Offer) to the extent necessary, the Offer
Amount of Senior Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Senior Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Senior Notes or portions thereof were accepted for payment by the Company
in accordance with the terms of this Section 3.09.  The Company, the Depository
or the Paying Agent, as the case may be, shall promptly (but in any case not
later than five days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Senior Notes tendered by
such Holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Senior Note, and the Trustee, upon written request from the
Company shall authenticate and mail or deliver such new Senior Note to such
Holder, in a principal amount equal to any unpurchased portion of the Senior
Note surrendered.  Any Senior Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof.  The Company shall publicly
announce the results of the Asset Sale Offer on the Purchase Date.

     Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.

                                  ARTICLE 4.
                                   COVENANTS

Section 4.01.  Payment of Senior Notes.

     The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Senior Notes on the dates and in the manner provided in
the Senior Notes.  Principal, premium, if any, and interest shall be considered
paid on the date due if the Paying Agent, if other than the Company or a
Subsidiary thereof, holds as of 10:00 a.m. Central Time on the due date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due.  The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.

     The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable 

                                       27
<PAGE>
 
interest rate on the Senior Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages (without regard to any
applicable grace period) at the same rate to the extent lawful.

Section 4.02.  Maintenance of Office or Agency.

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

     The Company may also from time to time designate one or more other offices
or agencies where the Senior Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes.  The Company shall give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.

     The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.

Section 4.03.  Reports.

     (a)  Whether or not required by the rules and regulations of the SEC, so
long as any Senior Notes are outstanding, the Company and the Guarantors shall
furnish to the Trustee for provision to all Holders (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the SEC on Forms 10-Q and 10-K if the Company and/or the Guarantors were
required to file such forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" that describes the financial
condition and results of operations of the Company and its consolidated
Subsidiaries (showing in reasonable detail, either on the face of the financial
statements or in the footnotes thereto and in Management's Discussion and
Analysis of Financial Condition and Results of Operations, the financial
condition and results of operations of the Company and the Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all reports that would be required to be filed with the SEC
on Form 8-K if the Company were required to file such reports.  In addition,
whether or not required by the rules and regulations of the SEC, the Company
shall file a copy of all such information with the SEC for public availability
(unless the SEC will not accept such a filing).  The Company and the Guarantors
shall at all times comply with TIA (S) 314(a).

     (b)  For so long as any Transfer Restricted Securities remain outstanding,
the Company shall furnish to all Holders and prospective purchasers of the
Senior Notes designated by the Holders of Transfer Restricted Securities,
promptly upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.

                                       28
<PAGE>
 
Section 4.04.  Compliance Certificate.

     (a)  The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Senior Notes
is prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.

     (b)  So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.

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

Section 4.05.  Taxes.

     The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Senior Notes.

Section 4.06.  Stay, Extension and Usury Laws.

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

                                       29
<PAGE>
 
Section 4.07.  Restricted Payments.

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company) or
to the direct or indirect holders of the Company's or any of its Restricted
Subsidiaries' Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
the Company); (ii) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company or other Affiliate of the Company (other than any
such Equity Interests owned by the Company or any Wholly Owned Restricted
Subsidiary of the Company); (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is pari passu with or subordinated to the Senior Notes (other
than under the Senior Credit Facility and the Senior Notes), except a payment of
interest or principal at Stated Maturity; or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time of
and after giving effect to such Restricted Payment:

          (a)  no Default or Event of Default shall have occurred and be
     continuing or would occur as a consequence thereof; and

          (b)  the Company would, at the time of such Restricted Payment and
     after giving pro forma effect thereto as if such Restricted Payment had
     been made at the beginning of the applicable four-quarter period, have been
     permitted to incur at least $1.00 of additional Indebtedness pursuant to
     the Fixed Charge Coverage Ratio test set forth in the first paragraph of
     Section 4.09 below; and

          (c)  such Restricted Payment, together with the aggregate amount of
     all other Restricted Payments made by the Company and its Restricted
     Subsidiaries after the date of this Indenture (excluding Restricted
     Payments permitted by clause (ii), (iii), (iv), (vi) or (vii) of the next
     succeeding paragraph), is less than the sum of (i) 50% of the Consolidated
     Net Income of the Company for the period (taken as one accounting period)
     from the beginning of the first fiscal quarter commencing after the date of
     this Indenture to the end of the Company's most recently ended fiscal
     quarter for which internal financial statements are available at the time
     of such Restricted Payment (or, if such Consolidated Net Income for such
     period is a deficit, less 100% of such deficit), plus (ii) 100% of the
     aggregate net cash proceeds received by the Company from the issue or sale
     since the date of this Indenture of Equity Interests of the Company (other
     than Disqualified Stock) or of Disqualified Stock or debt securities of the
     Company that have been converted into such Equity Interests (other than
     Equity Interests (or Disqualified Stock or convertible debt securities)
     sold to a Subsidiary of the Company and other than Disqualified Stock or
     convertible debt securities that have been converted into Disqualified
     Stock), plus (iii) to the extent that any Restricted Investment that was
     made after the date of this Indenture is sold for cash or otherwise
     liquidated or repaid for cash, the lesser of (A) the cash return of capital
     with respect to such Restricted Investment (less the cost of disposition,
     if any) and (B) the initial amount of such Restricted Investment, plus (iv)
     50% of any dividends received by the Company or a Wholly Owned Restricted
     Subsidiary after the date of this Indenture from an Unrestricted Subsidiary
     of the Company, to the extent that such dividends were not otherwise
     included in Consolidated Net Income of the Company for such period, plus
     (v) $5.0 million.

                                       30
<PAGE>
 
     The foregoing provisions shall not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness or Equity Interests
of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c)(ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of pari passu or
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the payment of any dividend by a
Subsidiary of the Company to the holders of its Equity Interests on a pro rata
basis; (v) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Subsidiary of the Company
held by any member of the Company's (or any of its Subsidiaries') management
pursuant to any management equity subscription agreement, stock option agreement
or shareholder agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not exceed
$500,000 in any twelve-month period and no Default or Event of Default shall
have occurred and be continuing immediately after such transaction; (vi) if an
Asset Sale Offer is required in respect of the Senior Notes pursuant to this
Indenture, the making and consummation of an asset sale offer in accordance with
the provisions of an indenture governing pari passu Indebtedness permitted by
this Indenture; or (vii) if a Change of Control Offer is required in respect of
the Senior Notes pursuant to this Indenture, the making and consummation of a
change of control offer as required by the provisions of an indenture governing
pari passu Indebtedness permitted by this Indenture, provided that the
definition of "change of control" and the terms and timing of a change of
control offer applicable to such pari passu Indebtedness are substantially
identical to the definition of Change of Control and the terms and timing of a
Change of Control Offer under this Indenture.

     If the Company or any Wholly Owned Restricted Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or indirect
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Wholly Owned Restricted Subsidiary of
the Company, the Company shall be deemed to have made an Investment on the date
of any such sale or disposition equal to the fair market value of the Equity
Interests of such Subsidiary not sold or disposed of in an amount determined as
provided in the second succeeding paragraph below.

     The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default, provided
that in no event shall the business currently operated by Wilson Leather
Holdings Inc. or any of its direct or indirect parent companies be transferred
to or held by an Unrestricted Subsidiary. For purposes of making such
determination, all outstanding Investments by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated shall be deemed to be Restricted Payments at the time of such
designation and shall reduce the amount available for Restricted Payments under
the first paragraph of this Section 4.07. All such outstanding Investments shall
be deemed to constitute Investments in an amount equal to the greatest of (x)
the net book value of such Investments at the time of such designation, (y) the
fair market value of such Investments at the time of such designation and (z)
the original fair market value of such Investments at the time they were made.
Such designation shall only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.

     The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company 

                                       31
<PAGE>
 
or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The
fair market value of any non-cash Restricted Payment shall be determined by the
Board of Directors whose resolution with respect thereto shall be delivered to
the Trustee, such determination to be based upon an opinion or appraisal issued
by an accounting, appraisal or investment banking firm of national standing if
such fair market value exceeds $1.0 million. Not later than the date of making
any Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed.

Section 4.08.  Dividend and Other Payment Restrictions Affecting Subsidiaries.

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of this Indenture (b) the Senior Credit Facility as in effect
as of the date of this Indenture (after giving effect to amendments thereto
effective on such date) and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the Indebtedness refinanced, (c) this Indenture and the
Senior Notes, (d) applicable law, (e) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture to
be incurred, (f) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (g) Capital Lease Obligations and purchase money obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature described in clause (iii) above on the property so acquired, (h)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced, or (i) customary limitations of the nature described in clause
(iii) above imposed by any agreement entered into in connection with an Asset
Sale (or transaction that would be an Asset Sale but for the size of the
transaction) prior to the consummation thereof, provided that such limitations
apply only to the assets to be sold in such Asset Sale.

Section 4.09.  INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.

     The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall  not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company or any Guarantor may incur Indebtedness (including Acquired Debt) and
the Company may issue shares of Disqualified Stock if the Fixed Charge 

                                       32
<PAGE>
 
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 2.5 to 1, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock had
been issued, as the case may be, at the beginning of such four-quarter period.

     The Company and each Guarantor shall not incur any Indebtedness that is
contractually subordinated to any other Indebtedness of the Company or such
Guarantor, as the case may be, unless such Indebtedness is also contractually
subordinated to the Senior Notes or the Guarantee of such Guarantor, as
applicable, on substantially identical terms; provided, however, that no
Indebtedness of the Company or such Guarantor, as the case may be, shall be
deemed to be contractually subordinated to any other Indebtedness of the Company
or such Guarantor, as the case may be, solely by virtue of being unsecured.

     The provisions of the first paragraph of this Section 4.09 shall not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):

               (i)    the incurrence by the Company and any Guarantor of
          Indebtedness and letters of credit pursuant to the Senior Credit
          Facility; provided, however, that the aggregate principal amount of
          all Indebtedness (with letters of credit being deemed to have a
          principal amount equal to the maximum potential liability of the
          Company and its Subsidiaries thereunder) outstanding under the Senior
          Credit Facility does not exceed the greater of $150.0 million or the
          amount of the Borrowing Base; provided, further, that any acquisition
          of capital stock or substantially all of the assets of any business
          (including by way of any merger, consolidation or similar transaction
          and including any Permitted Investment permitted by clause (c) of the
          definition of such term) may be financed with borrowings under the
          Senior Credit Facility only to the extent that the Company would, at
          the time of such borrowings and after giving pro forma effect thereto
          as if such borrowings and such acquisition had occurred at the
          beginning of the applicable four-quarter period, have been permitted
          to incur at least $1.00 of additional Indebtedness pursuant to the
          Fixed Charge Coverage Ratio test set forth in the first paragraph of
          this covenant;

               (ii)   the incurrence by the Company and its Restricted
          Subsidiaries of the Existing Indebtedness;

               (iii)  the incurrence by the Company of Indebtedness represented
          by the Senior Notes and the incurrence by the Guarantors of the
          Guarantees;

               (iv)   the incurrence by the Company or any of its Restricted
          Subsidiaries of Indebtedness represented by Capital Lease Obligations,
          mortgage financings or purchase money obligations, in each case
          incurred for the purpose of financing all or any part of the purchase
          price or cost of construction or improvement of property, plant or
          equipment used in the business of the Company or such Restricted
          Subsidiary, in an aggregate principal amount not to exceed $6.0
          million at any time outstanding;

               (v)    the incurrence by the Company or any of its Restricted
          Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
          the net proceeds of which are used to refund, refinance or replace
          Indebtedness that was permitted by this Indenture to be incurred;
          provided, however, that Permitted Refinancing Indebtedness with
          respect to 

                                       33
<PAGE>
 
          clauses (iv), (vi) and (vii) (and any Existing Indebtedness
          of like character outstanding on the Issue Date) would otherwise be
          permitted to be incurred pursuant to such clauses, as applicable;

               (vi)    the incurrence by the Company or any of its Restricted
          Subsidiaries of intercompany Indebtedness between or among the Company
          and/or any of its Wholly Owned Restricted Subsidiaries; provided,
          however, that (i) if the Company or any Guarantor is the obligor on,
          and the lender is not a Guarantor of, such Indebtedness, such
          Indebtedness is expressly subordinated to the prior payment in full in
          cash of all Obligations with respect to the Senior Notes or the
          Guarantee of such Guarantor as applicable and (ii)(A) any subsequent
          issuance or transfer of Equity Interests that results in any such
          Indebtedness being held by a Person other than the Company or a Wholly
          Owned Restricted Subsidiary and (B) any sale or other transfer of any
          such Indebtedness to a Person that is not either the Company or a
          Wholly Owned Restricted Subsidiary shall be deemed, in each case, to
          constitute an incurrence of such Indebtedness by the Company or such
          Restricted Subsidiary, as the case may be;

               (vii)   the incurrence by the Company or any of its Restricted
          Subsidiaries of Hedging Obligations that are incurred for the purpose
          of fixing or hedging interest rate risk with respect to any floating
          rate Indebtedness that is permitted by the terms of this Indenture to
          be outstanding;

               (viii)  the guarantee by the Company or any of the Guarantors of
          Indebtedness of the Company or a Restricted Subsidiary of the Company
          that was permitted to be incurred by another provision of this Section
          4.09;

               (ix)    the incurrence by the Company or any of the Restricted
          Subsidiaries of additional Indebtedness (which may, but need not, be
          incurred under the Senior Credit Facility) in an aggregate principal
          amount (or accreted value, as applicable) at any time outstanding,
          including all Permitted Refinancing Indebtedness incurred to refund,
          refinance or replace any other Indebtedness incurred pursuant to this
          clause (ix), not to exceed $12.0 million; provided, however that no
          more than $2.0 million of such outstanding Indebtedness may be
          incurred by Restricted Subsidiaries that are not Guarantors; and

               (x)     the incurrence by the Company's Unrestricted Subsidiaries
          of Non-Recourse Debt, provided, however, that if any such Indebtedness
          ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such
          event shall be deemed to constitute an incurrence of Indebtedness by a
          Restricted Subsidiary of the Company.

     For purposes of determining compliance with this Section 4.09, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (x) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this Section 4.09 and such item of Indebtedness
shall be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Accrual of interest, the accretion of
accreted value and the payment of interest in the form of additional
Indebtedness shall not be deemed to be an incurrence of Indebtedness for
purposes of this Section 4.09.

                                       34
<PAGE>
 
Section 4.10.  Asset Sales.

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash;
provided that the amount of (x) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet) of the Company or any
Restricted Subsidiary (other than contingent liabilities and liabilities that
are by their terms subordinated to the Senior Notes or any guarantee thereof)
that are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary from
further liability and (y) any securities, notes or other obligations received by
the Company or any such Restricted Subsidiary from such transferee that are
converted by the Company or such Restricted Subsidiary into cash (to the extent
of the cash received) within five Business Days after such Asset Sale, shall be
deemed to be cash for purposes of this provision.

     Subject to the provisions relating to Excess Proceeds set forth below,
within 360 days after the receipt of any Net Proceeds from an Asset Sale, the
Company may apply such Net Proceeds at its option, (a) to repay Indebtedness
under the Senior Credit Facility (and to correspondingly permanently reduce
commitments with respect thereto), or (b) to the acquisition of a controlling
interest in another business, the making of a capital expenditure or the
acquisition of other long-term assets, in each case, in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce Indebtedness under the Senior Credit Facility or otherwise
invest such Net Proceeds in any manner that is not prohibited by this Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as provided
in the first sentence of this paragraph shall be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0 million,
the Company shall be required to make an "Asset Sale Offer" to purchase the
maximum principal amount of Senior Notes and pari passu Indebtedness (to the
extent the terms thereof require an asset sale offer) that may be purchased out
of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of
the principal amount thereof plus accrued and unpaid interest thereon, if any,
to the date of purchase, in accordance with the procedures set forth in this
Indenture. To the extent that the aggregate amount of Senior Notes and pari
passu Indebtedness tendered pursuant to an Asset Sale Offer (and any such
required asset sale offer) is less than the Excess Proceeds, the Company may use
any remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Senior Notes and pari passu Indebtedness permitted by this
Indenture surrendered by holders thereof exceeds the amount of Excess Proceeds,
such Senior Notes and pari passu Indebtedness shall be purchased on a pro rata
basis.  The Trustee shall cooperate with the trustee or representative of such
pari passu Indebtedness in the determination of Indebtedness to be repurchased
pursuant to this Section 4.10.  Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be reset at zero.

Section 4.11.  Transactions with Affiliates.

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a 

                                       35
<PAGE>
 
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustee (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $1.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of Directors and (b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$5.0 million (other than any purchase from a leather goods wholesaler made in
the ordinary course of business and consistent with past practices), an opinion
as to the fairness to the Holders of such Affiliate Transaction from a financial
point of view issued by an accounting, appraisal or investment banking firm of
national standing; provided that (w) any employment agreement entered into by
the Company or any of its Restricted Subsidiaries in the ordinary course of
business, (x) payment of reasonable directors' fees to directors of the Company
who are not employees, officers or Affiliates of the Company or any of its
Affiliates, (y) transactions between or among the Company and/or its Restricted
Subsidiaries, and (z) Restricted Payments that are permitted by the provisions
of Section 4.07 above, in each case, shall not be deemed Affiliate Transactions.

Section 4.12. Liens.

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired, or any income or
profits therefrom or assign or convey any right to receive income therefrom,
except Permitted Liens.

Section 4.13.  Line of Business.

     The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than a Permitted Business, except
to such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.

Section 4.14.  Corporate Existence.

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

Section 4.15.  Offer to Repurchase upon Change of Control.

     (a)  Upon the occurrence of a Change of Control, each Holder of Senior
Notes shall have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Senior Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest  and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control 

                                       36
<PAGE>
 
Payment"). Within ten days following any Change of Control, the Company shall
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Senior Notes on the
date specified in such notice, which date shall be no earlier than 30 days and
no later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"), pursuant to the procedures required by this Indenture
and described in such notice. The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Senior Notes as a result of a Change of Control.

     (b)  On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment all Senior Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of all
Senior Notes or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Senior Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Senior Notes or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail to
each Holder of Senior Notes so tendered the Change of Control Payment for such
Senior Notes, and the Trustee shall promptly authenticate and mail (or cause to
be transferred by book entry) to each Holder a new Senior Note equal in
principal amount to any unpurchased portion of the Senior Notes surrendered, if
any; provided that each such new Senior Note shall be in a principal amount of
$1,000 or an integral multiple thereof. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.

     (c)  Notwithstanding anything herein to the contrary, the Company shall
not be required to make a Change of Control Offer upon a Change of Control if a
third party makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this Section 4.15 and
purchases all Senior Notes validly tendered and not withdrawn under such Change
of Control Offer.

Section 4.16.  Limitation on Issuances and Sales of Capital Stock of Wholly
               owned Restricted Subsidiaries.

     The Company (i) shall not, and shall not permit any Wholly Owned Restricted
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose
of any Capital Stock of any Wholly Owned Restricted Subsidiary of the Company to
any Person (other than the Company or a Wholly Owned Restricted Subsidiary of
the Company), unless (a) such transfer, conveyance, sale, lease or other
disposition is of all the Capital Stock of such Wholly Owned Restricted
Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with Section 4.10 above and
(ii) shall not permit any Wholly Owned Restricted Subsidiary of the Company to
issue any of its Equity Interests (other than, if necessary, shares of its
Capital Stock constituting directors' qualifying shares) to any Person other
than to the Company or a Wholly Owned Restricted Subsidiary of the Company.

Section 4.17.  Limitations on Issuances of Guarantees of Indebtedness

     The Company shall not permit any Subsidiary, directly or indirectly, to
guarantee or pledge any assets to secure the payment of any other Indebtedness
of the Company unless such Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture providing for the Guarantee of the
payment of the Senior Notes by such Subsidiary, which Guarantee shall be senior
to or pari passu with such Subsidiary's guarantee of or pledge to secure such
other Indebtedness; provided 

                                       37
<PAGE>
 
however that, with respect to any Subsidiary's guarantee of the Senior Credit
Facility, the Guarantee of the Senior Notes shall not be secured notwithstanding
the delivery of a secured guarantee by such Subsidiary to secure the Senior
Credit Facility and provided further that nothing herein shall prohibit the
grant of such security securing obligations under the Senior Credit Facility by
such Subsidiary. Notwithstanding the foregoing, any such Guarantee by a
Subsidiary of the Senior Notes shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon any sale,
exchange or transfer, to any Person not an Affiliate of the Company, of all of
the Company's stock in, or all or substantially all the assets of, such
Subsidiary, which sale, exchange or transfer is made in compliance with the
applicable provisions of this Indenture.

Section 4.18.  Payments for Consent.

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

                                  ARTICLE 5.
                                  SUCCESSORS

Section 5.01.  Merger, Consolidation, or Sale of Assets.

     The Company shall not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to, another corporation, Person or entity
unless (i) the Company is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the entity or Person formed by or surviving any such consolidation or
merger (if other than the Company) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of the Company under the Senior Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) except in the case of a merger of the Company with or
into a Wholly Owned Restricted Subsidiary of the Company, the Company or the
entity or Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) will have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 above.

Section 5.02.  Successor Corporation Substituted.

     Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, 

                                       38
<PAGE>
 
the successor corporation formed by such consolidation or into or with which the
Company is merged or to which such sale, assignment, transfer, lease, conveyance
or other disposition is made shall succeed to, and be substituted for (so that
from and after the date of such consolidation, merger, sale, lease, conveyance
or other disposition, the provisions of this Indenture referring to the
"Company" shall refer instead to the successor corporation and not to the
Company), and may exercise every right and power of the Company under this
Indenture with the same effect as if such successor Person had been named as the
Company herein; provided, however, that the predecessor Company shall not be
relieved from the obligation to pay the principal of and interest on the Senior
Notes except in the case of a sale of all of the Company's assets that meets the
requirements of Section 5.01 hereof.

                                  ARTICLE 6.
                             DEFAULTS AND REMEDIES

Section 6.01.  Events of Default.

     An "Event of Default" occurs if:

          (a)  the Company defaults in the payment when due of interest on, or
     Liquidated Damages with respect to, the Senior Notes and such default
     continues for a period of 30 days;

          (b)  the Company defaults in the payment when due of principal of or
     premium, if any, on the Senior Notes when the same becomes due and payable
     at maturity, upon redemption (including in connection with an offer to
     purchase) or otherwise;

          (c)  the Company fails to comply with any of the provisions of
     Section 4.07, 4.09, 4.10, 4.15 or 5.01 hereof;

          (d)  the Company fails to observe or perform any other covenant,
     representation, warranty or other agreement in this Indenture or the Senior
     Notes for 60 days after notice to the Company by the Trustee or the Holders
     of at least 25% in principal amount of the Senior Notes then outstanding;

          (e)  a default occurs under any mortgage, indenture or instrument
     under which there may be issued or by which there may be secured or
     evidenced any Indebtedness for money borrowed by the Company or any of its
     Restricted Subsidiaries, whether such Indebtedness or guarantee now exists,
     or is created after the date of this Indenture, which default (a) is caused
     by a failure to pay principal of or premium, if any, or interest on such
     Indebtedness prior to the expiration of the grace period provided in such
     Indebtedness on the date of such default (a "Payment Default") or (b)
     results in the acceleration of such Indebtedness prior to its express
     maturity and, in each case, the principal amount of such Indebtedness,
     together with the principal amount of any other such Indebtedness under
     which there has been a Payment Default or the maturity of which has been so
     accelerated, aggregates $5 million or more;

          (f)  a final judgment or final judgments for the payment of money are
     entered by a court or courts of competent jurisdiction against the Company
     or any of its Restricted Subsidiaries and such judgment or judgments remain
     undischarged for a period (during which execution shall not be effectively
     stayed) of 60 days, provided that the aggregate of all such undischarged
     judgments exceeds $5 million;

                                       39
<PAGE>
 
          (g)  the Company or any of its Restricted Subsidiaries pursuant to or
     within the meaning of Bankruptcy Law:

               (i)    commences a voluntary case;

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

               (iii)  consents to the appointment of a Custodian of it or for
                      all or substantially all of its property;

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

               (v)    generally is not paying its debts as they become due;

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

               (i)    is for relief against the Company or any of its Restricted
                      Subsidiaries in an involuntary case;

               (ii)   appoints a Custodian of the Company or any of its
                      Restricted Subsidiaries for all or substantially all of
                      the property of the Company or any of its Restricted
                      Subsidiaries; or

               (iii)  orders the liquidation of the Company or any of its
                      Restricted Subsidiaries;

          and the order or decree remains unstayed and in effect for 60
          consecutive days; or

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

Section 6.02.  Acceleration.

     If any Event of Default (other than an Event of Default specified in clause
(g) or (h) of Section 6.01 hereof with respect to the Company or any Restricted
Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Senior Notes may declare all the
Senior Notes to be due and payable immediately; provided, that so long as any
Indebtedness permitted to be incurred pursuant to the Senior Credit Facility
shall be outstanding, such acceleration shall not be effective until the earlier
of (i) an acceleration of any such Indebtedness under the Senior Credit Facility
or (ii) five Business Days after receipt by the Company of written notice of
such acceleration of the Senior Notes.  Upon any such declaration, the Senior
Notes shall become due and payable immediately.  Notwithstanding the foregoing,
if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof
occurs with respect to the Company or any Restricted Subsidiary that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary, all outstanding Senior Notes
shall be due and payable immediately without further action or notice.  The
Holders of a majority in aggregate principal amount of the then outstanding
Senior Notes by written notice 

                                       40
<PAGE>
 
to the Trustee may on behalf of all of the Holders rescind an acceleration and
its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default (except nonpayment of principal,
interest, premium or Liquidated Damages that has become due solely because of
the acceleration) have been cured or waived.

     If an Event of Default occurs on or after August 15, 2001 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Senior Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Senior Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Senior Notes to
the contrary notwithstanding. If an Event of Default occurs prior to August 15,
2001 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Senior Notes prior to such date, then, upon acceleration of
the Senior Notes, an additional premium shall also become and be immediately due
and payable in an amount, for each of the years beginning on August 15 of the
years set forth below, as set forth below (expressed as a percentage of the
principal amount to the date of payment that would otherwise be due but for the
provisions of this sentence):

<TABLE> 
<CAPTION> 
               YEAR                                         PERCENTAGE
               ----                                         ----------
               <S>                                          <C>   
               1997................................           111.250%
               1998................................           109.844%
               1999................................           108.438%
               2000................................           107.031%
</TABLE> 

Section 6.03.  Other Remedies.

     If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium, if any, and
interest on the Senior Notes or to enforce the performance of any provision of
the Senior Notes or this Indenture.

     The Trustee may maintain a proceeding even if it does not possess any of
the Senior Notes or does not produce any of them in the proceeding.  A delay or
omission by the Trustee or any Holder of a Senior Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default.  All remedies
are cumulative to the extent permitted by law.

Section 6.04.  Waiver of PasT Defaults.

     Holders of not less than a majority in aggregate principal amount of the
then outstanding Senior Notes by notice to the Trustee may on behalf of the
Holders of all of the Senior Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Senior Notes (including in connection with an offer to
purchase) (provided, however, that the Holders of a majority in aggregate
principal amount of the then outstanding Senior Notes may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration).  Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.

                                       41
<PAGE>
 
Section 6.05.  Control by Majority.

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

Section 6.06.  Limitation on Suits.

     A Holder of a Senior Note may pursue a remedy with respect to this
Indenture or the Senior Notes only if:

          (a)  the Holder of a Senior Note gives to the Trustee written notice
     of a continuing Event of Default;

          (b)  the Holders of at least 25% in principal amount of the then
     outstanding Senior Notes make a written request to the Trustee to pursue
     the remedy;

          (c)  such Holder of a Senior Note or Holders of Senior Notes offer
     and, if requested, provide to the Trustee indemnity satisfactory to the
     Trustee against any loss, liability or expense;

          (d)  the Trustee does not comply with the request within 60 days
     after receipt of the request and the offer and, if requested, the provision
     of indemnity; and

          (e)  during such 60-day period the Holders of a majority in principal
     amount of the then outstanding Senior Notes do not give the Trustee a
     direction inconsistent with the request.

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

Section 6.07.  Rights of Holders of Senior Notes to Receive Payment.

     Notwithstanding any other provision of this Indenture, the right of any
Holder of a Senior Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Senior Note, on or after the respective due
dates expressed in the Senior Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.

Section 6.08.  Collection Suit by Trustee.

     If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company or any Guarantor for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Senior Notes and interest on overdue principal and, to
the extent lawful, interest and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

                                       42
<PAGE>
 
Section 6.09.  Trustee May File Proofs of Claim.

     The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Senior Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Senior Notes), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof.  To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise.  Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Senior
Notes or the rights of any Holder, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

Section 6.10.  Priorities.

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

     First:  to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;

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

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

     The Trustee may fix a record date and payment date for any payment to
Holders of Senior Notes pursuant to this Section 6.10.

Section 6.11.  Undertaking for Costs.

     In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant.  This 

                                       43
<PAGE>
 
Section does not apply to a suit by the Trustee, a suit by a Holder of a Senior
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Senior Notes.


                                   ARTICLE 7.
                                    TRUSTEE
 
Section 7.01.  Duties of Trustee.

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

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

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

          (ii)   in the absence of bad faith on its part, the Trustee may
                 conclusively rely, as to the truth of the statements and the
                 correctness of the opinions expressed therein, upon
                 certificates or opinions furnished to the Trustee and
                 conforming to the requirements of this Indenture. However, the
                 Trustee shall examine the certificates and opinions to
                 determine whether or not they conform to the requirements of
                 this Indenture.

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

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

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

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

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

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

                                       44
<PAGE>
 
     (f)  The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company.  Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

Section 7.02.  Rights of Trustee.

     (a)  The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person.  The
Trustee need not investigate any fact or matter stated in the document.

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

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

     (d)  The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.

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

     (f)  The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.

Section 7.03.  Individual Rights of Trustee.

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

Section 7.04.  Trustee's Disclaimer.

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

                                       45
<PAGE>
 
Section 7.05.  Notice of Defaults.

     If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Senior Notes a notice
of the Default or Event of Default within 90 days after it occurs.  Except in
the case of a Default or Event of Default in payment of principal of, premium,
if any, or interest on any Senior Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Senior
Notes.

Section 7.06.  Reports by Trustee to Holders of the Senior Notes.

     Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Senior Notes remain outstanding, the
Trustee shall mail to the Holders of the Senior Notes a brief report dated as of
such reporting date that complies with TIA (S) 313(a) (but if no event described
in TIA (S) 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted).  The Trustee also shall comply with TIA
(S) 313(b)(2).  The Trustee shall also transmit by mail to the Holders all
reports as required by TIA (S) 313(c) and all reports provided to the Trustee by
the Company pursuant to Section 4.03 hereof.

     A copy of each report at the time of its mailing to the Holders of Senior
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Senior Notes are listed in accordance with TIA (S) 313(d).
The Company shall promptly notify the Trustee when the Senior Notes are listed
on any stock exchange.

Section 7.07.  Compensation and Indemnity.

     The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.

     The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith.  The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity.  Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder.  The Company
shall defend the claim and the Trustee shall cooperate in the defense.  The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel.  The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.

     The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.

                                       46
<PAGE>
 
     To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Senior Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Senior Notes.  Such Lien shall survive the satisfaction
and discharge of this Indenture.

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

     The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the
extent applicable.

Section 7.08.  Replacement of Trustee.

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

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

          (a)  the Trustee fails to comply with Section 7.10 hereof;

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

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

          (d)  the Trustee becomes incapable of acting.

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

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

     If the Trustee, after written request by any Holder of a Senior Note who
has been a Holder of a Senior Note for at least six months, fails to comply with
Section 7.10, such Holder of a Senior Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

     A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company.  Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture.  The successor Trustee shall mail a notice of its succession to
Holders of the Senior Notes.  The retiring

                                       47
<PAGE>
 
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, provided all sums owing to the Trustee hereunder have been
paid and subject to the Lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company's obligations under Section 7.07 hereof shall continue for the benefit
of the retiring Trustee.

Section 7.09.  Successor Trustee by Merger, etc.

     If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.

Section 7.10.  Eligibility; Disqualification.

     There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trust power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.

     This Indenture shall always have a Trustee who satisfies the requirements
of TIA (S) 310(a)(1), (2) and (5).  The Trustee is subject to TIA (S) 310(b).

Section 7.11.  Preferential Collection of Claims Against Company.

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

                                  ARTICLE 8.
                   LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01.  Option to Effect Legal Defeasance or Covenant Defeasance.

     The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Senior Notes
upon compliance with the conditions set forth below in this Article Eight.

Section 8.02.  Legal Defeasance and Discharge.

     Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Senior Notes on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance").  For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Senior Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Senior Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder:  (a) the rights of Holders
of outstanding Senior Notes to receive solely from the trust fund

                                       48
<PAGE>
 
described in Section 8.04 hereof, and as more fully set forth in such Section,
payments in respect of the principal of, premium, if any, and interest on such
Senior Notes when such payments are due, (b) the Company's obligations with
respect to such Senior Notes under Article 2 and Section 4.02 hereof, (c) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Company's obligations in connection therewith and (d) this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.

Section 8.03.  Covenant Defeasance.

     Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.03, 4.04, 4.05, 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16 and 4.17 hereof with respect to
the outstanding Senior Notes on and after the date the conditions set forth
below are satisfied (hereinafter, "Covenant Defeasance"), and the Senior Notes
shall thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Senior Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Senior
Notes, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture and such Senior
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of Default.

Section 8.04.  Conditions to Legal or Covenant Defeasance.

     The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Senior Notes:

     In order to exercise either Legal Defeasance or Covenant Defeasance:

          (a)  the Company must irrevocably deposit with the Trustee, in trust,
     for the benefit of the Holders, cash in United States dollars, non-callable
     Government Securities, or a combination thereof, in such amounts as shall
     be sufficient, in the opinion of a nationally recognized firm of
     independent public accountants, to pay the principal of, premium and
     Liquidated Damages, if any, and interest on the outstanding Senior Notes on
     the stated date for payment thereof or on the applicable redemption date,
     as the case may be;

          (b)  in the case of an election under Section 8.02 hereof, the
     Company shall have delivered to the Trustee an Opinion of Counsel in the
     United States reasonably acceptable to the Trustee confirming that (A) the
     Company has received from, or there has been published by, the Internal
     Revenue Service a ruling or (B) since the date of this Indenture, there has
     been a change in the applicable federal income tax law, in either case to
     the effect that, and based thereon such Opinion of Counsel shall confirm
     that, the Holders of the outstanding Senior Notes will not

                                       49
<PAGE>
 
     recognize income, gain or loss for federal income tax purposes as a result
     of such Legal Defeasance and will be subject to federal income tax on the
     same amounts, in the same manner and at the same times as would have been
     the case if such Legal Defeasance had not occurred;

          (c)  in the case of an election under Section 8.03 hereof, the
     Company shall have delivered to the Trustee an Opinion of Counsel in the
     United States reasonably acceptable to the Trustee confirming that the
     Holders of the outstanding Senior Notes will not recognize income, gain or
     loss for federal income tax purposes as a result of such Covenant
     Defeasance and will be subject to federal income tax on the same amounts,
     in the same manner and at the same times as would have been the case if
     such Covenant Defeasance had not occurred;

          (d)  no Default or Event of Default shall have occurred and be
     continuing on the date of such deposit (other than a Default or Event of
     Default resulting from the incurrence of Indebtedness all or a portion of
     the proceeds of which will be used to defease the Senior Notes pursuant to
     this Article Eight concurrently with such incurrence) or insofar as
     Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period
     ending on the 91st day after the date of deposit;

          (e)  such Legal Defeasance or Covenant Defeasance shall not result in
     a breach or violation of, or constitute a default under, any material
     agreement or instrument (other than this Indenture) to which the Company or
     any of its Subsidiaries is a party or by which the Company or any of its
     Subsidiaries is bound;

          (f)  the Company shall have delivered to the Trustee an opinion of
     counsel to the effect that on the day after the last day of the applicable
     preference period under Bankruptcy Law following the deposit, the trust
     funds will not be subject to the effect of any applicable bankruptcy,
     insolvency, reorganization or similar laws affecting creditors' rights
     generally;

          (g)  the Company shall have delivered to the Trustee an Officers'
     Certificate stating that the deposit was not made by the Company with the
     intent of preferring the Holders over any other creditors of the Company or
     with the intent of defeating, hindering, delaying or defrauding any other
     creditors of the Company; and

          (h)  the Company shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that all conditions
     precedent provided for or relating to the Legal Defeasance or the Covenant
     Defeasance have been complied with.

Section 8.05.  Deposited Money and Government Securities to be Held in Trust;
               Other Miscellaneous Provisions.

     Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Senior
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Senior Notes and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as Paying
Agent) as the Trustee may determine, to the Holders of such Senior Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.

                                       50
<PAGE>
 
     The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Senior
Notes.

     Anything in this Article Eight to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 8.06.  Repayment to Company.

     Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Senior Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Senior Note shall thereafter,
as an unsecured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.

Section 8.07.  Reinstatement.

     If the Trustee or Paying Agent is unable to apply any United States dollars
or non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Senior
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Senior Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Senior Notes to receive such payment from
the money held by the Trustee or Paying Agent.

                                  ARTICLE 9.
                       AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01.  Without Consent of Holders of Senior Notes.

     Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee
may amend or supplement this Indenture or the Senior Notes without the consent
of any Holder of a Senior Note:

          (a)  to cure any ambiguity, defect or inconsistency;

                                       51
<PAGE>
 
          (b)  to provide for uncertificated Senior Notes in addition to or in
     place of certificated Senior Notes; provided, that the uncertificated
     Senior Notes are issued in registered form for purposes of Section 163(f)
     of the Code, or in a manner such that the uncertificated Senior Notes are
     described in Section 162(f)(2)(B) of the Code;

          (c)  to provide for the assumption of the obligations to the Holders
     of the Senior Notes in the case of a merger or consolidation of the Company
     pursuant to Article Five hereof or of a Guarantor pursuant to Article 10
     hereof;

          (d)  to make any change that would provide any additional rights or
     benefits to the Holders of the Senior Notes (including, without limitation,
     adding any Person as a Guarantor hereunder) or that does not adversely
     affect the legal rights hereunder of any Holder of the Senior Note; or

          (e)  to comply with requirements of the SEC in order to effect or
     maintain the qualification of this Indenture under the TIA.

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

Section 9.02.  With Consent of Holders of Senior Notes.

     Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture (including Sections 3.09, 4.10 and 4.15
hereof) and the Senior Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Senior Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Senior Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium, if any, or interest on
the Senior Notes, except a payment default resulting from an acceleration that
has been rescinded) or compliance with any provision of this Indenture or the
Senior Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Senior Notes (including consents
obtained in connection with a tender offer or exchange offer for the Senior
Notes).

     Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Senior Notes as aforesaid, and upon
receipt by the Trustee of the documents described in Section 7.02 hereof, the
Trustee shall join with the Company in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental Indenture.

                                       52
<PAGE>
 
     It shall not be necessary for the consent of the Holders of Senior Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.

     After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Senior Notes affected
thereby a notice briefly describing the amendment, supplement or waiver.  Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver.  Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Senior Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Senior Notes.  However, without the
consent of each Holder affected, an amendment or waiver may not (with respect to
any Senior Notes held by a non-consenting Holder):

          (a)  reduce the principal amount of Senior Notes whose Holders must
     consent to an amendment, supplement or waiver;

          (b)  reduce the principal of or change the fixed maturity of any
     Senior Note or alter or waive any of the provisions with respect to the
     redemption of the Senior Notes except as provided above with respect to
     Sections 3.09, 4.10 and 4.15 hereof;

          (c)  reduce the rate of or change the time for payment of interest,
     including default interest, on any Senior Note;

          (d)  waive a Default or Event of Default in the payment of principal
     of or premium, if any, or interest on the Senior Notes (except a rescission
     of acceleration of the Senior Notes by the Holders of at least a majority
     in aggregate principal amount of the then outstanding Senior Notes and a
     waiver of the payment default that resulted from such acceleration);

          (e)  make any Senior Note payable in money other than that stated in
     the Senior Notes;

          (f)  make any change in the provisions of this Indenture relating to
     waivers of past Defaults or the rights of Holders of Senior Notes to
     receive payments of principal of or premium, if any, or interest or
     Liquidated Damages, if any, on the Senior Notes;

          (g)  waive a redemption payment with respect to any Senior Note
     (except as provided above with respect to Sections 3.09, 4.10 and 4.15
     hereof); or

          (h)  make any change in Section 6.04 or 6.07 hereof or in the
     foregoing amendment and waiver provisions.

Section 9.03.  Compliance with Trust Indenture Act.

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

Section 9.04.  Revocation and Effect of Consents.

     Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Senior Note is a continuing consent by the Holder of a Senior
Note and every subsequent Holder of a Senior Note or portion of a Senior Note
that evidences the same debt as the consenting Holder's Senior

                                       53
<PAGE>
 
Note, even if notation of the consent is not made on any Senior Note. However,
any such Holder of a Senior Note or subsequent Holder of a Senior Note may
revoke the consent as to its Senior Note if the Trustee receives written notice
of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.

Section 9.05. Notation on or Exchange of Senior Notes.

     The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Senior Note thereafter authenticated.  The Company
in exchange for all Senior Notes may issue and the Trustee shall authenticate
new Senior Notes that reflect the amendment, supplement or waiver.

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

Section 9.06.  Trustee to Sign Amendments, etc.

     The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee.  The
Company may not sign an amendment or supplemental Indenture until the Board of
Directors approves it.  In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, an Officer's Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.

                                  ARTICLE 10.
                                  GUARANTEES

Section 10.01.  Unconditional Guarantee.

     Each Guarantor hereby unconditionally, jointly and severally, guarantees
(such guarantee to be referred to herein as the "Guarantee") to each Holder of a
Senior Note authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
this Indenture, the Senior Notes or the obligations of the Company hereunder or
thereunder, that: (i) the principal of, interest and Liquidated Damages, if any,
on the Senior Notes will be promptly paid in full when due, subject to any
applicable grace period, whether at stated maturity, by acceleration or
otherwise and interest on the overdue principal of, and interest on any
interest, to the exent lawful, and Liquidated Damages, if any, on the Senior
Notes and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full, all in accordance with
the terms hereof and thereof; and (ii) in case of any extension of time of
payment or renewal of any Senior Notes or of any such other obligations, the
same will be promptly paid in full when due in accordance with the terms of the
extension or renewal, subject to any applicable grace period, whether at stated
maturity, by acceleration or otherwise, subject, however, in the case of clauses
(i) and (ii) above, to the limitations set forth in Section 10.04. Each
Guarantor hereby agrees that its Obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Senior Notes
or this Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Senior Notes with respect to any provisions hereof
or thereof, the recovery of any judgment against the Company, any action to
enforce the same or any other circumstances which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand for payment, filing of claims

                                       54
<PAGE>
 
with a court in the event of insolvency or bankruptcy of the Company, any right
to require a proceeding first against the Company, protest, notice and all
demands whatsoever and covenants that this Guarantee will not be discharged
except by complete performance of the obligations contained in the Senior Notes,
this Indenture and in this Guarantee. If any Holder or the Trustee is required
by any court or otherwise to return to the Company, any Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
the Company or any Guarantor, any amount paid by the Company or any Guarantor to
the Trustee or such Holder, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect as to such amount only.
Each Guarantor further agrees that, as between each Guarantor, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in Article Six for
the purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any acceleration of such Obligations
as provided in Article Six, such Obligations (whether or not due and payable)
shall forthwith become due and payable by each Guarantor for the purpose of this
Guarantee.

Section 10.02.  Severability.

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

Section 10.03.  Release of a Guarantor.

     Upon (i) the sale or disposition of all of the capital stock of a Guarantor
(or all or substantially all of its assets), by way of merger, consolidation or
otherwise, to an entity which is not the Company or a Subsidiary of the Company
or (ii) the designation of a Guarantor as an Unrestricted Subsidiary which, in
each case, is otherwise in compliance with this Indenture, such Guarantor and,
if and only if such sale or disposition meets the test set forth below in
Section 10.05(b)(x), the purchaser of such assets or the entity succeeding to
the interests of such Guarantor by merger, consolidation or otherwise, shall be
deemed released from all its obligations under this Article Ten and its
Guarantee.  The Trustee shall deliver an appropriate instrument evidencing such
release upon receipt of a written request by the Company accompanied by an
Officers' Certificate certifying as to the compliance with this Section 10.03
and the other provisions of this Indenture. Any Guarantor not so released
remains liable for the full amount of principal of and interest on the Senior
Notes as provided in this Article Ten.

Section 10.04.  Limitation of Guarantor's Liability.

     Each Guarantor and by its acceptance hereof each Holder hereby confirms
that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law.
To effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the Obligations of such Guarantor under its Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 10.06, result in the Obligations of such Guarantor under its
Guarantee not constituting such fraudulent transfer or conveyance.

                                       55
<PAGE>
 
Section 10.05.  Guarantors May Consolidate, Etc. on Certain Terms.

     (a)  Nothing contained in this Indenture or in any of the Senior Notes
shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor or shall prevent any sale or conveyance of all or
substantially all of the assets of a Guarantor to the Company or another
Guarantor. Upon any such consolidation, merger, sale or conveyance, the
Guarantee given by such Guarantor shall no longer have any force or effect.

     (b)  Except as set forth in Article Four nothing contained in this
Indenture or in any of the Senior Notes shall prevent any consolidation or
merger of a Guarantor with or into a corporation or corporations other than the
Company or another Guarantor (whether or not affiliated with the Guarantor), or
successive consolidations or mergers in which a Guarantor or its successor or
successors shall be a party or parties, or shall prevent any sale or conveyance
of all or substantially all of the assets of a Guarantor to a corporation other
than the Company or another Guarantor (whether or not affiliated with the
Guarantor); provided, however, that, subject to Sections 10.03 and 10.05(a),
either (x) the transaction is not an Asset Sale based only on the size of such
transaction or is an Asset Sale consummated in accordance with Section 4.10, or
(y) (i) immediately after such transaction, and giving effect thereto (A) no
Default or Event of Default shall have occurred as a result of such transaction
and be continuing, (B) such Guarantor, or any Person formed by or surviving any
such consolidation or merger, would have Consolidated Net Worth (immediately
after giving effect to such transaction), equal to or greater than the
Consolidated Net Worth of such Guarantor immediately preceding the transaction,
and (C) the Company would be permitted by virtue of the Company's pro forma
Fixed Charge Coverage Ratio, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in Section 4.09 hereof and (ii) each
Guarantor hereby covenants and agrees that, upon any such consolidation, merger,
sale or conveyance, the Guarantee of such Guarantor set forth in this Article
Ten, and the due and punctual performance and observance of all of the covenants
and conditions of this Indenture to be performed by such Guarantor, shall be
expressly assumed (in the event that the Guarantor is not the surviving
corporation in such transaction), by supplemental indenture satisfactory in form
to the Trustee, executed and delivered to the Trustee, together with an
Officers' Certificate of the Company and an Opinion of Counsel stating that the
transaction and such supplemental indenture comply with this Indenture, by the
corporation formed by such consolidation, or into which the Guarantor shall have
merged, or by the corporation that shall have acquired such property. In the
case of any such consolidation, merger, sale or conveyance to which the
foregoing clause (y) applies, upon the assumption by the successor corporation,
by supplemental indenture executed and delivered to the Trustee and satisfactory
in form to the Trustee of the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the Guarantor,
such successor corporation shall succeed to and be substituted for the Guarantor
with the same effect as if it had been named herein as a Guarantor.

Section 10.06.  Contribution.

     In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under this
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the Senior Notes or any other Guarantor's
Obligations with respect to this Guarantee.

                                       56
<PAGE>
 
Section 10.07.  Waiver of Subrogation.

     Until the 91st day after the Senior Notes have been paid in full, each
Guarantor hereby irrevocably waives any claim or other rights which it may now
or hereafter acquire against the Company that arise from the existence, payment,
performance or enforcement of such Guarantor's Obligations under this Guarantee
and this Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Senior Notes against the Company, whether or
not such claim, remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Company, directly or indirectly, in cash or other property or by setoff or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Senior Notes shall not have been paid in full, such amount
shall have been deemed to have been paid to such Guarantor for the benefit of,
and held in trust for the benefit of, the Holders of the Senior Notes, and shall
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Senior Notes, whether matured or unmatured, in accordance
with the terms of this Indenture. Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
10.07 is knowingly made in contemplation of such benefits.

Section 10.08.  Execution of Guarantee.

     To evidence their guarantee to the Holders specified in Section 10.01, the
Guarantors hereby agree to execute the Guarantee in substantially the form of
Exhibit A recited to be endorsed on each Senior Note ordered to be authenticated
and delivered by the Trustee. Each Guarantor hereby agrees that its Guarantee
set forth in Section 10.01 shall remain in full force and effect notwithstanding
any failure to endorse on each Senior Note a notation of such Guarantee.  Each
such Guarantee shall be signed on behalf of each Guarantor by one Officer (each
of whom shall, in each case, have been duly authorized by all requisite
corporate actions) prior to the authentication of the Senior Note on which it is
endorsed, and the delivery of such Senior Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of such
Guarantee on behalf of such Guarantor.  Such signatures upon the Guarantee may
be by manual or facsimile signature of such Officers and may be imprinted or
otherwise reproduced on the Guarantee, and in case any such Officer who shall
have signed the Guarantee shall cease to be such Officer before the Senior Note
on which such Guarantee is endorsed shall have been authenticated and delivered
by the Trustee or disposed of by the Company, such Senior Note nevertheless may
be authenticated and delivered or disposed of as though the person who signed
the Guarantee had not ceased to be such officer of the Guarantor.

Section 10.09.  Obligations of Each Guarantor Unconditional.

     Nothing contained in this Article Ten or elsewhere in this Indenture or in
the Senior Notes or the Guarantees is intended to or shall impair, as among any
Guarantor, its creditors, and the Holders of the Senior Notes, the obligation of
such Guarantor, which is absolute and unconditional, to pay to the Holders of
the Senior Notes the principal of and any interest on the Senior Notes as and
when the same shall become due and payable in accordance with the terms of the
Guarantees, or is intended to or shall affect the relative rights of the Holders
of the Senior Notes and creditors of any Guarantor, nor shall anything herein or
therein prevent the Holder of any Senior Note or the Trustee on its behalf from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, in respect of cash, property or
securities of any Guarantor received upon the exercise of such remedy.

                                       57
<PAGE>
 
Section 10.10.  Notice to Trustee.

     The Company or any Guarantor shall give prompt written notice to the
Trustee of any fact known to the Company or any such Guarantor which would
prohibit the making of any payment to or by the Trustee in respect of the
Guarantees pursuant to the provisions of this Article Ten. Regardless of
anything to the contrary contained in this Article Ten or elsewhere in this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any Default or Event of Default with respect to any facts which would prohibit
the making of any payment to or by the Trustee unless and until the Trustee
shall have received notice in writing from the Company or a Guarantor, and,
prior to receipt of any such written notice, the Trustee shall be entitled to
assume (in the absence of actual knowledge to the contrary) that no such facts
exist .

Section 10.11.  Reliance on Judicial Order of Certificate of Liquidating Agent.

     Upon any payment or distribution of assets of any Guarantor referred to in
this Article Ten, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Senior Notes shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or upon certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Trustee or the holders of the Senior Notes, for the purpose of ascertaining the
persons entitled to participate in such distribution, the amount thereof or
payable thereon, the amount or amounts paid or distribution thereon and all
other facts pertinent thereto or to this Article Ten.

                                  ARTICLE 11.
                                 MISCELLANEOUS

Section 11.01.  Trust Indenture Act Controls.

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

Section 11.02.  Notices.

     Any notice or communication by the Company or the Trustee to the others is
duly given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:

          If to the Company or the Guarantors:

          Wilsons The Leather Experts Inc.
          7401 Boone Avenue North
          Brooklyn Park, Minnesota  55428
          Telecopier No.:  (612) 391-4906
          Attention:  Chief Financial Officer

                                       58
<PAGE>
 
          With a copy to:

          Faegre & Benson LLP
          2200 Norwest Center
          90 South Seventh Street
          Minneapolis, Minnesota  55402
          Telecopier No.:  (612) 336-3026
          Attention:  Susan Jacobson

          If to the Trustee:

          Norwest Bank Minnesota, N.A.
          Corporate Trust Services
          6th and Marquette
          Minneapolis, Minnesota  55479-0069
          Telecopier No.:  (612) 667-9825
          Attention:  Corporate Trust

          With a copy to:

          Norwest Bank Minnesota, N.A.
          c/o The Depository Trust Company
          55 Water Street
          New York, New York  10041
          Telecopier No.:  (212) 558-2619
          Attention:  Norwest Window

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

     All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given:  at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.

     Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar.  Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA.  Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.

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

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

                                       59
<PAGE>
 
Section 11.03.  Communication by Holders of Senior Notes with Other Holders of
                Senior Notes.

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

Section 11.04.  Certificate and Opinion as to Conditions Precedent.

     Upon any request or application by the Company and/or the Guarantor to the
Trustee to take any action under this Indenture, the Company and/or such
Guarantor, as the case may be, shall furnish to the Trustee:

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

          (b)  an Opinion of Counsel in form and substance reasonably
     satisfactory to the Trustee (which shall include the statements set forth
     in Section 11.05 hereof) stating that, in the opinion of such counsel, all
     such conditions precedent and covenants have been satisfied.

Section 11.05.  Statements Required in Certificate or Opinion.

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

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

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

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

          (d)  a statement as to whether or not, in the opinion of such Person,
     such condition or covenant has been satisfied.

Section 11.06.  Rules by Trustee and Agents.

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

Section 11.07.  No Personal Liability of Directors, Officers, Employees and
                Stockholders.

     No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Senior Notes, this Indenture

                                       60
<PAGE>
 
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Senior Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Senior Notes.

Section 11.08.  Governing Law.

     THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE SENIOR NOTES AND THE SUBSIDIARY GUARANTEES.

Section 11.09.  No Adverse Interpretation of Other Agreements.

     This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person.  Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.

Section 11.10.  Successors.

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

Section 11.11.  Severability.

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

Section 11.12.  Counterpart Originals.

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

Section 11.13.  Table of Contents, Headings, etc.

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

                         [Signatures on following page]

                                       61
<PAGE>
 
                                          SIGNATURES:

                                          THE COMPANY:

Dated as of August 18, 1997
                                          WILSONS THE LEATHER EXPERTS INC.
   
                                 
                                          By: /s/  David L. Rogers  
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          THE GUARANTORS:
 
                                          WILSONS LEATHER HOLDINGS INC.
  
                                
                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
  
                                          WILSONS CENTER, INC.
  
                                
                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          ROSEDALE WILSONS, INC.
                                
                                
                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          RIVER  HILLS WILSONS, INC.
                                      

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President

                                       62
<PAGE>
 
                                          BERMANS THE LEATHER EXPERTS INC.
                                         

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS HOUSE OF SUEDE, INC.
 

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS TANNERY WEST, INC.
                                          

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
  
                                          WILSONS LEATHER OF ALABAMA INC.
                                         

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF CONNECTICUT INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF FLORIDA INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President

                                       63
<PAGE>
 
                                          WILSONS LEATHER OF GEORGIA INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF INDIANA INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF IOWA INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF LOUISIANA INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF MARYLAND INC.
 

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF MASSACHUSETTS INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President

                                       64
<PAGE>
 
                                          WILSONS LEATHER OF MICHIGAN INC.
 

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF NEW JERSEY INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
  
                                          WILSONS LEATHER OF NEW YORK INC.
        

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF NORTH CAROLINA INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF OHIO INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                 Name:   David L. Rogers
                                                 Title:  President
 
 
                                          WILSONS LEATHER OF PENNSYLVANIA INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President

                                       65
<PAGE>
 
                                          WILSONS LEATHER OF RHODE ISLAND INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF TENNESSEE INC.
 

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF TEXAS INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF VIRGINIA INC.
 

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF WEST VIRGINIA INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF WISCONSIN INC.
 

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President

                                       66
<PAGE>
 
                                          WILSONS LEATHER OF ARKANSAS INC.
 

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF DELAWARE INC.
 

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF MISSISSIPPI INC.
 

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF MISSOURI INC.
 
                                           
                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF SOUTH CAROLINA INC.
 

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President
 
 
                                          WILSONS LEATHER OF VERMONT INC.
 

                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President

                                       67
<PAGE>
 
                                          WILSONS INTERNATIONAL INC.


                                          By: /s/  David L. Rogers
                                             -----------------------------------
                                                  Name:   David L. Rogers
                                                  Title:  President


NORWEST BANK MINNESOTA,
N.A., as Trustee

By:  /s/  Curtis D. Schwegman
   ----------------------------------------  
         Name:  Curtis D. Schwegman
         Title:  Assistant Vice President

                                       68
<PAGE>
 
                                   EXHIBIT A

                             (Face of Senior Note)

               ____% [Series A ] [Series B] Senior Note due 2004

No. _____                                                   Cusip No.:__________

                                                                   $__________

                       WILSONS THE LEATHER EXPERTS INC.

promises to pay to

or registered assigns,

the principal sum of SEVENTY FIVE MILLION

Dollars on August 15, 2004.

Interest Payment Dates:  February 15 and August 15

Record Dates:  February 1 and August 1

                                               Dated:  August 18, 1997

                                               WILSONS THE LEATHER EXPERTS INC.

                                               By:______________________________
                                                     Name:
                                                     Title:


                                               By:______________________________
                                                     Name:
                                                     Title:
 
This is one of the Global
Senior Notes referred to in the
within-mentioned Indenture:

Norwest Bank Minnesota, N.A.,
as Trustee

By:__________________________________
        Authorized Signatory

                                      A-1
<PAGE>
 
                             (Back of Senior Note)

                ___% [Series A] [Series B] Senior Note due 2004

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

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

______________________

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

                                      A-2
<PAGE>
 
     Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.

     1.  Interest.  Wilsons The Leather Experts Inc., a Minnesota corporation
(the "Company"), promises to pay interest on the principal amount of this Senior
Note at 11 1/4% per annum from August 18, 1997 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below.  The Company will pay interest and Liquidated
Damages semi-annually on February 15 and August 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date").  Interest on the Senior Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that if there is no existing Default
in the payment of interest, and if this Senior Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be February
15, 1998.  The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, from time to time on demand at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful.  Interest will be computed
on the basis of a 360-day year of twelve 30-day months.

     2.  Method of Payment.  The Company will pay interest on the Senior Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Senior Notes at the close of business on the February 1 or
August 1 next preceding the Interest Payment Date, even if such Senior Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest.  The Senior Notes will be payable as to principal, premium, interest
and Liquidated Damages at the office or agency of the Company maintained for
such purpose within or without the City and State of New York, or, at the option
of the Company, payment of interest and Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest, premium and Liquidated
Damages on, all Global Senior Notes and all other Senior Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent.  Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.

     3.  Paying Agent and Registrar.  Initially, Norwest Bank Minnesota, N.A.,
the Trustee under the Indenture, will act as Paying Agent and Registrar.  The
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.

     4.  Indenture.  The Company issued the Senior Notes under an Indenture
dated as of August 18, 1997 ("Indenture") among the Company, the Guarantors and
the Trustee.  The terms of the Senior Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb).  The
Senior Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms.  The Senior Notes are
obligations of the Company limited to $75 million in aggregate principal amount.

     5.  Optional Redemption.

                                      A-3
<PAGE>
 
     (a)  Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Senior Notes prior to August 15,
2001.  Thereafter, the Company shall have the option to redeem the Senior Notes,
in whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on August 15 of the years
indicated below:

<TABLE>
<CAPTION>
          YEAR                                                  PERCENTAGE
          ----                                                  ----------
          <S>                                                   <C>        
          2001.....................................              105.625%
          2002.....................................              102.813%
          2003 (and thereafter)....................              100.000% 
</TABLE>

     (b)  Notwithstanding the provisions of subparagraph (a) of this Paragraph
5, on any one occasion prior to August 15, 2000, the Company may redeem Senior
Notes with the net proceeds of a public offering of its common stock at a
redemption price equal to 111.25% of the principal amount thereof plus accrued
and unpaid interest and Liquidated Damages thereon, if any; provided that at
least 75% in aggregate principal amount of the Senior Notes originally issued
remains outstanding immediately after the occurrence of such redemption and that
such redemption occurs within 45 days of the date of the closing of such public
offering.

     6.   Mandatory Redemption.

     Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption or sinking fund payments with respect to the Senior
Notes.

     7.   Repurchase at Option of Holder.

     (a)  If there is a Change of Control, each Holder of Senior Notes shall
have the right to require the Company to make an offer (a "Change of Control
Offer") to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Senior Notes at a purchase price equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase (the "Change of Control
Payment"). Within 10 days following any Change of Control, the Company shall
mail a notice to each Holder setting forth the procedures governing the Change
of Control Offer as required by the Indenture.

     (b)  If the Company or a Restricted Subsidiary consummates any Asset Sales,
within five days of each date on which the aggregate amount of Excess Proceeds
exceeds $10 million, the Company shall commence an offer to all Holders of
Senior Notes (an "Asset Sale Offer") pursuant to Section 3.09 of the Indenture
to purchase the maximum principal amount of Senior Notes (and pari passu
Indebtedness) that may be purchased out of the Excess Proceeds at an offer price
in cash in an amount equal to 100% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Senior Notes (and pari passu Indebtedness) tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use such deficiency for general corporate purposes. If the aggregate
principal amount of Senior Notes and pari passu Indebtedness permitted by the
Indenture surrendered by holders thereof exceeds the amount of Excess Proceeds,
the Senior Notes and pari passu Indebtedness shall  be purchased on a pro rata
basis.  Holders of Senior Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have 

                                      A-4
<PAGE>
 
such Senior Notes purchased by completing the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Senior Notes.

     8.   Notice of Redemption.  Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Senior Notes are to be redeemed at its registered address.  Senior Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Senior Notes held by a Holder are to be
redeemed.  On and after the redemption date interest ceases to accrue on Senior
Notes or portions thereof called for redemption.

     9.   Denominations, Transfer, Exchange.  The Senior Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000.  The transfer of Senior Notes may be registered and Senior Notes may be
exchanged as provided in the Indenture.  The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture.  The Company need not
exchange or register the transfer of any Senior Note or portion of a Senior Note
selected for redemption, except for the unredeemed portion of any Senior Note
being redeemed in part.  Also, it need not exchange or register the transfer of
any Senior Notes for a period of 15 days before a selection of Senior Notes to
be redeemed or during the period between a record date and the corresponding
Interest Payment Date.

     10.  Persons Deemed Owners.  The registered Holder of a Senior Note may be
treated as its owner for all purposes.

     11.  Amendment, Supplement and Waiver.  Subject to certain exceptions, the
Indenture or the Senior Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Senior Notes, and any existing default or compliance with any provision of the
Indenture or the Senior Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Senior Notes.  Without the
consent of any Holder of a Senior Note, the Indenture or the Senior Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Senior Notes in addition to or in place of
certificated Senior Notes, to provide for the assumption of the obligations of
the Company or a Guarantor to Holders of the Senior Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Senior Notes or that does not adversely affect
the legal rights under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.

     12.  Defaults and Remedies.  Events of Default include: (i) default for 30
days in the payment when due of interest or Liquidated Damages on the Senior
Notes; (ii) default in payment when due of principal of or premium, if any, on
the Senior Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise,
(iii) failure by the Company to comply with Section 4.07, 4.09, 4.10, 4.15 or
5.01 of the Indenture; (iv) failure by the Company for 60 days after notice to
the Company by the Trustee or the Holders of at least 25% in principal amount of
the Senior Notes then outstanding to comply with any other covenant,
representation, warranty or other agreement in the Indenture or the Senior
Notes; (v) payment default under certain other agreements relating to
Indebtedness of the Company or Restricted Subsidiaries or other defaults under
such agreements which default results in the acceleration of such Indebtedness
prior to its express maturity; (vi) certain final judgments for the payment of
money that remain undischarged for a period of 60 days; (vii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Restricted

                                      A-5
<PAGE>
 
Subsidiaries; and (viii) except as permitted by the Indenture, any Guarantee
shall be held unenforceable in any judicial proceeding or shall cease to be in
full force and effect for any reason or any person acting on behalf of any
Guarantor shall deny or disaffirm its obligations under its Guarantee.  If any
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Senior Notes may declare
all the Senior Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Senior Notes will become due and payable without
further action or notice.  Holders may not enforce the Indenture or the Senior
Notes except as provided in the Indenture.  Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Senior Notes
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Senior Notes notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal or interest) if it determines that withholding notice is in their
interest.  The Holders of a majority in aggregate principal amount of the Senior
Notes then outstanding by notice to the Trustee may on behalf of the Holders of
all of the Senior Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the Senior Notes.  The
Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.

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

     14.  No Recourse Against Others.  A director, officer, employee,
incorporator or stockholder of the Company, as such, shall not have any
liability for any obligations of the Company under the Senior Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation.  Each Holder by accepting a Senior Note waives
and releases all such liability.  The waiver and release are part of the
consideration for the issuance of the Senior Notes.

     15.  Authentication.  This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.

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

     17.  Additional Rights of Holders of Transfer Restricted Securities.  In
addition to the rights provided to Holders of Senior Notes under the Indenture,
Holders of Transfer Restricted Securities shall have all the rights set forth in
the Registration Rights Agreement dated as of August 18, 1997, between the
Company and the parties named on the signature pages thereof (the "Registration
Rights Agreement").

     18.  CUSIP Numbers.  Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders.  No representation
is made as to the accuracy of such numbers either as printed on the Senior Notes
or as 

                                      A-6
<PAGE>
 
contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.

     19.  Guarantees.  Payment of principal and interest (including interest on
overdue principal and overdue interest, if lawful) is unconditionally guaranteed
by certain subsidiaries of the Company.

     The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:

          Wilsons The Leather Experts Inc.
          7401 Boone Avenue North
          Brooklyn Park, Minnesota  55428
          Attention:  Chief Financial Officer

                                      A-7
<PAGE>
 
                                Assignment Form

     To assign this Senior Note, fill in the form below: (I) or (we) assign and
transfer this Senior Note to

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

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

and irrevocably appoint __________________________________________________
to transfer this Senior Note on the books of the Company.  The agent may
substitute another to act for him.

Date:__________________

                              Your Signature:___________________________________
                              (Sign exactly as your name appears on the face of
                              this Senior Note)
Signature Guarantee.

                                      A-8
<PAGE>
 
                      Option of Holder to Elect Purchase

     If you want to elect to have this Senior Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:

     [_]Section 4.10                [_]Section 4.15

     If you want to elect to have only part of the Senior Note purchased by the
Company pursuant to Section 4.15 of the Indenture, state the amount you elect to
have purchased:  $___________

Date:________________

                              Your Signature:___________________________________
                              (Sign exactly as your name appears on the face of
                              this Senior Note)
                              Tax Identification No.:___________________________

Signature Guarantee.

                                      A-9
<PAGE>
 
                                   SCHEDULE I



Wilsons Leather Holdings Inc.
Wilsons Center, Inc.
Rosedale Wilsons, Inc.
River Hills Wilsons, Inc.
Bermans The Leather Experts Inc.
Wilsons House Of Suede, Inc.
Wilsons Tannery West, Inc.
Wilsons Leather Of Alabama Inc.
Wilsons Leather Of Connecticut Inc.
Wilsons Leather Of Florida Inc.
Wilsons Leather Of Georgia Inc.
Wilsons Leather Of Indiana Inc.
Wilsons Leather Of Iowa Inc.
Wilsons Leather Of Louisiana Inc.
Wilsons Leather Of Maryland Inc.
Wilsons Leather Of Massachusetts Inc.
Wilsons Leather Of Michigan Inc.
Wilsons Leather Of New Jersey Inc.
Wilsons Leather Of New York Inc.
Wilsons Leather Of North Carolina Inc.
Wilsons Leather Of Ohio Inc.
Wilsons Leather Of Pennsylvania Inc.
Wilsons Leather Of Rhode Island Inc.
Wilsons Leather Of Tennessee Inc.
Wilsons Leather Of Texas Inc.
Wilsons Leather Of Virginia Inc.
Wilsons Leather Of West Virginia Inc.
Wilsons Leather Of Wisconsin Inc.
Wilsons Leather Of Arkansas Inc.
Wilsons Leather Of Delaware Inc.
Wilsons Leather Of Mississippi Inc.
Wilsons Leather Of Missouri Inc.
Wilsons Leather Of South Carolina Inc.
Wilsons Leather Of Vermont Inc.
Wilsons International Inc.

                                     A-10
<PAGE>
 
                SCHEDULE OF EXCHANGES OF DEFINITIVE SENIOR NOTE/2/


     The following exchanges of a part of this Global Senior Note for Definitive
Senior Notes have been made:

<TABLE>
<CAPTION>
                                                                          Principal Amount of          Signature of          
                              Amount of decrease    Amount of increase           this                authorized officer     
                                     in                    in              Global Senior Note                of             
Date of Exchange               Principal Amount    Principal Amount of       following such          Trustee or Senior      
----------------                     of             this Global Senior          decrease                    Note            
                                                    ------------------
                              this Global Senior         Note                 (or increase)               Custodian         
                              ------------------         ----                  -----------                ---------
                                    Note                                                                                     
                                    ----                 
<S>                           <C>                  <C>                    <C>                        <C>    
---------------------------------------------------------------------------------------------------------------------------
</TABLE> 
                                                                  
____________________
/2/   This should be included only if the Senior Note is issued in global form. 

                                     A-11
<PAGE>
 
                                  EXHIBIT A-1

                       [FORM OF NOTATION ON SENIOR NOTE
                            RELATING TO GUARANTEE]

          Each of the corporations listed on the signature pages hereto
(hereinafter referred to as the "Guarantors", which term includes any successor
or additional Guarantor under the Indenture (the "Indenture") referred to in the
Senior Note upon which this notation is endorsed), (i) has unconditionally
guaranteed that (a) the principal of, interest and Liquidated Damages, if any,
on the Senior Notes will be promptly paid in full when due, subject to any
applicable grace period, whether at stated maturity, by acceleration or
otherwise and interest on the overdue principal of, and interest on interest, to
the extent lawful, and Liquidated Damages, if any, on the Senior Note and all
other obligations of the Company to the Holders or the Trustee under the
Indenture or the Senior Note will be promptly paid in full, all in accordance
with the terms set forth in the Indenture; and (b) in case of any extension of
time of payment or renewal of the Senior Note or of any such other obligations,
the same will be promptly paid in full when due in accordance with the terms of
the extension or renewal, subject to any applicable grace period, whether at
stated maturity, by acceleration or otherwise, (ii) has agreed to pay any and
all costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder in enforcing any rights under this Guarantee; provided,
however, that this Guarantee is limited as to each Guarantor to the extent
necessary not to constitute a fraudulent conveyance or fraudulent transfer.

          No stockholder, officer, director or incorporator, as such, past,
present or future, of any Guarantor shall have any personal liability under this
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.

          This Guarantee shall be binding upon each Guarantor and, to the extent
provided in the Indenture, its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holders and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions hereof.

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


                                    A-1(1)
<PAGE>
 
                              WILSONS LEATHER HOLDINGS INC.                 
                                                                            
                              By:_______________________________________    
                                 Name:                                      
                                 Title:                                     
                                                                            

                                                                            
                              WILSONS CENTER, INC.                          
                                                                            
                              By:________________________________________   
                                 Name:                                      
                                 Title:                                     
                                                                            

                                                                            
                              ROSEDALE WILSONS, INC.                        
                                                                            
                              By:________________________________________   
                                 Name:                                      
                                 Title:                                     
                                                                            
                                                                            
                                                                            
                                                                            
                              RIVER HILLS WILSONS, INC.                     
                                                                            
                              By:________________________________________   
                                 Name:                                      
                                 Title:                                     
                                                                            
                                                                            
                                                                            
                                                                            
                              BERMANS THE LEATHER EXPERTS INC.              
                                                                            
                              By:________________________________________   
                                 Name:                                      
                                 Title:                                     
                                                                            
                                                                            
                                                                            
                                                                            
                              WILSONS HOUSE OF SUEDE, INC.                  
                                                                            
                              By:________________________________________   
                                 Name:                                      
                                 Title:                                     
 
                                    A-1(2) 
<PAGE>
 
                                        WILSONS TANNERY WEST, INC.           
                                                                             
                                        By:________________________________  
                                           Name:                             
                                           Title:                            
                                                                             
                                                                             
                                                                             
                                                                             
                                        WILSONS LEATHER OF ALABAMA INC.      
                                                                             
                                        By:________________________________  
                                           Name:                             
                                           Title:                            
                                                                             
                                                                             
                                                                             
                                                                             
                                        WILSONS LEATHER OF CONNECTICUT INC.  
                                                                             
                                        By:________________________________  
                                           Name:                             
                                           Title:                            
                                                                             
                                                                             
                                                                             
                                                                             
                                        WILSONS LEATHER OF FLORIDA INC.      
                                                                             
                                        By:________________________________  
                                           Name:                             
                                           Title:                            
                                                                             
                                                                             
                                                                             
                                                                             
                                        WILSONS LEATHER OF GEORGIA INC.      
                                                                             
                                        By:________________________________  
                                           Name:                             
                                           Title:                            
                                                                             
                                                                             
                                                                             
                                                                             
                                        WILSONS LEATHER OF INDIANA INC.      
                                                                             
                                        By:________________________________  
                                           Name:                             
                                           Title:                            

                                    A-1(3) 
<PAGE>
 
                                        WILSONS LEATHER OF IOWA INC.          
                                                                              
                                        By:_________________________________  
                                           Name:                              
                                           Title:                             
                                                                              
                                                                              
                                                                              
                                                                              
                                        WILSONS LEATHER OF LOUISIANA INC.     
                                                                              
                                        By:_________________________________  
                                           Name:                              
                                           Title:                             
                                                                              
                                                                              
                                                                              
                                                                              
                                        WILSONS LEATHER OF MARYLAND INC.      
                                                                              
                                        By:_________________________________  
                                           Name:                              
                                           Title:                             
                                                                              
                                                                              
                                                                              
                                                                              
                                        WILSONS LEATHER OF MASSACHUSETTS INC. 
                                                                              
                                        By:_________________________________  
                                           Name:                              
                                           Title:                             
                                                                              
                                                                              
                                                                              
                                                                              
                                        WILSONS LEATHER OF MICHIGAN INC.      
                                                                              
                                        By:_________________________________  
                                           Name:                              
                                           Title:                             
                                                                              
                                                                              
                                                                              
                                                                              
                                        WILSONS LEATHER OF NEW JERSEY INC.    
                                                                              
                                        By:_________________________________  
                                           Name:                              
                                           Title:                             
 
                                    A-1(4)
<PAGE>
 
                                        WILSONS LEATHER OF NEW YORK INC.       
                                                                               
                                        By:_________________________________   
                                           Name:                               
                                           Title:                              
                                                                               
                                                                               
                                                                               
                                                                               
                                        WILSONS LEATHER OF NORTH CAROLINA INC. 
                                                                               
                                        By:__________________________________  
                                           Name:                               
                                           Title:                              
                                                                               
                                                                               
                                                                               
                                                                              
                                        WILSONS LEATHER OF OHIO INC.          
                                                                              
                                        By:__________________________________ 
                                           Name:                              
                                           Title:                             
                                                                              
                                                                              
                                                                              
                                                                              
                                        WILSONS LEATHER OF PENNSYLVANIA INC. 
                                                                             
                                        By:__________________________________
                                           Name:                             
                                           Title:                            
                                                                             
                                                                             
                                                                             
                                                                             
                                        WILSONS LEATHER OF RHODE ISLAND INC. 
                                                                             
                                        By:__________________________________
                                           Name:                             
                                           Title:                            
 



                                        WILSONS LEATHER OF TENNESSEE INC.    
                                                                             
                                        By:__________________________________
                                           Name:                             
                                           Title:                            

                                    A-1(5) 
<PAGE>
 
                                        WILSONS LEATHER OF TEXAS INC.        
                                                                             
                                        By:__________________________________
                                           Name:                             
                                           Title:                            
                                                                             
                                                                             
                                                                             
                                                                             
                                        WILSONS LEATHER OF VIRGINIA INC.     
                                                                             
                                        By:__________________________________
                                           Name:                             
                                           Title:                            
                                                                             
                                                                             
                                                                             
                                                                             
                                        WILSONS LEATHER OF WEST VIRGINIA INC.
                                                                             
                                        By:__________________________________
                                           Name:                             
                                           Title:                            
                                                                             
                                                                             
                                                                             
                                                                             
                                        WILSONS LEATHER OF WISCONSIN INC.    
                                                                             
                                        By:__________________________________
                                           Name:                             
                                           Title:                            
                                                                             
                                                                             
                                                                             
                                                                             
                                        WILSONS LEATHER OF ARKANSAS INC.     
                                                                             
                                        By:__________________________________
                                           Name:                             
                                           Title:                            
                                                                             
                                                                             
                                                                             
                                                                             
                                        WILSONS LEATHER OF DELAWARE INC.     
                                                                             
                                        By:__________________________________
                                           Name:                             
                                           Title:                            

                                 A-1(6)       
<PAGE>
 
                                        WILSONS LEATHER OF MISSISSIPPI INC.   
                                                                              
                                        By:__________________________________  
                                           Name:                              
                                           Title:                             
                                                                               
                                                                              
                                        WILSONS LEATHER OF MISSOURI INC.      
                                                                              
                                        By:__________________________________  
                                           Name:                              
                                           Title:                             
                                                                               
                                                                              
                                        WILSONS LEATHER OF SOUTH CAROLINA INC.
                                        By:__________________________________  
                                           Name:                              
                                           Title:                             
                                                                               
                                                                               
                                        WILSONS LEATHER OF VERMONT INC.       
                                        By:__________________________________  
                                           Name:                              
                                           Title:                             
                                                                              
                                                                              
                                        WILSONS INTERNATIONAL INC.            
                                                                              
                                                                              
                                        By:__________________________________  
                                           Name:                              
                                           Title:                              

                                    A-1(7)
<PAGE>
 
                                   EXHIBIT B

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

Re:  11 1/4% Senior Notes due 2004 of Wilsons The Leather Experts Inc.

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

The Transferor*:

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

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

     In connection with such request and in respect of each such Senior Note,
the Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above captioned Senior Notes and as provided in
Section 2.06 of such Indenture, the transfer of this Senior Note does not
require registration under the Securities Act (as defined below) because:*

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

     [_] Such Senior Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.06(a)(ii)(B), Section 2.06(b)(i) or Section 2.06(d)(i) (B) of the Indenture)
or pursuant to an exemption from registration in accordance with Rule 904 under
the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture.)

_______________
*Check applicable box.

                                      B-1
<PAGE>
 
     [_] Such Senior Note is being transferred in accordance with Rule 144 under
the Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).

     [_] Such Senior Note is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of
Counsel to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the Indenture).


                              ________________________________________________ 
                              [INSERT NAME OF TRANSFEROR]

                              By:_____________________________________________

Date:____________________



_______________
*Check applicable box.

                                      B-2