Document:

Lease No:        7750
                                                        ------------------------
                                               Lease Date:      November 3, 1998
                                                          ----------------------
                                               Schedule No.:    1
                                                            --------------------
                                               Schedule Date:   November 3, 1998
                                                             -------------------

                              ASSUMPTION AGREEMENT

         This  Assumption  Agreement  is  made  between ZIONS CREDIT CORPORATION
("Lessor"),  VDC  Communications,  Inc.  and  VDC  Telecommunications,  Inc.  as
Co-Lessees ("Lessee"), and Wang Communications, Inc. dba West Comm ("Assignee"),
and is ALSO considered as an amendment to Equipment Schedule No. 1 to the Master
Lease No. 7750, entered into by Lessor and Lessee on November 3, 1998.

         WHEREAS, Lessee wishes to assign its interest in the Lease to Assignee,
in consideration of the terms thereof, the parties mutually agree as follows:

         1.       Lessee hereby assigns and transfers to Assignee all its right,
                  title, and interest as Lessee in the above described Lease.

         2.       Assignee hereby assumes all of the obligations of Lessee under
                  said Lease and agrees to make  payments  of rental  thereunder
                  when  due  and to  perform  promptly  all  of  the  covenants,
                  conditions, and stipulations contained therein.

         3.       This  assignment  shall   relieve  Lessee   from  all  of  its
                  obligations under said Lease.

         4.       Assignee  hereby  assumes  the  following   payment   schedule
                  beginning with the January 23, 2000 payment:

<TABLE>
<CAPTION>

        Due Date             No. of Payments              Rent                  Use Tax                 Total
        --------             ---------------              ----                  -------                 -----

          <S>                      <C>                 <C>                     <C>                   <C>
          23rd                     30@                 $16,766.10              $1,342.09             $18,118.19

</TABLE>

                  Notices shall be sent to Assignee addressed as follows:

                            Wang Communications, Inc.
                        4155 E. Jewell Avenue, Suite 912
                                Denver, CO 80222

                                          ZIONS CREDIT CORPORATION
                                                   Lessor
                                          By:      /s/ Norman Weldon
                                             -----------------------------------
                                                       Norman Weldon

                                          Title:   Vice President
                                                --------------------------------
                                          Date:    December 20, 1999
                                               ---------------------------------

Wang Communications, Inc. dba West Comm.  VDC Communications, Inc. and VDC
         Assignee                         Telecommunications, Inc. as Co-Lessees
By:      /s/ Paul Wang                             Lessee
   ---------------------------            By:      /s/ Frederick A. Moran
             Paul Wang                       -----------------------------------
                                                       Frederick A. Moran
Title:   President & C.E.O.
      ------------------------            Title:   Chairman & C.E.O./President
                                                --------------------------------
Date:    December 13, 1999
     -------------------------            Date:    December 10, 1999
                                               ---------------------------------

<PAGE>

         IN WITNESS WHEREOF,  I have  hereunto  set  my  hand  and  affixed  the
corporate seal of this   day of     , 19     .

                                          --------------------------------------
                                                   Secretary
STATE OF COLORADO
CITY & COUNTY OF DENVER

The foregoing  was  acknowledged  before me this 13th day of December,  1999, by
Paul Wang. My commission expires November 18, 2000.

                                          /s/ Eloise Anne Burchett
                                          --------------------------------------
                                          Notary Public--------------------------------------------------------------------------------

                           PARAGON TRADE BRANDS, INC.

                                    AS ISSUER

                            PTB INTERNATIONAL, INC.,

                           PTB ACQUISITION SUB, INC.,

                                       AND

                               PTB HOLDINGS, INC.,

                                  AS GUARANTORS

                                  $182,000,000

                    11.25% SENIOR SUBORDINATED NOTES DUE 2005

                                    INDENTURE

                          DATED AS OF JANUARY 28, 2000

                  NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION

                                   AS TRUSTEE

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

<PAGE>

<TABLE>
<CAPTION>
                              CROSS-REFERENCE TABLE

TIA SECTION                                                                       INDENTURE SECTION
<S>      <C>                                                                                 <C>
Sec.310  (a)(1)..............................................................................7.10
         (a)(2)..............................................................................7.10
         (a)(3)..............................................................................N.A.
         (a)(4)..............................................................................N.A.
         (b)...........................................................................7.08; 7.10
         (c).................................................................................N.A.
Sec.311  (a).................................................................................7.11
         (b).................................................................................7.11
         (c).................................................................................N.A.
Sec.312  (a).................................................................................7.13
         (b)................................................................................13.03
         (c)................................................................................13.03
Sec.313  (a).................................................................................7.06
         (b)(1)..............................................................................N.A.
         (b)(2)..............................................................................7.06
         (c)..........................................................................7.06; 13.02
         (d).................................................................................7.06
Sec.314  (a)...........................................................................4.07; 4.18
         (b).................................................................................N.A.
         (c)(1).............................................................................13.04
         (c)(2).............................................................................13.04
         (c)(3)..............................................................................N.A.
         (d).................................................................................N.A.
         (e)................................................................................13.05
         (f).................................................................................N.A.
Sec.315  (a).................................................................................7.01
         (b)..........................................................................7.05; 13.02
         (c).................................................................................7.01
         (d).................................................................................7.01
         (e).................................................................................6.11
Sec.316  (a)(last sentence).................................................................13.06
         (a)(1)(A)...........................................................................6.05
         (a)(1)(B)...........................................................................6.04
         (a)(2)..............................................................................N.A.
         (b).................................................................................6.07
         (c)...........................................................................1.01; 2.11
Sec.317  (a)(1)..............................................................................6.08
         (a)(2)..............................................................................6.09
         (b).................................................................................2.04
Sec.318  (a)................................................................................13.01
</TABLE>

N.A. means Not Applicable

Note:  This Cross-Reference Table shall not,  for any purpose,  be deemed  to be
part of this Indenture.

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
<S>            <C>                                                                                      <C>
ARTICLE I.     DEFINITIONS AND INCORPORATION BY REFERENCE................................................1

   Section 1.01            Incorporation by Reference of Trust Indenture Act............................29
   Section 1.02            Rules of Construction........................................................29

ARTICLE II.    THE NOTES................................................................................30

   Section 2.01            Form and Dating..............................................................30
   Section 2.02            Execution and Authentication.................................................30
   Section 2.03            Registrar and Paying Agent...................................................32
   Section 2.04            Paying Agent To Hold Money in Trust..........................................33
   Section 2.05            Global Notes.................................................................33
   Section 2.06            Transfer and Exchange........................................................34
   Section 2.07            Replacement Notes............................................................35
   Section 2.08            Outstanding Notes............................................................35
   Section 2.09            Temporary Notes..............................................................36
   Section 2.10            Cancellation.................................................................36
   Section 2.11            Payment of Interest; Interest Rights Preserved...............................36
   Section 2.12            CUSIP Numbers................................................................38
   Section 2.13            Transfers, etc...............................................................38

ARTICLE III.   REDEMPTION...............................................................................39

   Section 3.01            Redemption of Notes; Notices to Trustee......................................39
   Section 3.02            Selection of Notes To Be Redeemed............................................40
   Section 3.03            Notice of Redemption.........................................................40
   Section 3.04            Effect of Notice of Redemption...............................................41
   Section 3.05            Deposit of Redemption Price..................................................41
   Section 3.06            Notes Redeemed in Part.......................................................41

ARTICLE IV.    COVENANTS................................................................................42

   Section 4.01            Payment of Notes.............................................................42
   Section 4.02            Maintenance of Office or Agency..............................................42
   Section 4.03            Money for the Note Payments to be Held in Trust..............................43
   Section 4.04            Corporate Existence..........................................................43
   Section 4.05            Maintenance of Property......................................................44
   Section 4.06            Payment of Taxes and Other Claims............................................44
   Section 4.07            SEC Reports..................................................................44
   Section 4.08            Limitation on Indebtedness...................................................45
   Section 4.09            Limitation on Restricted Payments............................................45
   Section 4.10            Limitation on Restrictions on Distributions from Restricted Subsidiaries.....48
   Section 4.11            Limitation on Sales of Assets and Subsidiary Stock...........................50
   Section 4.12            Limitation on Affiliate Transactions.........................................53
   Section 4.13            Limitation on the Sale or Issuance of Capital Stock of
                              Restricted Subsidiaries...................................................54

<PAGE>

   Section 4.14            Change of Control............................................................55
   Section 4.15            Limitation on Liens..........................................................55
   Section 4.16            Designation of Unrestricted Subsidiaries.....................................56
   Section 4.17            Limitation on Layered Indebtedness...........................................57
   Section 4.18            Compliance Certificate.......................................................57
   Section 4.19            Waiver of Stay, Extension or Usury Laws......................................57
   Section 4.20            Investment Company Act.......................................................58
   Section 4.21            Further Instruments and Acts.................................................58

ARTICLE V.     SUCCESSOR COMPANY........................................................................58

   Section 5.01            Merger, Consolidation and Sale of Assets.....................................58

ARTICLE VI.    DEFAULTS AND REMEDIES....................................................................60

   Section 6.01            Events of Default............................................................60
   Section 6.02            Acceleration.................................................................62
   Section 6.03            Other Remedies...............................................................62
   Section 6.04            Waiver of Past Defaults......................................................63
   Section 6.05            Control by Majority..........................................................63
   Section 6.06            Limitation on Suits..........................................................63
   Section 6.07            Rights of Holders to Receive Payment.........................................64
   Section 6.08            Collection Suit by Trustee...................................................64
   Section 6.09            Trustee May File Proofs of Claim.............................................64
   Section 6.10            Priorities...................................................................64
   Section 6.11            Undertaking for Costs........................................................65
   Section 6.12            Waiver of Stay or Extension Laws.............................................65

ARTICLE VII.   TRUSTEE..................................................................................66

   Section 7.01            Duties of Trustee............................................................66
   Section 7.02            Rights of Trustee............................................................67
   Section 7.03            Individual Rights of Trustee.................................................67
   Section 7.04            Trustee's Disclaimer.........................................................68
   Section 7.05            Notice of Defaults...........................................................68
   Section 7.06            Reports by Trustee to Holders................................................68
   Section 7.07            Compensation and Indemnity...................................................68
   Section 7.08            Replacement of Trustee.......................................................69
   Section 7.09            Successor Trustee by Merger..................................................70
   Section 7.10            Eligibility; Disqualification................................................71
   Section 7.11            Preferential Collection of Claims Against Company............................71
   Section 7.12            Trustee's Application for Instructions from the Company......................71
   Section 7.13            Company to Furnish Trustee Names and Addresses of Holders....................71

ARTICLE VIII.  DISCHARGE OF INDENTURE; DEFEASANCE.......................................................72

   Section 8.01            Discharge of Liability on Notes; Defeasance..................................72
   Section 8.02            Conditions to Defeasance.....................................................73
   Section 8.03            Application of Trust Money...................................................74
   Section 8.04            Repayment to Company.........................................................75
   Section 8.05            Indemnity for Government Obligations.........................................75

                                       ii
<PAGE>

   Section 8.06            Reinstatement................................................................75

ARTICLE IX.    AMENDMENTS...............................................................................75

   Section 9.01            Without Consent of Holders...................................................75
   Section 9.02            With Consent of Holders......................................................76
   Section 9.03            Compliance with Trust Indenture Act..........................................77
   Section 9.04            Revocation and Effect of Consents and Waivers................................77
   Section 9.05            Notation on or Exchange of Notes.............................................78
   Section 9.06            Trustee To Sign Amendments...................................................78
   Section 9.07            Payment for Consent..........................................................78

ARTICLE X.     SUBORDINATION OF THE NOTES...............................................................78

   Section 10.01           Agreement to Subordinate.....................................................78
   Section 10.02           Liquidation, Dissolution, Bankruptcy.........................................79
   Section 10.03           Default on Senior Indebtedness of the Company................................79
   Section 10.04           Acceleration of Payment of Notes.............................................80
   Section 10.05           When Distribution Must Be Paid Over..........................................80
   Section 10.06           Subrogation..................................................................81
   Section 10.07           Relative Rights..............................................................81
   Section 10.08           Subordination May Not Be Impaired by Company.................................81
   Section 10.09           Rights of Trustee and Paying Agent...........................................81
   Section 10.10           Distribution or Notice to Representative.....................................82
   Section 10.11           Article 10 Not to Prevent Events of Default or Limit Right to Accelerate.....82
   Section 10.12           Trust Moneys Not Subordinated................................................82
   Section 10.13           Trustee Entitled to Rely upon Any Payment or Distribution....................82
   Section 10.14           Trustee To Effectuate Subordination..........................................83
   Section 10.15           Trustee not Fiduciary for Holders of Senior Indebtedness.....................83
   Section 10.16           Reliance by Holders of Senior Indebtedness on Subordination Provisions.......83

ARTICLE XI.    NOTE GUARANTEES; RELEASE OF NOTE GUARANTEES;  ADDITIONAL NOTE GUARANTEES.................83

   Section 11.01           Note Guarantees..............................................................83
   Section 11.02           Successors and Assigns.......................................................85
   Section 11.03           No Waiver....................................................................86
   Section 11.04           Modification.................................................................86
   Section 11.05           Limitation of Note Guarantor's Liability.....................................86
   Section 11.06           Release of Note Guarantees...................................................86
   Section 11.07           Additional Note Guarantees...................................................87

ARTICLE XII.   SUBORDINATION OF THE NOTE GUARANTEES.....................................................87

   Section 12.01           Agreement to Subordinate.....................................................87
   Section 12.02           Liquidation, Dissolution, Bankruptcy.........................................87
   Section 12.03           Default on Senior Indebtedness of Note Guarantors............................88
   Section 12.04           Demand for Payment...........................................................89
   Section 12.05           When Distribution Must Be Paid Over..........................................89

                                      iii
<PAGE>

   Section 12.06           Subrogation..................................................................89
   Section 12.07           Relative Rights..............................................................90
   Section 12.08           Subordination May not Be Impaired by Note Guarantors.........................90
   Section 12.09           Rights of Trustee and Paying Agent...........................................90
   Section 12.10           Distribution or Notice to Representative.....................................91
   Section 12.11           Article 12 not to Prevent Defaults Under the Note Guarantees or
                              Limit Right to Demand Payment.............................................91
   Section 12.12           Trustee Entitled to Rely Upon Any Payment or Distribution....................91
   Section 12.13           Trustee to Effectuate Subordination..........................................91
   Section 12.14           Trustee not Fiduciary for Holders of Senior Indebtedness of Note Guarantors..92
   Section 12.15           Reliance by Holders of Senior Indebtedness on Subordination Provisions.......92

ARTICLE XIII.  MISCELLANEOUS............................................................................92

   Section 13.01           Trust Indenture Act Controls.................................................92
   Section 13.02           Notices......................................................................92
   Section 13.03           Communication by Holders with Other Holders..................................93
   Section 13.04           Certificate and Opinion as to Conditions Precedent...........................93
   Section 13.05           Statements Required in Certificate or Opinion................................94
   Section 13.06           When Notes Disregarded.......................................................94
   Section 13.07           Rules by Trustee, Paying Agent and Registrar.................................94
   Section 13.08           Legal Holidays...............................................................94
   Section 13.09           Governing Law................................................................95
   Section 13.10           No Recourse Against Others...................................................95
   Section 13.11           Successors...................................................................95
   Section 13.12           Multiple Originals...........................................................95
   Section 13.13           Table of Contents; Headings..................................................96
   Section 13.14           Severability.................................................................96
   Section 13.15           Further Instruments and Acts.................................................96

FORM OF GLOBAL NOTE......................................................................................1
</TABLE>

                                       iv
<PAGE>

                                       -i-
ATL01/10615713v15

                             INDEX OF DEFINED TERMS

11.25% Senior Subordinated Notes Due 2005, 4

                                        A
ACQUIRED  INDEBTEDNESS,  1
ADDITIONAL GUARANTEE,  1, 87
ADDITIONAL GUARANTOR,  1
adequately  capitalized,  5
AFFILIATE,  2
AFFILIATE  TRANSACTION,  2, 53
AGENT MEMBERS,  2, 33, 10
ASSET  SALE,  2
ASSET  SALE  OFFER,  3, 51
ASSET  SALE OFFER
AMOUNT, 3, 51

                                        B
BANKRUPTCY  LAW, 3
beneficial  ownership,  5, 6
beneficially  owned, 6
BLOCKAGE NOTICE, 3, 80
BOARD OF DIRECTORS, 3
BOARD RESOLUTION, 4
BUSINESS ACQUISITION,  4
BUSINESS DAY, 4 BUSINESS DISPOSITION, 4

                                        C
CAPITAL STOCK, 4
CAPITALIZED LEASE OBLIGATION, 4
CASH EQUIVALENTS, 5
CASH FLOW, 4
CERTIFICATED NOTES, 5
CHANGE OF CONTROL, 5
CHANGE OF CONTROL OFFER, 6, 55
CHANGE OF CONTROL PAYMENT DATE, 6, 55
CODE, 6
COMMISSION, 29
COMMODITY  HEDGING  AGREEMENTS,   6
Company,  1,  6,  5,  3
COMPANY  ORDER,  6
CONSOLIDATED  COVERAGE  RATIO,  7
CONSOLIDATED  EBITDA,  8
CONSOLIDATED  FIXED CHARGES,  8
CONSOLIDATED   INTEREST  EXPENSE,  8
CONSOLIDATED  NET  INCOME,  9
CONSOLIDATED NON-CASH CHARGES, 9
CONSOLIDATED  REVENUES, 9
control, 2
controlled by, 2
controlling,  2
CORPORATE  NATIONAL TRUST OFFICE,  10
covenant  defeasance option, 73
CUSIP, 38
CUSTODIAN, 10

                                        D
DEFAULT, 10
DEFAULTED INTEREST, 10, 37, 5, 4
DEPOSITARY,  10
DESIGNATED SENIOR INDEBTEDNESS, 10
Designation,  56
Designation  Amount,  56
DISQUALIFIED  STOCK,  10
DOMESTIC RESTRICTED SUBSIDIARY, 11

                                        E
EVENT OF DEFAULT, 11, 60
EXCESS PROCEEDS, 11, 51
EXCHANGE ACT, 11
EXTRAORDINARY EXPENSES, 11

                                        F
FAIR MARKET VALUE, 11
FOREIGN INVESTMENT AGREEMENTS, 11
FOREIGN JOINT VENTURE, 12
FOREIGN SUBSIDIARY, 12
FOUR QUARTER PERIOD, 12

                                        G
GAAP, 12
GLOBAL NOTE, 13
GUARANTEE, 13
Guarantee Obligations, 84

                                        H
HOLDER, 13

                                        I
INCUR, 13
INDEBTEDNESS, 13
INDENTURE, 14, 4, 3
INDENTURE SECURITIES, 29
INSOLVENCY OR LIQUIDATION PROCEEDING, 14
INTEREST PAYMENT DATE, 14
INTEREST RATE OR CURRENCY PROTECTION AGREEMENT, 15
INVESTMENT, 15
ISSUE DATE, 15

                                      -i-
<PAGE>

                                        J
JOINT VENTURE, 15

                                        K
KC, 15

                                        L
legal defeasance option, 72
LEGAL HOLIDAY, 15, 94
LIEN, 16

                                        M
MABESA OPTION, 16
Moody's, 5

                                        N
NET AVAILABLE  CASH,  16
NET CASH  PROCEEDS,  16
NET COST SAVINGS,  16
NEW JOINT VENTURE,  17
NON-US  PERSON,  17
NOTE  CUSTODIAN,  17
NOTE  GUARANTEE,  17
NOTE GUARANTOR,  17
Note  Guarantors,  1, 4, 3
NOTE REGISTER,  17, 32
NOTEHOLDER,  13
NOTES, 17, 4, 3
NOTICE OF DEFAULT, 17, 61

                                        O
OBLIGATIONS, 17
OBLIGOR, 29
OFFICER, 17
OFFICERS'CERTIFICATE, 17
OPINION OF COUNSEL, 18
Option of Holder to Elect Purchase, 55, 9, 8

                                        P
P&G,  18
pay its Note  Guarantee,  88
pay the  Notes,  79
PAYING  AGENT,  18, 32
PAYMENT BLOCKAGE PERIOD, 18, 79
PERMITTED HOLDERS, 18
PERMITTED INDEBTEDNESS, 18
PERMITTED  INVESTMENT,  20
PERMITTED  LIENS,  21
person,  5
PERSON,  23
PLAN, 23
POST-PETITION INTEREST, 23
PREFERRED STOCK, 23
PRINCIPAL, 23
PROPERTY, 23
PUBLIC EQUITY OFFERING, 23
PUBLIC MARKET, 23

                                        Q
QUALIFIED CAPITAL STOCK, 24

                                        R
RECORD DATE, 24
REDEMPTION DATE, 24
REDEMPTION PRICE, 24
REFINANCE, 24
REFINANCING INDEBTEDNESS, 24
REGISTRAR, 24, 32
RELATED BUSINESS, 25
REPRESENTATIVE, 25
RESTRICTED PAYMENT, 25
RESTRICTED SUBSIDIARY, 25
Revocation, 56

                                        S
S&P, 5
SALE AND LEASEBACK  TRANSACTION,  25
SEC, 25
SECONDARY SECURITIES,  25
Secondary Securities, 36, 5, 4
SECURITIES ACT, 26
SENIOR CREDIT FACILITIES,  26
SENIOR INDEBTEDNESS,  26
SENIOR SUBORDINATED INDEBTEDNESS, 27
SIGNIFICANT SUBSIDIARY, 27
SPECIAL RECORD DATE, 27
STATED  MATURITY,  27
STOCK  PURCHASE  LOAN,  27
SUBORDINATED  OBLIGATION,  27
SUBORDINATED  REORGANIZATION SECURITIES, 27, 79
SUBSIDIARY, 27
Surviving Entity, 58
SURVIVING ENTITY, 27

                                        T
TIA, 28
Transaction Date, 28
TRUST OFFICER, 28
Trustee, 1, 28, 4, 3

                                        U
under common  control  with, 2
UNIFORM  COMMERCIAL  CODE, 28
UNITED  STATES,  28
UNRESTRICTED SUBSIDIARY, 28, 56
US, 28
US GOVERNMENT OBLIGATIONS, 28

                                       ii

<PAGE>

                                        V
VOTING STOCK, 28

                                        W
WEIGHTED AVERAGE LIFE TO MATURITY, 28
WHOLLY-OWNED RESTRICTED SUBSIDIARY, 28

                                      iii

<PAGE>

         This  INDENTURE  dated as of  January  28,  2000,  is made by and among
PARAGON  TRADE  BRANDS,  INC.,  a  Delaware  corporation  (the  "Company"),  PTB
INTERNATIONAL,  INC.,  a Delaware  corporation,  PTB  ACQUISITION  SUB,  INC., a
Delaware  corporation  and PTB HOLDINGS,  INC., an Ohio  corporation  (the "Note
Guarantors") AND NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION (the "Trustee").

                                    RECITALS

         Pursuant to the Plan, the Company has duly  authorized the creation and
issue of its 11.25% Senior Subordinated Notes Due 2005, and the Company has duly
authorized the execution and delivery of this Indenture.

         Each of the Note  Guarantors  has duly  authorized  the  execution  and
delivery of this Indenture to provide a Guarantee of the Notes and of certain of
the obligations of the Company hereunder.

         All things  necessary to make the Notes,  when  executed by the Company
and  authenticated and delivered by the Trustee hereunder and duly issued by the
Company,  the valid  obligations  of the Company,  and to make this  Indenture a
valid instrument of the Company and each of the Note  Guarantors,  in accordance
with their respective terms, have been done.

         In consideration  of the foregoing  and the acceptance  of the Notes by
the Holders thereof,  it is mutually  covenanted and  agreed, for  the equal and
proportionate benefit of all Holders of the Notes, as follows.

ARTICLE I.     DEFINITIONS AND INCORPORATION BY REFERENCE

         "ACQUIRED  INDEBTEDNESS"  means,  with  respect to any Person,  (i) any
Indebtedness or Disqualified Stock of any other Person existing at the time such
Person  is  merged  with or into or  becomes  a  Restricted  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  Restricted  Subsidiary  of  such  specified  Person,  and  (ii)
indebtedness  secured by a Lien encumbering any asset acquired by such specified
Person,  and in either case for purposes of this Indenture shall be deemed to be
Incurred by such  specified  Person at the time such other Person is merged with
or into or becomes a Restricted  Subsidiary of such  specified  Person or at the
time such asset is acquired by such specified Person, as the case may be.

         "ADDITIONAL GUARANTEE" has the meaning assigned to it in Section 11.07.

         "ADDITIONAL GUARANTOR" has the meaning assigned to it in Section 11.07.
<PAGE>

         "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  and shall  include,  with  respect to the
Company,  all Foreign  Joint  Ventures.  For the  purposes  of this  definition,
"control"   (including  with  correlative   meaning,  the  terms  "controlling,"
"controlled  by" and "under common  control with") when used with respect to any
Person,  means (i) the power to  direct  the  management  and  policies  of such
Person,  directly  or  indirectly,  whether  through  the  ownership  of  voting
securities,  by contract or otherwise or (ii) the beneficial ownership of 10% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of
such Person.

         "AFFILIATE TRANSACTION" has the meaning assigned to it in Section 4.12.

         "AGENT MEMBERS" has the meaning assigned to it in Section 2.05(a).

         "ASSET SALE" means any direct or indirect sale,  issuance,  conveyance,
transfer,  assignment  or other  transfer for value by the Company or any of its
Restricted  Subsidiaries  (including any Sale and Leaseback  Transaction) to any
Person  other than the Company or a  Restricted  Subsidiary  (including a Person
that is or will  become a  Restricted  Subsidiary  immediately  after such sale,
issuance, conveyance, transfer, assignment or other transfer for value) of:

         (i)   any Capital Stock of any Restricted Subsidiary; or,

         (ii)  any other property or assets (whether  tangible or intangible) of
         the Company or any  Restricted  Subsidiary  other than in the  ordinary
         course of business; or

         (iii) any deemed Asset Sale specified in Section 4.11(c);

PROVIDED, HOWEVER, that Asset Sale shall not include:

         (a)   any  disposition of Cash Equivalents, receivables or inventory in
         the ordinary  course of business  consistent with past practices of the
         Company or any of its Restricted  Subsidiaries or the lease or sublease
         of any real or personal property in the ordinary course of business,

         (b)   exchanges of properties or assets for other  properties or assets
         (other  than cash,  Cash  Equivalents,  notes,  Capital  Stock or other
         equity  interests);  PROVIDED,  that the property or assets so acquired
         (1) are used in a Related  Business and (2) have a Fair Market Value at
         least equal to the Fair Market Value of the assets or properties  being
         exchanged  (as  evidenced by a  resolution  of the  Company's  Board of
         Directors);

         (c)   exchanges  of properties  or assets  for the  Capital  Stock of a
         Person; PROVIDED, that the property or assets of the Person the Capital
         Stock of which is so acquired  (1) are used in a Related  Business  and
         (2) have a Fair Market Value at least equal to the Fair Market Value of
         the assets or properties  being exchanged

                                      -2-
<PAGE>

         (as evidenced by a resolution of the Company's  Board of Directors) and
         (3) the  Investment in such Capital Stock is permitted by Section 4.09;

         (d)   for purposes of Section 4.11 only, a  disposition  which complies
         with Section 4.09;

         (e)   dispositions  of Capital  Stock  or  other  assets  (whether in a
         single transaction or a series of  related transactions) for  which the
         consideration received is $500,000 or less;

         (f)   dispositions of Capital Stock or other assets the aggregate value
         of which does not exceed  $10,000,000  less the aggregate  value of all
         other  dispositions of Capital Stock or other assets made subsequent to
         the Issue Date pursuant to this clause (f);

         (g)   the sale, conveyance,  disposition  or other  transfer  of all or
         substantially  all of the  assets  of the  Company  and its  Restricted
         Subsidiaries as permitted under Section 5.01;

         (h)   any sale of Capital Stock in, or Indebtedness or other securities
         of  an  Unrestricted Subsidiary; and

         (i)   any sale of the Company's or a Restricted  Subsidiary's equity in
         a Foreign Joint Venture or a New Joint  Venture  concurrently  with the
         acquisition  of such  equity  interest  under  the  terms of any of the
         Foreign Investment Agreements or otherwise.

         "ASSET SALE OFFER" has the meaning assigned to it in Section 4.11.

         "ASSET SALE OFFER AMOUNT"  has the meaning  assigned  to  it in Section
4.11.

         "BANKRUPTCY  LAW" means  Title 11,  United  States  Code,  or any other
applicable federal,  state, or foreign bankruptcy,  insolvency or similar law as
now or hereafter constituted.

         "BLOCKAGE NOTICE" has the meaning assigned to it in Section 10.03.

         "BOARD OF  DIRECTORS"  means,  as the  context  requires,  the Board of
Directors of the Company or the applicable  Restricted  Subsidiary,  as the case
may be, or any committee thereof duly authorized to act on behalf of such Board.

         "BOARD  RESOLUTION"  means a duly  adopted  resolution  of the Board of
Directors in full force and effect at the time of determination and certified as
such by the  Secretary  or  Assistant  Secretary  of the Company or a Restricted
Subsidiary, as the case may be.

         "BUSINESS ACQUISITION" means (i) an Investment by the Company or any of
its Restricted  Subsidiaries  in any other Person  pursuant to which such Person
shall become a

                                      -3-
<PAGE>

Restricted  Subsidiary or shall be merged into or consolidated  with the Company
or any of its Restricted  Subsidiaries  or (ii) an acquisition by the Company or
any of its  Restricted  Subsidiaries  of the  property  and assets of any Person
other than the Company or any of its  Restricted  Subsidiaries  that  constitute
substantially  all of the  assets  of such  Person  or of any  division,  brand,
business unit or line of business of such Person.

         "BUSINESS  DAY" means any day  excluding  Saturday,  Sunday and any day
which is a legal  holiday under the laws of the States of Georgia or New York or
is a day on which banking institutions located in those States are authorized or
required by law or other governmental action to close.

         "BUSINESS  DISPOSITION"  means any sale,  transfer or other disposition
(including by way of merger or  consolidation) in one transaction or a series of
related transactions by the Company or any of its Restricted Subsidiaries to any
Person other than the Company or any of its Restricted  Subsidiaries  of (i) all
or substantially  all of the Capital Stock of any Restricted  Subsidiary or (ii)
all or  substantially  all of the assets of any Restricted  Subsidiary or of any
division,  brand,  business  unit or  line of  business  of the  Company  or any
Restricted Subsidiary.

         "CAPITALIZED LEASE OBLIGATION" means, as to any Person, the obligations
of such Person under a lease that are required to be  capitalized  and accounted
for  as  capital  lease  obligations  under  GAAP  and,  for  purposes  of  this
definition,  the amount of such obligations at any date shall be the capitalized
amount of such  obligations  at such date,  determined in accordance  with GAAP;
PROVIDED, the term "Capitalized Lease Obligation" shall include Property subject
to a Sale and Leaseback  Transaction only if such Sale and Leaseback Transaction
occurs within 90 days of the acquisition of the such Property.

         "CAPITAL  STOCK" of any  Person  means any and all  shares,  interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests  in (however  designated)  the equity of such  Person,  including  any
Preferred Stock, but excluding any debt securities convertible into such equity.

         "CASH FLOW" means for any period the Company's  Consolidated EBITDA for
such period,  LESS any Capital  Expenditures  of the Company and its  Restricted
Subsidiaries for such period.

         "CASH  EQUIVALENTS"  means (i) marketable direct  obligations issued or
unconditionally  Guaranteed  by the United  States  government  or issued by any
agency thereof and backed by the full faith and credit of the United States,  in
each case maturing  within one year from the date of acquisition  thereof;  (ii)
marketable  direct  obligations  issued by any state of the United States or any
political  subdivision of any such state or any public  instrumentality  thereof
maturing  within one year from the date of acquisition  thereof and, at the time
of  acquisition,  having the highest rating  obtainable  from either  Standard &
Poor's  Rating Group ("S&P") or Moody's  Investors  Service,  Inc.  ("Moody's");
(iii)  commercial paper maturing no more than one year from the date of

                                      -4-
<PAGE>

creation  thereof  and, at the time of  acquisition,  having the highest  rating
obtainable  from  either S&P or  Moody's;  and (iv)  certificates  of deposit or
bankers'  acceptances  maturing  within  one year  from the date of  acquisition
thereof  issued by any commercial  bank  organized  under the laws of the United
States or any state  thereof or the  District of  Columbia  that (a) is at least
"adequately  capitalized"  (as defined in the regulations of its primary Federal
banking  regulator) and (b) has Tier 1 capital (as defined in such  regulations)
of not less than  $100,000,000;  (v) shares of any money market mutual fund that
(a) has its assets invested continuously in the types of investments referred to
in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000,
and (c) has the highest rating  obtainable from either S&P or Moody's;  and (vi)
repurchase  agreements  with  respect  to,  and  which are  fully  secured  by a
perfected security interest in, obligations of a type described in clause (i) or
clause  (ii) above and are with any  commercial  bank  described  in clause (iv)
above.

         "CERTIFICATED NOTES" has the meaning assigned to it in Section 2.01.

         "CHANGE OF  CONTROL"  means the  occurrence  of  one  or  more  of  the
following events:

                  (i) (A) any "person"  (as such term is used in Sections  13(d)
         and  14(d) of the  Exchange  Act),  other  than  one or more  Permitted
         Holders,  is or becomes the beneficial owner (as defined in Rules 13d-3
         and 13d-5 under the  Exchange  Act,  except  that for  purposes of this
         clause (i) such person shall be deemed to have  "beneficial  ownership"
         of all shares that any such  person has the right to  acquire,  whether
         such right is  exercisable  immediately  or only  after the  passage of
         time),  directly or indirectly,  of more than 50.0% of the total voting
         power of the Voting Stock of the Company;

                  (ii) the Company  consolidates  with,  or merges with or into,
         another  Person  (other than the Company or a Wholly  Owned  Restricted
         Subsidiary) or the Company or any of its Restricted Subsidiaries sells,
         conveys,  assigns,  transfers,  leases or otherwise  disposes of all or
         substantially  all of the  assets  of the  Company  and its  Restricted
         Subsidiaries  (determined on a  consolidated  basis for the Company and
         its Restricted  Subsidiaries)  to any Person (other than the Company or
         any  Wholly  Owned   Restricted   Subsidiary),   other  than  any  such
         transaction  where  immediately  after such  transaction  the Person or
         Persons that "beneficially  owned" (as defined in Rules 13d-3 and 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 exercisable immediately or only after
         the passage of time) immediately prior to such transaction, directly or
         indirectly,   a  majority  of  the  total  voting  power  of  the  then
         outstanding   Voting   Stock  of  the   Company,   taken  as  a  whole,
         "beneficially  owns" (as so  determined),  directly  or  indirectly,  a
         majority of the total voting power of the then outstanding Voting Stock
         of the surviving or transferee Person.

                                      -5-
<PAGE>

                  (iii) during any period of two consecutive years,  individuals
         who at the beginning of such period  constituted the Board of Directors
         (together  with  any new  directors  whose  election  by such  Board of
         Directors or whose  nomination for election by the  shareholders of the
         Company  was  approved  by a vote of 66 2/3%  of the  directors  of the
         Company then still in office who were either directors at the beginning
         of such  period  or whose  election  or  nomination  for  election  was
         previously  so approved)  cease for any reason to constitute a majority
         of the Board of Directors then in office; or

                  (iv) the Company is  liquidated  or dissolves or adopts a plan
         of  liquidation  or  dissolution   other  than  in  connection  with  a
         transaction which complies with the provisions  described under Article
         V.

         "CHANGE OF CONTROL OFFER" has  the  meaning  assigned to it  in Section
4.14.

         "CHANGE  OF  CONTROL  PAYMENT  DATE" has the  meaning assigned to it in
Section 4.14.

         "CODE" means the Internal Revenue Code of 1986, as amended.

         "COMMODITY  HEDGING  AGREEMENTS" means agreements which protect against
losses by the Company as a result of upward or downward  movements in the market
price of  commodities,  entered into in the ordinary  course of business and not
for speculative purposes.

         "COMPANY"  means  the  party  named as such in this  Indenture  until a
successor replaces it and, thereafter,  means the successor and, for purposes of
any  provision  contained  herein and required by the TIA, each other obligor on
the indenture securities.

         "COMPANY ORDER" means a written order signed in the name of the Company
by (i) the Chairman of the Board,  Chief  Executive  Officer,  President,  Chief
Operating Officer,  Chief Financial Officer or any Vice President of the Company
and (ii) the Treasurer,  an Assistant  Treasurer,  the Secretary or an Assistant
Secretary of the Company, and delivered to the Trustee.

         "CONSOLIDATED  COVERAGE RATIO" means, as of any date of  determination,
the ratio of the aggregate  amount of  Consolidated  EBITDA for the Four Quarter
Period to Consolidated  Fixed Charges for such Four Quarter Period.  In addition
to and without  limitation of the  foregoing,  for purposes of this  definition,
"Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after
giving effect on a PRO FORMA basis for the period of such calculation to

         (i) the Incurrence or repayment of any  Indebtedness  of the Company or
         any of its Restricted Subsidiaries (and the application of the proceeds
         thereof),  including  the  Incurrence  of  any  Indebtedness  (and  the
         application  of the proceeds  thereof)  giving rise to the need to make
         such determination,  occurring during or after such Four Quarter Period
         and on or prior to such date of determination, as if such

                                      -6-
<PAGE>

         Incurrence or repayment,  as the  case may be (and the  application  of
         the  proceeds thereof), occurred on the first  day of such Four Quarter
         Period; PROVIDED,  HOWEVER,  that for  purposes of this clause (i), the
         amount  of  Indebtedness  under any  revolving  credit  facility of the
         Senior Credit Facilities shall be deemed to be the average daily amount
         outstanding during such Four Quarter Period; and

         (ii) any Business Dispositions or Business Acquisitions  (including any
         Business Acquisition giving rise to the need to make such determination
         as a  result  of the  Company  or one  of its  Restricted  Subsidiaries
         (including  any Person who becomes a Restricted  Subsidiary as a result
         of the Business Acquisition) Incurring Acquired Indebtedness) occurring
         during the Four Quarter  Period or at any time  subsequent  to the last
         day of the  Four  Quarter  Period  and on or  prior  to  such  date  of
         determination,  as if such Business Disposition or Business Acquisition
         (including  the Incurrence of any Acquired  Indebtedness  in connection
         with a  Business  Acquisition)  occurred  on the  first day of the Four
         Quarter Period. In giving PRO FORMA effect to any Business Acquisitions
         and  Business  Dispositions,  the  following  shall be given  PRO FORMA
         effect:

               *      any Net Cost Savings of such Business Acquisition; and

               *      any  Consolidated  EBITDA  (provided  that  such PRO FORMA
                      Consolidated  EBITDA  shall  be  calculated  in  a  manner
                      consistent  with  the  exclusions  in  the  definition  of
                      "Consolidated  Net Income" but  without  giving  effect to
                      clause (c) of the definition of  Consolidated  Net Income)
                      attributable  to the assets  which are the  subject of the
                      Business  Disposition or Business  Acquisition  during the
                      Four Quarter Period

If the Company or any of its  Restricted  Subsidiaries  directly  or  indirectly
Guarantees  Indebtedness of a third Person,  the preceding  clauses (i) and (ii)
shall give effect to the Incurrence of such  Guaranteed  Indebtedness  as if the
Company or such Restricted Subsidiary, as the case may be, had directly Incurred
or otherwise assumed such Guaranteed Indebtedness.  Furthermore,  in calculating
"Consolidated  Fixed Charges" for purposes of determining the  denominator  (but
not the  numerator)  of this  "Consolidated  Coverage  Ratio,"  (i)  interest on
outstanding Indebtedness determined on a fluctuating basis as of the Transaction
Date and which will continue to be so determined  thereafter  shall be deemed to
have  accrued at a fixed rate per annum  equal to the rate of  interest  on such
Indebtedness  in  effect  on the  Transaction  Date;  (ii)  if  interest  on any
Indebtedness  actually  Incurred  on the  Transaction  Date  may  optionally  be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency  interbank  offered rate, or other rates, then the interest rate in
effect on the Transaction  Date will be deemed to have been in effect during the
Four Quarter Period;  and (iii)  notwithstanding  clause (i) above,  interest on
Indebtedness  determined on a fluctuating  basis, to the extent such interest is
covered  by  agreements   relating  to  Interest  Rate  or  Currency  Protection
Agreements  shall be deemed to  accrue  at the rate per  annum  resulting  after
giving effect to the operation of such agreements.

                                      -7-
<PAGE>

         "CONSOLIDATED  EBITDA"  means,  with  respect to the  Company,  for any
period,  (a) the sum (without  duplication) of (i)  Consolidated  Net Income and
(ii) to the extent  Consolidated  Net Income has been reduced  thereby,  (A) all
income taxes of the Company and its Restricted  Subsidiaries  paid or accrued in
accordance  with GAAP for such period (other than income taxes  attributable  to
extraordinary,  unusual or nonrecurring gains or losses or taxes attributable to
sales or dispositions outside the ordinary course of business); (B) Consolidated
Interest  Expense;  (C) Consolidated  Non-Cash  Charges;  and (D)  Extraordinary
Expenses less (b) any non-cash items increasing Consolidated Net Income for such
period,  all as  determined  on a  consolidated  basis for the  Company  and its
Restricted Subsidiaries in accordance with GAAP.

         "CONSOLIDATED FIXED CHARGES" means, with respect to the Company for any
period,  the sum,  without  duplication,  of (a)  Consolidated  Interest Expense
(including any premium or penalty paid in connection  with redeeming or retiring
Indebtedness of the Company and its Restricted  Subsidiaries prior to the stated
maturity thereof pursuant to the agreements  governing such Indebtedness),  plus
(b) the  product of (i) the  amount of all  dividend  payments  on any series of
Preferred  Stock of the Company (other than dividends paid in Capital Stock that
is not  Disqualified  Stock)  paid,  accrued or  scheduled to be paid or accrued
during such period times and (ii) a fraction,  the numerator of which is one and
the denominator of which is one minus the  then-current  effective  consolidated
federal, state and local income tax rate of the Company, expressed as a decimal.

         "CONSOLIDATED  INTEREST  EXPENSE"  means,  for any period,  the sum of,
without duplication: (i) the aggregate of all cash and non-cash interest expense
(minus amortization or write-off of deferred financing costs included in cash or
non-cash  interest  expense) of the Company and its Restricted  Subsidiaries for
such  period  determined  on a  consolidated  basis  in  accordance  with  GAAP,
including,  without limitation,  (a) any amortization of debt discount,  (b) the
net  costs  under  Interest  Rate or  Currency  Protection  Agreements,  (c) all
capitalized  interest  and (d) the  interest  portion  of any  deferred  payment
obligation;  and (ii) the interest  component of Capitalized  Lease  Obligations
paid,  accrued  and/or  scheduled  to be paid or accrued by the  Company and its
Restricted Subsidiaries during such period as determined on a consolidated basis
in accordance with GAAP.

         "CONSOLIDATED  NET INCOME"  means,  for any period,  the  aggregate net
income (or loss) of the Company and its Restricted  Subsidiaries for such period
on a consolidated  basis,  determined in accordance  with GAAP;  PROVIDED,  that
principal  payments received by the Company with respect to Indebtedness owed to
the Company by Affiliates  thereof shall be included in Consolidated  Net Income
only if (i) such Indebtedness remains an asset on the consolidated balance sheet
of the  Company in  accordance  with GAAP as  consistently  applied and (ii) the
principal amount of such  Indebtedness  outstanding after such principal payment
is greater than twice the aggregate amount of all principal payments received by
the Company  with  respect to such  Indebtedness  in the 12  preceding  calendar
months;  PROVIDED,  FURTHER,  that there shall be excluded from Consolidated Net
Income  (a)  after-tax  gains and  losses  from Asset  Sales or  abandonment  or
reserves relating thereto,  (b) items classified as extraordinary,

                                      -8-
<PAGE>

nonrecurring or unusual gains,  losses or charges,  and the related tax effects,
each  determined  in  accordance  with  GAAP,  (c) the net  income of any Person
acquired in a "pooling of  interests"  transaction  accrued prior to the date it
becomes a Restricted Subsidiary of the Company or is merged or consolidated with
the Company or any Restricted Subsidiary of the Company, (d) the net income (but
not loss) of any  Restricted  Subsidiary  of the  Company to the extent that the
declaration of dividends or similar  distributions by that Restricted Subsidiary
of that income is restricted by a contract,  operation of law or otherwise,  (e)
the net income of any Person, other than a Restricted Subsidiary of the Company,
except (without  duplication)  to the extent of cash dividends or  distributions
paid to the Company or to a Wholly-Owned Restricted Subsidiary of the Company by
such Person, (f) any restoration to income of any contingency reserve, except to
the extent that  provision  for such  reserve was made out of  Consolidated  Net
Income accrued at any time after the Issue Date, (g) income or loss attributable
to discontinued operations (including,  without limitation,  operations disposed
of  during  such  period  whether  or not such  operations  were  classified  as
discontinued),   and  (h)  in  the  case  of  a  successor  to  the  Company  by
consolidation or merger or as a transferee of the Company's assets, any earnings
of the successor corporation prior to such consolidation,  merger or transfer of
assets.

         "CONSOLIDATED  NON-CASH CHARGES" means with respect to the Company, for
any period, the aggregate depreciation, amortization and other non-cash expenses
of the Company and its Restricted  Subsidiaries reducing Consolidated Net Income
of the Company for such period, determined on a consolidated basis in accordance
with GAAP (including any such charges constituting an extraordinary item or loss
or any such charge  which  requires an accrual of or a reserve for cash  charges
for any future period).

         "CONSOLIDATED  REVENUES" means for any period the consolidated revenues
of the Company and its Restricted Subsidiaries, as determined in accordance with
GAAP.

         "CORPORATE  NATIONAL  TRUST OFFICE"  means the principal  office of the
Trustee at which at any  particular  time its corporate  trust business shall be
principally  administered,  which  office is, at the date of  execution  of this
Indenture, Sixth and Marquette, N9303-120, Minneapolis, Minnesota 55479.

         "CUSTODIAN"  means  any  receiver,   trustee,   assignee,   liquidator,
custodian or similar official under any Bankruptcy Law.

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

         "DEFAULTED INTEREST" has the meaning set forth in Section 2.11 hereof.

         "DEPOSITARY"  means The  Depository  Trust Company,  its nominees,  and
their respective successors.

         "DESIGNATED SENIOR INDEBTEDNESS" means, in respect of the Company,

                                      -9-
<PAGE>

         (i) the Obligations in respect of the Senior Credit Facilities and

         (ii) any other Senior  Indebtedness of the Company which, in each case,
         at the  date  of  determination,  has  an  aggregate  principal  amount
         outstanding  of,  or under  which,  at the date of  determination,  the
         holders of such Senior  Indebtedness  are  committed  to lend up to, at
         least  $50,000,000 and is specifically  designated by the Company or in
         such Indebtedness as "Designated Senior Indebtedness" and,

in  respect of any Note  Guarantor,  any  Guarantee  by such Note  Guarantor  of
Designated Senior Indebtedness of the Company.

         "DISQUALIFIED  STOCK"  means,  with respect to any Person,  any Capital
Stock  which 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
(i) matures or is mandatorily  redeemable  pursuant to a sinking fund obligation
or  otherwise,   (ii)  is  convertible  or  exchangeable   for  Indebtedness  or
Disqualified  Stock or (iii) is redeemable at the option of the holder  thereof,
in whole or in part,  in each case on or prior to the first  anniversary  of the
Stated  Maturity of the Notes;  PROVIDED,  however,  that any Capital Stock that
would not  constitute  Disqualified  Stock  but for  provisions  thereof  giving
holders  thereof the right to require such Person to  repurchase  or redeem such
Capital Stock upon the occurrence of a Business Disposition or Change of Control
occurring  prior to the first  anniversary  of the Stated  Maturity of the Notes
shall not constitute Disqualified Stock if the "business disposition" or "change
of control"  provisions  applicable to such Capital Stock are not more favorable
to the holders of such Capital Stock than the provisions described under Section
4.11 and Section 4.14.

         "DOMESTIC   RESTRICTED   SUBSIDIARY"   means  any  direct  or  indirect
Restricted  Subsidiary  of the Company that is  organized  under the laws of the
United States, any state thereof or the District of Columbia.

         "EVENT OF DEFAULT" has the meaning assigned to it in Section 6.01.

         "EXCESS PROCEEDS" has the meaning assigned to it in Section 4.11.

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

         "EXTRAORDINARY EXPENSES" shall have the  meaning assigned to  such term
by GAAP.

         "FAIR MARKET VALUE" means,  with respect to any asset, the price (after
taking into  account any  liabilities  relating to such  assets)  which could be
negotiated  in an  arm's-length  free market  transaction,  for cash,  between a
willing  seller  and a willing  and able  buyer,  neither  of which is under any
compulsion to complete the transaction.  The Fair Market Value of any such asset
or assets  shall be  determined  conclusively  by the Board of  Directors of the
Company acting in good faith, and shall be evidenced by a Board Resolution.

                                      -10-
<PAGE>

         "FOREIGN INVESTMENT AGREEMENTS" means (i) that certain Pledge Agreement
dated as of January 26, 1996 by and among PTB International, Inc., International
Disposable  Products  Investments,  Ltd. and Danielson Trust Company;  (ii) that
certain  Investment  Agreement  dated January 26, 1996 by and among Mr. Gilberto
Marin  Quintero,   Grupo  P.I.  Mabe,  S.A.  de  C.V.,  the  Company.   and  PTB
International,  Inc.; (iii) that certain Put and Call Option Agreement for Grupo
Mabe Shares dated as of January 26, 1996 between Mr.  Gilberto  Marin  Quintero,
the Company,  PTB  International,  Inc. and Grupo P.I. Mabe,  S.A. de C.V.; (iv)
that certain Joint Venture  Agreement  dated January 26, 1996 by and between Mr.
Gilberto Marin Quintero, the Company, PTB International, Inc. and Paragon-Mabesa
International, S.A. de C.V.; (v) that certain Shareholder Agreement dated August
26, 1997 by and between PTB  International,  Inc. and Euro  American 2000 Trust;
(vi) that certain Shareholders  Agreement of Serenity S.A. dated August 26, 1997
by and among Stronger  Corporation S.A., Cerro Moteado S.A., PTB  International,
Inc.,  Euro  American  2000 Trust,  Mr. Mario Walter  Garcia and Mr. Juan Carlos
Marshall;  (vii) that  certain  Irrevocable  Call Option  Agreement  dated as of
November 6, 1996 by and between  International  Disposable Products Investments,
Ltd. (now, Hortela  Investiments,  S.A. by reason of merger), PTB International,
Inc.,  Juliette  Research  S.A.  and the Company;  (viii) that certain  Facility
Financing  Side Letter dated  January 26, 1996 by and among Mr.  Gilberto  Marin
Quintero, PTB International,  Inc. and the Company; (ix) Articles of Association
of Goodbaby paragon  Hygienic  Products Co. Ltd.; (x) that certain Joint Venture
Contract  dated  September  30, 1997 among  Goodbaby  Group Co., the Company and
First Shanghai  Investments Ltd.; (xi) that certain Technology License Agreement
dated  January 26, 1996 by and between  Grupo P.I.  Mabe,  S.A. de C.V.  and the
Company;  (xii) that certain Technology License Agreement dated January 26, 1996
by and  between  Paragon-Mabesa  International,  S.A. de C.V.  and the  Company;
(xiii) that certain  Transfer of Technology  and Licensing  Contract dated on or
about  September  30,  1997 by and between  the  Company  and  Goodbaby  Paragon
Hygienic  Products Co.  Ltd.;  (xiv) that  certain  Product  Supply and Services
Agreement  dated January 26, 1996 by and between  Paragon-Mabesa  International,
S.A. de C.V. and the Company,  as amended by First  Amendment to Product  Supply
and Services  Agreement dated March 14, 1997;  (xv) those certain  Purchase Loan
and Security  Agreements by and between  Paragon-Mabesa  International,  S.A. de
C.V.  and the  Company;  (xvi) that certain  Agreement  as to  Contingent  Labor
Liability  regarding  the  facility in Tijuana;  and (xvii) any other  document,
instrument or agreement  relating to any of the foregoing,  in each case, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

         "FOREIGN  JOINT  VENTURE" means Grupo P.I. Mabe S.A. de C.V., a Mexican
corporation,  Paragon-Mabesa International, S.A. de C.V., a Mexican corporation,
Stronger Corporation S.A., a Uruguayan  corporation,  MPC Produtos para Higiene,
Ltda.,  a Brazilian  company,  Goodbaby  Paragon  Hygienic  Products Co. Ltd., a
company  formed  under the laws of the  People's  Republic of China and Serenity
S.A., an Argentine corporation.

         "FOREIGN  SUBSIDIARY"  means, with respect to any Person, any direct or
indirect  Subsidiary  of such  Person  that is  organized  under the laws of any
jurisdiction  outside the

                                      -11-
<PAGE>

United  States,  any state  thereof or the  District of  Columbia  but shall not
include any Foreign Joint Venture or New Joint Venture.

         "FOUR  QUARTER  PERIOD"  means,  with respect to the  determination  of
Consolidated Coverage Ratio and Consolidated Revenues, (a) for all periods prior
to the time financial statements of the Company and its Restricted  Subsidiaries
are available  for four full fiscal  quarters  after the Issue Date,  the period
from the Issue Date to the end of the latest fiscal quarter for which  financial
statements are available  ending prior to the  Transaction  Date and (b) for all
other  periods,  the four most recent full fiscal  quarters for which  financial
statements are available ending prior to the Transaction  Date;  PROVIDED,  that
for the purposes of this  definition of "Four Quarter  Period",  the period from
the Issue Date through  March 26, 2000 shall be treated as if such period were a
full fiscal quarter.

         "GAAP" means  generally  accepted  accounting  principles in the United
States as in effect as of the Issue Date,  including  those set forth (i) in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public Accountants, (ii) in statements and pronouncements
of the Financial  Accounting  Standards Board, (iii) in such other statements by
such  other  entity as  approved  by a  significant  segment  of the  accounting
profession,  and (iv) in the published  rules and  regulations of the Commission
governing the inclusion of financial  statements  (including PRO FORMA financial
statements) in periodic  reports  required to be filed pursuant to Section 13 of
the Exchange Act,  including  opinions and  pronouncements  in staff  accounting
bulletins  and  similar  written  statements  from the  accounting  staff of the
Commission.

         "GLOBAL NOTE" has the meaning assigned to it in Section 2.01.

         "GUARANTEE"  means any  obligation,  contingent  or  otherwise,  of any
Person directly or indirectly  guaranteeing any Indebtedness or other obligation
of any Person and any obligation,  direct or indirect,  contingent or otherwise,
of such  Person  (i) to  purchase  or pay (or  advance  or supply  funds for the
purchase or payment of) such  Indebtedness  or other  obligation  of such Person
(whether  arising by virtue of  partnership  arrangements,  or by  agreements to
keep-well,  to purchase assets, goods, securities or services, to take-or-pay or
to maintain  financial  statement  conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
or other  obligation of the payment  thereof or to protect such obligee  against
loss in respect thereof (in whole or in part); PROVIDED,  HOWEVER, that the term
"Guarantee"  shall not include  endorsements  for  collection  or deposit in the
ordinary  course  of  business.  The  term  "Guarantee"  used  as a  verb  has a
corresponding meaning.

         "HOLDER"  or  "NOTEHOLDER"  means the  Person  in whose  name a Note is
registered on the Registrar's books.

         "INCUR"  means issue,  assume,  Guarantee,  incur or  otherwise  become
liable for;  PROVIDED,  HOWEVER,  that any Indebtedness or Disqualified  Capital
Stock  of a Person  existing  at the  time  such  Person  becomes  a  Restricted
Subsidiary (whether by

                                      -12-
<PAGE>

merger, consolidation,  acquisition or otherwise) shall be deemed to be Incurred
by such Subsidiary at the time it becomes a Restricted Subsidiary,  and PROVIDED
FURTHER,  HOWEVER,  the term "incur" may be modified by Section 1.02 hereof. The
term "Incurrence" when used as a noun shall have a correlative meaning.

         "INDEBTEDNESS" means, with respect to any Person,  without duplication,
on any date of  determination,  the principal  amount (or if less,  the accreted
value) of all indebtedness, obligations and liabilities of such Person

                  (i) for borrowed money;

                  (ii) evidenced by  bonds,  debentures,  notes or other similar
         instruments;

                  (iii) Capitalized Lease Obligations;

                  (iv) notes payable and drafts accepted representing extensions
         of credit, whether or not representing  obligations for borrowed money,
         of such Person;

                  (v) any  indebtedness,  obligation or liability of such Person
         owed for all or any part of the deferred  purchase price of property or
         services (excluding any such obligations  Incurred under ERISA),  which
         purchase  price is (a) due more than six months (or a longer  period of
         up to one year,  if such  terms are  available  from  suppliers  in the
         ordinary  course  of  business)  from  the  date of  Incurrence  of the
         obligation  in respect  thereof or (b)  evidenced  by a note or similar
         written instrument;

                  (vi)  Guarantees  of such  Person in respect  of  Indebtedness
         referred to in clauses (i) through (v) above and clause (vii) below;

                  (vii)  all  indebtedness  of any  other  Person  of  the  type
         referred to in clauses  (i) through  (vi) above which is secured by any
         Lien on any property or asset of such Person  regardless of whether the
         indebtedness  secured thereby shall have been assumed by such Person or
         is  nonrecourse  to the  credit  of such  Person,  the  amount  of such
         indebtedness being the lesser of the Fair Market Value of such property
         or asset or the principal amount of the indebtedness so secured;

                  (viii) all obligations of such Person for the reimbursement of
         any  obligor on any letter of credit,  banker's  acceptance  or similar
         credit transaction, and

                  (ix) all  Disqualified  Stock  issued by such  Person with the
         amount of  Indebtedness  represented by such  Disqualified  Stock being
         equal  to the  greater  of its  voluntary  or  involuntary  liquidation
         preference  and its  maximum  fixed  repurchase  price,  but  excluding
         accrued  dividends,  if any. For purposes  hereof,  the "maximum  fixed
         repurchase price" of any Disqualified Stock which does not have a fixed
         repurchase  price shall be calculated  in accordance  with the terms of
         such Disqualified Stock as if such Disqualified Stock were purchased on
         any  date on which  Indebtedness  shall be  required  to be  determined
         pursuant  to this

                                      -13-
<PAGE>

         Indenture, and if such price is  based upon,  or  measured by, the Fair
         Market Value of such  Disqualified  Stock, such Fair Market Value to be
         determined  reasonably and in good faith by the  board of  directors of
         the issuer of such Disqualified Stock.

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

         "INSOLVENCY  OR  LIQUIDATION  PROCEEDING"  means (i) any  insolvency or
bankruptcy case or proceeding, or any receivership,  liquidation, reorganization
or other similar case or proceeding  in  connection  therewith,  relating to the
Company or its assets, or (ii) any liquidation,  dissolution or other winding up
of the Company,  whether  voluntary or  involuntary  or whether or not involving
insolvency or  bankruptcy,  or (iii) any assignment for the benefit of creditors
or any other marshaling of assets or liabilities of the Company.

         "INTEREST PAYMENT DATE" means each semiannual  Interest Payment Date on
August 1 and February 1 of each year,  commencing  August 1, 2000, in respect of
the Notes.  The "First  Interest  Payment  Date" shall mean August 1, 2000.  The
"Second  Interest Payment Date" shall mean February 1, 2001. The "Third Interest
Payment  Date" shall mean August 1, 2001.  The "Fourth  Interest  Payment  Date"
shall mean February 1, 2002.

         "INTEREST  RATE OR CURRENCY  PROTECTION  AGREEMENT" of any Person means
any interest rate protection agreement (including, without limitation,  interest
rate  swaps,  caps,  floors,   collars,   derivative   instruments  and  similar
agreements),  and/or other types of interest hedging agreements and any currency
protection  agreement  (including  foreign  exchange  contracts,  currency  swap
agreements or other currency  hedging  arrangements) in support of the Company's
business and not of a speculative nature.

         "INVESTMENT" in any Person means any direct or indirect  advance,  loan
(other than  advances to customers in the ordinary  course of business that are,
in conformity with GAAP, recorded as accounts receivable on the balance sheet of
such Person) or other  extensions  of credit  (including  by way of Guarantee or
similar  arrangement)  or capital  contribution  to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others),  or any  purchase or  acquisition  of Capital  Stock,
indebtedness or other similar instruments issued by such Person. For purposes of
the  definition of  "Unrestricted  Subsidiary,"  the  definition of  "Restricted
Payment" and the covenant  described in Section  4.09,  (i)  "Investment"  shall
include the portion  (proportionate  to the  Company's  equity  interest in such
Subsidiary)  of the Fair Market Value of the net assets of any Subsidiary of the
Company  at  the  time  that  such  Subsidiary  is  designated  an  Unrestricted
Subsidiary; PROVIDED, HOWEVER, that upon a redesignation of such Subsidiary as a
Restricted  Subsidiary,  the  Company  shall be  deemed  to  continue  to have a
permanent  "Investment"  in an  Unrestricted  Subsidiary  equal to an amount (if
positive)  equal  to  (x)  the  Company's   "Investment"  in  such  Unrestricted
Subsidiary at the time of such redesignation as a Restricted Subsidiary less

                                      -14-
<PAGE>

(y)  the  portion  (proportionate  to the  Company's  equity  interest  in  such
Unrestricted  Subsidiary)  of the Fair  Market  Value of the net  assets of such
Unrestricted  Subsidiary  at the  time of  such  redesignation  as a  Restricted
Subsidiary;  and  (ii)  any  property  transferred  to or from  an  Unrestricted
Subsidiary  shall  be  valued  at its  Fair  Market  Value  at the  time of such
transfer, in each case as determined in good faith by the Board of Directors.

         "ISSUE DATE" means the date on which the Notes are originally issued.

         "JOINT  VENTURE"  means a joint  venture,  partnership or other similar
arrangement,  whether in corporate,  partnership  or other legal form,  and with
respect to which the Company  and its  Restricted  Subsidiaries  own less than a
majority of the aggregate voting power of all classes of the Capital Stock.

         "KC" means Kimberly-Clark Corporation.

         "LEGAL HOLIDAY" has the meaning assigned to it in Section 13.08.

         "LIEN"  means any  mortgage,  pledge,  assignment,  security  interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement,  any lease in the nature thereof and any agreement to
give  any  security  interest)  and any  option,  trust  or  other  preferential
arrangement having the practical effect of any of the foregoing.

         "MABESA OPTION" means that certain  Irrevocable  Call  Option Agreement
dated as of November 6,  1996 by and between  International  Disposable Products
Investments, ltd.  (now  Hortela  Investimentos,  S.A. by reason of merger), PTB
International, Inc., Juliette Research S.A. and the Company.

         "NET  AVAILABLE  CASH"  means,  with  respect  to any Asset  Sale,  the
proceeds in the form of cash or Cash Equivalents,  including payments in respect
of  deferred  payment  obligations  when  received  in the  form of cash or Cash
Equivalents  received by the Company or any of its Restricted  Subsidiaries from
such Asset Sale, net of (a) reasonable  out-of-pocket expenses and fees relating
to such  Asset  Sale  (including,  without  limitation,  legal,  accounting  and
investment banking fees and sales commissions),  (b) taxes paid or payable after
taking into account any reduction in consolidated tax liability due to available
tax credits or  deductions  and any tax sharing  arrangements,  (c) repayment of
Indebtedness  that is required to be repaid in connection  with such Asset Sale,
(d)  appropriate  amounts  to be  provided  by the  Company  or  any  Restricted
Subsidiary,  as the case may be, as a reserve,  in accordance with GAAP, against
any  liabilities  associated with such Asset Sale and retained by the Company or
any Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without  limitation,  pension  and other  post-employment  benefit  liabilities,
liabilities   related  to  environmental   matters  and  liabilities  under  any
indemnification obligations associated with such Asset Sale.

                                      -15-
<PAGE>

         "NET CASH  PROCEEDS"  with  respect to any  issuance or sale of Capital
Stock, means, without duplication,  the proceeds of such issuance or sale in the
form  of  cash  or  Cash  Equivalents  net  of  amounts   specified  in  Section
4.09(a)(3)(B),  attorneys' fees,  accountants' fees,  underwriters' or placement
agents' fees, discounts or commissions and brokerage,  consultant and other fees
actually Incurred in connection with such issuance or sale and net of taxes paid
or payable as a result thereof;  PROVIDED,  HOWEVER,  in no event shall Net Cash
Proceeds be less than zero.

         "NET  COST  SAVINGS"  means the PRO  FORMA  effect of net cost  savings
resulting from a Business  Acquisition  (regardless of whether such cost savings
could then be reflected in PRO FORMA financial statements under GAAP, Regulation
S-X  promulgated  by the SEC or any other  regulation or policy or the SEC) that
the  Company   reasonably   determines  are  probable  based  upon  specifically
identified  actions  that it has  determined  to take (net of any  reduction  in
Consolidated  EBITDA  as a result  of the  Business  Acquisition  and such  cost
savings that the Company reasonably determines is probable);  PROVIDED, that the
Company's  chief  financial   officer  shall  have  certified  in  an  Officer's
Certificate  delivered to the Trustee the specific actions to be taken, the cost
savings to be achieved from each such action,  that such savings have reasonably
been  determined  to be probable,  and the amount,  if any, of any  reduction in
Consolidated  EBITDA  as  a  result  thereof  or  of  the  Business  Acquisition
reasonably determined to be probable,  and such certificate shall be accompanied
by a Board Resolution  specifically  approving such cost savings and authorizing
such certification to be delivered to the Trustee.

         "NEW JOINT  VENTURE"  means a Joint  Venture in which the  Company or a
Restricted Subsidiary invests after the Issue Date.

         "NON-US  PERSON" means any Person who is not a "US  Person," as defined
in Rule 902 under the  Securities Act.

         "NOTE CUSTODIAN" means, with respect to each Global Note, the custodian
with respect to such Global Note, the custodian with respect to such Global Note
(as appointed by the  Depositary),  or any successor  Person thereto,  and shall
initially be the Trustee.

         "NOTE  GUARANTEE"  means  the  Guarantee  of the  Notes  by  each  Note
Guarantor under Article XI hereof.

         "NOTE GUARANTOR" means PTB International, Inc., a Delaware corporation,
PTB Acquisition Sub, Inc., a Delaware  corporation,  and PTB Holdings,  Inc., an
Ohio corporation and each Additional Guarantor.

         "NOTE REGISTER" has the meaning assigned to it in Section 2.03.

         "NOTES" means the 11.25% Senior Subordinated Notes Due 2005,  including
any Secondary  Securities issued as interest thereon, in each case, issued under
this  Indenture,  as the same may be  amended or  modified  from time to time in
accordance with the terms hereof.

                                      -16-
<PAGE>

         "NOTICE OF DEFAULT" has the meaning assigned to it in Section 6.01.

         "OBLIGATIONS"  means, with respect to any Indebtedness,  any principal,
interest (including,  without limitation,  Post-Petition  Interest),  penalties,
fees, indemnifications, reimbursements, including damages, and other liabilities
payable under the documentation governing such Indebtedness.

         "OFFICER"  means  the  Chairman  of the  Board,  the  President,  Chief
Financial  Officer,  the  Treasurer  or  the  Secretary  of the  Company  or any
Restricted Subsidiary, as the case may be.

         "OFFICERS' CERTIFICATE" means a certificate signed by two Officers.

         "OPINION OF COUNSEL" means a written  opinion from legal counsel who is
acceptable  to the Trustee.  The counsel may be an employee of or counsel to the
Company.

         "P&G" means The Procter & Gamble Company.

         "PAYING AGENT" has the meaning assigned to it in Section 2.03.

         "PAYMENT BLOCKAGE PERIOD"  has  the  meaning assigned  to it in Section
10.03.

         "PERMITTED  HOLDERS" means (i) P&G; (ii) KC; (iii)  Wellspring  Capital
Management  L.L.C.;  (iv)  Co-Investment  Partners,  L.P.; (v) Ontario  Teachers
Pension  Plan  Board;  (vi)  partnerships,  corporations  or  limited  liability
companies  which control or are  controlled by the Persons  described in clauses
(i) through (v) above; and (vii) any direct and indirect general partner, member
or shareholder (the "Transferee") of any of the Persons described in clauses (i)
through  (vi)  above (the  "Transferor"),  but each such  Transferee  shall be a
Permitted  Holder only with respect to the Capital  Stock of the Company held by
such Transferee that was transferred to it by a Transferor.

         "PERMITTED  INDEBTEDNESS"  means,  without  duplication,  each  of  the
following:

         (i) Indebtedness  in respect of the  Notes  outstanding  hereunder from
time to time and the Note Guarantees in respect thereof;

         (ii) Guarantees by any Note  Guarantor of  Indebtedness  of the Company
(permitted  under Section 4.08 hereof) other than the Notes; PROVIDED,  HOWEVER,
that  if  any such  Guarantee is of  Subordinated  Obligations,  then  the  Note
Guarantee of such Note  Guarantor  shall  be  senior  to such  Note  Guarantor's
guarantee  of  such  Subordinated Obligations;

         (iii)  Indebtedness Incurred  pursuant to  the Senior Credit Facilities
in an  aggregate  principal  amount  outstanding  (at  the  time  of Incurrence)
not to  exceed the greater of  (A) $75 million (less the amount of any permanent
prepayments  of  Indebtedness  made with the Net Available Cash of an Asset Sale
pursuant to  subsection

                                      -17-
<PAGE>

(a)(2)(A)  of Section  4.11) and (B) 25% of Consolidated  Revenues  for the most
recent  Four  Quarter  Period;

         (iv) other Indebtedness of the Company and its Restricted  Subsidiaries
outstanding  on  the  Issue  Date,  reduced  by  the  amount  of  any  scheduled
amortization  payments or mandatory  prepayments when actually paid or permanent
reductions thereto;

         (v)  Interest  Rate  or  Currency Protection  Agreements  or  Commodity
Hedging  Agreements  entered into  in  the  ordinary  course of  business  or in
connection with the Senior  Credit Facilities and not for  speculative purposes;
PROVIDED,  (i) the notional principal amount of such  Interest  Rate or Currency
Protection Agreements or Commodity Hedging Agreements does not exceed the amount
of  Indebtedness  hedged and (ii) such  Interest  Rate  or  Currency  Protection
Agreements  or  Commodity  Hedging  Agreements  do not  increase  the  amount of
Indebtedness outstanding except as a result of  fluctuations  of the currency or
interest or commodity  markets;

         (vi)  Indebtedness of any Restricted Subsidiary which  was not Incurred
in  violation  of Section  4.09 AND which is owed to and held by the  Company or
any  Note Guarantor for so long as such  Indebtedness  is held by the Company or
such Note Guarantor; in each case subject to no Lien securing Indebtedness other
than Liens Incurred in compliance with Section 4.15;  provided, however, that if
as of any date any Person other than the Company or any Note Guarantor holds any
such Indebtedness or holds a  Lien  in  respect of such  Indebtedness   securing
Indebtedness  other  than  Permitted  Liens,  such  date  shall  be  deemed  the
Incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer
of such  Indebtedness;

         (vii) Indebtedness of the Company  which was not Incurred  in violation
of  Section 4.09  and which is  owed to and  held by any  Note Guarantor that is
unsecured and subordinated  in right of payment to the  payment  and performance
of the Company's  obligations under any Senior  Indebtedness, the Indenture, the
Notes and the Note Guarantees and subject to no Lien securing Indebtedness other
than  Liens  Incurred  in  compliance  with  Section  4.15;  provided,  however,
that if as of any  date any Person  other than  any Note Guarantor owns or holds
any such  Indebtedness or any Person other than any Note Guarantor  holds a Lien
in respect of such  Indebtedness  securing  Indebtedness  other  than  Permitted
Liens, such date shall be deemed the Incurrence of Indebtedness not constituting
Permitted  Indebtedness by the Company;

         (viii) Indebtedness  of  the   Company   or  any   of   its  Restricted
Subsidiaries  arising from the honoring by a bank or other financial institution
of a check,  draft or similar  instrument  inadvertently  (except in the case of
daylight  overdrafts) drawn against insufficient funds in the ordinary course of
business;  provided, however,  that such  Indebtedness  is  extinguished  within
two business days of Incurrence;

         (ix) Refinancing  Indebtedness  in respect of  Indebtedness (other than
Permitted  Indebtedness)  Incurred  pursuant  to  Section  4.08 or  Indebtedness
Incurred  pursuant  to  clause  (i) or  (iv)  of this  definition  of  Permitted
Indebtedness;

                                      -18-
<PAGE>

         (x) Indebtedness of the  Company and its Restricted Subsidiaries in  an
aggregate   principal  amount  not  to  exceed  $20,000,000   at  any  one  time
outstanding for Capitalized  Lease  Obligations or for purposes of financing the
purchase price or construction cost of equipment,  fixtures or similar property;

         (xi)  Indebtedness  arising  from  agreements  of  the  Company  or   a
Restricted Subsidiary  providing  for indemnification,  adjustment  of  purchase
price or  similar  obligations,  in each case,  incurred  in connection with the
disposition  of  any  business,  assets,  or Restricted  Subsidiary,  other than
guarantees of Indebtedness incurred by any Person acquiring  all or any  portion
of such business,  assets or Restricted Subsidiary  for the purpose of financing
such acquisition; provided,  that the maximum aggregate  liability in respect of
all  such  Indebtedness  shall at no time  exceed  the gross  proceeds  actually
received by  the Company  and the Restricted   Subsidiary  in  connection   with
such disposition;   and

         (xii)  Indebtedness  of the Company  and  its  Restricted  Subsidiaries
which,  when taken  together  with all other  Indebtedness  incurred  under this
clause (xii) and still outstanding, will not to exceed $10,000,000.

         "PERMITTED INVESTMENT" means any of the following:

         (i)  Investments   existing  on  the  Issue  Date,  together  with  any
extension,  modification or renewal of any such  Investments (but not additional
advances,  contributions  or  other  investments  of cash or  property  or other
increases  thereof,  other  than as a result  of the  accrual  or  accretion  of
interest or original issue discount or payment-in-kind  pursuant to the terms of
such Investment as of the Issue Date);

         (ii)  Investments  by the Company or any  Restricted  Subsidiary in any
Person that is or will become  immediately  after such  Investment  a Restricted
Subsidiary  and a Note  Guarantor  or that will  merge or  consolidate  into the
Company or a Restricted Subsidiary that is also a Note Guarantor;

         (iii) Investments in the Company by any Restricted Subsidiary; PROVIDED
that any Indebtedness  evidencing such Investment is unsecured and subordinated,
pursuant to a written  agreement,  to the Company's  obligations under the Notes
and this Indenture;

         (iv)  Investments in cash and Cash Equivalents;

         (iv) Loans or advances to employees in the ordinary  course of business
in  accordance  with  the  past  practices  of the  Company  or  its  Restricted
Subsidiaries,  but in  any  event  not to  exceed  $2,000,000  in the  aggregate
outstanding at any one time;

         (v)  Stock Purchase Loans;

         (vi)  loans  made by the  Company  to  certain  employees  to pay taxes
arising  from the  granting  of  stock  to such  employees  in  connection  with
confirmation of the Plan;

                                      -19-
<PAGE>

         (viii)  Interest Rate or Currency  Protection  Agreements and Commodity
Hedging  Agreements  entered into in the ordinary course of the Company's or its
Restricted  Subsidiaries'  businesses  and  otherwise  in  compliance  with this
Indenture;  PROVIDED, (i) the notional principal amount of such Interest Rate or
Currency  Protection  Agreements or Commodity Hedging Agreements does not exceed
the  amount of  Indebtedness  hedged  and (ii) such  Interest  Rate or  Currency
Protection Agreements or Commodity Hedging Agreements do not increase the amount
of Indebtedness  outstanding  except as a result of fluctuations of the currency
or interest or commodity markets;

         (ix) Investments in securities of trade creditors or customers received
pursuant  to  any  plan  of  reorganization  or  similar  arrangement  upon  the
bankruptcy or insolvency of such trade creditors or customers;

         (x) Consideration other than cash and Cash Equivalents  received by the
Company or its Restricted  Subsidiaries in connection with an Asset Sale made in
compliance with Section 4.11;

         (xi) Investments as contemplated by the Foreign  Investment  Agreements
as in effect on the Issue Date;

         (xii)  Investments in New Joint Ventures  approved by a majority of the
independent  members of the Board of Directors;  PROVIDED such New Joint Venture
is or will be engaged in a Related Business;

         (xiii)  Investments in Foreign  Subsidiaries in an aggregate  amount at
any time outstanding not to exceed $10,000,000; or

         (xiv)  Other  Investments  not to  exceed  $10,000,000  at any one time
outstanding.

         "PERMITTED LIENS" means any of the following:

         (i) statutory  Liens of landlords and Liens of carriers,  warehousemen,
mechanics,  suppliers,  materialmen,  repairmen  and other Liens  imposed by law
incurred in the ordinary course of business for sums not yet delinquent or being
contested in good faith, if such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made in respect thereof;

         (ii) Liens Incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security,  including any Lien securing letters of credit issued in the
ordinary  course  of  business  consistent  with  past  practice  in  connection
therewith, or to secure the performance of tenders, statutory obligations surety
and appeal bonds, bids, leases, government performance and return-of-money bonds
and other  similar  obligations  (exclusive  of  obligations  for the payment of
borrowed money);

         (iii)  judgment liens not giving rise to an Event of Default so long as
such Lien is adequately  bonded and any appropriate  legal proceedings which may
have been duly

                                      -20-
<PAGE>

initiated  for the review of such  judgment  shall not have been
finally  terminated or the period within which such proceedings may be initiated
shall not have expired;

         (iv) any  interest  or title of a lessor  under any  Capitalized  Lease
Obligation;  provided,  however,  that such Liens do not extend to any  property
which is not leased property subject to such Capitalized Lease Obligation;

         (v)  purchase  money  Liens to  finance  property  of the  Company or a
Restricted  Subsidiary  acquired in the ordinary  course of business;  provided,
however,  that (A) the related purchase money  Indebtedness shall not exceed the
cost of such property and shall not be secured by any property of the Company or
any Restricted  Subsidiary  other than the property so acquired and (B) the Lien
securing such Indebtedness shall be created within 90 days of such acquisition;

         (vi) Liens upon specific items of inventory or other goods and proceeds
of any  Person  securing  such  Person's  obligations  in  respect  of  bankers'
acceptances  issued or created for the account of such Person to facilitate  the
purchase, shipment or storage of such inventory or other goods;

         (vii)  Liens  securing   reimbursement   obligations  with  respect  to
commercial  letters  of credit  which  encumber  documents  and  other  property
relating to such letters of credit and products and proceeds thereof;

         (viii) Liens encumbering  deposits made to secure  obligations  arising
from statutory, regulatory, contractual, or warranty requirements of the Company
or a Restricted  Subsidiary,  including rights of offset and set-off relating to
such deposits;

         (ix) Liens securing Interest Rate or Currency Protection Agreements and
Commodity  Hedging  Agreements that relate to  Indebtedness  that is Incurred in
accordance with the covenant described under Section 4.08;

         (x) Liens  existing on the Issue Date  (including  Liens  securing  the
Senior Credit Facilities) and Liens to secure any Refinancing Indebtedness which
is Incurred  to  Refinance  any  Indebtedness  which has been  secured by a Lien
permitted under the covenant described under Section 4.15 and which Indebtedness
has been Incurred in accordance with the covenant  described under Section 4.08;
provided,  however, that such new Liens (A) are not materially less favorable to
the Holders of Notes and are not materially  more  favorable to the  lienholders
with respect to such Liens than the Liens in respect of the  Indebtedness  being
Refinanced  and (B) do not  extend  to any  property  or assets  other  than the
property or assets  securing the  Indebtedness  Refinanced  by such  Refinancing
Indebtedness;

         (xi) Easements,  rights-of-way  zoning  restrictions  and other similar
charges or  encumbrances  in respect of real  property  not  interfering  in any
material respect with the ordinary conduct of the business of the Company or any
of its Subsidiaries;

                                      -21-
<PAGE>

         (xii) Liens securing Acquired  Indebtedness Incurred in accordance with
Section  4.08;  provided,  however,  that (A) such Liens  secured such  Acquired
Indebtedness  at the time of and prior to the  Incurrence  by the  Company  or a
Restricted  Subsidiary  of such  Acquired  Indebtedness  and were not granted in
connection  with,  or in  anticipation  of the  Incurrence  by the  Company or a
Restricted  Subsidiary of such Acquired  Indebtedness  and (B) such Liens do not
extend to or cover any  property  of the  Company or any  Restricted  Subsidiary
other than the property that secured the Acquired Indebtedness prior to the time
such  Indebtedness  became Acquired  Indebtedness of the Company or a Restricted
Subsidiary and are no more favorable to the lienholders  than the Liens securing
the Acquired  Indebtedness prior to the Incurrence of such Acquired Indebtedness
by the Company or a Restricted Subsidiary; and

         (xiii) Liens securing other Indebtedness not in excess of $5,000,000 at
any one time outstanding.

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

         "PLAN"  means  the  modified  Second  Amended  Plan  of  Reorganization
confirmed in connection with IN RE Paragon Trade Brands, Inc., Case No. 98-60390
pending  in  the  United States Bankruptcy Court,  Northern District of Georgia,
Atlanta Division.

         "POST-PETITION  INTEREST" means all interest  accrued or accruing after
the commencement of any Insolvency or Liquidation  Proceeding (and interest that
would  accrue  but  for  the  commencement  of  any  Insolvency  or  Liquidation
Proceeding)  in  accordance  with and at the contract rate  (including,  without
limitation,  any rate  applicable  upon  default)  specified in the agreement or
instrument creating,  evidencing or governing any Indebtedness,  whether or not,
pursuant to applicable law or otherwise,  the claim for such interest is allowed
as a claim in such Insolvency or Liquidation Proceeding.

         "PREFERRED  STOCK"  means,  as  applied  to the  Capital  Stock  of any
corporation, Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends,  or as to the  distribution  of assets
upon  any  voluntary  or   involuntary   liquidation   or  dissolution  of  such
corporation,   over  shares  of  Capital  Stock  of  any  other  class  of  such
corporation.

         "PRINCIPAL" of a Note means the principal of the Note plus the premium,
if any,  payable  on the Note which is due or overdue or is to become due at the
relevant time.

         "PROPERTY"  means,  with  respect to any Person,  any  interest of such
Person  in any kind of  property  or asset,  whether  real,  personal  or mixed,
tangible or intangible.

         "PUBLIC EQUITY OFFERING" means an underwritten  primary public offering
of  any  class  of  common  stock  of  the  Company  pursuant  to  an  effective
registration statement under the Securities Act.

                                      -22-
<PAGE>

         "PUBLIC  MARKET" means any time after (i) a Public  Equity  Offering of
the Company has been  consummated  and (ii) at least 10% of the total issued and
outstanding  common  stock of the  Company has been  distributed  by means of an
effective  registration  statement under the Securities Act or sales pursuant to
Rule 144 under the Securities Act.

         "QUALIFIED  CAPITAL  STOCK"  means  any  Capital  Stock  that  is   not
Disqualified Stock.

         "RECORD DATE" means,  for the interest  payable on any Interest Payment
Date, the date specified in Section 2.11 hereof.

         "REDEMPTION  DATE"  means,  when used with  respect to any Note or part
thereof to be redeemed  hereunder,  the date fixed for  redemption of such Notes
pursuant to the terms of the Notes and this Indenture.

         "REDEMPTION  PRICE"  means,  when used with respect to any Note or part
thereof to be redeemed  hereunder,  the price fixed for  redemption of such Note
pursuant to the terms of the Notes and this  Indenture,  plus accrued and unpaid
interest thereon, if any, to the Redemption Date.

         "REFINANCE"  means,  in respect of any  security  or  Indebtedness,  to
refinance,  extend, renew, refund, repay, prepay,  redeem, defease or retire, or
to issue a security  or  Indebtedness  in  exchange  or  replacement  for,  such
security or Indebtedness  in whole or in part.  "Refinanced"  and  "Refinancing"
shall have correlative meanings.

         "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 substantially concurrently to extend, Refinance,  renew, replace,
defease or refund  other  Indebtedness  of the Company or any of its  Restricted
Subsidiaries;  PROVIDED  that:  (i) the  principal  amount  of such  Refinancing
Indebtedness  does not  exceed  the  principal  amount  of the  Indebtedness  so
extended,  Refinanced,  renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses Incurred in connection therewith);  (ii) such Refinancing
Indebtedness  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 Notes, such Refinancing Indebtedness has
a final maturity date later than the final maturity date of, and is subordinated
in right of payment to, the Notes on terms at least as  favorable to the Holders
of Notes as those  contained in the  documentation  governing  the  Indebtedness
being extended,  Refinanced,  renewed, replaced,  defeased or refunded; and (iv)
such  Indebtedness  is  Incurred  either  by the  Company  or by the  Restricted
Subsidiary  of the  Company  that  is the  obligor  on  the  Indebtedness  being
extended, Refinanced, renewed, replaced, defeased or refunded.

         "REGISTRAR" has the meaning assigned to it in Section 2.03.

                                      -23-
<PAGE>

         "RELATED  BUSINESS"  means  the  businesses  of  the  Company  and  the
Restricted Subsidiaries on the Issue Date and any business related, ancillary or
complementary  to the businesses of the Company and the Restricted  Subsidiaries
on the Issue Date.

         "REPRESENTATIVE"  means any trustee,  agent or representative  (if any)
for an issue of Senior Indebtedness of the Company.

         "RESTRICTED   PAYMENT"  with  respect  to  any  Person  means  (i)  the
declaration or payment of any dividends or any other distributions in respect of
its  Capital  Stock  (including  any  payment in  connection  with any merger or
consolidation  involving  such  Person)  or  similar  payment  to the  direct or
indirect  holders of its Capital  Stock (other than  dividends or  distributions
payable  solely  in its  Capital  Stock  (other  than  Disqualified  Stock)  and
dividends  or  distributions  payable  solely to the  Company or a  Wholly-Owned
Restricted Subsidiary,  and other than pro rata dividends or other distributions
made by a Restricted Subsidiary that is not a Wholly-Owned Restricted Subsidiary
to minority  stockholders (or owners of an equivalent  interest in the case of a
Subsidiary  that is an entity  other than a  corporation)),  (ii) the  purchase,
redemption or other  acquisition or retirement for value of any Capital Stock of
the  Company or any  Restricted  Subsidiary  held by any Person  (other than the
Company or a Wholly-Owned  Restricted  Subsidiary),  or any warrants,  rights or
options  to  acquire  shares  of any  class of such  Capital  Stock,  (iii)  the
purchase, repurchase,  redemption, defeasance or other acquisition or retirement
for value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund  payment  of  any  Subordinated   Obligations  (other  than  the  purchase,
repurchase  or  other  acquisition  of  Subordinated  Obligations  purchased  in
anticipation of satisfying a sinking fund obligation,  principal  installment or
final maturity,  in each case due within one year of the date of acquisition) or
(iv)  the  making  of any  Investment  in any  Person  (other  than a  Permitted
Investment).

         "RESTRICTED SUBSIDIARY" means any Subsidiary of the Company that is not
an Unrestricted Subsidiary.

         "SALE  AND  LEASEBACK  TRANSACTION"  means   any  direct  or   indirect
arrangement with  any  Person  or to which any such Person is a party  providing
for  the  leasing to the  Company or a Restricted  Subsidiary  of any  property,
whether  owned  by the Company or any Restricted Subsidiary at the Issue Date or
later acquired,  which has been or is to be sold or  transferred  by the Company
or such  Restricted  Subsidiary  to such  Person or to  any other Person by whom
funds have been or are to be advanced on the security of such Property.

         "SEC" means the Securities and Exchange Commission.

         "SECONDARY SECURITIES" has the meaning set forth in Section 2.11.

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

                                      -24-
<PAGE>

         "SENIOR  CREDIT  FACILITIES"  means the  Credit  Agreement  dated as of
January 28, 2000 among the Company,  the Lenders party thereto and Citicorp USA,
Inc.,  as  administrative  agent,  together  with the other Loan  Documents  (as
defined therein), as such agreements may be amended (including any amendment and
restatement  thereof),  supplemented  or otherwise  modified  from time to time,
including any agreement  extending  the maturity of,  refinancing,  replacing or
otherwise  restructuring  (including  adding  Subsidiaries  of  the  Company  as
additional  borrowers  or  guarantors  thereunder)  all  or any  portion  of the
Indebtedness under such agreement or any successor or replacement  agreement and
whether by the same or any other agent, lender or group of lenders.

         "SENIOR  INDEBTEDNESS"  means  with  respect  to any  Person,  (i)  all
Obligations in respect of the Senior Credit  Facilities and (ii) all Obligations
in  respect  of other  Indebtedness,  whether  outstanding  on the Issue Date or
thereafter  Incurred;  PROVIDED,  HOWEVER,  that Senior  Indebtedness  shall not
include (1) any obligation of such Person to any Subsidiary of such Person,  (2)
any  liability  for Federal,  state,  local or other taxes owed or owing by such
Person,  (3) any accounts payable or other similar  liability to trade creditors
(including Guarantees thereof or instruments  evidencing such liabilities),  (4)
any  Indebtedness of such Person (and any accrued and unpaid interest in respect
thereof) which is subordinate or junior in any respect to any other Indebtedness
or other obligation of such Person,  (5) that portion of any Indebtedness  which
at the time of  Incurrence  is Incurred in  violation of Section 4.08 or (6) any
Indebtedness that by the terms of the instrument creating or evidencing the same
or by which the same is assumed or  affirmed,  is not  expressly  designated  as
Senior  Indebtedness.  Notwithstanding the foregoing,  Senior Indebtedness shall
not include any Acquired  Indebtedness  whose  maturity was  shortened to a date
prior to the Stated Maturity of the Notes

         (i) with the  consent  of the  holders  of such  Acquired  Indebtedness
         (other than consent  obtained in connection with the  restructuring  or
         bankruptcy of the obligor of such Indebtedness), and

         (ii) in connection  with or in  anticipation  of the Incurrence of such
         Acquired Indebtedness by the Company or Restricted Subsidiary.

To the extent any payment of Senior Indebtedness is declared to be fraudulent or
preferential,  set aside or required to be paid to a trustee,  receiver or other
similar party under any  bankruptcy,  insolvency,  receivership  or similar law,
then if such payment is recovered by, or paid over to, such trustee, receiver of
similar party, the Senior Indebtedness or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if payment had not
occurred.

         "SENIOR SUBORDINATED  INDEBTEDNESS" means, with respect to the Company,
the Notes and, with respect to any Note Guarantor,  such Note  Guarantor's  Note
Guarantee and any other  Indebtedness of the Company or such Note Guarantor that
specifically  provides that such  Indebtedness is to rank PARI PASSU in right of
payment  with the Notes or such Note  Guarantee,  as the case may be, and is not
subordinated  by its  terms in right

                                      -25-
<PAGE>

of payment to any  Indebtedness or other  obligation of the Company or such Note
Guarantor which is not Senior Indebtedness.

         "SIGNIFICANT   SUBSIDIARY"   means  any  Subsidiary  that  would  be  a
"Significant  Subsidiary"  of the Company  within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.

         "SPECIAL  RECORD  DATE" means a date fixed by the  Trustee  pursuant to
Section 2.11 for the payment of Defaulted Interest.

         "STATED  MATURITY"  means,  with  respect  to any  security,  the  date
specified  in such  security  as the fixed  date on which the final  payment  of
principal  of  such  security  is due and  payable,  including  pursuant  to any
mandatory  redemption  provision (but excluding any provision  providing for the
repurchase  of such  security  at the  option  of the  holder  thereof  upon the
happening of any contingency unless such contingency has occurred).

         "STOCK  PURCHASE LOAN" means a loan made by the Company or a Restricted
Subsidiary to one of its employees,  agents or directors,  the proceeds of which
are used to purchase  Capital Stock of the Company and the repayment of which is
secured by a pledge of such Capital Stock.

         "SUBORDINATED  OBLIGATION"  means any  Indebtedness of the Company or a
Restricted  Subsidiary of the Company (whether  outstanding on the Issue Date or
thereafter  Incurred)  which is subordinate or junior in right of payment to the
Notes or the Note Guarantees pursuant to a written agreement to that effect.

         "SUBORDINATED REORGANIZATION SECURITIES" has the meaning assigned to it
in Section 10.02.

         "SUBSIDIARY"   means,  in  respect  of  any  Person,  any  corporation,
association,  partnership or other business entity of which more than 50% of the
total voting power of  outstanding  shares of Capital  Stock or other  interests
(including  partnership interests) 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 (i) such
Person,  (ii) such Person and one or more  Subsidiaries  of such Person or (iii)
one or more Subsidiaries of such Person.

         "SURVIVING ENTITY " has the meaning assigned to it in Section 5.01.

         "TIA"  means  the Trust  Indenture  Act of 1939 (15 USC Section  77aaa-
77bbbb)  as in effect on the date of this Indenture.

         "TRANSACTION DATE" means the date of the transaction giving rise to the
need to calculate the Consolidated Coverage Ratio or Consolidated Revenues.

         "TRUSTEE"  means  the  party  named as such in this  Indenture  until a
successor replaces it and, thereafter, means the successor

                                      -26-
<PAGE>

         "TRUST  OFFICER" means the Chairman of the Board,  the President or any
other  officer or  assistant  officer of the Trustee  assigned by the Trustee to
administer its corporate trust matters.

         "UNIFORM COMMERCIAL CODE" means the New York Uniform Commercial Code as
in effect from time to time.

         "UNRESTRICTED SUBSIDIARY"  has the  meaning  assigned to it in  Section
4.16.

         "US" or "UNITED STATES" means the United States of America.

         "US GOVERNMENT  OBLIGATIONS"  means direct obligations (or certificates
representing  an ownership  interest in such  obligations)  of the United States
(including any agency or  instrumentality  thereof) for the payment of which the
full faith and credit of the United States is pledged and which are not callable
at the issuer's option.

         "VOTING  STOCK" of a Person means all classes of Capital Stock or other
interests (including  partnership interests) of such Person then outstanding and
normally  entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.

         "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 product  obtained by  multiplying  (a) the amount of each then  remaining
installment,  sinking  fund,  serial  maturity  or other  required  payments  of
principal,  including payments 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" means a Restricted Subsidiary all
the Capital Stock of which (other than directors'  qualifying  shares and shares
held by other Persons to the extent such shares are required by  applicable  law
to be held by a Person  other than the Company or a  Restricted  Subsidiary)  is
owned  by the  Company  or one or  more  Wholly-Owned  Restricted  Subsidiaries.

SECTION 1.01        INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

         This Indenture is subject to the mandatory  provisions of the TIA which
are  incorporated  by  reference  in and  made a part  of  this  Indenture.  The
following TIA terms have the following meanings:

         "COMMISSION" means the SEC.

         "INDENTURE  SECURITIES"  means the Notes;  "indenture  security holder"
means a Noteholder; "indenture to be qualified" means this Indenture; "indenture
trustee" or "institutional trustee" means the Trustee.

                                      -27-
<PAGE>

         "OBLIGOR"  on the  indenture  securities  means  the  Company  and  any
other  obligor  on the  indenture securities.

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

SECTION 1.02        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)  "including" means including without limitation;

         (5)  words in the  singular include the  plural and words in the plural
include the singular;

         (6) unsecured  Indebtedness  shall not be deemed to be  subordinate  or
junior to  Secured  Indebtedness  merely by  virtue of its  nature as  unsecured
Indebtedness;

         (7) the principal  amount of any noninterest  bearing or other discount
security at any date shall be the principal  amount  thereof that would be shown
on a balance  sheet of the issuer dated such date  prepared in  accordance  with
GAAP and  accretion  of  principal  on such  security  shall be deemed to be the
Incurrence of Indebtedness; and

         (8)  all  references to the date the Notes were originally issued shall
refer to Issue Date.

                             ARTICLE II. THE NOTES

SECTION 2.01        FORM AND DATING

         (a) The Notes and the  certificate  of  authentication  of the  Trustee
thereon shall be substantially in the form of Exhibit A or Exhibit B hereto,  as
applicable,  which are hereby  incorporated in and expressly made a part of this
Indenture.

         (b) The  Notes  may  have  such  letters,  numbers  or  other  marks of
identification and such legends and endorsements, stamped, printed, lithographed
or engraved  thereon,  (i) as the Company  may deem  appropriate  and as are not
inconsistent  with the provisions of this Indenture,  (ii) as may be required to
comply with this  Indenture,  any law or any rule of any securities  exchange on
which the  Notes may be listed  and  (iii) as may be

                                      -28-
<PAGE>

necessary  to conform to customary  usage.  Each Note shall be dated the date of
its  authentication  by the  Trustee.  The Notes  shall be issued  only in fully
registered  form,  without  coupons,  in  denominations  of $1.00  and  integral
multiples  thereof.  Definitive Notes shall be typed,  printed,  lithographed or
engraved or produced by any combination of such methods or produced in any other
manner permitted by the rules of any securities exchange on which such Notes may
be listed,  all as  determined  by the  officers of the Company  executing  such
Notes, as evidenced by their execution of such Notes.

         (c) Notes shall be issued initially in the form of a single,  permanent
global note in definitive, fully registered form, without coupons, substantially
in the form and bearing  the legends set forth in Exhibit A hereto (the  "Global
Note").

         Upon issuance,  such Global Note shall be registered in the name of the
Depositary or its nominee, duly executed by the Company and authenticated by the
Trustee as hereinafter provided and deposited on behalf of the purchasers of the
Notes  represented  thereby  with the Trustee at its  Corporate  National  Trust
Office, as custodian for the Depositary.  Owners of beneficial  interests in the
Global  Note  shall  be  entitled  to  receive  physical  delivery  of a note in
definitive,  fully registered form, without coupons,  substantially in the form,
and bearing the legends,  set forth in Exhibit B hereto  ("Certificated  Notes")
only upon the occurrence of the events specified in clauses (i) through (iii) of
Section  2.06(a).  Upon  issuance,  any  such  Certificated  Note  shall be duly
executed  by the  Company  and  authenticated  by  the  Trustee  as  hereinafter
provided.  Any Certificated  Note may be exchanged for a beneficial  interest in
the Global Note.

SECTION 2.02        EXECUTION AND AUTHENTICATION

         The  Notes  shall be  issued  in one  series,  except  to the  extent a
separate  series of Notes may be issued under  Section  2.11(b).  The  aggregate
principal amount of Notes outstanding at any time shall not exceed  $182,000,000
except as provided in Section 2.07 and Section  2.11 hereof.  The Notes shall be
executed on behalf of the  Company by its Chief  Executive  Officer,  President,
Chief  Operating  Officer,  Chief  Financial  Officer,  Treasurer  or  any  Vice
President,  and  shall be  attested  by the  Company's  Secretary  or one of its
Assistant Secretaries, in each case by manual or facsimile signature.

         The Notes shall be  authenticated  by manual signature of an authorized
signatory  of the  Trustee  and  shall not be valid  for any  purpose  unless so
authenticated.

         In case any  officer of the  Company  whose  signature  shall have been
placed  upon any of the Notes  shall  cease to be such  officer  of the  Company
before authentication of such Notes by the Trustee and the issuance and delivery
thereof,  such Notes may,  nevertheless,  be  authenticated  by the  Trustee and
issued and  delivered  with the same force and effect as though  such Person had
not ceased to be such an officer of the Company.

         The Trustee  shall,  upon receipt of a Company  Order  requesting  such
action,  authenticate Notes, excluding Secondary Securities,  for original issue
up to the aggregate

                                      -29-
<PAGE>

principal  amount  not to exceed  $146,000,000  outstanding  at any given  time,
except for any Secondary  Securities that may be issued pursuant to Section 2.11
and except as provided in Section 2.07 or Section 2.08. Such Company Order shall
specify the amount of Notes to be authenticated  and the date on which the Notes
are to be  authenticated  and  shall  further  provide  instructions  concerning
registration,  amounts for each Holder and delivery.  Upon the occurrence of any
event  specified in Section  2.06(a)  hereof,  the Company shall execute and the
Trustee shall  authenticate  and make available for delivery to each  beneficial
owner  identified by the  Depositary,  in exchange for such  beneficial  owner's
interest in the Global Note or Certificated Notes representing Notes theretofore
represented by the Global Note.

         A Note  shall  not be valid or  entitled  to any  benefits  under  this
Indenture  or  obligatory  for any  purpose  unless  executed by the Company and
authenticated  by the manual  signature of one of the authorized  signatories of
the Trustee as provided herein. Such signature upon any Note shall be conclusive
evidence, and the only evidence,  that such Note has been duly authenticated and
delivered  under  this  Indenture  and is  entitled  to  the  benefits  of  this
Indenture.

         The Trustee may appoint an authenticating  agent reasonably  acceptable
to the Company to  authenticate  the Notes.  Unless limited by the terms of such
appointment,  an  authenticating  agent may  authenticate the Notes whenever the
Trustee may do so. Each  reference in this  Indenture to  authentication  by the
Trustee includes  authentication by such agent. Any authenticating  agent of the
Trustee shall have the same rights hereunder as any Registrar or Paying Agent.

         Notwithstanding   the   foregoing,   if  any  Note   shall   have  been
authenticated and delivered  hereunder but never issued and sold by the Company,
and the Company  shall  deliver  such Note to the Trustee  for  cancellation  as
provided in Section 2.10  together with a written  statement  (which need not be
accompanied  by an Opinion  of  Counsel)  stating  that such Note has never been
issued and sold by the  Company,  for all purposes of this  Indenture  such Note
shall be deemed never to have been  authenticated  and  delivered  hereunder and
shall not be entitled to the benefits of this Indenture.

SECTION 2.03        REGISTRAR AND PAYING AGENT

         The Company shall maintain,  pursuant to Section 4.02 hereof, an office
or agency where the Notes may be presented for  registration  of transfer or for
exchange (the "Registrar"), an office or agency where Notes may be presented for
payment (the "Paying  Agent") and an office or agency where  notices and demands
to or upon the Company in respect of the Notes and this Indenture may be served.

         The Company shall cause to be kept at such office a register (the "Note
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company  shall  provide for the  registration  of Notes and of  transfers of
Notes entitled to be registered or transferred as provided herein.

                                      -30-
<PAGE>

         The Trustee,  at its  Corporate  National  Trust  Office,  is initially
appointed  Registrar for the purpose of registering Notes and transfers of Notes
as herein provided. The Company may, upon written notice to the Trustee,  change
the designation of the Trustee as Registrar and appoint another Person to act as
Registrar for purposes of this  Indenture.  If any Person other than the Trustee
acts as Registrar, the Trustee shall have the right at any time, upon reasonable
notice,  to inspect or examine the Note  Register and to make such  inquiries of
the Registrar as the Trustee shall in its discretion deem necessary or desirable
in performing its duties hereunder.

         The Company shall enter into an appropriate  agency  agreement with any
Person  designated  by the Company as  Registrar  or Paying  Agent that is not a
party to this Indenture, which agreement shall incorporate the provisions of the
TIA and shall  implement the  provisions of this  Indenture  that relate to such
Registrar or Paying  Agent.  Prior to the  designation  of any such Person,  the
Company  shall,  by written  notice  (which  notice  shall  include the name and
address of such Person), inform the Trustee of such designation. The Trustee, at
its Corporate  National Trust Office, is initially  appointed Paying Agent under
this  Indenture.  If the Company  fails to maintain a Registrar or Paying Agent,
the Trustee shall act as such. Subject to Section 2.06(a) hereof, upon surrender
for  registration  of transfer of any Note at an office or agency of the Company
designated for such purpose,  the Company shall  execute,  and the Trustee shall
authenticate  and make  available  for delivery,  in the name of the  designated
transferee or transferees,  one or more new Notes of any authorized denomination
or denominations, of like tenor and aggregate principal amount, all as requested
by the transferor.

         Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company,  the Trustee or the Registrar) be
duly endorsed,  or be  accompanied by a duly executed  instrument of transfer in
form satisfactory to the Company,  the Trustee and the Registrar,  by the Holder
thereof or such  Holder's  attorney  duly  authorized  in writing.

SECTION 2.04        PAYING AGENT TO HOLD MONEY IN TRUST.

         On or prior to each due date of the principal,  premium, if any, or any
payment of interest with respect to any Note, the Company shall deposit with the
Paying Agent a sum or, in compliance  with Section 2.11,  Secondary  Securities,
sufficient to pay such principal,  premium, if any, or interest when so becoming
due.

         The Company shall require each Paying Agent (other than the Trustee) to
agree in writing  that such Paying  Agent shall hold in trust for the benefit of
Holders or the Trustee all money or  Secondary  Securities,  held by such Paying
Agent for the payment of principal, premium, if any, or interest with respect to
the Notes,  shall notify the Trustee of any default by the Company in making any
such payment and at any time during the  continuance  of any such default,  upon
the written request of the Trustee,  shall forthwith pay to the Trustee all sums
held in trust by such Paying Agent.

                                      -31-
<PAGE>

         The Company at any time may require a Paying  Agent to pay all money or
Secondary  Securities  held by it to the Trustee and to account for any funds or
Secondary  Securities  disbursed by such Paying Agent.  Upon complying with this
Section 2.04, the Paying Agent shall have no further  liability for the money or
Secondary Securities delivered to the Trustee.

SECTION 2.05        GLOBAL NOTES.

         (a) The Global Note shall  initially be  registered  in the name of the
Depositary or its nominee and be delivered to the Note  Custodian.  So long as a
Global Note is registered in the name of the Depositary or its nominee,  members
of, or participants  in, the Depositary  ("Agent  Members") shall have no rights
under this Indenture with respect to the Global Note held on their behalf by the
Depositary or the Trustee as its custodian, and the Depositary may be treated by
the Company, the Note Guarantors,  the Trustee and any agent of the Company, the
Note Guarantors or the Trustee as the absolute owner of such Global Note for all
purposes.  Notwithstanding  the foregoing,  nothing herein shall (i) prevent the
Company, the Note Guarantors,  the Trustee or any agent of the Company, the Note
Guarantors  or the  Trustee,  from giving  effect to any written  certification,
proxy or other  authorization  furnished by the  Depositary  or (ii) impair,  as
between  the  Depositary  and its Agent  Members,  the  operation  of  customary
practices governing the exercise of the rights of a Holder.

         (b) The  Holder  of a  Global  Note may  grant  proxies  and  otherwise
authorize  any  Person,  including  Agent  Members  and  Persons  that  may hold
interests in such Global Note through Agent Members,  to take any action which a
Holder is entitled to take under this Indenture or the Notes.

         (c)  Whenever,  as a result of an optional  redemption  of Notes by the
Company,  a Change of Control  Offer,  an Asset Sale  Offer or an  exchange  for
Certificated  Notes  pursuant to the  provisions of Section  2.06(a)  hereof,  a
Global Note is redeemed,  repurchased  or  exchanged  in part,  such Global Note
shall be  surrendered  by the Holder  thereof to the  Trustee who shall cause an
adjustment to be made to Schedule A thereof so that the principal amount of such
Global  Note will be equal to the  portion  of such  Global  Note not  redeemed,
repurchased  or exchanged and shall  thereafter  return such Global Note to such
Holder,  PROVIDED  that each such Global Note shall be in a principal  amount of
$1.00 or an integral multiple thereof.

SECTION 2.06        TRANSFER AND EXCHANGE.

         (a) The Global Note shall be  exchanged  by the Company for one or more
Certificated  Notes if (i) the  Depositary  has  notified the Company that it is
unwilling  or  unable  to  continue  as,  or  ceases  to be, a  clearing  agency
registered  under  Section  17A of  the  Exchange  Act  and a  successor  to the
Depositary registered as a clearing agency under Section 17A of the Exchange Act
is not able to be appointed by the Company  within 90 calendar days, or (ii) the
Depositary is at any time  unwilling or unable to continue as  Depositary  and a
successor to the Depositary is not able to be appointed by the Company

                                      -32-
<PAGE>

within 90 calendar  days,  or (iii) the  Company,  at its option,  notifies  the
Trustee in writing  that it elects to cause the issuance of Notes in the form of
Certificated Notes. If an Event of Default occurs and is continuing, the Company
shall, at the request of the Holder thereof,  exchange all or part of the Global
Note for one or more Certificated  Notes;  PROVIDED that the principal amount of
each of such Certificated Note and such Global Note, after such exchange,  shall
be $1.00 or an integral multiple thereof. Whenever a Global Note is exchanged as
a whole for one or more Certificated Notes it shall be surrendered by the Holder
thereof to the Trustee for cancellation.  Whenever a Global Note is exchanged in
part for one or more  Certificated  Notes it shall be  surrendered by the Holder
thereof to the  Trustee  and the Trustee  shall make the  appropriate  notations
thereon  pursuant to Section 2.05(c) hereof.  All  Certificated  Notes issued in
exchange for a Global Note or any portion  thereof  shall be  registered in such
names, and delivered, as the Depositary shall instruct the Trustee.

         (b) A Holder may  transfer a Note only upon the  surrender of such Note
for registration of transfer.  No such transfer shall be effected until, and the
transferee  shall succeed to the rights of a Holder only upon,  final acceptance
and  registration  of the transfer in the Note Register by the  Registrar.  When
Notes are presented to the Registrar with a request to register the transfer of,
or to exchange,  such Notes,  the Registrar  shall register the transfer or make
such exchange as requested if its  requirements  for such  transactions  and any
applicable  requirements  hereunder are satisfied.  To permit  registrations  of
transfers and exchanges of Certificated  Notes issued in accordance with Section
2.06(a),  the  Company  shall  execute and the Trustee  shall  authenticate  and
deliver Certificated Notes at the Registrar's request.

         (c) The Company  shall not be required to make and the  Registrar  need
not register the transfer or exchange of Certificated  Notes or portions thereof
selected  for  redemption  (except,  in the  case of a  Certificated  Note to be
redeemed  in  part,  the  portion  of  such  Note  not  to be  redeemed)  or any
Certificated  Notes for a period of 15 calendar days before a selection of Notes
to be redeemed.

         (d) No service charge shall be made for any registration of transfer or
exchange of Notes,  but the Company may require  payment of a sum  sufficient to
cover any tax or other  governmental  charge  that may be imposed in  connection
with any registration of transfer of Notes.

         (e) All Notes  issued  upon any  registration  of  transfer or exchange
pursuant to the terms of this  Indenture will evidence the same debt and will be
entitled to the same benefits under this Indenture as the Notes  surrendered for
such registration of transfer or exchange.

         (f) Any Holder of a Global Note  shall,  by  acceptance  of such Global
Note,  agree that  transfers of beneficial  interests in such Global Note may be
effected  only through a  book-entry  system  maintained  by such Holder (or its
agent),  and that  ownership of a beneficial  interest in the Notes  represented
thereby  shall be required to be reflected  in  book-entry  form  Transfers of a
Global  Note  shall be  limited to  transfers  in whole and not

                                      -33-
<PAGE>

in part, to the  Depositary,  its  successors,  and their  respective  nominees.
Interests  of  beneficial  owners in a Global  Note shall be  transferred  which
complies with the rules and procedures of the Depositary (or its successors).

SECTION  2.07       REPLACEMENT NOTES

         If a mutilated Note is surrendered to the Registrar or if the Holder of
a Note claims that the Note has been lost,  destroyed or wrongfully  taken,  the
Company shall issue and the Trustee shall authenticate a replacement Note if the
requirements  of Section  8-405 of the Uniform  Commercial  Code are met and the
Holder satisfies any other reasonable  requirements of the Trustee.  If required
by the Trustee or the  Company,  such Holder  shall  furnish an  indemnity  bond
sufficient  in the  judgment  of the  Company  and the  Trustee to  protect  the
Company,  the Trustee, the Paying Agent, the Registrar and any co-registrar from
any loss which any of them may suffer if a Note is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Note.

         Every replacement Note is an additional obligation of the Company.

SECTION 2.08        OUTSTANDING NOTES

         Notes  outstanding  at any  time  are all  Notes,  including  Secondary
Securities,  authenticated by the Trustee except for those canceled by it, those
delivered  to it for  cancellation  and those  described  in this Section as not
outstanding.  A Note does not cease to be outstanding  because the Company or an
Affiliate of the Company holds the Note.

         If a Note is  replaced  pursuant  to  Section  2.07,  it  ceases  to be
outstanding  unless the Trustee and the Company  receive proof  satisfactory  to
them that the replaced Note is held by a bona fide purchaser.

          If the Paying Agent  segregates and holds in trust, in accordance with
this Indenture,  on a Redemption  Date or maturity date money  sufficient to pay
all principal, premium,  if any, and interest  payable on that date with respect
to  the  Notes (or portions thereof)  to be  redeemed or  maturing,  as the case
may  be,  and  the Paying  Agent is not prohibited from paying such money to the
Noteholders on that date  pursuant  to the terms of this  Indenture, then on and
after that date  such Notes (or portions  thereof) cease to be  outstanding  and
interest on them ceases to accrue.

SECTION 2.09      TEMPORARY NOTES

     Until definitive Notes are ready for delivery,  the Company may prepare and
the Trustee shall  authenticate  and deliver  temporary  Notes.  Temporary Notes
shall be  substantially  in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes. Without unreasonable
delay, the Company shall prepare and the Trustee shall  authenticate  definitive
Notes and deliver them in exchange for temporary Notes.

                                      -34-
<PAGE>

SECTION  2.10       CANCELLATION

         The  Company  at  any  time  may  deliver  Notes  to  the  Trustee  for
cancellation.  The  Registrar  and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment.
The  Trustee  and no one else shall  cancel and  destroy  (subject to the record
retention   requirements  of  the  Exchange  Act)  any  Notes   surrendered  for
registration  of  transfer,  exchange,  payment or  cancellation  and  deliver a
certificate of such  destruction  to the Company.  The Company may not issue new
Notes to replace  Notes it has  redeemed,  paid or  delivered to the Trustee for
cancellation.

SECTION 2.11        PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED

         (a) The Notes  shall bear  interest  at 11.25% per annum from the Issue
Date or from the most recent  Interest  Payment Date to which  interest has been
paid or provided for. If the Company's Cash Flow for a period specified below is
less than the amount  specified  for such  period in the table  below,  then the
Company may on the  Interest  Payment  Date set  opposite  such  period,  at the
Company's  option and in its sole  discretion,  pay interest in additional Notes
("Secondary  Securities") in lieu of the payment in whole or in part of interest
in cash on the Notes; PROVIDED,  HOWEVER, that the Company may at its option pay
cash in lieu of issuing  Secondary  Securities in any denominations of less than
$1.00.

<TABLE>
<CAPTION>
------------------------------------- ----------------------------------- -----------------------------------
               PERIOD                     SPECIFIED CASH FLOWAMOUNT             INTEREST PAYMENT DATE
------------------------------------- ----------------------------------- -----------------------------------
<S>                                               <C>                         <C>
      Issue Date--June 25, 2000                   $10,742,000                 First Interest Payment Date
------------------------------------- ----------------------------------- -----------------------------------
  June 26, 2000--December 31, 2000                $16,930,000                 Second Interest Payment Date
------------------------------------- ----------------------------------- -----------------------------------
    January 1, 2001--July 1, 2001                 $18,016,000                 Third Interest Payment Date
------------------------------------- ----------------------------------- -----------------------------------
   July 2, 2001--December 30, 2001                $20,253,000                 Fourth Interest Payment Date
------------------------------------- ----------------------------------- -----------------------------------
</TABLE>

Any such Secondary  Securities  shall be governed by this Indenture and shall be
subject to the same terms (including  Stated Maturity and rates of interest from
time to time payable thereon (but not including the issuance date)) on all other
Notes.  Except as otherwise allowed by the foregoing,  interest shall be paid in
cash.

         (b) The Company shall give written  notice to the Trustee of the amount
of interest to be paid in Secondary  Securities not less than five Business Days
prior  to  the  applicable   Interest  Payment  Date,  and  the  Trustee  or  an
authenticating  agent (upon written order of the Company signed by an Authorized
Representatives  of the  Company  given not less than five nor more than 45 days
prior to such Interest Payment Date) shall  authenticate for original issue (pro
rata to each  Holder  of any  Notes on the  applicable  Record  Date)  Secondary
Securities in an aggregate principal amount equal to the amount

                                      -35-
<PAGE>

of cash  interest  not paid on such  Interest  Payment  Date.  Each  issuance of
Secondary  Securities  in  lieu  of the  payment  of  interest  in  cash  on the
Securities shall be made pro rata with respect to the outstanding Notes, and the
Company  shall have the right to  aggregate  amounts of interest  payable in the
form of Secondary  Securities to a Holder of outstanding Notes and issue to such
holder a single Secondary Security in payment thereof.  Secondary Securities may
be  denominated a separate  series if the Company deems it necessary to do so in
order to comply with any law or other applicable regulation or requirement, with
appropriate distinguishing designations.

         (c) Interest on any Note which is payable, and is paid, whether in cash
or Secondary  Securities,  or duly  provided  for, on any Interest  Payment Date
shall be paid to the Person in whose name such Note is  registered  at the close
of  business on the Record Date for such  interest  payment,  which shall be the
January 15 or July 15 (whether or not a Business Day) immediately preceding such
Interest Payment Date.

         (d) Any interest on any Note which is payable,  but is not paid, either
in Secondary  Securities or cash, or duly provided for, on any Interest  Payment
Date (herein called "Defaulted Interest") shall forthwith cease to be payable to
the registered  Holder on the relevant  Record Date,  and, except as hereinafter
provided,  such Defaulted  Interest,  and any interest payable on such Defaulted
Interest,  shall be paid by the Company, at its election,  as provided in clause
(e)(i) or (e)(ii) below:

         (e)  (i)  The  Company  may  elect  to make  payment  of any  Defaulted
Interest, and any interest payable on such Defaulted Interest, to the Persons in
whose  names the  Notes are  registered  at the close of  business  on a Special
Record Date for the payment of such Defaulted Interest,  which shall be fixed in
the  following  manner.  The Company  shall notify the Trustee in writing of the
amount of  Defaulted  Interest  proposed to be paid on the Notes and the date of
the proposed  payment,  and at the same time the Company  shall deposit with the
Trustee an amount of money equal to the aggregate  amount proposed to be paid in
respect of such Defaulted  Interest or shall make  arrangements  satisfactory to
the Trustee for such  deposit  prior to the date of the proposed  payment,  such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as provided in this Section 2.11(e)(i). Thereupon the
Trustee  shall fix a  Special  Record  Date for the  payment  of such  Defaulted
Interest  which  shall be not more  than 15  calendar  days and not less than 10
calendar  days prior to the date of the  proposed  payment  and not less than 10
calendar  days after the  receipt by the  Trustee of the notice of the  proposed
payment.  The Trustee shall  promptly  notify the Company of such Special Record
Date and, in the name and at the expense of the  Company,  shall cause notice of
the proposed  payment of such  Defaulted  Interest  and the Special  Record Date
therefor to be sent,  first-class mail, postage prepaid,  to each Holder at such
Holder's  address as it appears in the Note Register,  not less than 10 calendar
days prior to such Special Record Date.  Notice of the proposed  payment of such
Defaulted  Interest and the Special  Record Date therefor  having been mailed as
aforesaid,  such Defaulted  Interest shall be paid to the Persons in whose names
the Notes are  registered  at the close of business on such Special  Record Date
and shall no longer be payable pursuant to the following clause (ii); or

                                      -36-
<PAGE>

         (ii) The Company may make payment of any  Defaulted  Interest,  and any
interest  payable on such Defaulted  Interest,  on the Notes in any other lawful
manner not  inconsistent  with the  requirements  of any securities  exchange on
which the Notes may be listed,  and upon such  notice as may be required by such
exchange,  if,  after notice given by the Company to the Trustee of the proposed
payment  pursuant to this clause  (ii),  such manner of payment  shall be deemed
practicable by the Trustee.

         (f) Subject to the foregoing provisions of this Section 2.11, each Note
delivered under this Indenture upon  registration of transfer of, or in exchange
for, or in lieu of, any other Note,  shall carry the rights to interest  accrued
and unpaid,  and to accrue,  which were carried by such other Note.

SECTION 2.12        CUSIP NUMBERS

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

SECTION 2.13        TRANSFERS, ETC

         Each Holder of a Note agrees to  indemnify  the Company and the Trustee
against any liability that may result from the transfer,  exchange or assignment
by such Holder of such  Holder's  Note in  violation  of any  provision  of this
Indenture and/or applicable US Federal or state securities law.

                            ARTICLE III. REDEMPTION

SECTION 3.01        REDEMPTION OF NOTES; NOTICES TO TRUSTEE

         (a) Except as set forth in clause (b) of this Section  3.01,  the Notes
are not  redeemable  at the option of the  Company  prior to  February  1, 2003.
Thereafter,  the Notes may be redeemed at the option of the Company, in whole or
in part,  upon at least 30 calendar  days' but not more than 60  calendar  days'
prior notice,  at the redemption  prices  (expressed as percentages of principal
amount) set forth below,  plus accrued and unpaid interest  thereon,  if any, to
the applicable Redemption Date (subject to the right of each Holder of record on
the  relevant  Record  Date to receive  interest  due on the  relevant  Interest
Payment Date), if redeemed during the twelve-month  period beginning  February 1
of the years indicated below:

                                      -37-
<PAGE>

                  YEAR                                    PERCENTAGE
                  ----                                    ----------

                  2003                                    5.6250%

                  2004                                    2.8125%

         (b) At any time and from  time to time  prior to  February  1, 2003 the
Company,  at its option, may redeem in the aggregate up to 35.0% of the original
principal  amount of the Notes with the Net Cash  Proceeds of one or more Public
Equity Offerings following which there is a Public Market, at a redemption price
(expressed  as a  percentage  of principal  amount) of 111.25% of the  aggregate
principal  amount so redeemed,  plus accrued and unpaid interest  thereon to the
redemption  date  (subject  to the right of  Holders  of record on the  relevant
Record Date to receive  interest due on the  relevant  Interest  Payment  Date);
PROVIDED,  HOWEVER,  that at least 65.0% of the original principal amount of the
Notes must remain outstanding after each such redemption; and PROVIDED, FURTHER,
that each such  redemption  shall occur within 60 days of the date of closing of
the related Public Equity Offering.

         (c) If the Company elects to redeem Notes pursuant to clause (a) or (b)
of this  Section  3.01,  the Company  shall notify the Trustee in writing of the
Redemption Date and the principal amount of Notes to be redeemed.

         (d) The Company  shall give each notice to the Trustee  provided for in
Section  3.01(c)  not  less  than 30 days  nor  more  than  60 days  before  the
Redemption  Date unless the Trustee  consents to a shorter  period.  Such notice
shall be accompanied by an Officers'  Certificate and an Opinion of Counsel from
the Company to the effect that such  redemption  will comply with the conditions
herein.

SECTION 3.02        SELECTION OF NOTES TO BE REDEEMED

         If fewer  than all the  Notes are to be  redeemed,  the  Trustee  shall
select the Notes to be redeemed pro rata or by lot or by a method that  complies
with applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and which complies with methods generally
used at the time of  selection  by  fiduciaries  in similar  circumstances.  The
Trustee shall make the selection from  outstanding  Notes not previously  called
for redemption.  The Trustee may select for redemption portions of the principal
of Notes that have  denominations  larger than $1.00. Notes and portions of them
the Trustee  selects shall be in amounts of $1.00 or a whole  multiple of $1.00.
Provisions  of this  Indenture  that apply to Notes called for  redemption  also
apply to portions of Notes called for  redemption.  The Trustee shall notify the
Company promptly of the Notes or portions of Notes to be redeemed.

                                      -38-
<PAGE>

SECTION 3.03        NOTICE OF REDEMPTION

         At least 20 days but not more than 60 days  before a  Redemption  Date,
the Company  shall mail a notice of  redemption  by  first-class  mail,  postage
prepaid, to each Holder of Notes to be redeemed.

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

         (1)      the Redemption Date;

         (2)      the Redemption Price;

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

         (4)      that Notes called for redemption  must be  surrendered  to the
Paying  Agent to  collect  the Redemption Price;

         (5) if any Global Note is being  redeemed  in part,  the portion of the
principal  amount of such Note to be  redeemed  and that,  after the  Redemption
Date,  the Global  Note,  with a notation  on Schedule A thereof  adjusting  the
principal amount thereof to be equal to the unredeemed portion, will be returned
to the Holder thereof;

         (6) if any Certificated  Note is being redeemed in part, the portion of
the principal  amount of such Note to be redeemed and that, after the Redemption
Date, a new Certificated Note or Certificated Notes in principal amount equal to
the unredeemed portion will be issued;

         (7)  if fewer than all the  outstanding  Notes are to be redeemed,  the
identification  and principal amounts of the particular Notes to be redeemed;

         (8) that, unless the Company defaults in making such redemption payment
or the Paying Agent is prohibited from making such payment pursuant to the terms
of this Indenture,  interest on Notes (or portion thereof) called for redemption
ceases to accrue on and after the Redemption Date; and

         (9) 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 Notes.

         At the  Company's  request,  the  Trustee  shall  give  the  notice  of
redemption  in the Company's name and at the Company's  expense.  In such event,
the  Company  shall  provide the Trustee with the  information  required by this
Section 3.03.

SECTION 3.04        EFFECT OF NOTICE OF REDEMPTION

         Once notice of redemption is mailed, Notes called for redemption become
due and payable on the Redemption Date and at the Redemption Price stated in the
notice.  Upon  surrender  to the Paying  Agent,  such Notes shall be paid at the
Redemption  Price

                                      -39-
<PAGE>

stated in the notice,  plus accrued interest to the Redemption Date.  Failure to
give  notice or any  defect in the  notice to any  Holder  shall not  affect the
validity of the notice to any other  Holder.

SECTION 3.05      DEPOSIT OF REDEMPTION PRICE

         On or prior to the Redemption  Date, the Company shall deposit with the
Paying  Agent (or, if the Company or a  domestically  incorporated  Wholly-Owned
Subsidiary  is the Paying  Agent,  shall  segregate  and hold in trust) money in
immediately  available  funds,  sufficient  to pay the  Redemption  Price of and
accrued  interest  on all Notes to be  redeemed on that date other than Notes or
portions of Notes called for redemption which have been delivered by the Company
to the Trustee for cancellation.

         So long as the Company  complies with the  preceding  paragraph and the
other provisions of this Article I, interest on the Notes or portions thereof to
be redeemed  on the  applicable  Redemption  Date shall cease to accrue from and
after such date and such  Notes or  portions  thereof  shall be deemed not to be
entitled to any benefit under this  Indenture  except to receive  payment of the
Redemption  Price on the Redemption Date (subject to the right of each Holder of
record on the  relevant  Record  Date to receive  interest  due on the  relevant
Interest  Payment Date). If any Note called for redemption  shall not be so paid
upon  surrender  for  redemption,  then,  from the  Redemption  Date  until such
Redemption  Price is paid,  interest  shall be paid on the unpaid  principal and
premium and, to the extent  permitted by law, on any accrued but unpaid interest
thereon,  in each case at the rate  prescribed  therefor by such Notes.

SECTION 3.06      NOTES REDEEMED IN PART

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

                                      -40-
<PAGE>

                              ARTICLE IV. COVENANTS

SECTION 4.01      PAYMENT OF NOTES

         The Company shall promptly pay the principal of,  premium,  if any, and
interest  on the Notes on the dates and in the manner  provided in the Notes and
in this Indenture.  Principal, premium, if any, and interest shall be considered
paid on the date due if on such date the  Trustee or the Paying  Agent  holds in
accordance  with this  Indenture  money or, to the extent  permitted  by Section
2.11, Secondary  Securities,  sufficient to pay all principal,  premium, if any,
and interest then due and the Trustee or the Paying  Agent,  as the case may be,
is not prohibited  from paying such money or Secondary  Securities,  as the case
may be, to the Noteholders on that date pursuant to the terms of this Indenture.

         To the  extent  lawful,  the  Company  shall pay  interest  on  overdue
principal,  overdue  premium  and  Defaulted  Interest  (without  regard  to any
applicable  grace period) at the interest rate borne on the Notes. The Company's
obligation  pursuant to the previous  sentence  shall apply whether such overdue
amount is due at its maturity, as a result of the Company's obligations pursuant
to Section 3.05, Section 4.11 or Section 4.14 hereof, or otherwise.

         All payments not made in Secondary  Securities with respect to a Global
Note or a Certificated Note (including principal, premium, if any, and interest)
the Holders of which have given wire transfer  instructions to the Company, will
be required to be made by wire transfer of  immediately  available  funds to the
account or (in the case of a Global  Note)  accounts  specified  by the  Holders
thereof or, if no such account is specified,  by sending via  first-class  mail,
postage prepaid, a check to each such Holders' registered address.

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  where  Notes may be  presented  or  surrendered  for
payment, where Notes may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Company in respect of the Notes and
this  Indenture  may be served,  which office shall be initially  the  Corporate
Trust Office. 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,  and the Company hereby appoints the Trustee its agent to
receive all presentations, surrenders, notices and demands.

         The  Company  may also from time to time  designate  one or more  other
offices or agencies  (in or outside of The City of New York) where the Notes may
be presented or surrendered  for any or all of such purposes,  and may from time
to time  rescind  such

                                      -41-
<PAGE>

designations;  PROVIDED,  that no such  designation  or rescission  shall in any
manner  relieve the Company of its obligation to maintain an office or agency in
The City of New York for such  purposes.  The Company shall give prompt  written
notice to the Trustee of any such  designation and 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 hereof.

SECTION 4.03      MONEY FOR THE NOTE PAYMENTS TO BE HELD IN TRUST

         If the  Company,  any  Subsidiary  of  the  Company  or  any  of  their
respective  Affiliates shall at any time act as Paying Agent with respect to the
Notes,  such Paying Agent shall, on or before each due date of the principal of,
premium,  if any, or interest on any of the Notes,  segregate  and hold in trust
for the benefit of the  Persons  entitled  thereto  money,  or if such  interest
payment  is to be made in  Secondary  Securities  in  accordance  with the terms
hereof,  Secondary  Securities  sufficient to pay interest so becoming due until
such money  shall be paid (or in the case of  Secondary  Securities,  issued) to
such Persons or otherwise  disposed of as herein  provided,  and shall  promptly
notify the Trustee of its action or failure so to act.

         Whenever the Company  shall have one or more Paying Agents with respect
to the Notes,  it shall,  prior to  10:00 am New York City time on each due date
of the principal of, premium, if any, or interest  on any of the  Notes, deposit
with  a  Paying Agent  a sum  or if such  interest  payment is  to  be  made  in
Secondary Securities in accordance  with the terms hereof, Secondary  Securities
sufficient to pay the principal,  premium, if any, or interest so  becoming due,
such sum  or  Secondary  Securities  to be  held in  trust  for the  benefit  of
the Persons entitled to such  principal,  premium or interest  and (unless  such
Paying  Agent is the Trustee) the Paying Agent shall promptly notify the Trustee
of the Company's action or failure so to act.

SECTION 4.04      CORPORATE EXISTENCE

         Subject to the  provisions  of Article V and Section 4.11  hereof,  the
Company  shall do or cause to be done all things  necessary to preserve and keep
in full force and effect the corporate existence, rights (charter and statutory)
and franchises of the Company and each of its Restricted Subsidiaries; PROVIDED,
that the Company  and any such  Restricted  Subsidiary  shall not be required to
preserve the  corporate  existence of any such  Subsidiary  or any such right or
franchise  if the Board  shall  determine  that the  preservation  thereof is no
longer desirable in the conduct of the business of the Company and that the loss
thereof is not  disadvantageous in any material respect to the Holders.

SECTION 4.05      MAINTENANCE OF PROPERTY

         The Company  shall cause all Property  used or useful in the conduct of
its  business  or the  business  of any of  its  Restricted  Subsidiaries  to be
maintained  and kept in good  condition,  repair and working  order and supplied
with all necessary  equipment and shall

                                      -42-
<PAGE>

cause to be made all necessary repairs, renewals, replacements,  betterments and
improvements  thereof,  all as, in the judgment of the Company, may be necessary
so that the  business  carried on in  connection  therewith  may be properly and
advantageously  conducted at all times;  PROVIDED,  that nothing in this Section
4.05 shall prevent the Company from  discontinuing  the operation or maintenance
of any of such  Property  if such  discontinuance  is,  in the  judgment  of the
Company,  desirable in the conduct of its business or the business of any of its
Subsidiaries and not disadvantageous in any material respect to the Holders.

SECTION 4.06      PAYMENT OF TAXES AND OTHER CLAIMS

         The Company  shall pay or discharge or cause to be paid or  discharged,
before  the  same  shall  become  delinquent,  (a) all  taxes,  assessments  and
governmental  charges  levied  or  imposed  upon  the  Company  or  any  of  its
Subsidiaries  or upon the  income,  profits or Property of the Company or any of
its  Subsidiaries  and (b) all material  lawful claims for labor,  materials and
supplies which,  if unpaid,  might by law become a Lien upon the Property of the
Company  or any of its  Subsidiaries;  provided  that the  Company  shall not be
required to pay or  discharge  or cause to be paid or  discharged  any such tax,
assessment,  charge or claim whose  amount,  applicability  or validity is being
contested  in good  faith by  appropriate  proceedings  and for  which  adequate
reserves in accordance with GAAP or other  appropriate  provision has been made.

SECTION 4.07      SEC REPORTS

         Notwithstanding  that the Company may not be required to remain subject
to the  reporting  requirements  of Section 13 or 15(d) of the Exchange Act, the
Company shall:

         (1) file with the  Commission  and provide the Trustee and  Noteholders
with such annual  reports and such  information,  documents and other reports as
are  specified in Sections 13 and 15(d) of the Exchange Act and  applicable to a
US corporation subject to such Sections,  such information,  documents and other
reports to be so filed and  provided  at the times  specified  for the filing of
such information, documents and reports under such Sections;

         (2) file with the  Commission  and provide the Trustee,  in  accordance
with rules and regulations prescribed from time to time by the Commission,  such
additional information,  documents and reports with respect to compliance by the
Company with the  conditions  and covenants of this Indenture as may be required
from time to time by such rules and regulations; and

         (3) transmit by mail to the Holders of the Notes,  within 30 days after
the filing thereof with the Trustee, in the manner and to the extent provided in
TIA Section  313(c),  such summaries of any  information,  documents and reports
required to be filed by the Company  pursuant to paragraphs  (1) and (2) of this
Section as may be required by rules and regulations prescribed from time to time
by the Commission; and

                                      -43-
<PAGE>

PROVIDED, delivery of such reports,  information and documents to the Trustee is
for  informational  purposes  only and the  Trustee's  receipt of such shall not
constitute  constructive notice of any information contained therein,  including
the Company's  compliance  with any of its covenants  hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).

SECTION 4.08      LIMITATION ON INDEBTEDNESS

         The Company shall not, and shall not permit any  Restricted  Subsidiary
to,  Incur,  directly  or  indirectly,   any  Indebtedness   (including  without
limitation,  any  Acquired  Indebtedness)  other  than  Permitted  Indebtedness.
Notwithstanding  the  foregoing,  in addition  to  Permitted  Indebtedness,  the
Company or any Restricted Subsidiary may Incur Indebtedness (including,  without
limitation,  Acquired  Indebtedness) if (i) no Default or Event of Default shall
have occurred and be continuing on the date of the proposed  Incurrence  thereof
or would result as a  consequence  of such proposed  Incurrence  and (ii) at the
time  of and  immediately  after  giving  PRO  FORMA  effect  to  such  proposed
Incurrence  and  the  application  of the  proceeds  thereof,  the  Consolidated
Coverage  Ratio is at least 2.0 to 1.0. For purposes of  determining  compliance
with,  and the  outstanding  principal  amount  of any  particular  Indebtedness
Incurred  pursuant  to and in  compliance  with,  this  covenant,  the amount of
Indebtedness  issued at a price that is less than the principal  amount  thereof
will be equal to the amount of the  liability in respect  thereof  determined in
accordance with GAAP.

SECTION 4.09      LIMITATION ON RESTRICTED PAYMENTS

         (a) The  Company  shall  not,  and  shall  not  permit  any  Restricted
Subsidiary,  directly or indirectly, to make a Restricted Payment if at the time
of such Restricted Payment or immediately after giving PRO FORMA effect thereto:

         (1) a Default or Event of Default shall have occurred and be continuing
(or would result therefrom);

         (2) the  Company or such  Restricted  Subsidiary  is not able to Incur,
after giving PRO FORMA effect to such Restricted Payment, an additional $1.00 of
Indebtedness pursuant to the second sentence of Section 4.08; or

         (3) the  aggregate  amount  of such  Restricted  Payment  and all other
Restricted Payments since the Issue Date would exceed the sum of:

         (A) 50% of the  Consolidated  Net Income accrued on a cumulative  basis
         during the period (treated as one accounting  period)  beginning on the
         first day of the fiscal  quarter  beginning  immediately  following the
         Issue  Date to the end of the most  recent  fiscal  quarter  for  which
         consolidated  financial information of the Company is available (or, in
         case such  Consolidated  Net Income  shall be a deficit,  minus 100% of
         such deficit);

                                      -44-
<PAGE>

         (B) the aggregate  Net Cash  Proceeds  received by the Company from the
         issuance  or sale of, or as a capital  contribution  in respect of, its
         Capital Stock (other than  Disqualified  Stock) subsequent to the Issue
         Date (other than an issuance or sale to a Subsidiary of the Company and
         other than an issuance or sale to an employee  stock  ownership plan or
         to a trust  established by the Company or any of its  Subsidiaries  for
         the benefit of their employees); PROVIDED, HOWEVER, that in determining
         Net Cash  Proceeds  for  purposes of this  clause  (B),  there shall be
         deducted  therefrom an amount equal to the amount,  if any, of such Net
         Cash Proceeds used by the Company or a Restricted  Subsidiary after the
         Issue Date to exercise the Mabesa Option;

         (C) the amount by which  Indebtedness  of the Company is reduced on the
         Company's  balance sheet upon the conversion or exchange (other than by
         a  Subsidiary  of the  Company)  subsequent  to the  Issue  Date of any
         Indebtedness  of the Company  convertible or  exchangeable  for Capital
         Stock (other than  Disqualified  Stock) of the Company (less the amount
         of any cash, or the fair value of any other  property,  distributed  by
         the Company upon such conversion or exchange);

         (D) without  duplication of any amounts included in clause (A) above or
         clause (E) below,  in the case of the  disposition  or repayment of, or
         the  receipt  by  the  Company  or  any  Restricted  Subsidiary  of any
         dividends  or  distributions   from,  any  Investment   constituting  a
         Restricted  Payment  made after the Issue Date,  an amount equal to the
         lesser of the amount of such  Investment and the amount received by the
         Company or any Restricted Subsidiary upon such disposition,  repayment,
         dividend or distribution;

         (E) without duplication of any amounts included in clause (D) above, in
         the event the Company or any Restricted Subsidiary makes any Investment
         in a Person that, as a result of or in connection with such Investment,
         becomes a Restricted  Subsidiary,  an amount equal to the  Company's or
         any Restricted Subsidiary's existing Investment in such Person that was
         previously treated as a Restricted Payment; and

         (F) so long as the  Designation  thereof  was  treated as a  Restricted
         Payment  made after the Issue Date,  with  respect to any  Unrestricted
         Subsidiary that has been redesignated as a Restricted  Subsidiary after
         the Issue Date in accordance  with Section 4.16, an amount equal to the
         Company's  Investment in such  Unrestricted  Subsidiary  (provided that
         such amount  shall not in any case exceed the  Designation  Amount with
         respect to such Restricted Subsidiary upon its Designation);

PROVIDED, HOWEVER, prior to the second anniversary of the Issue Date, Restricted
Payments (other than Investments)  permitted only by virtue of the provisions of
this  clause  (3) may not be made if  interest  on the  Notes  has been  paid in
Secondary Securities as provided in Section 2.11.

                                      -45-
<PAGE>

         (b) The provisions of the foregoing subsection (a) shall not prohibit:

         (1) the  payment  of any  dividend  within  60 days  after  the date of
declaration  of such dividend if the dividend  would have been  permitted on the
date of declaration;

         (2) if no  Default  or Event of  Default  shall  have  occurred  and be
continuing, the acquisition of any shares of Capital Stock of the Company or any
warrants,  rights or options to purchase or acquire  shares of Capital  Stock of
the Company,

         (A) solely in exchange  for shares of  Qualified  Capital  Stock of the
         Company  or any  warrants,  rights or options  to  purchase  or acquire
         shares of Qualified Capital Stock of the Company or

         (B)  through the  application  of the net  proceeds of a  substantially
         concurrent sale for cash (other than to a Restricted  Subsidiary of the
         Company)  of shares of  Qualified  Capital  Stock of the Company or any
         warrants,  rights or options to purchase or acquire shares of Qualified
         Capital Stock of the Company; PROVIDED,  HOWEVER, that the value of any
         such Qualified Capital Stock or warrants,  rights and options issued in
         exchange for such acquired capital stock,  warrants,  rights or options
         and any such net cash proceeds  shall be excluded from clause (3)(B) of
         subsection (a) above (and were not included therein at any time);

         (3) if no  Default  or Event of  Default  shall  have  occurred  and be
continuing, the voluntary prepayment, purchase, defeasance,  redemption or other
acquisition or retirement for value of any Subordinated Obligations

         (A) solely in  exchange  for shares of Capital  Stock of the Company or
         any  warrants,  rights or options  to  purchase  or  acquire  shares of
         Capital Stock of the Company;  PROVIDED,  HOWEVER, that if such Capital
         Stock is, or such warrants,  rights or options to purchase such Capital
         Stock are convertible  into or exchangeable at the option of the holder
         thereof for, Disqualified Stock, then such Disqualified Stock shall not
         (i) by its terms,  or upon the  happening  of any  event,  mature or be
         mandatorily  redeemable  pursuant  to  a  sinking  fund  obligation  or
         otherwise, or be redeemable at the option of the holder thereof, in any
         case, on or prior to the final maturity of the  Indebtedness  permitted
         to be prepaid,  purchased,  defeased,  redeemed or acquired pursuant to
         this clause (3) and (ii) have a Weighted  Average Life to Maturity less
         than the  Indebtedness  permitted to be prepaid,  purchased,  defeased,
         redeemed or acquired pursuant to this clause (3) or

         (B) in exchange for Refinancing Indebtedness or through the application
         of net proceeds of a substantially concurrent sale for cash (other than
         to a Restricted  Subsidiary  of the Company) of (A) shares of Qualified
         Capital  Stock of the  Company  or any  warrants,  rights or options to
         purchase or acquire shares of Qualified Capital Stock of the Company or
         (B) Refinancing Indebtedness;  and PROVIDED, FURTHER, that the value of
         such Qualified  Capital Stock or warrants,  rights or options issued in
         exchange  for  such  Subordinated  Obligations  and any

                                      -46-
<PAGE>

         such  net  cash  proceeds  shall  be  excluded  from  clause  (3)(B) of
         subsection  (a) above (and were not included therein at any time); or

         (C) in  exchange  for,  or out of  the  proceeds  of the  substantially
         concurrent  sale of,  Indebtedness of the Company which is permitted to
         be Incurred under Section 4.08;

         (4) the  repurchase, redemption  or other acquisition or retirement for
value of

         (A) any Capital Stock (or interests under any stock appreciation rights
         plan) of the  Company  held by any member of the  Company's  management
         pursuant  to any  management  equity  subscription  agreement  or stock
         option  agreement in effect as of the date of this Indenture or entered
         into  thereafter  with members of the management of any Person acquired
         after the Issue Date in connection  with the acquisition of such Person
         or

         (B) Capital Stock of the Company held by employees,  former  employees,
         directors  or former  directors  pursuant  to the  terms of  agreements
         (including employment agreements) approved by the Board of Directors;

         PROVIDED,   HOWEVER,  that  the  aggregate  price  paid  for  all  such
         repurchased,  redeemed, acquired or retired Capital Stock (or interests
         under any stock  appreciation  rights plan) set forth in subclauses (A)
         and  (B)  of  this  clause  (4)  shall  not  exceed  $1,000,000  in any
         twelve-month  period  and no  Default  or Event of  Default  shall have
         occurred and be continuing immediately after any such transaction.

         In  determining  the  aggregate  amount  of  Restricted  Payments  made
subsequent to the Issue Date under Section 4.09(a)(3), amounts expended pursuant
to  clauses  (1)  (without  duplication  for  the  declaration  of the  relevant
dividend)  of this Section  4.09(b)  shall be included in such  calculation  and
amounts  expended  pursuant to clauses (2), (3) and (4) of this Section  4.09(b)
shall not be included in such calculation.

SECTION 4.10      LIMITATION  ON  RESTRICTIONS ON  DISTRIBUTIONS FROM RESTRICTED
SUBSIDIARIES

         The  Company  will  not,  and  will  not  cause  or  permit  any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit  to exist or become  effective  any  encumbrance  or  restriction  on the
ability of any Restricted Subsidiary to

         (a) pay dividends or make any other  distributions  on or in respect of
its Capital Stock to the Company or any other  Restricted  Subsidiary or pay any
Indebtedness owed to the Company or any other Restricted Subsidiary;

                                      -47-
<PAGE>

         (b) make loans or advances to, or guarantee any  Indebtedness  or other
obligations  of, or make any Investment in, the Company or any other  Restricted
Subsidiary; or

         (c)  transfer any of its property or assets to the Company or any other
Restricted Subsidiary,

except for such encumbrances or restrictions existing under or by reason of:

         (1)  applicable law;

         (2)  this Indenture;

         (3) the Senior Credit  Facilities  as in effect on the Issue Date,  and
         any amendments,  refinancings,  replacements  or restatements  thereof;
         PROVIDED, HOWEVER, that any such amendment, refinancing, replacement or
         restatement is not  materially  more  restrictive  with respect to such
         encumbrances or restrictions than those in existence on the Issue Date;

         (4) customary  non-assignment  provisions of any contract and customary
         provisions  restricting assignment or subletting in any lease governing
         a leasehold  interest of any  Restricted  Subsidiary,  or any customary
         restriction  on the ability of a  Restricted  Subsidiary  to  dividend,
         distribute or otherwise transfer any asset which secures purchase money
         Indebtedness of such Restricted Subsidiary;

         (5) any instrument governing Acquired  Indebtedness,  which encumbrance
         or restriction  is not  applicable to any Person,  or the properties or
         assets of any Person, other than the Person or the properties or assets
         of the Person so acquired;

         (6) restrictions with respect to a Restricted Subsidiary of the Company
         imposed pursuant to a binding agreement which has been entered into for
         the sale or disposition of Capital Stock or assets of such  Subsidiary;
         provided,  however,  that such restrictions apply solely to the Capital
         Stock or assets of such Restricted Subsidiary which are being sold;

         (7)  customary restrictions  imposed on the  transfer of copyrighted or
         patented materials;

         (8) secured Indebtedness otherwise permitted to be incurred pursuant to
         Section 4.08 and Section 4.15, which  encumbrance or restriction is not
         applicable  to any property or assets other than the property or assets
         subject to the Lien securing such Indebtedness; or

         (9) an  agreement  governing  Indebtedness  Incurred to  Refinance  the
         Indebtedness  issued,  assumed or  Incurred  pursuant  to an  agreement
         referred to in clause (3), (5) or (8) above;  provided,  however,  that
         such  refinancing  agreement is not materially  more  restrictive  with
         respect to such  encumbrances or  restrictions  than

                                      -48-
<PAGE>

         those  contained in  the agreement  referred to in such clause (3), (5)
         or (8) as determined by the Board of Directors in their reasonable good
         faith judgment.

SECTION 4.11      LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK

         (a) The  Company  shall  not,  and  shall  not  permit  any  Restricted
Subsidiary to, directly or indirectly, consummate any Asset Sale unless:

         (1)  the   Company  or  such   Restricted   Subsidiary   (x)   receives
consideration  at the time of such Asset Sale at least  equal to the Fair Market
Value of the assets subject to such Asset Sale (which Fair Market Value shall be
determined  by the  Board  of  Directors  for  any  transaction  (or  series  of
transactions)  involving  consideration  in excess of  $15,000,000)  and (y) the
consideration  received  consists of cash,  Cash  Equivalents  or other non-cash
consideration,  the Fair  Market  Value of which and basis of  valuation  is set
forth in an Officer's  Certificate;  PROVIDED,  HOWEVER,  if at least 75% of the
consideration   received  by  the  Company  or  such  Restricted  Subsidiary  in
connection  with an Asset  Sale is in the form of cash or Cash  Equivalents,  no
such Officer's  Certificate shall be required;  and PROVIDED  FURTHER,  HOWEVER,
that any  securities,  notes or other  obligations  received by the Company or a
Restricted  Subsidiary from such transfers that are converted  within 90 days of
receipt thereof by the Company or such  Restricted  Subsidiary into cash or Cash
Equivalents  (to the  extent  so  received),  shall be deemed to be cash or Cash
Equivalents  for  purposes  of  this  provision  AND  that  the  amount  of  any
Indebtedness  of  the  Company  or  such  Restricted   Subsidiary   (other  than
Subordinated  Obligations)  that is actually  assumed by the  transferee in such
Asset Sale and from which the Company or such Restricted Subsidiary is fully and
unconditionally  released shall be deemed to be cash for purposes of determining
the percentage of cash consideration  received by the Company or such Restricted
Subsidiary;

         (2) an amount equal to 100% of the Net  Available  Cash from such Asset
Sale is applied by the Company (or such Restricted  Subsidiary,  as the case may
be) at its election within 270 days from the date of such Asset Sale:

         (A) to prepay or repay Senior  Indebtedness and permanently  reduce the
         commitments, if any, with respect thereto; or

         (B) (i) to make an  investment in properties or assets that replace the
         properties  or assets  that were the  subject  of such Asset Sale or in
         properties or assets that will be used in a Related Business or (ii) to
         acquire  the  Capital  Stock  of a Person  that  becomes  a  Restricted
         Subsidiary  as a  result  of the  acquisition  of such  Capital  Stock;
         PROVIDED  that  such  Person  is, at the time it  becomes a  Restricted
         Subsidiary,  engaged in a Related  Business;  PROVIDED FURTHER that, in
         the case of items (i) and (ii),  the  Company may elect to deem such an
         investment or acquisition made within 180 days prior to such Asset Sale
         to have been made with Net  Available  Cash  resulting  from such Asset
         Sale.

                                      -49-
<PAGE>

         In  determining  whether  an  investment  or  acquisition  of the  type
         referred to in (i) and (ii) above was made within the  applicable  time
         limits,  such  investment or  acquisition  shall be deemed to have been
         made, at the election of the Company, either on the date the Company or
         Restricted  Subsidiary  actually made the  investment or acquisition OR
         the date the  Company  or  Restricted  Subsidiary  executed  a  binding
         commitment to consummate such investment or acquisition and the closing
         of such  investment  or  acquisition  occurs within 90 days of the date
         such commitment is executed.

         (b) Any Net  Available  Cash not  applied as  provided in clause (2) of
paragraph (a) above will be deemed to  constitute  "Excess  Proceeds".  When the
aggregate  amount of Excess  Proceeds  exceeds $10 million,  the Company will be
required to make an offer to all Holders (an "Asset Sale Offer") to purchase, on
a pro rata basis,  the  principal  amount of Notes equal in amount to the Excess
Proceeds (and not just the amount  thereof that exceeds $10 million) (the "Asset
Sale Offer  Amount"),  at a purchase price in cash in an amount equal to 100% of
the principal  amount  thereof plus accrued and unpaid  interest  thereon to the
date of purchase  (subject to the right of each Holder of record on the relevant
Record Date to receive  interest due on the relevant  Interest Payment Date), in
accordance  with the procedures set forth in this  Indenture,  and in accordance
with the following standards:

                  (1) If the aggregate  principal amount of Notes surrendered by
         Holders  thereof  exceeds  the amount of Excess  Proceeds,  the Trustee
         shall select the Notes to be  purchased  on a pro rata basis,  based on
         the principal amount of Notes tendered, with such adjustments as may be
         deemed appropriate by the Trustee,  so that only Notes in denominations
         of $1.00 or integral multiples thereof shall be purchased.

                  (2)  If the  aggregate  principal  amount  of  Notes  tendered
         pursuant to such Asset Sale Offer is less than the Excess Proceeds, the
         Company may use any remaining Excess Proceeds  following the completion
         of the Asset Sale Offer for general corporate  purposes (subject to the
         other provisions of this Indenture).

Upon  completion  of an Asset Sale  Offer,  the amount of Excess  Proceeds  then
required to be otherwise applied in accordance with this covenant shall be reset
to zero, subject to any subsequent Asset Sale.

         (c) In the event of the transfer of substantially  all (but not all) of
the property  and assets of the Company and its  Restricted  Subsidiaries  as an
entirety to a Person in a transaction  permitted  under Section 5.01 below,  the
successor  shall be deemed to have sold the properties and assets of the Company
and its Subsidiaries not so transferred for purposes of this covenant, and shall
comply with the  provisions of this covenant with respect to such deemed sale as
if it were an Asset Sale. In addition,  the Fair Market Value of such properties
and assets of Company or its  Subsidiaries  deemed to be sold shall be deemed to
be Net Available Cash for purposes of this covenant.

                                      -50-
<PAGE>

         (d) If at any time any non-cash  consideration  received by the Company
or any Subsidiary in connection with any Asset Sale is converted into or sold or
otherwise  disposed of for cash,  then such  conversion or disposition  shall be
deemed to constitute an Asset Sale  hereunder and the Net Available Cash thereof
shall be applied in accordance with this covenant.

         (e) Each Asset Sale Offer will be mailed to the record Holders as shown
on the  register  of  Holders  within 30 days  following  the date the amount of
Excess  Proceeds  exceeded  $10 million,  with a copy to the Trustee,  and shall
comply with the procedures set forth herein.  Upon receiving notice of the Asset
Sale  Offer,  Holders  may  elect to tender  their  Notes in whole or in part in
integral multiples of $1.00 in exchange for cash. To the extent Holders of Notes
and holders of other Senior Subordinated  Indebtedness,  if any, which are or is
the subject of an Asset Sale Offer  properly  tender  Notes or such other Senior
Subordinated  Indebtedness  in an  aggregate  amount  exceeding  the  amount  of
unapplied  Excess  Proceeds,  Notes of  tendering  Holders and such other Senior
Subordinated  Indebtedness of tendering  holders will be purchased on a PRO RATA
basis (based on amounts tendered).

         (f) Upon  surrender and  cancellation  of a  Certificated  Note that is
purchased  in part,  the Company  shall  promptly  issue and the  Trustee  shall
authenticate and deliver to the surrendering Holder of such Certificated Note, a
new Certificated  Note equal in principal  amount to the unpurchased  portion of
such  surrendered  Certificated  Note;  PROVIDED that each such new Certificated
Note shall be in a principal amount of $1.00 or an integral multiple thereof.

         (g) Upon  surrender  of a Global Note that is  purchased  in part,  the
Paying  Agent  shall  forward  such  Global Note to the Trustee who shall make a
notation  on  Schedule A thereof to reduce the  principal  amount of such Global
Note, as provided in Section 2.05(c) hereof.

         (h) The  Company  shall  comply,  to the  extent  applicable,  with the
requirements of Section 14(e) of the Exchange Act and any other  securities laws
or  regulations  in connection  with the  repurchase  of Notes  pursuant to this
Section  4.11.  To the extent  that the  provisions  of any  securities  laws or
regulations  conflict with provisions of this Section,  the Company shall comply
with the applicable  securities  laws and regulations and shall not be deemed to
have breached its obligations under this Section 4.11 by virtue thereof.

SECTION 4.12      LIMITATION ON AFFILIATE TRANSACTIONS

         (a) The  Company  shall  not,  and  shall  not  permit  any  Restricted
Subsidiary  to,  enter into or permit to exist any  transaction  (including  the
purchase,  sale,  lease  or  exchange  of any  property,  employee  compensation
arrangements  or the rendering of any service) with any Affiliate of the Company
(an "Affiliate Transaction") unless the terms thereof:

                                      -51-
<PAGE>

                  (i) are no less  favorable  to the Company or such  Restricted
         Subsidiary  than  those  that  could  be  obtained  at the time of such
         transaction in  arm's-length  dealings with a Person who is not such an
         Affiliate;

                  (ii) if such  Affiliate  Transaction  involves  an  amount  in
         excess of  $1,000,000,  (A) are set forth in writing  and (B) have been
         approved  by a majority  of the  disinterested  members of the Board of
         Directors; and.

                  (iii) if such  Affiliate  Transaction  involves  an  amount in
         excess  of  $5,000,000  (other  than  such  an  Affiliate   Transaction
         involving a Foreign  Joint Venture or a New Joint  Venture),  have been
         determined by a nationally  recognized investment banking or accounting
         firm having  experience  in such  matters to be fair,  from a financial
         point of view, to the Company and its Restricted Subsidiaries.

         (b) The provisions of the foregoing paragraph (a) shall not prohibit:

                  (i)  any  Restricted Payment  permitted to be paid pursuant to
         Section 4.09;

                  (ii) any issuance of securities,  or other payments, awards or
         grants in cash, securities or otherwise pursuant to, or the funding of,
         employment  arrangements,  stock options and stock  ownership  plans or
         similar employee benefit plans or arrangements approved by the Board of
         Directors;

                  (iii)  the  grant  of  stock  options  or  similar  rights  to
         employees  and directors of the Company  pursuant to plans  approved by
         the Board of Directors;

                  (iv) loans or advances to employees in the ordinary  course of
         business in  accordance  with the past  practices of the Company or its
         Restricted  Subsidiaries,  but in any event not to exceed $2,000,000 in
         the aggregate outstanding at any one time;

                  (v)  Stock  Purchase  Loans or loans  made by the  Company  to
         certain  employees  to pay taxes  arising from the granting of stock to
         such employees in connection with confirmation of the Plan;

                  (vi)  reasonable  fees  and  compensation  paid  to,  and  any
         indemnity  provided  on  behalf  of,  officers,  directors,  employees,
         consultants  or agents of the Company or any  Restricted  Subsidiary as
         determined in good faith by the Company's Board of Directors;

                  (vii) any Affiliate  Transaction (v) between the Company and a
         Restricted Subsidiary; (w) between Restricted Subsidiaries; (x) between
         the Company or a Restricted Subsidiary and a Foreign Joint Venture; (y)
         involving  payments  made  pursuant  to or  contemplated  by a  Foreign
         Investment  Agreement (as in effect on the Issue Date);  or (z) between
         the Company or a Restricted Subsidiary, on the one hand, and P&G or KC,
         on the other,  relating  to  technology  licenses;

                                      -52-
<PAGE>

         PROVIDED  that,  no  Affiliate of the  Company  other than a Restricted
         Subsidiary  owns  any  Capital  Stock  in  or  otherwise has a material
         financial interest in any  such Restricted Subsidiary or Joint Venture,
         as the case may be;

                  (viii) any transactions undertaken pursuant to any contractual
         obligations  or rights in  existence on the Issue Date (as in effect on
         the Issue Date); and

                  (ix)  the  entering  into  by  the  Company  and  any  of  its
         consolidated  Restricted  Subsidiaries  of a  tax  sharing  or  similar
         arrangement.

SECTION 4.13      LIMITATION  ON  THE  SALE OR  ISSUANCE  OF  CAPITAL  STOCK  OF
RESTRICTED SUBSIDIARIES

         The Company will not sell or otherwise dispose of any shares of Capital
Stock of a Restricted  Subsidiary,  and will not cause or permit any  Restricted
Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any
shares of its Capital Stock, except

         (i) to the Company or a Wholly Owned Restricted Subsidiary;

         (ii)  the  sale of 100%  of the  shares  of the  Capital  Stock  of any
Restricted Subsidiary owned by the Company or any Restricted Subsidiary effected
in compliance with either Section 4.11 or Section 5.01 hereof;

         (iii) in the case of  Restricted  Subsidiaries  other than Wholly Owned
Restricted  Subsidiaries,  issuance of Capital  Stock on a PRO RATA basis to all
shareholders of such Restricted  Subsidiary (or on less than a PRO rata basis to
any such minority  holder if such minority  holder does not acquire its PRO RATA
amount); and

         (iv) the sale of Capital  Stock of a Restricted  Subsidiary or issuance
by a Restricted  Subsidiary of Capital Stock if following such sale or issuance,
(x) such  Restricted  Subsidiary  is no longer a  Subsidiary,  (y) the Company's
continuing Investment in such former Restricted Subsidiary is in compliance with
Section 4.09 and (z) any sale of Capital Stock by the Company or such Restricted
Subsidiary  is made in  compliance  with  Section  4.11.

SECTION 4.14      CHANGE OF CONTROL

                  (a) Upon the  occurrence  of a Change of Control,  each Holder
will have the right to require  that the Company  purchase  all or a portion (in
integral  multiples  of  $1.00) of such  Holder's  Notes  pursuant  to the offer
described in this Section  4.14 (the "Change of Control  Offer"),  at a purchase
price equal to 101% of the  principal  amount  thereof  plus  accrued and unpaid
interest  thereon to the date of  purchase  (subject  to the right of Holders of
record on a record date to receive  interest due on the related interest payment
date  that is on or prior to such  date of  purchase).  Not  later  than 30 days
following the date upon which the Change of Control  occurred,  the Company must
send,

                                      -53-
<PAGE>

by first-class mail, a notice to each Holder, with a copy to the Trustee,  which
notice shall govern the terms of the Change of Control Offer.  Such notice shall
state,  among other things,  the purchase date, which must be no earlier than 30
days nor later than 60 days from the date such  notice is mailed,  other than as
may be required by law (the "Change of Control Payment Date").  Holders electing
to have a Note purchased  pursuant to a Change of Control Offer will be required
to  surrender  the  Note,  with the form  entitled  "Option  of  Holder to Elect
Purchase"  on the  reverse of the Note  completed,  to the  Paying  Agent at the
address  specified  in the notice  prior to the close of  business  on the third
business day prior to the Change of Control Payment Date.

                  (b) The  Company  will comply  with the  requirements  of Rule
14e-1 under the Exchange Act of 1934,  as amended (the  "Exchange  Act") and any
other  securities  laws and  regulations  thereunder to the extent such laws and
regulations  are applicable in connection with the purchase of Notes pursuant to
a Change of Control  Offer.  To the extent that the provisions of any securities
laws or  regulations  conflict with this Section 4.14,  the Company shall comply
with the applicable  securities  laws and regulations and shall not be deemed to
have breached its obligations under this Section 4.14 by virtue thereof.

SECTION 4.15      LIMITATION ON LIENS

         Except for (A) Liens  securing  Indebtedness  Incurred under the Senior
Credit  Facilities and (B) Permitted  Liens,  the Company will not, and will not
cause or permit any of its Restricted  Subsidiaries  to, directly or indirectly,
Incur any Liens of any kind against or upon any of their  respective  properties
or assets,  whether owned on the Issue Date or acquired after the Issue Date, or
any proceeds  therefrom,  to secure any  Indebtedness  unless  contemporaneously
therewith  effective provision is made, (i) in the case of the Company to secure
the Notes and all other  amounts  due  hereunder  and (ii) in the case of a Note
Guarantor,  to secure such Note Guarantor's Note Guarantee and all other amounts
due hereunder,  in each case, equally and ratably with such Indebtedness (or, in
the event  that such  Indebtedness  is  subordinated  in right of payment to the
Notes or such Note  Guarantee,  prior to such  Indebtedness)  with a Lien on the
same  properties  and  assets  securing  such  Indebtedness  for so long as such
Indebtedness is secured by such Lien.

SECTION 4.16      DESIGNATION OF UNRESTRICTED SUBSIDIARIES

         (a) The Company may  designate  after the Issue Date any  Subsidiary of
the Company as an "Unrestricted Subsidiary" (a "Designation") only if:

                  (i) no Default or Event of Default  shall have occurred and be
         continuing at the time of or after giving effect to such Designation;

                  (ii)  at  the  time  of  and  after  giving   effect  to  such
         Designation,  the Company could Incur $1.00 of additional  Indebtedness
         (other than Permitted Indebtedness) pursuant to Section 4.08; and

                                      -54-
<PAGE>

                  (iii) the Company  would be permitted to make an Investment at
         the time of Designation (assuming the effectiveness of such Designation
         and treating such  Designation  as an Investment at such time) pursuant
         to Section 4.09(a) in an amount (the "Designation Amount") equal to the
         amount of the Company's Investment in such Subsidiary on such date.

Neither the Company nor any Restricted  Subsidiary shall at any time (x) provide
credit  support  for,  subject  any of its  property  or assets  (other than the
Capital Stock of any Unrestricted Subsidiary) to the satisfaction,  or guarantee
of, any Indebtedness of any Unrestricted  Subsidiary (including any undertaking,
agreement or instrument evidencing such Indebtedness) unless such credit support
or guarantee  constitutes an Investment  permitted pursuant to Section 4.09, (y)
be  directly  or  indirectly  liable for any  Indebtedness  of any  Unrestricted
Subsidiary or (z) be directly or indirectly  liable for any  Indebtedness  which
provides  that the  holder  thereof  may  (upon  notice,  lapse of time or both)
declare a default  thereon or cause the  payment  thereof to be  accelerated  or
payable prior to its final  scheduled  maturity upon the occurrence of a default
with respect to any Indebtedness of any Unrestricted Subsidiary,  except for any
non-recourse  guarantee given solely to support the pledge by the Company or any
Restricted Subsidiary of the Capital Stock of any Unrestricted  Subsidiary.  For
purposes of the foregoing,  the Designation of a Subsidiary of the Company as an
Unrestricted Subsidiary shall be deemed to include the Designation of all of the
Subsidiaries of such Subsidiary.

         (b) The  Company  may  revoke any  Designation  of a  Subsidiary  as an
Unrestricted Subsidiary (a "Revocation") only if:

                  (i) no Default or Event of Default  shall have occurred and be
         continuing at the time of and after giving  effect to such  Revocation;
         and

                  (ii)  all  Liens  and   Indebtedness   of  such   Unrestricted
         Subsidiary outstanding  immediately following such Revocation would, if
         Incurred  at such time,  have been  permitted  to be  Incurred  for all
         purposes of this Indenture.

         (c) All Designations  and Revocations must be evidenced  by resolutions
of the  Board of  Directors, delivered to the Trustee certifying compliance with
the foregoing provisions.

SECTION 4.17      LIMITATION ON LAYERED INDEBTEDNESS

         (a) The  Company  shall  not,  and  shall  not  permit  any  Restricted
Subsidiary  to,  directly  or  indirectly,   Incur  any  Indebtedness   that  is
subordinate  in  right  of  payment  to  any  other  Indebtedness,  unless  such
Indebtedness  is  subordinate  in right of payment to, or ranks pari passu with,
the Notes or, in the case of Restricted  Subsidiaries  that are Note Guarantors,
such  Indebtedness  is  subordinate  in right of payment to, or ranks pari passu
with, the Note Guarantees of such Note Guarantors.

                                      -55-
<PAGE>

         (b) The Note Guarantors will not, directly or indirectly, Guarantee any
Indebtedness of the Company that is subordinate in right of payment to any other
Indebtedness  of the Company  unless such  Guarantee is  subordinate in right of
payment  to,  or ranks  pari  passu  with,  the  Note  Guarantees  of such  Note
Guarantors.

SECTION 4.18      COMPLIANCE CERTIFICATE

         The Company shall deliver to the Trustee  within 120 days after the end
of each fiscal year of the Company an Officers'  Certificate stating that in the
course of the  performance  by the  signers of their  duties as  Officers of the
Company they would normally have knowledge of any Default and whether or not the
signers know of any Default that  occurred  during such period.  If they do, the
certificate  shall describe the Default,  its status and what action the Company
is taking or  proposes to take with  respect  thereto.  The  Company  also shall
comply with TIA Section  314(a)(4).

SECTION  4.19     WAIVER OF STAY,  EXTENSION OR USURY LAWS

         The Company and each of the Note  Guarantors  will not at any time,  to
the  extent that they may lawfully not do so,  insist upon,  or plead, or in any
manner  whatsoever  claim or  take  the  benefit or  advantage of,  any  stay or
extension law  or any usury law or other law that would  prohibit or forgive the
Company or the Note  Guarantors  from paying all or any portion of the principal
of or premium, if any, or interest on the Notes as contemplated herein, wherever
enacted,  now  or  at  any  time  hereafter  in force,  or  that may  affect the
covenants or the performance of this Indenture; and, to the extent that they may
lawfully do so, the  Company  and the Note  Guarantors  hereby  expressly  waive
all  benefit or  advantage  of  any such  law  and  expressly  agree  that  they
not hinder,  delay or impede  the  execution of any  power herein granted to the
Trustee,  but will  suffer and  permit  the  execution  of  every  such power as
though no such law had been enacted.

SECTION 4.20      INVESTMENT COMPANY ACT

         None  of  the  Company or its Subsidiaries  shall become  an investment
company  subject to  registration under  the Investment  Company Act of 1940, as
amended.

SECTION 4.21      FURTHER INSTRUMENTS AND ACTS

         Upon request of the Trustee,  the Company will execute and deliver such
further  instruments and do such further acts as may be reasonably  necessary or
proper to carry out more effectively the purpose of this Indenture.

                                      -56-
<PAGE>

                          ARTICLE V. SUCCESSOR COMPANY

SECTION 5.01      MERGER, CONSOLIDATION AND SALE OF ASSETS

         (a) The Company will not, in a single  transaction or series of related
transactions,  consolidate or merge with or into any Person  (whether or not the
Company is the surviving Person),  or sell, assign,  transfer,  lease, convey or
otherwise  dispose of (or cause or permit  any  Restricted  Subsidiary  to sell,
assign,  transfer,  lease,  convey or otherwise dispose of) all or substantially
all of the  Company's and its  Restricted  Subsidiaries'  properties  and assets
(determined  on  a  consolidated  basis  for  the  Company  and  its  Restricted
Subsidiaries) to any Person unless:

                  (i)  either  (1)  the  Company   shall  be  the  surviving  or
         continuing  entity or (2) the Person (if other than the Company) formed
         by such consolidation or into which the Company is merged or the Person
         which  acquires by sale,  assignment,  transfer,  lease,  conveyance or
         other  disposition  the properties and assets of the Company and of the
         Company's  Restricted  Subsidiaries  substantially  as an entirety (the
         "Surviving  Entity") (x) shall be a  corporation  organized and validly
         existing  under the laws of the United  States or any State thereof and
         (y) shall  expressly  assume,  by  supplemental  indenture (in form and
         substance  satisfactory to the Trustee),  executed and delivered to the
         Trustee, the due and punctual payment of the principal of, and premium,
         if any,  and  interest  on all of the  Notes  and the  performance  and
         observance  of every  covenant of the Notes and this  Indenture  on the
         part of the Company to be performed or observed;

                  (ii)  immediately  after giving effect to such transaction and
         the assumption contemplated by clause (i)(2)(y) above (including giving
         effect on a PRO FORMA basis to any Indebtedness, including any Acquired
         Indebtedness,  Incurred  in  connection  with  or in  respect  of  such
         transaction), the Company or such Surviving Entity, as the case may be,
         shall be able to Incur at least $1.00 of additional Indebtedness (other
         than Permitted Indebtedness) pursuant to Section 4.08;

                  (iii)  immediately  before and immediately after giving effect
         to such transaction and the assumption contemplated by clause (i)(2)(y)
         above  (including,  without  limitation,  giving  effect on a PRO FORMA
         basis  to  any  Indebtedness,   including  any  Acquired  Indebtedness,
         Incurred and any Lien granted in  connection  with or in respect of the
         transaction),  no Default or Event of Default shall have occurred or be
         continuing;

                  (iv) each Note Guarantor  (including Persons which become Note
         Guarantors  as a result of the  transaction)  shall have  confirmed  by
         Supplemental  Indenture  that its Note  Guarantee  shall apply for such
         Person's  Guarantee  Obligations  in respect of this  Indenture and the
         Notes; and

                  (v) the Company or the Surviving  Entity shall have  delivered
         to the Trustee an Officers' Certificate and an Opinion of Counsel, each
         stating that such

                                      -57-
<PAGE>

         consolidation,  merger, sale,  assignment,  transfer, lease, conveyance
         or other disposition and, if a supplemental indenture  is  required  in
         connection with such transaction,  such supplemental indenture,  comply
         with  the  applicable   provisions  of  this  Indenture  and  that  all
         conditions  precedent  in this  Indenture relating  to such transaction
         have been satisfied.

         For purposes of the foregoing, the transfer (by lease, assignment, sale
or  otherwise,  in a single  transaction  or series of  transactions)  of all or
substantially  all of the  properties  or  assets  of  one  or  more  Restricted
Subsidiaries  of the  Company,  the Capital  Stock of which  constitutes  all or
substantially  all of the properties and assets of the Company,  shall be deemed
to be the transfer of all or  substantially  all of the properties and assets of
the Company.

         The provisions of clause (ii) above shall not apply to (x) any transfer
of the  properties  or assets of a Restricted  Subsidiary  of the Company to the
Company  or to a  Wholly  Owned  Restricted  Subsidiary,  (y)  any  merger  of a
Restricted  Subsidiary  into the Company or (z) any merger of the Company into a
Restricted Subsidiary.

         Upon any consolidation, combination or merger or any transfer of all or
substantially all of the properties and assets of the Company and its Restricted
Subsidiaries in accordance  with the foregoing,  in which the Company is not the
continuing  corporation,  the successor  Person formed by such  consolidation or
into which the Company is merged or to which such conveyance,  lease or transfer
is made shall succeed to, and be  substituted  for, and may exercise every right
and power of, the Company  hereunder and under the Notes with the same effect as
if such surviving entity had been named as such.

         (b) Each Note  Guarantor  (other  than any Note  Guarantor  whose  Note
Guarantee is to be released in accordance  with Section 11.06) will not, and the
Company  will not cause or permit any Note  Guarantor  to,  consolidate  with or
merge into any Person that is not a Note  Guarantor  unless such Person (if such
Person is the surviving  entity)  assumes by  supplemental  indenture all of the
obligations of such Note Guarantor in respect of its Note Guarantee.

                       ARTICLE VI. DEFAULTS AND REMEDIES

SECTION 6.01      EVENTS OF DEFAULT

         The term "Event of Default,"  wherever  used herein with respect to the
Notes,  means any one of the  following  events  (whatever  the  reason for such
event,  and  whether it shall be  voluntary  or  involuntary,  or be effected by
operation of law, pursuant to any judgment,  decree or order of any court or any
order, rule or regulation of any administrative or governmental body):

                                      -58-
<PAGE>

         (1) the Company defaults in any payment of interest with respect to any
Note when the same becomes due and payable, whether or not such payment shall be
prohibited by Article X, and such default continues for a period of 30 days;

         (2) the Company (i)  defaults  in the payment of the  principal  of, or
premium, if any, on any Note when the same becomes due and payable at its Stated
Maturity,  upon redemption,  upon declaration or otherwise,  whether or not such
payment  shall be  prohibited  by Article X or (ii) fails to redeem or  purchase
Notes when required pursuant to this Indenture or the Notes, whether or not such
redemption or purchase shall be prohibited by Article X;

         (3) the Company fails to observe or perform any covenant,  condition or
agreement  on the part of the Company to be observed  or  performed  pursuant to
Section 4.08, Section 4.09, Section 4.11, Section 4.14 and Section 5.01;

         (4) the  Company  fails to comply with any of its other  agreements  or
covenants  in or  provisions  of the Notes or this  Indenture  and such  failure
continues for 30 days after the notice specified below;

         (5)  Indebtedness  of the  Company  or any  Significant  Subsidiary  is
accelerated by the holders  thereof because of a default and the total amount of
such  Indebtedness  accelerated  exceeds  $15,000,000  or its  foreign  currency
equivalent at the time;

         (6) any proceeding shall be instituted by or against the Company or any
Significant  Subsidiary  seeking to adjudicate  it a bankrupt or  insolvent,  or
seeking  liquidation,  winding  up,  reorganization,   arrangement,  adjustment,
protection,  relief or  composition of it or its debts under any law relating to
bankruptcy,  insolvency or reorganization  or relief of debtors,  or seeking the
entry of an order  for  relief  or the  appointment  of a  custodian,  receiver,
trustee or other  similar  official  for it or for any  substantial  part of its
property and, in the case of any such proceedings instituted against the Company
or  any  Significant   Subsidiary  (but  not  instituted  by  it),  either  such
proceedings shall remain  undismissed or unstayed for a period of 60 days or any
of the actions sought in such proceedings shall occur;

         (7)(i) the commencement by the Company or any Significant Subsidiary of
the Company of a voluntary case or proceeding under any Bankruptcy Law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent;  or (ii) the
consent by the Company or any Significant Subsidiary of the Company to the entry
of a decree or order for  relief in respect  of the  Company or any  Significant
Subsidiary  of the  Company  in an  involuntary  case or  proceeding  under  any
Bankruptcy Law or to the  commencement  of any bankruptcy or insolvency  case or
proceeding against the Company or any Significant  Subsidiary of the Company; or
(iii) the filing by the Company or any Significant  Subsidiary of the Company of
a  petition  or answer or consent  seeking  reorganization  or relief  under any
Bankruptcy Law; or (iv) the consent by the Company or any Significant Subsidiary
of the Company to the filing of such petition or to the appointment of or taking
possession  by a Custodian of the Company or any  Significant  Subsidiary of the

                                      -59-
<PAGE>

Company  or of any  substantial  part  of the  Property  of the  Company  or any
Significant  Subsidiary of the Company,  or (v) the making by the Company or any
Significant  Subsidiary  of the  Company  of an  assignment  for the  benefit of
creditors; or (vi) the admission by the Company or any Significant Subsidiary of
the  Company in  writing of its  inability  to pay its debts  generally  as they
become  due;  or (vii)  the  approval  by  stockholders  of the  Company  or any
Significant  Subsidiary  of  the  Company  of  any  plan  or  proposal  for  the
liquidation or dissolution of the Company or any  Significant  Subsidiary of the
Company;  or  (viii)  the  taking of  corporate  action  by the  Company  or any
Significant Subsidiary of the Company in furtherance of any such action; or

         (8) any  judgment  or  decree  for the  payment  of money in  excess of
$15,000,000  above any  applicable  insurance  coverage or its foreign  currency
equivalent  at the  time is  entered  against  the  Company  or any  Significant
Subsidiary,  remains  outstanding and unstayed for a period of 60 days following
the entry of such judgment or decree; or

         (9) the Note Guarantee of any Note Guarantor ceases to be in full force
and effect (other than (x) in accordance  with the terms of such Note  Guarantee
or (y) with respect to any Note Guarantor that is not a Significant  Subsidiary,
as a result of the occurrence of an event  described in clause (6) or clause (7)
above) or any Note Guarantor denies or disaffirms its obligations under its Note
Guarantee.

                  A Default  under  clause (4) is not an Event of Default  until
         the Trustee or the Holders of at least 25% in  principal  amount of the
         Notes  notify the Company of the Default and the Company  does not cure
         such Default  within the time  specified  after  receipt of such notice
         Such notice must  specify the  Default,  demand that it be remedied and
         state that such notice is a "Notice of Default".

         The  Company  shall  deliver to the  Trustee,  within 30 days after the
occurrence  thereof,  written notice in the form of an Officers'  Certificate of
any Event of Default  under  clause (3), (5) or (9) and any event which with the
giving of notice or the lapse of time  would  become an Event of  Default  under
clause  (4),  (6) or (8),  its status and what  action the  Company is taking or
proposes to take with respect thereto.

SECTION 6.02      ACCELERATION

         If an Event of Default  (other  than an Event of Default  specified  in
Section  6.01(6) or (7) with respect to the Company)  occurs and is  continuing,
the Trustee by written notice to the Company,  or the Holders of at least 25% in
principal  amount of the Notes by written notice to the Company and the Trustee,
may declare the principal of,  premium,  if any, and accrued but unpaid interest
on all the Notes to be due and payable. Upon such a declaration, such principal,
premium, if any, and interest shall be due and payable immediately.  If an Event
of Default  specified  in Section  6.01(6)  or (7) with  respect to the  Company
occurs,  the principal of, premium,  if any, and interest on all the Notes shall
automatically  become and be immediately due and payable without any declaration
or other act on the part of the  Trustee or any  Noteholders.  The  Holders of a
majority  in  principal  amount of the Notes by  notice to the  Trustee  and the
Company may rescind an

                                      -60-
<PAGE>

acceleration  and its consequences if the rescission would not conflict with any
judgment  or decree and if all  existing  Events of  Default  have been cured or
waived except  nonpayment of  principal,  premium,  if any, or interest that has
become due solely because of such acceleration.  No such rescission shall affect
any subsequent Default or impair any right consequent thereto.

SECTION 6.03      OTHER REMEDIES

         The Company  covenants that if an Event of Default specified in Section
6.01(1) or Section 6.01(2) occurs the Company shall, upon demand of the Trustee,
pay to the Trustee,  for the benefit of the  Holders,  the whole amount then due
and payable on the Notes for  principal,  premium,  if any, and interest and, to
the extent that payment of such interest shall be legally enforceable,  interest
upon the overdue principal (and premium,  if any) and upon Defaulted Interest at
the rate or rates prescribed  therefor in the Notes,  and, in addition  thereto,
such further  amount as shall be  sufficient  to cover the costs and expenses of
collection,  including  reasonable  compensation,  expenses,  disbursements  and
advances of the Trustee, its agents and counsel and all other amounts due to the
Trustee pursuant to Section 7.07 hereof.

         If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal of, premium, if any, or
interest  on the Notes or to enforce the  performance  of any  provision  of the
Notes or this  Indenture.  The Trustee may maintain a proceeding even if it does
not possess any of the Notes or does not produce any of them in the  proceeding.
A delay or omission by the Trustee or any  Noteholder 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.  No remedy is
exclusive of any other remedy.  All available  remedies are cumulative.

SECTION 6.04      WAIVER OF PAST DEFAULTS

         The  Holders of not less than a  majority  in  principal  amount of the
Notes by notice to the  Trustee  may, on behalf of the Holders of all the Notes,
waive an  existing  Default or Event of Default  and its  consequences  except a
continuing  Default or Event of Default (i) in the payment of the  principal of,
premium,  if any or interest on a Note (except a payment default  resulting from
an acceleration  that has been rescinded) or (ii) in respect of a provision that
under  Section  9.02 cannot be amended  without  the consent of each  Noteholder
affected.

SECTION 6.05      CONTROL BY MAJORITY

         The  Holders of not less than a  majority  in  principal  amount of the
Notes may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power conferred on
the  Trustee.  However,  the  Trustee  may refuse to follow any  direction  that
conflicts  with law or this  Indenture  or,

                                      -61-
<PAGE>

subject to Section 7.01,  that the Trustee  determines is unduly  prejudicial to
the  rights of other  Noteholders  or would  involve  the  Trustee  in  personal
liability;  PROVIDED, HOWEVER, that the Trustee may take any other action deemed
proper by the Trustee that is not  inconsistent  with such  direction.  Prior to
taking any action  hereunder,  the Trustee shall be entitled to  indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.

SECTION 6.06      LIMITATION ON SUITS

         A Noteholder  may not pursue any remedy with respect to this  Indenture
or the Notes unless:

         (1) the Holder  has  previously  given to the  Trustee  written  notice
stating that an Event of Default is continuing;

         (2) the Holders of at least 25% in  principal  amount of the Notes have
made a written  request  to the  Trustee to pursue the remedy in respect of such
Event of Default in its own name as Trustee hereunder;

         (3) such  Holder or  Holders  have  offered to the  Trustee  reasonable
security or indemnity  against any loss,  liability or expense to be Incurred in
compliance with such request;

         (4) the Trustee has not complied with the request  within 60 days after
receipt of the request and the offer of security or indemnity; and

         (5) the Holders of a majority in principal amount of the Notes have not
given the Trustee a direction  inconsistent  with the request during such 60-day
period.

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

SECTION 6.07      RIGHTS OF HOLDERS TO RECEIVE PAYMENT

         Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of, premium,  if any, and interest on the
Notes held by such Holder, on or after the respective due dates expressed in the
Notes,  or the  Redemption  Dates or purchase  dates  provided for therein 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;
PROVIDED,  that  prior  to  the  occurrence  of any  event  giving  rise  to the
requirement  that the  Company  make an Asset  Sale  Offer or Change of  Control
Offer,  nothing  contained  in this  Section 6.07 shall be deemed to require the
consent of the Holders of 100% of the  outstanding  Notes to amend or supplement
the  provisions  of Section  4.11 or Section  4.14,  respectively,  or any other
provision  of  this  Indenture  or the  Notes  relating  thereto.

                                      -62-
<PAGE>

SECTION  6.08     COLLECTION SUIT BY TRUSTEE

         If an Event of Default  specified in Section  6.01(1) or (2) occurs and
is continuing,  the Trustee may recover  judgment in its own name and as trustee
of an express  trust against the Company for the whole amount then due and owing
on the Notes for  principal,  premium,  if any, and interest  and, to the extent
that payment of such interest  shall be legally  enforceable,  interest upon the
overdue  principal  (and premium,  if any) and upon  Defaulted  Interest and the
amounts  provided for in Section  7.07.

SECTION 6.09      TRUSTEE MAY FILE PROOFS OF CLAIM

         The Trustee may file such proofs of claim and other papers or documents
as may be  necessary or advisable in order to have the claims of the Trustee and
the Noteholders allowed in any judicial proceedings relative to the Company, any
Note  Guarantor,  their  respective  creditors or its  respective  property and,
unless  prohibited by law or applicable  regulations,  may vote on behalf of the
Holders in any election of a trustee in  bankruptcy  or other Person  performing
similar functions,  and any Custodian in any such judicial  proceeding is hereby
authorized by each Holder to make payments to the Trustee. 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 it for the reasonable compensation,  expenses,
disbursements and advances of the Trustee,  its agents and its counsel,  and any
other amounts due the Trustee under Section 7.07.

SECTION 6.10      PRIORITIES

         Subject to the provisions of Article X and Article XII, if the  Trustee
collects any money or property pursuant to this Article VI, it shall pay out the
money or property in the following order:

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

                  SECOND:  if  the  Noteholders   proceed  against  the  Company
         directly  without  the  Trustee  in  accordance with this Indenture, to
         the Noteholders for their collection costs;

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

                                      -63-
<PAGE>

                  FOURTH:  to the Company or, to the extent the Trustee collects
         any  amount  pursuant to Article XI  hereof from any Note Guarantor, to
         such Note Guarantor.

         The Trustee  may fix a Record  Date and  payment  date for any  payment
to  Noteholders  pursuant to this Section.  At least 15 days before such  Record
Date, the  Company shall mail to  each  Noteholder and the Trustee a notice that
states the record date, the payment date and amount to be paid.

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  Trustee,  a court in its  discretion  may require the filing by any party
litigant  in the suit of an  undertaking  to pay the costs of the suit,  and the
court in its  discretion  may  assess  reasonable  costs,  including  reasonable
attorneys'  fees,  against any party litigant in the suit,  having due regard to
the merits and good faith of the claims or defenses made by the party  litigant.
This Section  6.11 does not apply to a suit by the  Trustee,  a suit by a Holder
pursuant  to Section  6.07 or a suit by  Holders  of more than 10% in  principal
amount of the Notes.

SECTION 6.12      WAIVER OF STAY OR EXTENSION LAWS

         The Company (to the extent it may lawfully do so) shall not at any time
insist upon, or plead, or in any manner  whatsoever claim or take the benefit or
advantage  of, any stay or extension  law wherever  enacted,  now or at any time
hereafter in force,  which may affect the covenants or the  performance  of this
Indenture,  and the Company  (to the extent  that it may  lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and shall not 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
had been enacted.

                              ARTICLE VII. TRUSTEE

SECTION 7.01      DUTIES OF TRUSTEE

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

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

                                      -64-
<PAGE>

                  (1) the  Trustee  undertakes  to perform  such duties and only
         such  duties as are  specifically  set forth in this  Indenture  and no
         implied  covenants  or  obligations  shall be read into this  Indenture
         against the Trustee; and

                  (2) 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 (but need not confirm or investigate  the accuracy of
         mathematical calculations or other facts stated therein).

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

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

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

                  (3) 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.

         (d) 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.

         (e) money  held in trust by the  Trustee  need not be  segregated  from
other funds except to the extent required by law.

         (f) no provision of this Indenture  shall require the Trustee to expend
or risk its own funds or otherwise Incur financial  liability in the performance
of any of its  duties  hereunder  or in the  exercise  of any of its  rights  or
powers,  if it shall have  reasonable  grounds to believe that repayment of such
funds or adequate  indemnity  against such risk or  liability is not  reasonably
assured to it.

         (g)  every provision  of this  Indenture  relating  to the  conduct  or
affecting  the  liability  of or  affording  protection  to the Trustee shall be
subject to the provisions of this Section 7.01 and to the provisions of the TIA.

SECTION 7.02      RIGHTS OF TRUSTEE

         (a) The Trustee may rely on 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.

                                      -65-
<PAGE>

         (b) Before the Trustee acts or refrains from acting,  it may require an
Officers'  Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any  action  it  takes or omits  to take in good  faith in  reliance  on any
Officers' Certificate or Opinion of Counsel.

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

         (d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes  to be  authorized  or within its rights or
powers; PROVIDED, HOWEVER, that the Trustee's conduct does not constitute wilful
misconduct or negligence.

         (e) The Trustee  may consult  with  counsel of its  selection,  and the
advice or opinion of counsel  with  respect to legal  matters  relating  to this
Indenture  and  the  Notes  shall  have  full  and  complete  authorization  and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance  with the advice or opinion of such
counsel.

         (f) Any request or direction of the Company  mentioned  herein shall be
sufficiently  evidenced by an Officers'  Certificate  and any  resolution of the
Board of Directors may be sufficiently evidenced by a Board Resolution.

         (g) 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  pursuant to this  Indenture,  unless such Holders shall have
offered to the  Trustee  reasonable  security  or  indemnity  against the costs,
expenses and  liabilities  which 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 Notes and may  otherwise  deal with the  Company,  the Note
Guarantors or their Affiliates with the same rights it would have if it were not
Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the
same with like  rights.  However,  the Trustee must comply with Section 7.10 and
Section 7.11.

SECTION 7.04      TRUSTEE'S DISCLAIMER

         The Trustee shall not be responsible for and makes no representation as
to the  validity  or adequacy of this  Indenture  or the Notes,  it shall not be
accountable  for the Company's use of the proceeds from the Notes,  and it shall
not be responsible  for any statement of the Company in this Indenture or in any
document  issued in connection  with the sale of the Notes or in the Notes other
than the  Trustee's  certificate  of  authentication.

                                      -66-
<PAGE>

SECTION  7.05     NOTICE  OF DEFAULTS

         If a Default  occurs and is continuing  and if it is actually  known to
the Trustee,  the Trustee  shall mail to each  Noteholder  notice of the Default
within 30 days after it occurs.  Except in the case of a Default in the  payment
of principal of, premium,  if any, or interest on any Note  (including  payments
pursuant to the  mandatory  redemption  provisions  of such Note,  if any),  the
Trustee  may  withhold  the  notice if and so long as a  committee  of its Trust
Officers  in  good  faith  determines  that  withholding  the  notice  is in the
interests of Noteholders.

SECTION 7.06      REPORTS BY TRUSTEE TO HOLDERS

         As promptly  as  practicable  after each  August 1  beginning  with the
August 1 following the date of this Indenture, and in any event prior to October
1 in each year,  the Trustee shall mail to each  Noteholder a brief report dated
as of August 1 that  complies  with TIA Section  313(a).  The Trustee also shall
comply with TIA Section 313(b) and 313(c).

         A copy of each report at the time of its mailing to  Noteholders  shall
be filed  with the SEC and each stock  exchange  (if any) on which the Notes are
listed.  The Company  agrees to notify  promptly the Trustee  whenever the Notes
become listed on any stock exchange and of any delisting  thereof.

SECTION 7.07      COMPENSATION AND INDEMNITY

         The Company shall pay to the Trustee from time to time compensation for
its  services as the  Company  and the Trustee  shall from time to time agree in
writing.  The  Trustee's  compensation  shall  not  be  limited  by  any  law on
compensation  of a trustee of an express trust.  The Company shall reimburse the
Trustee upon request for all reasonable  out-of-pocket expenses Incurred or made
by it,  including costs of collection,  in addition to the  compensation for its
services.  Such expenses shall include the reasonable compensation and expenses,
disbursements  and advances of the  Trustee's  agents and  counsel.  The Company
shall  indemnify  the  Trustee  against any and all loss,  liability  or expense
(including  reasonable  attorneys'  fees) incurred by it in connection  with the
administration of this trust and the performance of its duties hereunder.

         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 of the claim;  PROVIDED that the Trustee may have  separate  counsel
and the Company  shall pay the  reasonable  fees and expenses of such counsel if
the actual or potential defendants in, or the targets of, any such claim include
both the Trustee and the Company and the Trustee shall have reasonably concluded
that there may be legal

                                      -67-
<PAGE>

defenses  available  to it  which  are  different  from or  additional  to those
available to the Company.

         The Trustee will not, without the prior written consent of the Company,
settle or compromise or consent to the entry of any judgment with respect to any
claim in respect of which  indemnification may be sought hereunder.  The Company
need not  reimburse  any expense or  indemnify  against any loss,  liability  or
expense  Incurred by the Trustee  through the Trustee's  own wilful  misconduct,
negligence or bad faith.

         To secure the Company's  payment  obligations in this Section 7.07, the
Trustee  shall have a Lien prior to the Notes on all money or  property  held or
collected  by the  Trustee  other  than money or  property  held in trust to pay
principal of, premium, if any, and interest on particular Notes.

         The Company's payment  obligations  pursuant to this Section 7.07 shall
survive the discharge of this Indenture.  When the Trustee Incurs expenses after
the occurrence of a Default  specified in Section 6.01(6) or (7) with respect to
the Company,  the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.

SECTION 7.08      REPLACEMENT OF TRUSTEE

         The Trustee may resign at any time by so  notifying  the  Company.  The
Holders of not less than a majority in principal  amount of the Notes may remove
the Trustee by so notifying the Trustee and may appoint a successor Trustee. The
Company shall remove the Trustee if:

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

         (2)  the Trustee is adjudged bankrupt or insolvent;

         (3)  a receiver or other public  officer takes charge of the Trustee or
its property; or

         (4)  the Trustee otherwise becomes incapable of acting.

         If the Trustee resigns,  is removed by the Company or by the Holders of
a majority in principal  amount of the Notes and such Holders do not  reasonably
promptly  appoint a successor  Trustee,  or if a vacancy exists in the office of
Trustee  for any reason (the  Trustee in such event being  referred to herein as
the retiring Trustee), the Company shall promptly appoint 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  Noteholders.  The retiring  Trustee shall  promptly  transfer all
property  held by it as Trustee to the  successor  Trustee,  subject to the Lien
provided for in Section 7.07.

                                      -68-
<PAGE>

         If a successor  Trustee  does not take office  within 30 days after the
retiring  Trustee resigns or is removed,  the retiring Trustee or the Holders of
not less than 10% in  principal  amount of the Notes may  petition  any court of
competent jurisdiction for the appointment of a successor Trustee.

         If the Trustee fails to comply with Section 7.10,  any  Noteholder  may
petition any court of competent  jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

         Notwithstanding the replacement of the Trustee pursuant to this Section
7.08,  the  Company's  obligations  under  Section  7.07 shall  continue for the
benefit of the retiring Trustee

SECTION 7.09      SUCCESSOR TRUSTEE BY MERGER

         If the Trustee consolidates with, merges or converts into, or transfers
all or  substantially  all its corporate  trust  business or assets to,  another
corporation  or banking  association,  the  resulting,  surviving or  transferee
corporation without any further act shall be the successor Trustee.

         In case at the time such  successor or successors by merger, conversion
or  consolidation  to the Trustee  shall  succeed to the trusts  created by this
Indenture  any of the Notes  shall have been  authenticated  but not  delivered,
any such  successor to the Trustee may adopt the certificate  of  authentication
of any  predecessor trustee,  and deliver  such Notes so  authenticated;  and in
case  at  that time any  of the Notes  shall not  have  been authenticated,  any
successor to the Trustee may  authenticate such Notes  either in the name of any
predecessor hereunder or in the name of the successor to the Trustee, and in all
such cases such  certificates  shall have the full force which it is anywhere in
the Notes or in this Indenture  provided that the certificate of  authentication
of the Trustee shall have.

SECTION 7.10      ELIGIBILITY; DISQUALIFICATION

         The Trustee shall at all times satisfy the  requirements of TIA Section
310(a).  The  Trustee  shall have a  combined  capital  and  surplus of at least
$50,000,000  as  set  forth  in its  most  recent  published  annual  report  of
condition. The Trustee shall comply with TIA Section 310(b); PROVIDED,  HOWEVER,
that there shall be excluded  from the  operation of TIA Section  310(b)(1)  any
indenture or indentures under which other securities or certificates of interest
or  participation  in other  securities  of the Company are  outstanding  if the
requirements  for such  exclusion  set forth in TIA Section  310(b)(1)  are met.

                                      -69-
<PAGE>

SECTION 7.11      PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY

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

SECTION 7.12      TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE COMPANY

         Any  application  by the  Trustee  for  written  instructions  from the
Company  may,  at the option of the  Trustee,  be set forth in writing and shall
state any  action  proposed  to be taken or omitted  by the  Trustee  under this
Indenture  and the date on and/or after which such action shall be taken or such
omission  shall be  effective.  The  Trustee  shall not be liable for any action
taken by, or omission of, the Trustee in accordance with a proposal  included in
such application on or after the date specified in such application  (which date
shall not be less than three  Business  Days  after the date any  Officer of the
Company actually receives such  application,  unless any such Officer shall have
consented in writing to any earlier date) unless prior to taking any such action
(or the  effective  date in the case of an  omission),  the  Trustee  shall have
received  written  instructions in response to such  application  specifying the
action to be taken or omitted.

SECTION 7.13      COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS

         The Company will furnish or cause to be furnished to the Trustee:

         (a)  semi-annually,  not later than 15 days  after the Record  Date for
interest  for the Notes,  a list,  in such form as the  Trustee  may  reasonably
require,  of the  names and  addresses  of the  Holders  of the Notes as of such
Record Date, and

         (b) at such other times as the  Trustee may request in writing,  within
30 days after the receipt by the Company of any such request,  a list of similar
form and  content as of a date not more than 15 days prior to the time such list
is furnished,  provided, however, that, so long as the Trustee is the Registrar,
no such list shall be required to be furnished.

                ARTICLE VIII. DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 8.01      DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE

         (a) When (i) the Company delivers to the Trustee all outstanding  Notes
(other than Notes replaced  pursuant to Section 2.07) for  cancellation  or (ii)
all outstanding Notes have become due and payable, whether at Stated Maturity or
as a result of the  mailing of a notice of  redemption  pursuant  to Article III
hereof and the Company irrevocably deposits with the Trustee funds sufficient to
pay at Stated  Maturity or upon

                                      -70-
<PAGE>

redemption all outstanding Notes,  including interest accrued and unpaid thereon
to Stated Maturity or such  Redemption Date (other than Notes replaced  pursuant
to Section 2.07),  and if in either case the Company pays all other sums payable
hereunder by the Company,  then this  Indenture  shall,  subject to Section 8.01
(c), cease to be of further effect.  The Trustee shall acknowledge  satisfaction
and  discharge  of this  Indenture  on demand of the Company  accompanied  by an
Officers'  Certificate  and an Opinion of Counsel and at the cost and expense of
the Company.

         (b) Subject to Section  8.01 (c) and Section  8.02,  the Company at any
time may terminate:

                  (i) all its obligations under the Notes and this Indenture and
         the  Guarantee  Obligations  of the  Note  Guarantors  under  the  Note
         Guarantees,  the Notes and the Indenture  ("legal  defeasance  option")
         subject to the following which shall survive until otherwise terminated
         or discharged hereunder:

                  (A) the  rights of  Holders  of  outstanding  Notes to receive
         payments in respect of the principal of, premium,  if any, and interest
         on such Notes when payments are due from the trust referred to below;

                  (B) the Company's obligations with respect to such Notes under
         Section 2.03,  Section 2.04,  Section 2.06, Section 2.07, Section 2.09,
         Section 4.02, Section 4.03 and Section 4.04 hereof;

                  (C) RESERVED

                  (D) the rights,  powers,  trusts, duties and immunities of the
         Trustee  under  this   Indenture  and  the  Company's   obligations  in
         connection therewith,

                  (E) Article III hereof, and

                  (F)  this Article VIII; or

                  (ii) its  obligations  under Section 4.05 through Section 4.17
         and the operation of Section 6.01(3) (but only as it applies to Section
         5.01(a)(iii)),  Section 6.01(5),  Section 6.01(6),  Section 6.01(7) and
         Section  6.01(8)  (but,  in the case of Section  6.01(6) and (7),  with
         respect  only to  Significant  Subsidiaries)  or  contained  in Section
         5.01(a)(iii) ("covenant defeasance option").

         The Company may exercise its legal  defeasance  option  notwithstanding
its prior exercise of its covenant defeasance option.

         If the Company  exercises its legal defeasance  option,  payment of the
Notes may not be  accelerated  because of an Event of  Default.  If the  Company
exercises  its  covenant  defeasance  option,  payment  of the  Notes may not be
accelerated because of an Event of Default specified in Section 6.01(3), Section
6.01(4),  and Section 6.01(9) or because of the failure of the Company to comply
with Section  5.01(a)(iii).  If the Company exercise

                                      -71-
<PAGE>

its  legal  defeasance  option  or its  covenant  defeasance  option,  each Note
Guarantor  shall  be  released  from  all  of its  obligations  under  its  Note
Guarantee.

         Upon  satisfaction  of the conditions set forth herein and upon request
of the Company,  the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.

         (c)  Notwithstanding  clauses   (a)  and  (b)  above,   the   Company's
obligations in Section 8.04,  Section 8.05 and Section 8.06 shall survive.

SECTION 8.02      CONDITIONS TO DEFEASANCE

         The Company may  exercise its legal  defeasance  option or its covenant
defeasance option only if:

         (1) the Company irrevocably deposits in trust with the Trustee money or
US  Government  Obligations  for the payment of principal of and interest on the
Notes to maturity or redemption, as the case may be;

         (2) the Company delivers to the Trustee a certificate from a nationally
recognized  firm of  independent  accountants  expressing  its opinion  that the
payments of principal  and  interest  when due and without  reinvestment  on the
deposited US Government  Obligations plus any deposited money without investment
will provide cash at such times and in such amounts as will be sufficient to pay
principal of, premium,  if any, and interest when due on all the Notes to Stated
Maturity or redemption, as the case may be;

         (3) 91 days pass after the deposit is made and during the 91-day period
no Default  specified  in Section  6.01(6)  or (7) with  respect to the  Company
occurs which is continuing at the end of the period;

         (4) the  deposit  does not  result  in a breach  or  violation  of,  or
constitute  a default  under any other  agreement or  instrument  binding on the
Company or any of its Subsidiaries and is not prohibited by Article X;

         (5) the  Company  delivers  to the Trustee an Opinion of Counsel to the
effect that the trust  resulting  from the deposit  does not  constitute,  or is
qualified as, a regulated investment company under the Investment Company Act of
1940;

         (6) in the case of the legal defeasance  option, the Company shall have
delivered to the Trustee an Opinion of Counsel  stating that (i) the Company has
received  from, or there has been published by, the Internal  Revenue  Service a
ruling,  or (ii) 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  Noteholders  will not
recognize  income,  gain or loss for Federal  income tax purposes as a result of
such  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
defeasance had not occurred;

                                      -72-
<PAGE>

         (7) in the case of the covenant  defeasance  option,  the Company shall
have  delivered  to the  Trustee an  Opinion  of Counsel to the effect  that the
Noteholders  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;

         (8) the Company delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the defeasance
and  discharge  of the  Notes as  contemplated  by this  Article  VIII have been
complied with;

         (9) the  Company  shall have  delivered  to the  Trustee  an  Officer's
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 the Note
Guarantors  or with the intent of defeating,  hindering,  delaying or defrauding
any other creditors of the Company, the Note Guarantors or others; and

         (10) such legal  defeasance or covenant  defeasance shall not cause the
Trustee to have a conflicting  interest  within the meaning of the TIA (assuming
for the  purpose of this  clause  (10) that all Notes are in default  within the
meaning of such Act).

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

SECTION 8.03      APPLICATION OF TRUST MONEY

         The  Trustee  shall hold in trust  money or US  Government  Obligations
deposited  with it pursuant to this Article  VIII.  It shall apply the deposited
money and the money from US Government  Obligations through the Paying Agent and
in accordance  with this Indenture to the payment of principal of,  premium,  if
any, and interest on the Notes.  Money and  securities  so held in trust are not
subject to Article X.

                                      -73-
<PAGE>

SECTION 8.04      REPAYMENT TO COMPANY

         The  Trustee  and the  Paying  Agent  shall  promptly  turn over to the
Company upon request any excess  money or  securities  held by them at any time.
Subject to any  applicable  abandoned  property  law, the Trustee and the Paying
Agent  shall pay to the  Company  upon  request  any money  held by them for the
payment of principal of, premium, if any, or interest that remains unclaimed for
two years, and,  thereafter,  Noteholders entitled to the money must look to the
Company for payment as general creditors.

SECTION 8.05      INDEMNITY FOR GOVERNMENT OBLIGATIONS

         The Company shall pay and shall indemnify the Trustee  against any tax,
fee or other  charge imposed on  or assessed  against  deposited  US  Government
Obligations  or the principal  and  interest  received  on  such  US  Government
Obligations.

SECTION 8.06      REINSTATEMENT

         If the  Trustee  or  Paying  Agent is  unable  to apply any money or US
Government  Obligations  in  accordance  with this Article VIII by reason of any
legal  proceeding  or by  reason  of any  order  or  judgment  of any  court  or
governmental  authority  enjoining,  restraining or otherwise  prohibiting  such
application,  the Company's obligations under this Indenture and the Notes shall
be revived and  reinstated  as though no deposit had  occurred  pursuant to this
Article  VIII until such time as the  Trustee or Paying  Agent is  permitted  to
apply  all such  money or US  Government  Obligations  in  accordance  with this
Article VIII;  PROVIDED,  HOWEVER,  that, if the Company has made any payment of
interest  on or  principal  of any Notes  because  of the  reinstatement  of its
obligations,  the Company  shall be  subrogated  to the rights of the Holders of
such Notes to receive such payment from the money or US  Government  Obligations
held by the Trustee or Paying Agent.

                             ARTICLE IX. AMENDMENTS

SECTION 9.01      WITHOUT CONSENT OF HOLDERS

         The  Company  and the  Trustee  may amend this  Indenture  or the Notes
without notice to or consent of any Noteholder:

         (1)  to cure any ambiguity, omission, defect or inconsistency;

         (2)  to comply with Article V;

         (3) to provide for  uncertificated  Notes in addition to or in place of
Certificated Notes; PROVIDED,  HOWEVER, that the uncertificated Notes are issued
in  registered

                                      -74-
<PAGE>

form for  purposes  of Section  163(f) of the Code or in a manner  such that the
uncertificated Notes are described in Section 163(f)(2)(B) of the Code;

         (4) to make any change in Article X or Article  XII that would limit or
terminate  the  benefits  available  to any  holder of Senior  Indebtedness  (or
Representatives therefor) under Article X or Article XII;

         (5) to add Guarantees with respect to the Notes or to secure the Notes;

         (6) to add to the  covenants  of the  Company  for the  benefit  of the
Holders or to surrender any right or power herein conferred upon the Company;

         (7) to  comply  with any  requirements  of the SEC in  connection  with
qualifying,  or maintaining the  qualification of, this Indenture under the TIA;
or

         (8) to make any change that does not adversely affect the rights of any
Noteholder.

         An  amendment  under this  Section  9.01 may not make any  change  that
adversely  affects  the rights  under  Article X or Article XII of any holder of
Senior   Indebtedness  then  outstanding  unless  the  holders  of  such  Senior
Indebtedness  (or any  group  or  representative  thereof  authorized  to give a
consent) consent to such change.

         After an  amendment  under this Section  9.01  becomes  effective,  the
Company shall mail to Noteholders a notice briefly  describing  such  amendment.
The failure to give such notice to all Noteholders, or any defect therein, shall
not impair or affect the  validity  of an  amendment  under this  Section  9.01.

SECTION 9.02      WITH CONSENT OF HOLDERS

         The  Company  and the  Trustee  may amend this  Indenture  or the Notes
without notice to any Noteholder but with the written  consent of the Holders of
at least a majority in principal  amount of the Notes then  outstanding  and any
past  Default or  compliance  with any  provisions  may also be waived  with the
consent of the  Holders of not less than a majority of the  principal  amount of
Notes  then  outstanding.  However,  without  the  consent  of  each  Noteholder
affected, an amendment may not:

         (1)  reduce  the  amount  of Notes  whose  Holders  must  consent to an
amendment;

         (2)  reduce the rate of or  extend the time for  payment of interest on
any Note;

         (3)  reduce the principal of or extend the Stated Maturity of any Note;

         (4) reduce  the  premium  payable  upon the  redemption  of any Note or
change the time at which any Note must be redeemed in  accordance  with  Article
III;

         (5) make any Note payable in money other than that stated in the Note;

                                      -75-
<PAGE>

         (6) make any change in Article X or Article XII that adversely  affects
the rights of any Noteholder under Article X or Article XII;

         (7)  make  any change  in Section 6.04 or Section 6.07  or  the  second
sentence of this Section 9.02; or

         (8) make any change in any Note Guarantee that would  adversely  affect
the Noteholders.

         It shall not be  necessary  for the consent of the  Holders  under this
Section 9.02 to approve the particular  form of any proposed  amendment,  but it
shall be sufficient if such consent approves the substance thereof.

         An  amendment  under this  Section  9.02 may not make any  change  that
adversely  affects  the rights  under  Article X or Article XII of any holder of
Senior   Indebtedness  then  outstanding  unless  the  holders  of  such  Senior
Indebtedness  (or any  group  or  representative  thereof  authorized  to give a
consent) consent to such change.

         After an  amendment  under this Section  9.02  becomes  effective,  the
Company shall mail to Noteholders a notice briefly  describing  such  amendment.
The failure to give such notice to all Noteholders, or any defect therein, shall
not impair or affect the validity of an amendment  under this  Section.

SECTION 9.03      COMPLIANCE WITH TRUST INDENTURE ACT

         Every  amendment  to this  Indenture or the Notes shall comply with the
TIA as then in effect.

SECTION 9.04      REVOCATION AND EFFECT OF CONSENTS AND WAIVERS

         A consent to an  amendment or a waiver by a Holder of a Note shall bind
the Holder and every subsequent  Holder of that Note or portion of the Note that
evidences the same debt as the consenting Holder's Note, even if notation of the
consent  or  waiver  is not  made on the  Note.  However,  any  such  Holder  or
subsequent  Holder may revoke the consent or waiver as to such  Holder's Note or
portion of the Note if the Trustee receives the notice of revocation  before the
date the  amendment or waiver  becomes  effective.  After an amendment or waiver
becomes  effective,  it shall  bind every  Noteholder.  An  amendment  or waiver
becomes effective upon the execution of such amendment or waiver by the Trustee.

         The Company may,  but shall not be obligated  to, fix a Record Date for
the purpose of  determining  the  Noteholders  entitled to give their consent or
take any other  action  described  above or  required or  permitted  to be taken
pursuant to this Indenture.  If a Record Date is fixed, then notwithstanding the
immediately  preceding  paragraph,  those Persons who were  Noteholders  at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such  consent or to revoke any consent

                                      -76-
<PAGE>

previously  given or to take  any  such  action,  whether  or not  such  Persons
continue to be Holders after such Record Date. No such consent shall be valid or
effective  for more than 120 days after such Record Date.

SECTION 9.05      NOTATION ON OR EXCHANGE OF NOTES

         If an  amendment  changes the terms of a Note,  the Trustee may require
the Holder of the Note to deliver it to the  Trustee.  The  Trustee may place an
appropriate  notation on the Note  regarding  the changed terms and return it to
the Holder.  Alternatively,  if the Company or the  Trustee so  determines,  the
Company in exchange for the Note shall issue and the Trustee shall  authenticate
and  deliver a new Note that  reflects  the changed  terms.  Failure to make the
appropriate  notation  or to issue a new Note shall not affect the  validity  of
such amendment.

SECTION 9.06      TRUSTEE TO SIGN AMENDMENTS

         The  Trustee  shall  sign any  amendment  authorized  pursuant  to this
Article  IX if the  amendment  does not  adversely  affect the  rights,  duties,
liabilities  or immunities of the Trustee.  If it does, the Trustee may but need
not sign it. In signing such  amendment the Trustee shall be entitled to receive
indemnity reasonably  satisfactory to it and to receive, and (subject to Section
7.01) shall be fully protected in relying upon, an Officers'  Certificate and an
Opinion of Counsel  stating that such  amendment is  authorized  or permitted by
this Indenture and that such amendment  constitutes the legal, valid and binding
obligation  of the  Company  and  each  Note  Guarantor,  subject  to  customary
exceptions.

SECTION 9.07      PAYMENT FOR CONSENT

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

                     ARTICLE X. SUBORDINATION OF THE NOTES

SECTION 10.01     AGREEMENT TO SUBORDINATE

         The Company  agrees,  and each  Noteholder  by accepting a Note agrees,
that the Obligations in respect of the Notes and the Indenture are  subordinated
in right of payment, to the extent and in the manner provided in this Article X,
to the  prior  payment  in  full  in cash  or  Cash  Equivalents  of all  Senior
Indebtedness of the Company and that the subordination is for the benefit of and
enforceable  by the holders of such Senior

                                      -77-
<PAGE>

Indebtedness.  Only  Obligations  in  respect of Senior  Indebtedness  will rank
senior  to the  Obligations  in  respect  of the  Notes  and  the  Indenture  in
accordance with the provisions set forth herein. The Notes shall in all respects
rank PARI PASSU with,  or be senior to, all other  Indebtedness  of the Company.
All  provisions  of this  Article X shall be subject to Section  10.02.

SECTION 10.02     LIQUIDATION, DISSOLUTION, BANKRUPTCY

         Upon any Insolvency or Liquidation Proceeding:

         (1) holders of Senior  Indebtedness of the Company shall be entitled to
receive payment in full of such Senior  Indebtedness in cash or Cash Equivalents
before  Noteholders  shall be  entitled to receive any payment in respect of the
Obligations in respect of the Notes and the Indenture; and

         (2)  until  such  Senior  Indebtedness  is paid in full in cash or Cash
Equivalents,  any  distribution to which  Noteholders  would be entitled but for
this  Article X shall be made to holders of such  Senior  Indebtedness  as their
interests may appear,  except that  Noteholders  may receive (a) securities of a
Person that are  subordinated  to such Senior  Indebtedness to at least the same
extent as the Notes are  subordinated to (A) Senior  Indebtedness of the Company
and (B) any securities issued in exchange for Senior Indebtedness ("Subordinated
Reorganization  Securities") and (b) payments and other  distributions made from
any  defeasance  trust  created  pursuant to Section 8.01 hereof.

SECTION 10.03     DEFAULT ON SENIOR INDEBTEDNESS OF THE COMPANY

         The  Company  may not pay any amount in respect of the  Obligations  in
respect of the Notes and the  Indenture or make any deposit  pursuant to Section
8.01 and may not repurchase, redeem or defease any Notes (collectively, "pay the
Notes") (other than with Subordinated Reorganization Securities and payments and
other  distributions  made from any defeasance trust created pursuant to Section
8.01 hereof) if (i) any  Designated  Senior  Indebtedness  of the Company is not
paid when due or (ii) any other default on such Designated  Senior  Indebtedness
occurs and the maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms unless, in either case, (x) the default has been cured
or waived and any such  acceleration  has been rescinded or (y) such  Designated
Senior Indebtedness has been paid in full in cash or Cash Equivalents; PROVIDED,
HOWEVER,  that the Company may pay the Notes without  regard to the foregoing if
the Company and the Trustee receive  written notice  approving such payment from
the   Representative  of  such  Designated  Senior   Indebtedness.   During  the
continuance of any default (other than a default described in clause (i) or (ii)
of the preceding sentence) with respect to any Designated Senior Indebtedness of
the  Company   pursuant  to  which  the  maturity  thereof  may  be  accelerated
immediately  without  further  notice  (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, the
Company  may not pay the  Notes  for a  period  (a  "Payment  Blockage  Period")
commencing  upon the receipt by the Company and the Trustee of written notice of
such default (a "Blockage  Notice") from the  Representative

                                      -78-
<PAGE>

of such  Designated  Senior  Indebtedness  specifying  an  election  to effect a
Payment  Blockage  Period  and ending 179 days  thereafter  (or  earlier if such
Payment  Blockage  Period is terminated (i) by written notice to the Trustee and
the Company from the Person or Persons who gave such  Blockage  Notice,  (ii) by
repayment  in  full  in cash or  Cash  Equivalents  of  such  Designated  Senior
Indebtedness  or  (iii)  because  the  Representative  of the  holders  of  such
Designated Senior  Indebtedness shall have notified the Trustee that the default
giving rise to such Blockage  Notice is no longer  continuing).  Notwithstanding
the provisions  described in the immediately  preceding sentence (but subject to
the provisions  contained in the first sentence of this Section  10.03),  unless
the holders of such Designated Senior Indebtedness or the Representative of such
holders  shall  have   accelerated  the  maturity  of  such  Designated   Senior
Indebtedness,  the Company may resume  payments on the Notes after such  Payment
Blockage Period. A Payment Blockage Period  instituted  pursuant to this Section
10.03 shall also be deemed to be a Payment  Blockage  Period pursuant to Section
12.03 hereof.  During any 360-day period,  the aggregate of all Payment Blockage
Periods under this Article X and Article XII shall not exceed 179 days and there
shall be a period of at least 181 consecutive days in each  consecutive  360-day
period  when no Payment  Blockage  Period is in  effect.  For  purposes  of this
Section 10.03,  no default or event of default that existed or was continuing on
the date of the  commencement of any Payment Blockage Period with respect to the
Designated Senior Indebtedness initiating such Payment Blockage Period shall be,
or be made,  the basis of the  commencement  of a  subsequent  Payment  Blockage
Period by the Representative of such Designated Senior Indebtedness,  whether or
not within a period of 360  consecutive  days,  unless such  default or event of
default  shall  have  been  cured or  waived  for a period  of not less  than 90
consecutive days. SECTION 10.04 ACCELERATION OF PAYMENT OF NOTES

         If payment of the Notes is  accelerated because of an Event of Default,
the Company or the Trustee shall  promptly notify  the holders of the Designated
Senior   Indebtedness  of   the   Company  (or  their   Representative)  of  the
acceleration.

SECTION 10.05     WHEN DISTRIBUTION MUST BE PAID OVER

         If, in  contravention  of the provisions of this Article X, the Trustee
or any  Noteholder  shall have received any payment or  distribution  before all
Senior  Indebtedness  is paid in full  in cash or Cash  Equivalents,  then  such
distribution  shall be held in trust for the benefit of, and shall be  forthwith
paid  over  and  delivered,  to the  holders  of  Senior  Indebtedness  as their
interests may appear, or their  Representative  under the agreement  pursuant to
which Senior  Indebtedness may have been issued,  as their respective  interests
may appear, for application to the payment of Senior  Indebtedness to the extent
necessary to pay all Senior Indebtedness in full.

                                      -79-
<PAGE>

SECTION 10.06     SUBROGATION

         After all Senior Indebtedness of the Company is paid in full in cash or
Cash  Equivalents  and until the  Notes are paid in full,  Noteholders  shall be
subrogated  to the  rights of  holders of such  Senior  Indebtedness  to receive
distributions applicable to such Senior Indebtedness.  A distribution made under
this Article X to holders of such Senior Indebtedness which otherwise would have
been made to  Noteholders  is not, as between the  Company  and  Noteholders,  a
payment by the  Company on such  Senior  Indebtedness.

SECTION  10.07    RELATIVE RIGHTS

         This Article X defines the relative  rights of Noteholders  and holders
of Senior Indebtedness of the Company. Nothing in this Indenture shall:

         (1) impair,  as between the Company and Noteholders,  the obligation of
the Company, which is absolute and unconditional,  to pay principal of, premium,
if any, and interest on the Notes in accordance with their terms; or

         (2) prevent the Trustee or any Noteholder from exercising its available
remedies upon a Default, subject to the rights of holders of Senior Indebtedness
of the Company to receive  distributions  otherwise payable to Noteholders.

SECTION 10.08     SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY

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

SECTION 10.09     RIGHTS OF TRUSTEE AND PAYING AGENT

         Notwithstanding Section 10.03, the Trustee or Paying Agent may continue
to make  payments on the Notes and shall not be charged  with  knowledge  of the
existence of facts that would  prohibit the making of any such payments  unless,
not less  than two  Business  Days  prior to the date of such  payment,  a Trust
Officer of the Trustee receives notice  satisfactory to it that payments may not
be made under this Article X. The Company,  the Registrar or  co-registrar,  the
Paying Agent, a Representative  or a holder of Senior  Indebtedness may give the
notice;  PROVIDED,  HOWEVER,  that,  if  the  holders  of  an  issue  of  Senior
Indebtedness of the Company have a Representative,  only the  Representative may
give the notice.

         The Trustee in its  individual  or any other  capacity  may hold Senior
Indebtedness  of the  Company  with the same rights it would have if it were not
the Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights.  The Trustee  shall be entitled to all the rights set forth in
this Article X with respect to any Senior  Indebtedness of the Company which may
at any time be held by it, to the same

                                      -80-
<PAGE>

extent as any other holder of such Senior  Indebtedness,  and nothing in Article
VII shall  deprive the  Trustee of any of its rights as such  holder  Nothing in
this  Article X shall apply to claims of, or payments  to, the Trustee  under or
pursuant to Section 7.07.

SECTION  10.10    DISTRIBUTION OR NOTICE TO REPRESENTATIVE

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

SECTION 10.11     ARTICLE 10 NOT TO PREVENT  EVENTS OF DEFAULT OR LIMIT RIGHT TO
ACCELERATE

         The  failure  to make a  payment  pursuant  to the  Notes by  reason of
any  provision  in  this  Article X  shall  not be  construed as preventing  the
occurrence  of a Default.  Nothing  in this  Article X  shall have any effect on
the  right of  the  Noteholders or the Trustee to accelerate the maturity of the
Notes.

SECTION 10.12     TRUST MONEYS NOT SUBORDINATED

         Notwithstanding  anything  contained  herein to the contrary,  payments
from money or the  proceeds  of US  Government  Obligations  held in trust under
Article VIII by the Trustee for the payment of principal  of,  premium,  if any,
and interest on the Notes shall not be  subordinated to the prior payment of any
Senior  Indebtedness or subject to the restrictions set forth in this Article X,
and none of the  Noteholders  shall be  obligated to pay over any such amount to
the  Company or any holder of Senior  Indebtedness  of the  Company or any other
creditor of the Company.

SECTION 10.13     TRUSTEE ENTITLED TO RELY UPON ANY PAYMENT OR DISTRIBUTION

         Pursuant to this  Article X, the Trustee and the  Noteholders  shall be
entitled  to  rely  (i)  upon  any  order  or  decree  of a court  of  competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending,  (ii) upon a  certificate  of the  liquidating  trustee or agent or
other  Person  making  such  payment or  distribution  to the  Trustee or to the
Noteholders  or  (iii)  upon  the  Representative  for  the  holders  of  Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to  participate  in such  payment or  distribution,  the  holders of such Senior
Indebtedness  and other  Indebtedness  of the  Company,  the  amount  thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts  pertinent  thereto or to this  Article  X. In the event that the  Trustee
determines,  in good faith,  that evidence is required with respect to the right
of any Person as a holder of Senior  Indebtedness  of the Company to participate
in any  payment or  distribution  pursuant  to this  Article X, the  Trustee may
request such Person to furnish  evidence to the reasonable  satisfaction  of the
Trustee as to the amount of such Senior  Indebtedness  held by such Person,  the
extent to which  such  Person is  entitled  to  participate  in such  payment or
distribution  and other facts  pertinent

                                      -81-
<PAGE>

to the rights of such Person under this Article X, and, if such  evidence is not
furnished,  the Trustee may defer any  payment to such Person  pending  judicial
determination  as to the  right of such  Person to  receive  such  payment.  The
provisions  of Section 7.01 and Section 7.02 shall be  applicable to all actions
or omissions of actions by the Trustee pursuant to this Article X.

SECTION 10.14     TRUSTEE TO EFFECTUATE SUBORDINATION

         Each  Noteholder by accepting a Note authorizes and directs the Trustee
on  such  Noteholder's  behalf  to  take  such  action  as may be  necessary  or
appropriate  to  acknowledge  or  effectuate  the   subordination   between  the
Noteholders and the holders of Senior Indebtedness of the Company as provided in
this Article X and appoints the Trustee as attorney-in-fact for any and all such
purposes.

SECTION 10.15     TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS

         The  Trustee  shall  not be  deemed  to owe any  fiduciary  duty to the
holders of Senior  Indebtedness  of the  Company  and shall not be liable to any
such  holders,  absent  gross  negligence  or  wilful  misconduct,  if it  shall
mistakenly  pay over or  distribute to  Noteholders  or the Company or any other
Person,  money or assets  to which any  holders  of Senior  Indebtedness  of the
Company  shall be entitled  by virtue of this  Article X or  otherwise.

SECTION 10.16     RELIANCE BY  HOLDERS  OF  SENIOR INDEBTEDNESS ON SUBORDINATION
PROVISIONS

         Each  Noteholder  by  accepting  a Note  acknowledges  and agrees  that
the  foregoing  subordination  provisions  are,  and  are  intended  to  be,  an
inducement  and  a  consideration  to each holder of any Senior  Indebtedness of
the Company, whether  such Senior  Indebtedness  was created or acquired  before
or after  the  issuance of the Notes,  to  acquire and  continue to  hold, or to
continue  to hold,  such Senior  Indebtedness  and such  holder of  such  Senior
Indebtedness  shall be  deemed conclusively to have relied on such subordination
provisions in acquiring  and continuing to hold,  or in continuing to hold, such
Senior Indebtedness.

            ARTICLE XI. NOTE GUARANTEES; RELEASE OF NOTE GUARANTEES;
                           ADDITIONAL NOTE GUARANTEES

SECTION 11.01     NOTE GUARANTEES

         (a)  Each  Note  Guarantor  hereby   unconditionally   and  irrevocably
Guarantees to each Holder and to the Trustee and its  successors and assigns (a)
the full and punctual payment of principal of, premium,  if any, and interest on
the Notes when due,  whether at maturity,  by  acceleration,  by  redemption  or
otherwise,  and  all  other  monetary  obligations  of the  Company  under  this
Indenture  and the  Notes  and (b) the  full  and  punctual

                                      -82-
<PAGE>

performance  within  applicable  grace periods of all other  obligations  of the
Company under this Indenture and the Notes (all the foregoing being  hereinafter
collectively  called the "Guarantee  Obligations").  Each Note Guarantor further
agrees that the Guarantee Obligations may be extended or renewed, in whole or in
part,  without  notice or further  assent from such Note Guarantor and that such
Note  Guarantor  will remain  bound under this  Article XI  notwithstanding  any
extension or renewal of any Guarantee Obligation.

         (b) Each Note Guarantor waives presentation to, demand of, payment from
and protest to the Company of any of the Guarantee  Obligations  and also waives
notice of protest  for  nonpayment.  Each Note  Guarantor  waives  notice of any
default under the Notes or the Guarantee  Obligations.  The  obligations of each
Note Guarantor  hereunder shall not be affected by (a) the failure of any Holder
or the  Trustee to assert any claim or demand or to enforce  any right or remedy
against the Company or any other Person under this  Indenture,  the Notes or any
other agreement or otherwise;  (b) any extension or renewal of any thereof,  (c)
any  rescission,  waiver,  amendment  or  modification  of any of the  terms  or
provisions of this Indenture,  the Notes or any other agreement; (d) the release
of any security held by any Holder or the Trustee for the Guarantee  Obligations
or any of them;  (e) the failure of any Holder or Trustee to exercise  any right
or remedy against any other guarantor of the Guarantee  Obligations;  or (f) any
change in the ownership of any Note Guarantor.

         (c) Each Note Guarantor  further agrees that its Note Guarantee  herein
constitutes a Guarantee of payment, performance and compliance when due (and not
a Guarantee  of  collection)  and waives any right to require that any resort be
had by any  Holder  or the  Trustee  to any  security  held for  payment  of the
Guarantee Obligations.

         (d) Each Note  Guarantee  is, to the extent and in the manner set forth
in  Article  XII,  subordinated  and  subject  in right of  payment to the prior
payment in full of all Senior  Indebtedness  of such Note  Guarantor and is made
subject to such provisions of this Indenture.

         (e)  Except as  expressly  set forth in  Section  8.01 (b) and  Section
11.05, the Guarantee  Obligations of each Note Guarantor  hereunder shall not be
subject to any reduction, limitation,  impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject  to any  defense of  setoff,  counterclaim,  recoupment  or
termination   whatsoever  or  by  reason  of  the   invalidity,   illegality  or
unenforceability of the Guarantee Obligations or otherwise. Without limiting the
generality of the  foregoing,  the Guarantee  Obligations of each Note Guarantor
herein shall not be discharged or impaired or otherwise  affected by the failure
of any Holder or the  Trustee  to assert  any claim or demand or to enforce  any
remedy under this Indenture,  the Notes or any other agreement, by any waiver or
modification  of any  thereof,  by any  default,  failure  or  delay,  wilful or
otherwise, in the performance of the Guarantee Obligations,  or by any other act
or thing or omission or delay to do any other act or thing which may or might in
any  manner  or to any  extent  vary the risk of each  Note  Guarantor  or would
otherwise  operate as a discharge  of such Note  Guarantor as a matter of law or
equity.

                                      -83-
<PAGE>

         (f) Each Note Guarantor  further agrees that its Note Guarantee  herein
shall continue to be effective or be  reinstated,  as the case may be, if at any
time payment, or any part thereof, of principal, premium, if any, or interest on
any  Guarantee  Obligation  is  rescinded  or must  otherwise be restored by any
Holder or the Trustee upon the  bankruptcy or  reorganization  of the Company or
otherwise.

         (g) In  furtherance of the foregoing and not in limitation of any other
right which any Holder or the  Trustee has at law or in equity  against any Note
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of, premium, if any or interest on any Guarantee Obligation when and as the same
shall  become due,  whether at  maturity,  by  acceleration,  by  redemption  or
otherwise,  or to perform or comply with any other  Guarantee  Obligation,  each
Note Guarantor  hereby  promises to and will,  upon receipt of written demand by
the Trustee, forthwith pay, or cause to be paid, in cash of Cash Equivalents, to
the Holders or the Trustee an amount  equal to the sum of (i) the unpaid  amount
of  such  Guarantee  Obligations,  (ii)  accrued  and  unpaid  interest  on such
Guarantee  Obligations  (but only to the extent not prohibited by law) and (iii)
all other monetary  Guarantee  Obligations of the Company to the Holders and the
Trustee.

         (h) Each Note  Guarantor  agrees  that it shall not be  entitled to any
right of subrogation in respect of any Guarantee  Obligations  Guaranteed hereby
until payment in full in cash or Cash  Equivalents of all Guarantee  Obligations
and all  obligations  to which the Guarantee  Obligations  are  subordinated  as
provided in Article XII. Each Note Guarantor further agrees that, as between it,
on the one hand,  and the Holders and the  Trustee,  on the other hand,  (x) the
maturity of the Guarantee  Obligations  Guaranteed  hereby may be accelerated as
provided in Article VI for the purposes of such Note  Guarantor's Note Guarantee
herein,  notwithstanding  any stay,  injunction or other prohibition  preventing
such acceleration in respect of the Guarantee Obligations Guaranteed hereby, and
(y)  in  the  event  of  any  declaration  of  acceleration  of  such  Guarantee
Obligations  as provided in Article VI, such Guarantee  Obligations  (whether or
not due and  payable)  shall  forthwith  become  due and  payable  by such  Note
Guarantor for the purposes of this Section 11.01.

         (i)  Each  Note  Guarantor  also  agrees  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 Section 11.01.

SECTION 11.02     SUCCESSORS AND ASSIGNS

         This  Article  XI shall be  binding  upon each Note  Guarantor  and 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
conferred upon that party in this Indenture and in the Notes shall automatically
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions of this Indenture.

                                      -84-
<PAGE>

SECTION 11.03     NO WAIVER

         Neither a failure  nor a delay on the part of either the Trustee or the
Holders in exercising any right,  power or privilege under this Article XI shall
operate  as a waiver  thereof,  nor shall a single or partial  exercise  thereof
preclude any other or further  exercise of any right,  power or  privilege.  The
rights,  remedies and benefits of the Trustee and the Holders  herein  expressly
specified are  cumulative  and not  exclusive of any other  rights,  remedies or
benefits  which  either  may have under this  Article XI at law,  in equity,  by
statute or otherwise.

SECTION 11.04     MODIFICATION

         No  modification,  amendment or waiver of any provision of this Article
XI, nor the consent to any departure by any Note Guarantor  therefrom,  shall in
any event be  effective  unless the same  shall be in writing  and signed by the
Trustee, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on any Note
Guarantor in any case shall entitle such Note  Guarantor to any other or further
notice or demand in the same,  similar  or other  circumstances.

SECTION  11.05    LIMITATION OF NOTE GUARANTOR'S LIABILITY

         Each Note Guarantor,  and by its acceptance hereof each Holder,  hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Note  Guarantor  not  constitute a fraudulent  transfer or  conveyance  for
purposes of the Bankruptcy Law, federal and state fraudulent  conveyance laws or
any  similar  federal,  state  or  foreign  law.  To  effectuate  the  foregoing
intention,  the Holders and each Note Guarantor hereby  irrevocably  agrees that
the obligations of each Note Guarantor under this Article XI shall be limited to
the maximum  amount as will,  after giving  effect to all other  contingent  and
fixed  liabilities  of such  Note  Guarantor  and  after  giving  effect  to any
collections from or payments made by or on behalf of any other Note Guarantor in
respect of the Guarantee  Obligations  of such other Note  Guarantor  under this
Article XI,  result in the  obligations  of such Note  Guarantor  under its Note
Guarantee not constituting a fraudulent  transfer or conveyance under applicable
federal, state or foreign law.

SECTION 11.06     RELEASE OF NOTE GUARANTEES

         In the event of a sale or other disposition of all or substantially all
of the  assets  of any  Note  Guarantor,  by way  of  merger,  consolidation  or
otherwise,  or a sale or other  disposition  of all of the Capital  Stock of any
Note  Guarantor,  by  way of  merger,  consolidation  or  otherwise,  such  Note
Guarantor  (in the event of a sale or other  disposition  of all of the  Capital
Stock of such Note  Guarantor)  will be released and  relieved of any  Guarantee
Obligations  under its Note  Guarantee or the Person  acquiring the property (in
the  event of a sale or other  disposition  of all or  substantially  all of the
assets  of such  Note  Guarantor)  will not be  required  to  enter  into a Note
Guarantee;

                                      -85-
<PAGE>

PROVIDED, in each case, that (i) such transaction is carried out pursuant to and
in accordance  with Section 4.11 and Section 5.01 (if applicable)  hereof.  Upon
delivery by the Company to the Trustee of an Officers'  Certificate  and Opinion
of Counsel,  to the effect that such sale or other  disposition  was made by the
Company in accordance with the provisions of this Indenture,  including  without
limitation  Section 4.11 and Section 5.01 (if  applicable)  hereof,  the Trustee
shall execute any documents reasonably required in order to evidence the release
of any such Note Guarantor from its obligations under its Note Guarantee.

SECTION 11.07     ADDITIONAL NOTE GUARANTEES

         In the event that any Subsidiary  shall, as of or after the Issue Date,
enter into a  Guarantee  of the  Obligations  in  respect  of the Senior  Credit
Facilities,  the Company will cause such  Subsidiary  to execute a Guarantee (an
"Additional  Guarantee") of the Company's  obligations  under this Indenture and
the  Notes to the same  extent  that the Note  Guarantors  have  Guaranteed  the
Guarantee Obligations pursuant to this Article XI, it being understood that such
Additional  Guarantee  shall  be  subordinated  in right of  payment  to  Senior
Indebtedness  of such Additional  Guarantor  including  Guarantees  constituting
Senior  Indebtedness;  PROVIDED,  HOWEVER,  each  Subsidiary that becomes a Note
Guarantor will be automatically and unconditionally released and discharged from
its obligations under such Additional Guarantee in accordance with Section 11.06
above.

               ARTICLE XII. SUBORDINATION OF THE NOTE GUARANTEES

SECTION 12.01     AGREEMENT TO SUBORDINATE

         Each Note  Guarantor  agrees,  and each  Noteholder by accepting a Note
agrees,  that the Guarantee  Obligations of such Note Guarantor are subordinated
in right of payment,  to the extent and in the manner  provided in this  Article
XII,  to the prior  payment  in full in cash or Cash  Equivalents  of all Senior
Indebtedness  of such  Note  Guarantor  and  that the  subordination  is for the
benefit of and  enforceable  by the  holders of such Senior  Indebtedness.  Only
Obligations in respect of Senior  Indebtedness of each Note Guarantor shall rank
senior to the Guarantee  Obligations of such Note  Guarantor in accordance  with
the  provisions  set  forth  herein.  The  Guarantee  Obligations  of each  Note
Guarantor shall in all respects rank PARI PASSU with, or be senior to, all other
Indebtedness of such Note  Guarantor.

SECTION 12.02     LIQUIDATION,  DISSOLUTION, BANKRUPTCY

         Upon any Insolvency or Liquidation Proceeding:

         (1)  holders of Senior  Indebtedness  of such Note  Guarantor  shall be
entitled to receive payment in full of such Senior  Indebtedness in cash or Cash
Equivalents before

                                      -86-
<PAGE>

Noteholders  shall be  entitled  to receive  any  payment  pursuant  to the Note
Guarantee of such Note Guarantor; and

         (2) until the Senior  Indebtedness  of such Note  Guarantor  is paid in
full in cash or Cash Equivalents, any distribution to which Noteholders would be
entitled  but for this  Article  XII  shall be made to  holders  of such  Senior
Indebtedness as their interests may appear,  except that Noteholders may receive
Subordinated Reorganization Securities and payments and other distributions made
from any defeasance trust created pursuant to Section 8.01 hereof.

SECTION 12.03     DEFAULT ON SENIOR INDEBTEDNESS OF NOTE GUARANTORS

         Each Note  Guarantor  may not make any  payment  pursuant to any of its
Guarantee  Obligations or repurchase,  redeem or otherwise retire or defease any
Notes or other Guarantee  Obligations  (collectively,  "pay its Note Guarantee")
(other than with Subordinated  Reorganization  Securities and payments and other
distributions from any defeasance trust created pursuant to Section 8.01 hereof)
if (i) any Designated Senior  Indebtedness of the relevant Note Guarantor is not
paid when due or (ii) any other default on  Designated  Senior  Indebtedness  of
such  Note  Guarantor  occurs  and  the  maturity  of  such  Designated   Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the  default  has been  cured or waived and any such  acceleration  has been
rescinded or (y) such Designated  Senior  Indebtedness  has been paid in full in
cash or Cash  Equivalents;  PROVIDED,  HOWEVER,  such Note Guarantor may pay its
Note  Guarantee  without  regard to the foregoing if such Note Guarantor and the
Trustee receive written notice approving such payment from the Representative of
the Designated Senior Indebtedness. During the continuance of any default (other
than a default  described in clause (i) or (ii) of the preceding  sentence) with
respect to any Designated Senior Indebtedness of such Note Guarantor pursuant to
which the maturity thereof may be accelerated immediately without further notice
(except  such  notice as may be required  to effect  such  acceleration)  or the
expiration of any applicable grace periods,  such Note Guarantor may not pay its
Note Guarantee for the Payment  Blockage  Period  commencing upon the receipt by
the Trustee (with a copy to such Note  Guarantor) of a Blockage  Notice from the
Representative of the holders of such Designated Senior Indebtedness  specifying
an election to effect a Payment  Blockage  Period and ending 179 days thereafter
(or earlier if such Payment  Blockage Period is terminated (i) by written notice
to the Trustee and such Note  Guarantor from the Person or Persons who gave such
Blockage  Notice,  (ii) by repayment in full in cash or Cash Equivalents of such
Designated Senior Indebtedness, or (iii) because a Representative of the holders
of such Designated Senior Indebtedness has notified the Trustee that the default
giving rise to such Blockage Notice is no longer continuing. Notwithstanding the
provisions  described in the immediately  preceding sentence (but subject to the
first  sentence of this Section  12.03),  unless the holders of such  Designated
Senior Indebtedness of such Note Guarantor or the Representative of such holders
has accelerated the maturity of such Designated Senior  Indebtedness,  such Note
Guarantor  may  resume  payments  on its Note  Guarantee  after  the end of such
Payment Blockage Period. A Payment Blockage Period  instituted  pursuant to this
Section  12.03shall  also be deemed to be a Payment  Blockage

                                      -87-
<PAGE>

Period  pursuant  to Section  10.03  hereof.  During  any  360-day  period,  the
aggregate of all Payment  Blockage  Periods under this Article XII and Article X
with respect to any Note Guarantee  shall not exceed 179 days and there shall be
a period of at least 181  consecutive  days in each  consecutive  360-day period
with  respect  to each Note  Guarantee  when no  Payment  Blockage  Period is in
effect.  For purposes of this Section 12.03, no default or event of default that
existed  or was  continuing  on the  date  of the  commencement  of any  Payment
Blockage Period with respect to the Designated  Senior  Indebtedness  initiating
such Payment Blockage Period shall be, or be made, the basis of the commencement
of a subsequent Payment Blockage Period by the Representative of such Designated
Senior  Indebtedness,  whether or not within a period of 360  consecutive  days,
unless  such  default or event of default  shall have been cured or waived for a
period of not less than 90 consecutive days.

SECTION 12.04     DEMAND FOR PAYMENT

         If a  demand for  payment is made  on any  Note  Guarantor  pursuant to
Article XI,  the  Trustee shall  promptly  notify the holders of the  Designated
Senior Indebtedness  (or their Representatives)  of such Note Guarantor of  such
demand.

SECTION 12.05     WHEN DISTRIBUTION MUST BE PAID OVER

         If, in contravention of the provisions of this Article XII, the Trustee
or any  Noteholder  shall have received any payment or  distribution  before all
Senior  Indebtedness  of any  Note  Guarantor  is  paid  in full in cash or Cash
Equivalents,  then such distribution  shall be held in trust for the benefit of,
and  shall be  forthwith  paid  over and  delivered,  to the  holders  of Senior
Indebtedness  of such Note Guarantor,  as their  interests may appear,  or their
Representative under the agreement pursuant to which Senior Indebtedness of such
Note Guarantor may have been issued,  as their respective  interests may appear,
for application to the payment of Senior  Indebtedness of such Note Guarantor to
the extent  necessary to pay all Senior  Indebtedness  of such Note Guarantor in
full.

SECTION 12.06     SUBROGATION

         After all Senior Indebtedness of each Note Guarantor is paid in full in
cash or Cash Equivalents and until the Notes are paid in full, Noteholders shall
be  subrogated to the rights of holders of such Senior  Indebtedness  to receive
distributions applicable to such Senior Indebtedness.  A distribution made under
this Article XII to holders of such Senior  Indebtedness  which  otherwise would
have been made to  Noteholders  is not,  as  between  each  Note  Guarantor  and
Noteholders,  a payment  by such Note  Guarantor  on such  Senior  Indebtedness.

                                      -88-
<PAGE>

SECTION 12.07     RELATIVE RIGHTS

         This Article XII defines the relative rights of Noteholders and holders
of Senior Indebtedness of each Note Guarantor. Nothing in this Indenture shall:

         (1) impair,  as between each Note  Guarantor and the  Noteholders,  the
obligation of the such Note Guarantor,  which is absolute and unconditional,  to
pay its Guarantee Obligations to the extent set forth in Article XI; or

         (2) prevent the Trustee or any Noteholder from exercising its available
remedies upon a default by any Note Guarantor  under its Guarantee  Obligations,
subject to the rights of holders of Senior  Indebtedness  of such Note Guarantor
to  receive  distributions  otherwise  payable  to  Noteholders.

SECTION  12.08    SUBORDINATION MAY NOT BE IMPAIRED BY NOTE GUARANTORS

         No right of any  holder of Senior  Indebtedness  of any Note  Guarantor
to enforce the subordination of the Guarantee Obligations of such Note Guarantor
shall be impaired by any act or failure to act by such Note  Guarantor or by its
failure to comply with this Indenture.

SECTION 12.09     RIGHTS OF TRUSTEE AND PAYING AGENT

         Notwithstanding Section 12.03, the Trustee or Paying Agent may continue
to make payments on each Note  Guarantee and shall not be charged with knowledge
of the  existence of facts that would  prohibit the making of any such  payments
unless,  not less than two Business  Days prior to the date of such  payment,  a
Trust Officer of the Trustee  receives  written notice  satisfactory  to it that
payments  may not be made  under  this  Article  XII.  The  Company,  each  Note
Guarantor, the Registrar or co-registrar,  the Paying Agent, a Representative or
a holder of  Senior  Indebtedness  of any Note  Guarantor  may give the  notice;
PROVIDED,  HOWEVER,  that,  if an  issue  of  Senior  Indebtedness  of any  Note
Guarantor has a Representative, only the Representative may give the notice.

         The Trustee in its  individual  or any other  capacity  may hold Senior
Indebtedness  with the same  rights it would  have if it were not  Trustee.  The
Registrar  and  co-registrar  and the  Paying  Agent  may do the same  with like
rights.  The  Trustee  shall be  entitled  to all the  rights  set forth in this
Article XII with respect to any Senior  Indebtedness of any Note Guarantor which
may at any time be held by it, to the same extent as any other  holder of Senior
Indebtedness, and nothing in Article VII shall deprive the Trustee of any of its
rights as such holder  Nothing in this  Article XII shall apply to claims of, or
payments  to, the  Trustee  under or  pursuant to Section  7.07.

                                      -89-
<PAGE>

SECTION  12.10    DISTRIBUTION OR NOTICE TO REPRESENTATIVE

         Whenever  a  distribution  is to be made or a notice  given to  holders
of  Senior Indebtedness of any Note Guarantor,  the distribution may be made and
the notice given to their Representative (if any).

SECTION 12.11     ARTICLE 12 NOT TO PREVENT DEFAULTS  UNDER THE NOTE  GUARANTEES
OR LIMIT RIGHT TO DEMAND PAYMENT

         The failure to make a payment  pursuant to any Note Guarantee by reason
of any  provision in this Article XII shall not be construed as  preventing  the
occurrence of a default under such Note  Guarantee.  Nothing in this Article XII
shall have any effect on the right of the  Noteholders  or the Trustee to make a
demand for payment on any Note  Guarantor  pursuant to Article XI.

SECTION 12.12     TRUSTEE ENTITLED TO RELY UPON ANY PAYMENT OR DISTRIBUTION

         Pursuant to this Article XII, the Trustee and the Noteholders  shall be
entitled  to  rely  (i)  upon  any  order  or  decree  of a court  of  competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending,  (ii) upon a  certificate  of the  liquidating  trustee or agent or
other  Person  making  such  payment or  distribution  to the  Trustee or to the
Noteholders  or  (iii)  upon  the  Representative  for  the  holders  of  Senior
Indebtedness of any Note Guarantor for the purpose of  ascertaining  the Persons
entitled to  participate  in such payment or  distribution,  the holders of such
Senior  Indebtedness and other  indebtedness of such Note Guarantor,  the amount
thereof or payable  thereon,  the amount or amounts paid or distributed  thereon
and all other facts pertinent  thereto or to this Article XII. In the event that
the Trustee determines, in good faith, that evidence is required with respect to
the  right of any  Person  as a  holder  of  Senior  Indebtedness  of such  Note
Guarantor to participate in any payment or distribution pursuant to this Article
XII, the Trustee may request such Person to furnish  evidence to the  reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of such Note
Guarantor  held by such  Person,  the extent to which such Person is entitled to
participate  in such payment or  distribution  and other facts  pertinent to the
rights of such Person  under this  Article  XII,  and,  if such  evidence is not
furnished,  the Trustee may defer any  payment to such Person  pending  judicial
determination  as to the  right of such  Person to  receive  such  payment.  The
provisions  of Section 7.01 and Section 7.02 shall be  applicable to all actions
or  omissions of actions by the Trustee  pursuant to this  Article XII.

SECTION 12.13     TRUSTEE TO EFFECTUATE SUBORDINATION

         Each  Noteholder by accepting a Note authorizes and directs the Trustee
on his  behalf  to take  such  action  as may be  necessary  or  appropriate  to
acknowledge  or effectuate the  subordination  between the  Noteholders  and the
holders of Senior

                                      -90-
<PAGE>

Indebtedness of any Note Guarantor as provided in this Article  XII and appoints
the Trustee as attorney-in-fact  for any and all such purposes.

SECTION 12.14     TRUSTEE  NOT  FIDUCIARY  FOR  HOLDERS  OF SENIOR  INDEBTEDNESS
OF NOTE GUARANTORS

         The  Trustee  shall  not be  deemed  to owe any  fiduciary  duty to the
holders of Senior  Indebtedness of any Note Guarantor and shall not be liable to
any such  holders,  absent gross  negligence or wilful  misconduct,  if it shall
mistakenly  pay over or  distribute to  Noteholders  or the Company or any other
Person,  money or assets to which any holders of such Senior  Indebtedness shall
be entitled by virtue of this Article XII or otherwise.

SECTION 12.15     RELIANCE  BY  HOLDERS OF SENIOR INDEBTEDNESS  ON SUBORDINATION
PROVISIONS

         Each  Noteholder by  accepting a Note  acknowledges and agrees that the
foregoing  subordination  provisions  are, and are intended to be, an inducement
and a  consideration  to each  holder  of any  Senior  Indebtedness  of any Note
Guarantor,  whether such Senior  Indebtedness  was created or acquired before or
after the issuance of the Notes, to acquire and continue to hold, or to continue
to hold, such Senior  Indebtedness and such holder of Senior  Indebtedness shall
be deemed  conclusively  to have  relied  on such  subordination  provisions  in
acquiring  and  continuing  to  hold,  or in  continuing  to hold,  such  Senior
Indebtedness.

                          ARTICLE XIII. MISCELLANEOUS

SECTION 13.01     TRUST INDENTURE ACT CONTROLS

         If any  provision  of this  Indenture  limits,  qualifies or  conflicts
with  another  provision  which is  required to be included in this Indenture by
the TIA, the required provision shall control.

SECTION 13.02     NOTICES

         Any notice or communication shall be in writing and delivered in person
or mailed by first-class mail addressed as follows:

                                      -91-
<PAGE>

         if to the Company or any Note Guarantor:

                  Paragon Trade Brands, Inc.
                  180 Technology Parkway
                  Norcross, Georgia 30092
                  Attention:  Chief Financial Officer

         if to the Trustee:

                  Norwest Bank Minnesota, National Association
                  Sixth & Marquette
                  N9303-120
                  Minneapolis, Minnesota  55479
                  Attention:  Corporate Trust Services

         The  Company  or the  Trustee  by notice  to the  other  may  designate
additional or different addresses for subsequent notices or communications.  Any
notice or communication mailed to a Noteholder shall be mailed to the Noteholder
at the  Noteholder's  address  as it appears  on the  registration  books of the
Registrar  and  shall  be  sufficiently  given  if so  mailed  within  the  time
prescribed.  Failure to mail a notice or  communication  to a Noteholder  or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or  communication is mailed in the manner provided above, it is duly
given,  whether or not the addressee receives it.

SECTION 13.03     COMMUNICATION BY HOLDERS WITH OTHER HOLDERS

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

SECTION 13.04     CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT

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

         (1)  an  Officers'   Certificate  in  form  and  substance   reasonably
satisfactory  to the Trustee  stating that,  in the opinion of the signers,  all
conditions  precedent,  if any,  provided for in this Indenture  relating to the
proposed action have been complied with; and

         (2) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.

                                      -92-
<PAGE>

SECTION 13.05     STATEMENTS REQUIRED IN CERTIFICATE OR OPINION

         Each  certificate or opinion with respect to compliance with a covenant
or condition provided for in this Indenture shall include:

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

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

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

         (3) a  statement  as  to  whether  or  not,  in  the  opinion  of  such
individual,  such  covenant or condition has been complied with.

SECTION 13.06     WHEN NOTES DISREGARDED

         In determining  whether the Holders of the required principal amount of
Notes have  concurred in any  direction,  waiver or consent,  Notes owned by the
Company or by any Affiliate of the Company shall be  disregarded  and deemed not
to be  outstanding,  except  that,  for the purpose of  determining  whether the
Trustee shall be protected in relying on any such direction,  waiver or consent,
only Notes which the Trustee knows are so owned shall be so  disregarded.  Also,
subject to the foregoing, only Notes outstanding at the time shall be considered
in any such  determination.

SECTION  13.07    RULES BY TRUSTEE,  PAYING  AGENT AND REGISTRAR

         The  Trustee may  make  reasonable  rules for action by or a meeting of
Noteholders.  The Registrar and the  Paying  Agent may make reasonable rules for
their functions.

SECTION 13.08     LEGAL HOLIDAYS

         A "Legal  Holiday"  is a Saturday,  a Sunday or a day on which  banking
institutions  are not  required to be open in the State of New York or the State
of Georgia.  If a payment date is a Legal Holiday,  payment shall be made on the
next  succeeding day that is not a Legal  Holiday,  and no interest shall accrue
for the  intervening  period.  If a regular record date is a Legal Holiday,  the
record date shall not be affected.

                                      -93-
<PAGE>

SECTION 13.09     GOVERNING LAW

         (a) THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SAID STATE.

         (b) Each of the Company and each Note Guarantor  hereby (i) agrees that
any suit,  action or  proceeding  against it arising  out of or relating to this
Indenture or the Notes,  as the case may be, may be instituted in any Federal or
state  court  sitting  in The  City of New  York,  (ii)  waives,  to the  extent
permitted by applicable law, any objection which it may now or hereafter have to
the laying of venue of any such suit,  action or proceeding,  and any claim that
any  suit,  action  or  proceeding  in  such a  court  has  been  brought  in an
inconvenient forum, (iii) irrevocably submits to the non-exclusive  jurisdiction
of such  courts in any suit,  action  or  proceeding,  (iv)  agrees  that  final
judgment in any such suit, action or proceeding brought in such a court shall be
conclusive  and  binding  upon  each and may be  enforced  in the  courts of the
jurisdiction  of which each is subject,  respectively,  by a suit upon judgment,
(v) agrees that service of process by mail to the addressed specified in Section
13.02 hereof shall constitute personal service of such process on it in any such
suit, action or proceeding.

SECTION 13.10     NO RECOURSE AGAINST OTHERS

         No director,  officer,  employee,  incorporator  or  stockholder of the
Company  or any Note  Guarantor,  as such,  shall  have  any  liability  for any
obligations  of the  Company or such Note  Guarantor  under the Notes,  the Note
Guarantees  or this  Indenture  or for any claim  based on, in respect of, or by
reason of, such obligations or their creation, solely by reason of its status as
a director,  officer,  employee,  incorporator  or stockholder of the Company or
such Note  Guarantor.  By accepting a Note,  each Holder waives and releases all
such  liability  (but  only such  liability)  as part of the  consideration  for
issuance of such Note to such Holder.

SECTION 13.11     SUCCESSORS

         All agreements of the Company and each Note Guarantor in this Indenture
and the Notes  shall bind their  respective successors.  All  agreements  of the
Trustee in this Indenture shall bind its successors.

SECTION 13.12     MULTIPLE 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.  One signed copy is enough to prove this Indenture.

                                      -94-
<PAGE>

SECTION 13.13     TABLE OF CONTENTS; HEADINGS

         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  intended to be  considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.

SECTION 13.14     SEVERABILITY

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

SECTION 13.15     FURTHER INSTRUMENTS AND ACTS

         Upon request of the Trustee,  the Company and each Note Guarantor  will
execute and deliver such further  instruments and do such further acts as may be
reasonably  necessary  or proper to carry out more  effectively  the purposes of
this Indenture.

                                      -95-
<PAGE>

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

                                                  PARAGON TRADE BRANDS, INC., as
                                                  Issuer

                                                  By: /s/ Alan J. Cyron
                                                     ---------------------------
                                                  Name: ALAN J. CYRON
                                                  Title: Chief Financial Officer

                                                  PTB INTERNATIONAL, INC.
                                                  as Guarantor

                                                  By: /s/ Alan J. Cyron
                                                     ---------------------------
                                                  Name: ALAN J. CYRON
                                                  Title: Chief Financial Officer

                                                  PTB ACQUISITION SUB, INC.
                                                  as Guarantor

                                                  By: /s/ Alan J. Cyron
                                                     ---------------------------
                                                  Name: ALAN J. CYRON
                                                  Title: Chief Financial Officer

                                                  PTB HOLDINGS, INC., as
                                                  Issuer

                                                  By: /s/ Alan J. Cyron
                                                     ---------------------------
                                                  Name: ALAN J. CYRON
                                                  Title: Chief Financial Officer

                                      -96-
<PAGE>

               [SIGNATURE PAGE TO INDENTURE DATED JANUARY 28, 2000
                        WITH PARAGON TRADE BRANDS, INC.]

                                                  NORWEST BANK MINNESOTA,
                                                  NATIONAL ASSOCIATION, as
                                                  Trustee

                                                  By: /s/ Jane Schweiger
                                                     ---------------------------
                                                  Name: JANE Y. SCHWEIGER
                                                  Title: Corporate Trust Officer

                                      -97-
<PAGE>

                                    EXHIBIT A
                               FORM OF GLOBAL NOTE

                               FACE OF GLOBAL NOTE

PARAGON TRADE BRANDS, INC.                                    CUSIP No 69912KAA5

THIS NOTE IS A GLOBAL  NOTE  WITHIN  THE  MEANING OF THE  INDENTURE  HEREINAFTER
REFERRED TO:

         UNLESS THIS NOTE IS PRESENTED BY AN  AUTHORIZED  REPRESENTATIVE  OF THE
DEPOSITORY  TRUST  COMPANY,  A NEW YORK  CORPORATION  ("DTC"),  TO PARAGON TRADE
BRANDS,  INC.  OR A  SUCCESSOR  THEREOF OR THE  REGISTRAR  FOR  REGISTRATION  OF
TRANSFER,  EXCHANGE OR PAYMENT AND ANY NOTE ISSUED IS  REGISTERED IN THE NAME OF
CEDE  & CO OR  SUCH  OTHER  ENTITY  AS  HAS  BEEN  REQUESTED  BY  AN  AUTHORIZED
REPRESENTATIVE  OF DTC (AND ANY  PAYMENT  HEREON IS MADE TO CEDE & CO OR TO SUCH
OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF TDTC), 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.

         TRANSFER OF THIS GLOBAL  NOTE SHALL BE LIMITED TO  TRANSFERS  IN WHOLE,
AND NOT IN PART, TO NOMINEES OF THE  DEPOSITORY  TRUST COMPANY OR TO A SUCCESSOR
THEREOF OR SUCH  SUCCESSOR'S  NOMINEE AND  TRANSFERS OF INTERESTS IN THIS GLOBAL
NOTE SHALL BE LIMITED TO TRANSFERS WHICH COMPLY WITH THE  RESTRICTIONS SET FORTH
IN SECTION  2.06 OF THE  INDENTURE,  DATED AS OF JANUARY 28, 2000 AMONG  PARAGON
TRADE BRANDS, INC., AS ISSUER, AND PTB INTERNATIONAL,  INC.,PTB ACQUISITION SUB,
INC.,  AND PTB  HOLDINGS,  INC.,  AS  GUARANTORS,  AND NORWEST  BANK  MINNESOTA,
NATIONAL ASSOCIATION, AS TRUSTEE, PURSUANT TO WHICH THIS NOTE WAS ISSUED.

                                      A-1
<PAGE>

                                   GLOBAL NOTE

             REPRESENTING 11.25% SENIOR SUBORDINATED NOTES DUE 2005.

         Paragon Trade Brands, Inc., a Delaware corporation, for value received,
hereby  promises to pay to Cede & Co, or its registered  assigns,  the principal
sum indicated on Schedule A hereof, on February 1, 2005.

         Interest Payment Dates:  February 1 and August 1,  commencing August 1,
         2000.

         Record Dates: January 15 and July 15.

         Reference  is hereby  made to the further  provisions  of this Note set
forth on the reverse  hereof,  which further  provisions  shall for all purposes
have the same effect as if set forth at this place.

         Unless the certificate of authentication  hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature,  this Note
shall  not be  entitled  to any  benefit  under  the  Indenture  or be  valid or
obligatory for any purposes.

         IN WITNESS WHEREOF, Paragon Trade Brands, Inc. has  caused this Note to
be duly executed.

                                                     PARAGON TRADE BRANDS, INC.

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

Attest:
        ------------------------

Dated:
        ------------------------

                                      A-2
<PAGE>

TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

Norwest Bank Minnesota, National Association, as Trustee, certifies that this is
one of the Notes referred to in the Indenture.

By:
    --------------------------
      Authorized Signatory

                                      A-3
<PAGE>

                           REVERSE SIDE OF GLOBAL NOTE

                           PARAGON TRADE BRANDS, INC.

                                   GLOBAL NOTE

             REPRESENTING 11.25% SENIOR SUBORDINATED NOTES DUE 2005

1.  Indenture.

         This Note is one of a duly  authorized  issue of debt securities of the
Company (as defined below) designated as its "11.25% Senior  Subordinated  Notes
Due 2005" (herein called the "Notes")  limited in aggregate  principal amount to
$182,000,000, issued under an indenture dated as of January 28, 2000 (as amended
or  supplemented  from time to time,  the  "Indenture")  among the  Company,  as
issuer, and PTB International, Inc., PTB Acquisition Sub, Inc. and PTB Holdings,
Inc.,  as guarantors  (collectively,  the "Note  Guarantors"),  and Norwest Bank
Minnesota,  National Association, as trustee (the "Trustee," which term includes
any successor trustee under the Indenture). The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust  Indenture Act of 1939, as amended (15 US Code ss.ss.  77aaa-77bbbb).  The
Notes are  subject to all such terms,  and Holders of Notes are  referred to the
Indenture and such Act for a statement of the respective rights,  limitations of
rights,  duties and immunities  thereunder of the Company,  the Note Guarantors,
the Trustee  and each Holder and of the terms upon which the Notes are,  and are
to be,  authenticated  and  delivered.  The  summary  of the  terms of this Note
contained  herein does not purport to be complete  and is qualified by reference
to the Indenture. To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this Note and the terms of the Indenture, the
terms of the Indenture shall control.  All  capitalized  terms used in this Note
which are not defined  herein  shall have the  meanings  assigned to them in the
Indenture.

         The Indenture  restricts,  among other things, the Company's ability to
incur  additional  indebtedness,  pay dividends or make certain other restricted
payments,  incur liens to secure PARI PASSU or subordinated  indebtedness,  sell
stock of Restricted  Subsidiaries,  apply net proceeds from certain asset sales,
merge or  consolidate  with any other person,  sell,  assign,  transfer,  lease,
convey or otherwise  dispose of substantially  all of the assets of the Company,
enter into certain  transactions  with affiliates or incur  indebtedness that is
subordinate in right of payment to any Senior  Indebtedness  and senior in right
of payment to the Notes.  The Indenture  permits,  under certain  circumstances,
Restricted  Subsidiaries of the Company to be deemed  Unrestricted  Subsidiaries
and thus not subject to the restrictions of the Indenture.

                                      A-4
<PAGE>

2.  Principal and Interest.

         Paragon Trade Brands,  Inc., a Delaware  corporation (such corporation,
and its  successors  and assigns  under the Indenture  hereinafter  referred to,
being herein called the  "Company"),  promises to pay the  principal  amount set
forth on Schedule A of this Note to the Holder hereof on February 1, 2005.

         The Company shall pay interest at a rate of 11.25% per annum,  from the
Issue Date or from the most recent  Interest  Payment Date  thereafter  to which
interest has been paid or duly provided for, semiannually in arrears on February
1 and August 1 of each year,  commencing on August 1, 2000, to the Holder hereof
until the  principal  amount hereof is paid or made  available for payment.  The
interest so payable,  and punctually  paid or duly provided for, on any Interest
Payment Date will, subject to certain exceptions  provided in the Indenture,  be
paid to the  Person  in  whose  name  this  Note  (or the  Note in  exchange  or
substitution  for which  this Note was  issued)  is  registered  at the close of
business on the Record Date for interest  payable on such Interest Payment Date.
The Record Date for any interest  payment is the close of business on January 15
or July 15,  as the case may be,  whether  or not a  Business  Day,  immediately
preceding the Interest Payment Date on which such interest is payable.  Any such
interest not so  punctually  paid or duly  provided for  ("Defaulted  Interest")
shall  forthwith cease to be payable to the Holder on such Record Date and shall
be paid as provided in Section 2.11 of the  Indenture  Interest will be computed
on the basis of a 360-day year of twelve 30-day months.

         If the Company's  Cash Flow for a period  specified  below is less than
the amount specified for such period in the table below, then the Company may on
the Interest Payment Date set opposite such period,  at the Company's option and
in  its  sole  discretion,   pay  interest  in  additional   Notes   ("Secondary
Securities")  in lieu of the  payment in whole or in part of interest in cash on
the Notes;  PROVIDED,  HOWEVER,  that the  Company may at its option pay cash in
lieu of issuing Secondary Securities in any denominations of less than $1.00.

<TABLE>
<CAPTION>
------------------------------------- ----------------------------------- -----------------------------------
               PERIOD                     SPECIFIED CASH FLOWAMOUNT             INTEREST PAYMENT DATE
------------------------------------- ----------------------------------- -----------------------------------
<S>                                               <C>                         <C>
      Issue Date--June 25, 2000                   $10,742,000                 First Interest Payment Date
------------------------------------- ----------------------------------- -----------------------------------
  June 26, 2000--December 31, 2000                $16,930,000                 Second Interest Payment Date
------------------------------------- ----------------------------------- -----------------------------------
    January 1, 2001--July 1, 2001                 $18,016,000                 Third Interest Payment Date
------------------------------------- ----------------------------------- -----------------------------------
   July 2, 2001--December 30, 2001                $20,253,000                 Fourth Interest Payment Date
------------------------------------- ----------------------------------- -----------------------------------
</TABLE>

If, pursuant to this paragraph,  the Company issues Secondary Securities in lieu
of cash payment,  in whole or in part, of interest,  it shall give notice to the
Trustee  not less than  five  Business  Days  prior to the  applicable  Interest
Payment Date,  and shall instruct the Trustee (upon written order of the Company
signed by an  Officer of the  Company  given

                                      A-5
<PAGE>

not less than five nor more than 45 days prior to such Interest Payment Date) to
authenticate  Secondary  Securities,  dated such  Interest  Payment  Date,  in a
principal  amount equal to the amount of interest not paid in cash in respect of
this  Security  on such  Interest  Payment  Date.  Each  issuance  of  Secondary
Securities in lieu of cash payments of interest on the Securities  shall be made
PRO  RATA  with  respect  to the  outstanding  Securities.  Any  such  Secondary
Securities  shall be governed by the  Indenture and shall be subject to the same
terms  (including  the maturity  date and the rate of interest from time to time
payable thereon) as this Security  (except,  as the case may be, with respect to
the title, issuance date and aggregate principal amount). The term "Notes" shall
include the Secondary Securities that may be issued under the Indenture.  Except
as otherwise allowed by the foregoing, interest shall be paid in cash.

         Each  payment of interest in respect of an Interest  Payment  Date will
include  interest  accrued through the day before such Interest Payment Date. If
an Interest Payment Date falls on a day that is not a Business Day, the interest
payment  to be made on  such  Interest  Payment  Date  will be made on the  next
succeeding  Business  Day with  the same  force  and  effect  as if made on such
Interest  Payment Date,  and no  additional  interest will accrue as a result of
such delayed payment.

         To the  extent  lawful,  the  Company  shall pay  interest  on  overdue
principal,  overdue  premium  and  Defaulted  Interest  (without  regard  to any
applicable  grace period) at the interest rate borne on this Note. The Company's
obligation  pursuant to the previous  sentence  shall apply whether such overdue
amount is due at its maturity, as a result of the Company's obligations pursuant
to Section 3.05, Section 4.11 or Section 4.13 of the Indenture, or otherwise.

3.  RESERVED.

4.  Method of Payment.

         The Company,  through the Paying Agent, shall pay interest on this Note
to the  registered  Holder of this Note,  as  provided  above.  The Holder  must
surrender this Note to a Paying Agent to collect principal payments. The Company
will pay principal,  premium, if any, and interest in money of the United States
that at the time of payment is legal  tender for payment of all debts public and
private. Principal, premium, if any, and interest, other than such interest paid
in Secondary Securities, shall be paid by check mailed to the registered Holders
at their registered  addresses;  PROVIDED that all such payments with respect to
Notes the Holders of which have given wire transfer  instructions to the Company
will be required to be made by wire transfer of immediately  available  funds to
the accounts  specified  by the Holders  thereof.  Payments of interest  made in
Secondary  Securities shall be made by mailing such Secondary  Securities to the
registered Holders at their registered addresses.

5.  Paying Agent and Registrar.

         Initially, the Trustee will act as Paying Agent and Registrar under the
Indenture.  The Company  may,  upon written  notice to the Trustee,  appoint and
change any Paying

                                      A-6
<PAGE>

Agent or Registrar. The Company or any of its Affiliates may act as Paying Agent
or Registrar, provided that if the Company or such Affiliate is acting as Paying
Agent,  the Company or such  Affiliate  shall  segregate all funds and Secondary
Securities  held by it as Paying Agent and hold them in trust for the benefit of
the Holders or the Trustee Note Guarantees.

6.  Guarantees

         This Note is initially  entitled to the benefits of the Note Guarantees
made by PTB International,  Inc., a Delaware  corporation,  PTB Acquisition Sub,
Inc., a Delaware corporation,  and PTB Holdings, Inc., an Ohio corporation,  and
may thereafter be entitled to Note  Guarantees made by other Note Guarantors for
the benefit of the Holders of Notes.  Each present Note  Guarantor has, and each
future  Note  Guarantor  will,  irrevocably  and  unconditionally,  jointly  and
severally,  guarantee on a senior  subordinated  basis the punctual payment when
due, whether at Stated Maturity, by acceleration, in connection with a Change of
Control  Offer,  an  Asset  Sale  Offer  or  redemption,  or  otherwise,  of all
obligations  of the  Company  under the  Indenture  and this Note,  whether  for
payment of principal of,  premium,  if any, or interest on the Notes,  expenses,
indemnification  or otherwise.  A Note Guarantor shall be released from its Note
Guarantee  upon  the  terms  and  subject  to the  conditions  set  forth in the
Indenture.

7.  Subordination.

         This Note and the Note Guarantees are subordinated in right of payment,
as set forth in the Indenture,  to the prior payment in full of all existing and
future Senior Indebtedness.  Each of the Company and the Note Guarantors agrees,
and each Holder by accepting a Note agrees, to the subordination  provisions set
forth in the Indenture,  authorizes the Trustee to give them effect and appoints
the Trustee as attorney-in-fact for such purpose.

8.  Redemption.

         Except  as set  forth in the  following  paragraph,  the  Notes are not
redeemable at the option of the Company  prior to February 1, 2003.  Thereafter,
the Notes will be subject to redemption  at the option of the Company,  in whole
or in part,  on at least 30 calendar  days' but not more than 60 calendar  days'
prior notice,  at the redemption  prices  (expressed as percentages of principal
amount) set forth below,  plus accrued and unpaid interest  thereon,  if any, to
the applicable Redemption Date (subject to the right of each Holder of record on
the  relevant  Record  Date to receive  interest  due on the  relevant  Interest
Payment Date), if redeemed during the twelve-month  period beginning  February 1
of the years indicated below:

                  YEAR                                    PERCENTAGE
                  ----                                    ----------

                  2003                                    5.6250%
                                      A-7
<PAGE>

                  2004                                    2.8125%

         In  addition,  at any time and from time to time prior to  February  1,
2003 the Company,  at its option, may redeem in the aggregate up to 35.0% of the
original principal amount of the Notes with the Net Cash Proceeds of one or more
Public  Equity  Offerings  following  which  there  is  a  Public  Market,  at a
redemption  price  (expressed as a percentage of principal  amount) of 11.25% of
the aggregate  principal  amount so redeemed,  plus accrued and unpaid  interest
thereon to the redemption date (subject to the right of Holders of record on the
relevant Record Date to receive  interest due on the relevant  Interest  Payment
Date);  provided,  however, that at least 65.0% of the original principal amount
of the Notes must remain  outstanding after each such redemption;  and provided,
further,  that each such  redemption  shall occur  within 60 days of the date of
closing of the related Public Equity Offering.

9.  Notice of Redemption.

         At least 20 calendar  days but not more than 60 calendar  days before a
Redemption  Date,  the  Company  shall  deliver  to the  Trustee  and  send,  by
first-class  mail,  postage  prepaid,  to Holders of Notes to be redeemed at the
addresses  of such  Holders  as they  appear in the Note  Register,  a notice of
redemption.

         If fewer than all the Notes are to be redeemed at any time, the Trustee
shall  select the Notes to be  redeemed  pro rata or by lot or by a method  that
complies with applicable legal and securities exchange requirements, if any, and
that the Trustee  considers fair and  appropriate and in accordance with methods
generally used at the time of selection by fiduciaries in similar circumstances.
The Trustee  shall make the  selection  from  outstanding  Notes not  previously
called for  redemption;  provided  that the  Trustee  may select for  redemption
portions (equal to $1.00 or any integral  multiple  thereof) of the principal of
Notes that have denominations larger than $1.00 (Notes in denominations of $1.00
or less may be redeemed only in whole). If any Note is redeemed  subsequent to a
Record Date with respect to any Interest  Payment Date specified above and on or
prior to such Interest  Payment Date, then any accrued  interest will be paid on
such  Interest  Payment Date to the Holder of the Note on such Record  Date.  If
money in an  amount  sufficient  to pay the  Redemption  Price of all  Notes (or
portions  thereof) to be redeemed on the  Redemption  Date is deposited with the
Paying  Agent on or before the  applicable  Redemption  Date and  certain  other
conditions  are  satisfied,  interest  on the Notes or  portions  thereof  to be
redeemed on the applicable Redemption Date will cease to accrue.

10. Repurchase at the Option of Holders upon Change of Control.

         Upon the occurrence of a Change of Control,  each Holder shall have the
right in  accordance  with the terms  hereof and the  Indenture  to require  the
Company to purchase  such  Holder's  Notes,  in whole or in part, in a principal
amount  that is an integral  multiple of $1.00,  pursuant to a Change of Control
Offer, at a purchase price in cash equal to

                                      A-8
<PAGE>

101% of the  principal  amount of such Notes (or portions  thereof) plus accrued
and unpaid interest to the Change of Control Payment Date.

         Within 30 calendar days  following  any Change of Control,  the Company
shall send, or cause to be sent, by first-class mail,  postage prepaid, a notice
regarding the Change of Control Offer to each Holder with a copy to the Trustee.
The  Holder of this  Note may elect to have this Note or a portion  hereof in an
authorized  denomination  purchased by completing  the form entitled  "Option of
Holder to Elect  Purchase"  appearing  below and tendering this Note pursuant to
the Change of Control Offer.  Unless the Company  defaults in the payment of the
Change of Control  Purchase  Price with respect  thereto,  all Notes or portions
thereof  accepted for payment pursuant to the Change of Control Offer will cease
to accrue interest from and after the Change of Control Payment Date.

         Prior to  complying  with the  provisions  of the  Indenture  governing
Change of Control  Offers,  but in any event within 30 calendar days following a
Change of  Control,  the  Company  shall  either  repay all  outstanding  Senior
Indebtedness  or obtain the requisite  consents,  if any,  under all  agreements
governing  outstanding  Senior  Indebtedness  to permit the  repurchase of Notes
required by the provisions of the Indenture governing Change of Control Offers.

11.  Repurchase at the Option of Holders upon Asset Sale.

         If at any time the Company or any Restricted  Subsidiary engages in any
Asset Sale, as a result of which the aggregate amount of Excess Proceeds exceeds
$10 million,  the Company shall,  within 30 calendar days of the date the amount
of Excess Proceeds exceeds $10 million, use the then-existing Excess Proceeds to
make an offer to purchase from all Holders of Notes, on a pro rata basis,  Notes
in an aggregate  principal  amount equal in amount to the  then-existing  Excess
Proceeds,  at a  purchase  price  in  cash  in an  amount  equal  to 100% of the
principal  amount thereof plus accrued and unpaid interest thereon to the to the
date of purchase by the Company  pursuant to an Asset Sale Offer (subject to the
right of each Holder of record on the relevant  Record Date to receive  interest
due on the relevant  Interest  Payment Date).  Upon  completion of an Asset Sale
Offer  (including  payment of the Asset Sale Purchase Price for accepted Notes),
any surplus  Excess  Proceeds that were the subject of such offer shall cease to
be Excess  Proceeds,  and the  Company  may then use such  amounts  for  general
corporate purposes.

         Within 30  calendar  days of the date the  amount  of  Excess  Proceeds
exceeds $10 million, the Company shall send, or cause to be sent, by first-class
mail,  postage prepaid,  a notice regarding the Asset Sale Offer to each Holder.
The  Holder of this  Note may elect to have this Note or a portion  hereof in an
authorized  denomination  purchased by completing  the form entitled  "Option of
Holder to Elect  Purchase"  appearing  below and tendering this Note pursuant to
the Asset Sale Offer.  Unless the  Company  defaults in the payment of the Asset
Sale Purchase Price with respect thereto, all Notes or portions thereof selected
for payment  pursuant to the Asset Sale Offer will cease to accrue interest

                                      A-9
<PAGE>

from and after the to the date of purchase  by the Company  pursuant to an Asset
Sale Offer.

12.  The Global Note.

         So long as this Global Note is registered in the name of the Depositary
or its nominee, members of, or participants in, the Depositary ("Agent Members")
shall have no rights under the  Indenture  with respect to this Global Note held
on their  behalf by the  Depositary  or the  Trustee as its  custodian,  and the
Depositary may be treated by the Company,  the Note Guarantors,  the Trustee and
any agent of the  Company,  the Note  Guarantors  or the Trustee as the absolute
owner of this  Global  Note for all  purposes.  Notwithstanding  the  foregoing,
nothing herein shall (i) prevent the Company,  the Note Guarantors,  the Trustee
or any agent of the Company,  the Note  Guarantors  or the Trustee,  from giving
effect to any written certification,  proxy or other authorization  furnished by
the Depositary or (ii) impair,  as between the Depositary and its Agent Members,
the operation of customary  practices  governing the exercise of the rights of a
Holder.

         The  Holder  of this  Global  Note  may  grant  proxies  and  otherwise
authorize  any  Person,  including  Agent  Members  and  Persons  that  may hold
interests in this Global Note through Agent Members,  to take any action which a
Holder is entitled to take under the Indenture or the Notes.

         Whenever,  as a result of optional  redemption by the Company, a Change
of Control  Offer,  an Asset Sale Offer or an exchange for  Certificated  Notes,
this Global Note is redeemed, repurchased or exchanged in part, this Global Note
shall be  surrendered  by the Holder  thereof to the  Trustee who shall cause an
adjustment to be made to Schedule A hereof so that the principal  amount of this
Global Note will be equal to the portion not redeemed,  repurchased or exchanged
and shall thereafter return this Global Note to such Holder;  PROVIDED that this
Global Note shall be in a principal  amount of $1.00 or an integral  multiple of
$1.00.

13.  RESERVED.

14.  Transfer and Exchange.

         A Holder may  transfer or as provided in the  Indenture  and subject to
certain limitations therein set forth. The Registrar may require a Holder, among
other things, to furnish  appropriate  endorsements or transfer documents and to
pay any taxes, fees and expenses required by law or permitted by the Indenture.

15.  Denominations.

         The Notes are  issuable  only in  registered  form  without  coupons in
denominations of $1.00 and integral multiples thereof of principal amount.

16.  Discharge and Defeasance.

                                      A-10
<PAGE>

         Subject to certain  conditions,  the Company at any time may  terminate
some or all of the obligations of the Company and the Note Guarantors  under the
Notes, the Note Guarantees and the Indenture if the Company irrevocably deposits
in trust with the Trustee cash or US Government  Obligations  for the payment of
principal,  premium, if any, interest on the Notes to redemption or maturity, as
the case may be.

17.  Amendment, Waiver.

         Subject  to  certain  exceptions  set forth in the  Indenture,  (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding  Notes (which consent
may,  but need not,  be given in  connection  with any tender  offer or exchange
offer for the  Notes)  and (ii) any past  Default  and its  consequences  or any
compliance  with any  provisions of the Indenture may be waived with the written
consent  of the  Holders  of at least a  majority  in  principal  amount  of the
outstanding  Notes.  Subject to certain  exceptions  set forth in the Indenture,
without  the  consent of any  Holder,  the Company and the Trustee may amend the
Indenture or the Notes (i) to evidence the  succession of another  Person to the
Company and the  assumption  by such  successor of the  covenants of the Company
under the Indenture and contained in the Notes;  (ii) to add to the covenants of
the Company, for the benefit of the Holders of all of the Notes, or to surrender
any  right or power  conferred  on the  Company  under the  Indenture;  (iii) to
provide for  uncertificated  Notes in  addition  to or in place of  Certificated
Notes; (iv) to secure the Notes; (v) to cure any ambiguity,  omission, defect or
inconsistency  in the Indenture,  provided that such actions shall not adversely
affect the  interests of the Holders of Notes in any material  respect;  (vi) to
comply  with the  requirements  of the SEC in order to  effect or  maintain  the
qualification of the Indenture under the TIA; or (vii) to evidence the agreement
or acknowledgment of a Restricted Subsidiary that it is a Note Guarantor for all
purposes  under  the  Indenture  (including,  without  limitation,  Article  XII
thereof).

18.  Defaults and Remedies.

         Under the Indenture,  Events of Default  include:  (i) a default for 30
days in the payment when due of interest on the Notes (whether or not prohibited
by the subordination provisions of the Indenture); (ii) a default in the payment
when due of the  principal of or premium,  if any, on the Notes  (whether or not
prohibited by the subordination  provisions of the Indenture);  (iii) failure by
the Company to observe or perform certain covenants,  conditions,  agreements or
other  provisions  of the  Indenture  or this Note (and,  in the case of certain
covenants,  agreements  or other  provisions,  such failure has continued for 30
calendar days after written notice by the Trustee or the Holders of at least 25%
in principal  amount of the Notes);  (iv)  acceleration  of  Indebtedness of the
Company  or any of its  Significant  Subsidiaries  in an amount in excess of $15
million in the aggregate;  (v) certain  events of bankruptcy or insolvency  with
respect to the  Company or any of its  Significant  Subsidiaries;  (vi)  certain
undischarged judgments not covered by insurance in excess of $15 million against
the Company or any of its Significant Subsidiaries;  or (vii) the Note Guarantee
of any Note Guarantor ceasing for certain reasons to be in full force and effect
(other than in

                                      A-11
<PAGE>

accordance  with the terms of the  Indenture) or any Note  Guarantor  denying or
disaffirming its obligations under its Note Guarantee.

         If an Event of Default  occurs and is  continuing,  the  Trustee or the
Holders of at least 25% in  principal  amount of the  Notes,  subject to certain
limitations,  may  declare  all the  Notes to be  immediately  due and  payable.
Certain  events of  bankruptcy  or  insolvency  shall  result in the Notes being
immediately  due and  payable  upon the  occurrence  of such  Events of  Default
without any further act of the Trustee or any Holder.

         Holders of Notes may not enforce the  Indenture  or the Notes except as
provided in the  Indenture.  The Trustee may refuse to enforce the  Indenture or
the Notes unless it receives reasonable indemnity or security Subject to certain
limitations,  Holders of a majority in principal  amount of the Notes may direct
the  Trustee in its  exercise  of any trust or power  under the  Indenture.  The
Holders of a majority in  principal  amount of the then  outstanding  Notes,  by
written  notice to the Trustee and the Company,  may rescind any  declaration of
acceleration  and its consequences if the rescission would not conflict with any
judgment or decree,  and if all  existing  Events of Default  have been cured or
waived, except nonpayment of principal,  interest or premium that has become due
solely because of  acceleration.  No such rescission shall affect any subsequent
Default or impair any right consequent thereto.

19.  Individual Rights of Trustee.

         Subject to certain  limitations  imposed by the TIA, the Trustee or any
Paying Agent or Registrar,  in its individual or any other capacity,  may become
the owner or pledgee of Notes and may otherwise deal with the Company,  the Note
Guarantors or their Affiliates with the same rights it would have if it were not
Trustee, Paying Agent or Registrar, as the case may be, under the Indenture.

20.  No Recourse Against Certain Others.

         No director,  officer,  employee,  incorporator  or  stockholder of the
Company  or any Note  Guarantor,  as such,  shall  have  any  liability  for any
obligations  of the  Company or such Note  Guarantor  under the Notes,  the Note
Guarantees  or the  Indenture  or for any claim  based on, in respect  of, or by
reason of, such obligations or their creation, solely by reason of its status as
a director,  officer,  employee,  incorporator  or stockholder of the Company or
such Note  Guarantor.  By accepting a Note,  each Holder waives and releases all
such  liability  (but  only such  liability)  as part of the  consideration  for
issuance of such Note to such Holder.

21.  Authentication.

         This Note shall not be valid  until the  Trustee  or an  authenticating
agent manually signs the certificate of authentication on the other side of this
Note.

22.  Abbreviations.

                                      A-12
<PAGE>

         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 rights of  survivorship  and not as
tenants in common),  CUST (=  custodian),  and U/G/M/A (= Uniform Gift to Minors
Act).

23.  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 Notes and has  directed  the  Trustee  to use CUSIP  numbers  in
notices of redemption as a convenience to Holders of Notes. No representation is
made as to the  accuracy  of such  numbers  either as printed on the Notes or as
contained  in any notice of  redemption  and  reliance may be placed only on the
other identification numbers placed thereon.

24.  Governing Law.

         THE  INDENTURE  AND THIS NOTE SHALL BE GOVERNED  BY, AND  CONSTRUED  IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SAID STATE.

         The Company will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture Requests may be made to:

                  Paragon Trade Brands, Inc.

                  180 Technology Parkway

                  Norcross, Georgia 30092

                  Attention:  Chief Financial Officer

                                      A-13
<PAGE>

                                   SCHEDULE A

                          SCHEDULE OF PRINCIPAL AMOUNT.

The initial principal amount at maturity of this Note shall be $146,000,000. The
following  decreases/increase  in the principal amount in denominations of $1.00
or integral multiples thereof at maturity of this Note have been made:

<TABLE>
<CAPTION>
Total Principal  Amount        Notation     Decrease        Increase       Made by or on  Date of
                 at                         in              in             Behalf of      Maturity
                 Maturity                   Principal       Principal      Trustee
<S>             <C>            <C>          <C>             <C>            <C>            <C>
</TABLE>

                                      A-14
<PAGE>

                                   ASSIGNMENT

(To be executed by the registered Holder if such Holder desires to transfer this
Note).

FOR VALUE RECEIVED                   hereby sells, assigns and transfers  unto
                   -----------------

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

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

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

(Please print name and address of transferee)

PLEASE INSERT SOCIAL SECURITY OR OTHER

TAX IDENTIFYING NUMBER OF TRANSFEREE.

--------------------------------------.

This Note,  together with all right,  title and interest herein, and does hereby
irrevocably  constitute  and  appoint
                                      ------------------------------------------
Attorney  to  transfer  this  Note on the  Note  Register,  with  full  power of
substitution.

Dated:
      ------------------

------------------------                              --------------------------
Signature of Holder                                   Signature Guaranteed

NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every  particular,  without  alteration or
any change whatsoever.

                                      A-15
<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

(check as appropriate).

_____    In  connection  with  the  Change  of Control  Offer made  pursuant  to
         Section  4.13 of the  Indenture, the undersigned hereby elects to have:

         _____    the entire principal amount; or

         _____    $________________  ($1.00 in  principal  amount or an integral
                  multiple thereof) of this Note repurchased by the Company.

         The undersigned hereby directs the Trustee or Paying Agent to

         _____    pay it; or

         _____    pay ______________________

         an amount in cash equal to 101% of the  principal  amount  indicated in
         the preceding  sentence plus accrued and unpaid  interest to the Change
         of Control Payment Date.

_____    In connection  with the Asset Sale  Offer made pursuant to Section 4.10
         of the Indenture,  the  undersigned hereby elects to have:

         _____    the entire principal amount

         _____    $________________  ($1.00 in  principal  amount or an integral
                  multiple thereof), of this Note repurchased by the Company.

         The undersigned hereby directs the Trustee or Paying Agent to

         _____    pay it; or

         _____    pay _________________

         an amount in cash equal to 100% of the  principal  amount  indicated in
         the preceding  sentence plus accrued and unpaid  interest to the to the
         date of purchase by the Company pursuant to an Asset Sale Offer.

Dated: _______________.

------------------------                              --------------------------
Signature of Holder                                   Signature Guaranteed

NOTICE:  The signature to the foregoing  must  correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.

                                      A-16
<PAGE>

                                    EXHIBIT B

                           FORM OF CERTIFICATED NOTE.

                           FACE OF CERTIFICATED NOTE.

PARAGON TRADE BRANDS, INC.                             CUSIP No 69912KAA5.

                    11.25% SENIOR SUBORDINATED NOTE DUE 2005.

         PARAGON TRADE BRANDS, INC., a Delaware corporation, for value received,
hereby promises to pay to __________________________, or its registered assigns,
the principal amount of ____________, on February 1, 2005.

         Interest Payment Dates: February 1  and August 1, commencing  August 1,
         2000.

         Record Dates: January 15 and July 15.

         Reference  is hereby  made to the further  provisions  of this Note set
forth on the reverse  hereof,  which further  provisions  shall for all purposes
have the same effect as if set forth at this place.

         Unless the certificate of authentication  hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature,  this Note
shall  not be  entitled  to any  benefit  under  the  Indenture  or be  valid or
obligatory for any purposes.

         IN WITNESS WHEREOF, PARAGON TRADE BRANDS, INC.  has caused this Note to
be duly executed.

                                                     PARAGON TRADE BRANDS, INC.

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

Attest:
        ------------------------
Dated:
        ------------------------

                                      B-1
<PAGE>

                    TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

Norwest Bank Minnesota, National Association, as Trustee, certifies that this is
one of the Notes referred to in the Indenture.

                                                  By:
                                                      --------------------------
                                                      Authorized Signatory

                                      B-2
<PAGE>

                   REVERSE SIDE OF INITIAL CERTIFICATED NOTE.

                           PARAGON TRADE BRANDS, INC.

                    11.25% SENIOR SUBORDINATED NOTE DUE 2005.

1.  Indenture.

         This Note is one of a duly  authorized  issue of debt securities of the
Company (as defined below)  designated as its 11.25% Senior  Subordinated  Notes
Due 2005" (herein called the "Notes")  limited in aggregate  principal amount to
$146,000,000,  exclusive of any Secondary Securities,  issued under an indenture
dated as of January 28, 2000 (as amended or supplemented  from time to time, the
"Indenture")  among the Company,  as issuer,  and PTB  International,  Inc., PTB
Acquisition Sub, Inc. and PTB Holdings, Inc., as guarantors  (collectively,  the
"Note Guarantors"), and Norwest Bank Minnesota, National Association, as trustee
(the "Trustee," which term includes any successor  trustee under the Indenture).
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
US Code  ss.ss.  77aaa-77bbbb).  The Notes are  subject to all such  terms,  and
Holders of Notes are referred to the  Indenture  and such Act for a statement of
the respective rights,  limitations of rights,  duties and immunities thereunder
of the  Company,  the Note  Guarantors,  the  Trustee and each Holder and of the
terms upon which the Notes are, and are to be, authenticated and delivered.  The
summary  of the terms of this  Note  contained  herein  does not  purport  to be
complete and is qualified by reference to the Indenture. To the extent permitted
by applicable law, in the event of any  inconsistency  between the terms of this
Note and the terms of the Indenture,  the terms of the Indenture  shall control.
All capitalized  terms used in this Note which are not defined herein shall have
the meanings assigned to them in the Indenture.

         The Indenture  restricts,  among other things, the Company's ability to
incur  additional  indebtedness,  pay dividends or make certain other restricted
payments,  incur liens to secure pari passu or subordinated  indebtedness,  sell
stock of Restricted  Subsidiaries,  apply net proceeds from certain asset sales,
merge or  consolidate  with any other person,  sell,  assign,  transfer,  lease,
convey or otherwise  dispose of substantially  all of the assets of the Company,
enter into certain  transactions  with affiliates or incur  indebtedness that is
subordinate in right of payment to any Senior  Indebtedness  and senior in right
of payment to the Notes.  The Indenture  permits,  under certain  circumstances,
Restricted  Subsidiaries of the Company to be deemed  Unrestricted  Subsidiaries
and thus not subject to the restrictions of the Indenture.

2.  Principal and Interest.

         Paragon Trade Brands,  Inc., a Delaware  corporation (such corporation,
and its  successors  and assigns  under the Indenture  hereinafter  referred to,
being herein called the  "Company"),  promises to pay the  principal  amount set
forth on Schedule A of this Note to the Holder hereof on February 1, 2005.

                                      B-3
<PAGE>

         The Company shall pay interest at a rate of 11.25% per annum,  from the
Issue Date or from the most recent  Interest  Payment Date  thereafter  to which
interest has been paid or duly provided for, semiannually in arrears on February
1 and August 1 of each year,  commencing on August 1, 2000, to the Holder hereof
until the  principal  amount hereof is paid or made  available for payment.  The
interest so payable,  and punctually  paid or duly provided for, on any Interest
Payment Date will, subject to certain exceptions  provided in the Indenture,  be
paid to the  Person  in  whose  name  this  Note  (or the  Note in  exchange  or
substitution  for which  this Note was  issued)  is  registered  at the close of
business on the Record Date for interest  payable on such Interest Payment Date.
The Record Date for any interest  payment is the close of business on January 15
or July 15 as the  case  may be,  whether  or not a  Business  Day,  immediately
preceding the Interest Payment Date on which such interest is payable.  Any such
interest not so  punctually  paid or duly  provided for  ("Defaulted  Interest")
shall  forthwith cease to be payable to the Holder on such Record Date and shall
be paid as provided in Section 2.11 of the  Indenture  Interest will be computed
on the basis of a 360-day year of twelve 30-day months.

         If the Company's  Cash Flow for a period  specified  below is less than
the amount specified for such period in the table below, then the Company may on
the Interest Payment Date set opposite such period,  at the Company's option and
in  its  sole  discretion,   pay  interest  in  additional   Notes   ("Secondary
Securities")  in lieu of the  payment in whole or in part of interest in cash on
the Notes;  PROVIDED,  HOWEVER,  that the  Company may at its option pay cash in
lieu of issuing Secondary Securities in any denominations of less than $1.00.

<TABLE>
<CAPTION>
------------------------------------- ----------------------------------- -----------------------------------
               PERIOD                     SPECIFIED CASH FLOWAMOUNT             INTEREST PAYMENT DATE
------------------------------------- ----------------------------------- -----------------------------------
<S>                                               <C>                         <C>
      Issue Date--June 25, 2000                   $10,742,000                 First Interest Payment Date
------------------------------------- ----------------------------------- -----------------------------------
  June 26, 2000--December 31, 2000                $16,930,000                 Second Interest Payment Date
------------------------------------- ----------------------------------- -----------------------------------
    January 1, 2001--July 1, 2001                 $18,016,000                 Third Interest Payment Date
------------------------------------- ----------------------------------- -----------------------------------
   July 2, 2001--December 30, 2001                $20,253,000                 Fourth Interest Payment Date
------------------------------------- ----------------------------------- -----------------------------------
</TABLE>

If, pursuant to this paragraph,  the Company issues Secondary Securities in lieu
of cash payment,  in whole or in part, of interest,  it shall give notice to the
Trustee  not less than  five  Business  Days  prior to the  applicable  Interest
Payment Date,  and shall instruct the Trustee (upon written order of the Company
signed by an  Officer of the  Company  given not less than five nor more than 45
days prior to such Interest Payment Date) to authenticate  Secondary Securities,
dated such Interest  Payment Date, in a principal  amount equal to the amount of
interest not paid in cash in respect of this Security on such  Interest  Payment
Date. Each issuance of Secondary Securities in lieu of cash payments of interest
on the  Securities  shall be made  PRO  RATA  with  respect  to the  outstanding
Securities. Any such Secondary Securities shall be governed by the Indenture and
shall be subject to the same terms  (including the maturity date and the rate of
interest  from time to time payable  thereon) as this Security  (except,  as the
case may be, with respect to

                                      B-4

<PAGE>

the title, issuance date and aggregate principal amount). The term "Notes" shall
include the Secondary Securities that may be issued under the Indenture.  Except
as otherwise allowed by the foregoing, interest shall be paid in cash.

         Each  payment of interest in respect of an Interest  Payment  Date will
include  interest  accrued through the day before such Interest Payment Date. If
an Interest Payment Date falls on a day that is not a Business Day, the interest
payment  to be made on  such  Interest  Payment  Date  will be made on the  next
succeeding  Business  Day with  the same  force  and  effect  as if made on such
Interest  Payment Date,  and no  additional  interest will accrue as a result of
such delayed payment.

         To the  extent  lawful,  the  Company  shall pay  interest  on  overdue
principal,  overdue  premium  and  Defaulted  Interest  (without  regard  to any
applicable  grace period) at the interest rate borne on this Note. The Company's
obligation  pursuant to the previous  sentence  shall apply whether such overdue
amount is due at its maturity, as a result of the Company's obligations pursuant
to Section 3.05, Section 4.10 or Section 4.13 of the Indenture, or otherwise.

3.  RESERVED.

4.  Method of Payment.

         The Company,  through the Paying Agent, shall pay interest on this Note
to the  registered  Holder of this Note,  as  provided  above.  The Holder  must
surrender this Note to a Paying Agent to collect principal payments. The Company
will pay principal,  premium, if any, and interest in money of the United States
that at the time of payment is legal  tender for payment of all debts public and
private. Principal, premium, if any, and interest, other than such interest paid
in Secondary Securities, shall be paid by check mailed to the registered Holders
at their registered  addresses;  PROVIDED that all such payments with respect to
Notes the Holders of which have given wire transfer  instructions to the Company
will be required to be made by wire transfer of immediately  available  funds to
the accounts  specified  by the Holders  thereof.  Payments of interest  made in
Secondary  Securities shall be made by mailing such Secondary  Securities to the
registered Holders at their registered addresses.

5.  Paying Agent and Registrar.

         Initially, the Trustee will act as Paying Agent and Registrar under the
Indenture.  The Company  may,  upon written  notice to the Trustee,  appoint and
change any Paying Agent or Registrar.  The Company or any of its  Affiliates may
act as Paying Agent or Registrar, provided that if the Company or such Affiliate
is acting as Paying Agent,  the Company or such  Affiliate  shall  segregate all
funds and Secondary Securities held by it as Paying Agent and hold them in trust
for the benefit of the Holders or the Trustee Note Guarantees.

                                      B-5

<PAGE>

6.  Note Guarantees.

         This Note is initially  entitled to the benefits of the Note Guarantees
made by PTB International,  Inc., a Delaware  corporation,  PTB Acquisition Sub,
Inc., a Delaware corporation,  and PTB Holdings, Inc., an Ohio corporation,  and
may thereafter be entitled to Note  Guarantees made by other Note Guarantors for
the benefit of the Holders of Notes.  Each present Note  Guarantor has, and each
future  Note  Guarantor  will,  irrevocably  and  unconditionally,  jointly  and
severally,  guarantee on a senior  subordinated  basis the punctual payment when
due, whether at Stated Maturity, by acceleration, in connection with a Change of
Control  Offer,  an  Asset  Sale  Offer  or  redemption,  or  otherwise,  of all
obligations  of the  Company  under the  Indenture  and this Note,  whether  for
payment of principal of, premium,  if any, and interest on the Notes,  expenses,
indemnification  or otherwise.  A Note Guarantor shall be released from its Note
Guarantee  upon  the  terms  and  subject  to the  conditions  set  forth in the
Indenture.

7.  Subordination.

         This Note and the Note Guarantees are subordinated in right of payment,
as set forth in the Indenture,  to the prior payment in full of all existing and
future Senior Indebtedness.  Each of the Company and the Note Guarantors agrees,
and each Holder by accepting a Note agrees, to the subordination  provisions set
forth in the Indenture,  authorizes the Trustee to give them effect and appoints
the Trustee as attorney-in-fact for such purpose.

8.  Redemption.

         Except  as set  forth in the  following  paragraph,  the  Notes are not
redeemable at the option of the Company  prior to February 1, 2003.  Thereafter,
the Notes will be subject to redemption  at the option of the Company,  in whole
or in part,  on at least 30 calendar  days' but not more than 60 calendar  days'
prior notice,  at the redemption  prices  (expressed as percentages of principal
amount) set forth below,  plus accrued and unpaid interest  thereon,  if any, to
the applicable Redemption Date (subject to the right of each Holder of record on
the  relevant  Record  Date to receive  interest  due on the  relevant  Interest
Payment Date), if redeemed during the twelve-month  period beginning  February 1
of the years indicated below:

                  YEAR                                    PERCENTAGE
                  ----                                    ----------

                  2003                                    5.6250%

                  2004                                    2.8125%

         In  addition,  at any time and from time to time prior to  February  1,
2003 the Company,  at its option, may redeem in the aggregate up to 35.0% of the
original principal

                                      B-6
<PAGE>

amount of the Notes  with the Net Cash  Proceeds  of one or more  Public  Equity
Offerings  following  which  there is a Public  Market,  at a  redemption  price
(expressed  as a  percentage  of principal  amount) of 111.25% of the  aggregate
principal  amount so redeemed,  plus accrued and unpaid interest  thereon to the
redemption  date  (subject  to the right of  Holders  of record on the  relevant
Record Date to receive  interest due on the  relevant  Interest  Payment  Date);
PROVIDED,  HOWEVER,  that at least 65.0% of the original principal amount of the
Notes must remain outstanding after each such redemption; and provided, further,
that each such  redemption  shall occur within 60 days of the date of closing of
the related Public Equity Offering.

9.  Notice of Redemption.

         At least 20 calendar  days but not more than 60 calendar  days before a
Redemption  Date,  the  Company  shall  deliver  to the  Trustee  and  send,  by
first-class  mail,  postage  prepaid,  to Holders of Notes to be redeemed at the
addresses  of such  Holders  as they  appear in the Note  Register,  a notice of
redemption.

         If fewer than all the Notes are to be redeemed at any time, the Trustee
shall  select the Notes to be  redeemed  pro rata or by lot or by a method  that
complies with applicable legal and securities exchange requirements, if any, and
that the Trustee  considers fair and  appropriate and in accordance with methods
generally used at the time of selection by fiduciaries in similar circumstances.
The Trustee  shall make the  selection  from  outstanding  Notes not  previously
called for  redemption;  provided  that the  Trustee  may select for  redemption
portions (equal to $1.00 or any integral  multiple  thereof) of the principal of
Notes that have denominations larger than $1.00 (Notes in denominations of $1.00
or less may be redeemed only in whole). If any Note is redeemed  subsequent to a
Record Date with respect to any Interest  Payment Date specified above and on or
prior to such Interest  Payment Date, then any accrued  interest will be paid on
such  Interest  Payment Date to the Holder of the Note on such Record  Date.  If
money in an  amount  sufficient  to pay the  Redemption  Price of all  Notes (or
portions  thereof) to be redeemed on the  Redemption  Date is deposited with the
Paying  Agent on or before the  applicable  Redemption  Date and  certain  other
conditions  are  satisfied,  interest  on the Notes or  portions  thereof  to be
redeemed on the applicable Redemption Date will cease to accrue.

10. Repurchase at the Option of Holders upon Change of Control.

         Upon the occurrence of a Change of Control,  each Holder shall have the
right in  accordance  with the terms  hereof and the  Indenture  to require  the
Company to purchase  such  Holder's  Notes,  in whole or in part, in a principal
amount  that is an integral  multiple of $1.00,  pursuant to a Change of Control
Offer, at a purchase price in cash equal to 101% of the principal amount of such
Notes (or portions  thereof)  plus accrued and unpaid  interest to the Change of
Control Payment Date.

         Within 30 calendar days  following  any Change of Control,  the Company
shall send, or cause to be sent, by first-class mail,  postage prepaid, a notice
regarding the Change of Control Offer to each Holder with a copy to the Trustee.
The  Holder of this  Note may elect to have this Note or a portion  hereof in an
authorized  denomination

                                      B-7

<PAGE>

purchased by completing the form entitled  "Option of Holder to Elect  Purchase"
appearing below and tendering this Note pursuant to the Change of Control Offer.
Unless the Company  defaults in the payment of the  purchase  price with respect
thereto,  all Notes or portions  thereof  accepted  for payment  pursuant to the
Change of Control Offer will cease to accrue  interest from and after the Change
of Control Payment Date.

         Prior to  complying  with the  provisions  of the  Indenture  governing
Change of Control  Offers,  but in any event within 30 calendar days following a
Change of  Control,  the  Company  shall  either  repay all  outstanding  Senior
Indebtedness  or obtain the requisite  consents,  if any,  under all  agreements
governing  outstanding  Senior  Indebtedness  to permit the  repurchase of Notes
required by the provisions of the Indenture governing Change of Control Offers.

11.  Repurchase at the Option of Holders upon Asset Sale.

         If at any time the Company or any Restricted  Subsidiary engages in any
Asset Sale, as a result of which the aggregate amount of Excess Proceeds exceeds
$10 million,  the Company shall,  within 30 calendar days of the date the amount
of Excess Proceeds exceeds $10 million, use the then-existing Excess Proceeds to
make an offer to purchase from all Holders of Notes, on a pro rata basis,  Notes
in an aggregate  principal  amount equal in amount to the  then-existing  Excess
Proceeds,  at a  purchase  price  in  cash  in an  amount  equal  to 100% of the
principal amount thereof plus accrued and unpaid interest thereon to the date of
purchase by the Company pursuant to an Asset Sale Offer (subject to the right of
each Holder of record on the relevant Record Date to receive interest due on the
relevant  Interest  Payment  Date).  Upon  completion  of an  Asset  Sale  Offer
(including  payment of the Asset Sale Purchase  Price for accepted  Notes),  any
surplus  Excess  Proceeds  that were the subject of such offer shall cease to be
Excess Proceeds, and the Company may then use such amounts for general corporate
purposes.

         Within 30  calendar  days of the date the  amount  of  Excess  Proceeds
exceeds $10 million, the Company shall send, or cause to be sent, by first-class
mail,  postage prepaid,  a notice regarding the Asset Sale Offer to each Holder.
The  Holder of this  Note may elect to have this Note or a portion  hereof in an
authorized  denomination  purchased by completing  the form entitled  "Option of
Holder to Elect  Purchase"  appearing  below and tendering this Note pursuant to
the Asset Sale Offer.  Unless the  Company  defaults in the payment of the Asset
Sale Purchase Price with respect thereto, all Notes or portions thereof selected
for payment  pursuant to the Asset Sale Offer will cease to accrue interest from
and after the to the date of purchase  by the Company  pursuant to an Asset Sale
Offer.

12.  RESERVED.

13.  Transfer and Exchange.

         A Holder may  transfer or as provided in the  Indenture  and subject to
certain limitations therein set forth. The Registrar may require a Holder, among
other things, to furnish  appropriate  endorsements or transfer documents and to
pay any taxes,  fees and

                                      B-8

<PAGE>

expenses required by law or permitted by the Indenture.
The Registrar need not register the transfer or exchange of  Certificated  Notes
or  portions  thereof  selected  for  redemption  (except,  in  the  case  of  a
Certificated  Note to be redeemed in part, the portion of such Certificated Note
not to be redeemed) or any  Certificated  Notes for a period of 15 calendar days
before a selection of Notes to be redeemed.

14.  Denominations.

         The Notes are  issuable  only in  registered  form  without  coupons in
denominations  of $1.00 and  integral  multiples  thereof of  principal  amount;
provided  that  Certificated  Notes,  except  those  issued  pursuant to Section
2.06(a), shall be subject to a minimum denomination of $250,000.

15.  Discharge and Defeasance.

         Subject to certain  conditions,  the Company at any time may  terminate
some or all of the obligations of the Company and the Note Guarantors  under the
Notes, the Note Guarantees and the Indenture if the Company irrevocably deposits
in trust with the Trustee cash or US Government  Obligations  for the payment of
principal,  premium, if any, interest on the Notes to redemption or maturity, as
the case may be.

16.  Amendment, Waiver.

         Subject  to  certain  exceptions  set forth in the  Indenture,  (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding  Notes (which consent
may,  but need not,  be given in  connection  with any tender  offer or exchange
offer for the  Notes)  and (ii) any past  Default  and its  consequences  or any
compliance  with any  provisions of the Indenture may be waived with the written
consent  of the  Holders  of at least a  majority  in  principal  amount  of the
outstanding  Notes.  Subject to certain  exceptions  set forth in the Indenture,
without  the  consent of any  Holder,  the Company and the Trustee may amend the
Indenture or the Notes (i) to evidence the  succession of another  Person to the
Company and the  assumption  by such  successor of the  covenants of the Company
under the Indenture and contained in the Notes;  (ii) to add to the covenants of
the Company, for the benefit of the Holders of all of the Notes, or to surrender
any  right or power  conferred  on the  Company  under the  Indenture;  (iii) to
provide for  uncertificated  Notes in  addition  to or in place of  Certificated
Notes; (iv) to secure the Notes; (v) to cure any ambiguity,  omission, defect or
inconsistency  in the Indenture,  provided that such actions shall not adversely
affect the  interests of the Holders of Notes in any material  respect;  (vi) to
comply  with the  requirements  of the SEC in order to  effect or  maintain  the
qualification of the Indenture under the TIA; or (vii) to evidence the agreement
or acknowledgment of a Restricted Subsidiary that it is a Note Guarantor for all
purposes  under  the  Indenture  (including,  without  limitation,  Article  XII
thereof).

17.  Defaults and Remedies.

         Under the Indenture,  Events of Default  include:  (i) a default for 30
days in the payment when due of interest on the Notes (whether or not prohibited
by the

                                      B-9

<PAGE>

subordination  provisions of the Indenture);  (ii) a default in the payment when
due of the  principal  of or  premium,  if any,  on the  Notes  (whether  or not
prohibited by the subordination  provisions of the Indenture);  (iii) failure by
the Company to observe or perform certain covenants,  conditions,  agreements or
other  provisions  of the  Indenture  or this Note (and,  in the case of certain
covenants,  agreements  or other  provisions,  such failure has continued for 30
calendar days after written notice by the Trustee or the Holders of at least 25%
in principal amount of the Notes); (iv) a default in the payment of Indebtedness
acceleration of the Company or any of its Significant Subsidiaries  Indebtedness
in an amount in excess of $15 million in the  aggregate;  (v) certain  events of
bankruptcy or insolvency  with respect to the Company or any of its  Significant
Subsidiaries;  (vi) certain  undischarged  judgments not covered by insurance in
excess  of  $15  million   against  the  Company  or  any  of  its   Significant
Subsidiaries;  or (vii) the Note Guarantee of any Note Guarantor ceasing certain
reasons to be in full force and effect (other than in accordance  with the terms
of the Indenture) or any Note Guarantor  denying or disaffirming its obligations
under its Note Guarantee.

         If an Event of Default  occurs and is  continuing,  the  Trustee or the
Holders of at least 25% in  principal  amount of the  Notes,  subject to certain
limitations,  may  declare  all the  Notes to be  immediately  due and  payable.
Certain  events of  bankruptcy  or  insolvency  shall  result in the Notes being
immediately  due and  payable  upon the  occurrence  of such  Events of  Default
without any further act of the Trustee or any Holder.

         Holders of Notes may not enforce the  Indenture  or the Notes except as
provided in the  Indenture.  The Trustee may refuse to enforce the  Indenture or
the Notes unless it receives reasonable indemnity or security Subject to certain
limitations,  Holders of a majority in principal  amount of the Notes may direct
the  Trustee in its  exercise  of any trust or power  under the  Indenture.  The
Holders of a majority in  principal  amount of the then  outstanding  Notes,  by
written  notice to the Trustee and the Company,  may rescind any  declaration of
acceleration  and its consequences if the rescission would not conflict with any
judgment or decree,  and if all  existing  Events of Default  have been cured or
waived, except nonpayment of principal,  interest or premium that has become due
solely because of  acceleration.  No such rescission shall affect any subsequent
Default or impair any right consequent thereto.

18.  Individual Rights of Trustee.

         Subject to certain  limitations  imposed by the TIA, the Trustee or any
Paying Agent or Registrar,  in its individual or any other capacity,  may become
the owner or pledgee of Notes and may otherwise deal with the Company,  the Note
Guarantors or their Affiliates with the same rights it would have if it were not
Trustee, Paying Agent or Registrar, as the case may be, under the Indenture.

19.  No Recourse Against Certain Others.

         No director,  officer,  employee,  incorporator  or  stockholder of the
Company  or any Note  Guarantor,  as such,  shall  have  any  liability  for any
obligations  of the  Company

                                      B-10

<PAGE>

or such Note Guarantor under the Notes,  the Note Guarantees or the Indenture or
for any claim  based on, in respect  of, or by reason of,  such  obligations  or
their creation, solely by reason of its status as a director, officer, employee,
incorporator or stockholder of the Company or such Note Guarantor.  By accepting
a Note,  each  Holder  waives and  releases  all such  liability  (but only such
liability)  as part  of the  consideration  for  issuance  of such  Note to such
Holder.

20.  Authentication.

         This Note shall not be valid  until the  Trustee  or an  authenticating
agent manually signs the certificate of authentication on the other side of this
Note.

21.  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 rights of  survivorship  and not as
tenants in common),  CUST (=  custodian),  and U/G/M/A (= Uniform Gift to Minors
Act).

22.  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 Notes and has  directed  the  Trustee  to use CUSIP  numbers  in
notices of redemption as a convenience to Holders of Notes. No representation is
made as to the  accuracy  of such  numbers  either as printed on the Notes or as
contained  in any notice of  redemption  and  reliance may be placed only on the
other identification numbers placed thereon.

23.  Governing Law.

         THE  INDENTURE  AND THIS NOTE SHALL BE GOVERNED  BY, AND  CONSTRUED  IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SAID STATE.

         The Company will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture Requests may be made to:

                  PARAGON TRADE BRANDS, INC.

                  180 Technology Parkway

                  Norcross, Georgia 30092

                  Attention:  Chief Financial Officer

                                      B-11

<PAGE>

                                   ASSIGNMENT

(To be executed by the registered Holder if such Holder desires to transfer this
Note).

FOR VALUE RECEIVED                   hereby sells, assigns and transfers  unto
                   -----------------

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

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

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

(Please print name and address of transferee)

PLEASE INSERT SOCIAL SECURITY OR OTHER

TAX IDENTIFYING NUMBER OF TRANSFEREE.

--------------------------------------.

This Note,  together with all right,  title and interest herein, and does hereby
irrevocably  constitute  and  appoint
                                      ------------------------------------------
Attorney  to  transfer  this  Note on the  Note  Register,  with  full  power of
substitution.

Dated:
      ------------------

------------------------                              --------------------------
Signature of Holder                                   Signature Guaranteed

NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every  particular,  without  alteration or
any change whatsoever.

                                      B-12
<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

(check as appropriate).

_____    In  connection  with  the  Change  of Control  Offer made  pursuant  to
         Section  4.13 of the  Indenture, the undersigned hereby elects to have:

         _____    the entire principal amount; or

         _____    $________________  ($1.00 in  principal  amount or an integral
                  multiple thereof) of this Note repurchased by the Company.

         The undersigned hereby directs the Trustee or Paying Agent to

         _____    pay it; or

         _____    pay ______________________

         an amount in cash equal to 101% of the  principal  amount  indicated in
         the preceding  sentence plus accrued and unpaid  interest to the Change
         of Control Payment Date.

_____    In connection  with the Asset Sale  Offer made pursuant to Section 4.10
         of the Indenture,  the  undersigned hereby elects to have:

         _____    the entire principal amount

         _____    $________________  ($1.00 in  principal  amount or an integral
                  multiple thereof), of this Note repurchased by the Company.

         The undersigned hereby directs the Trustee or Paying Agent to

         _____    pay it; or

         _____    pay _________________

         an amount in cash equal to 100% of the  principal  amount  indicated in
         the preceding  sentence plus accrued and unpaid  interest to the to the
         date of purchase by the Company pursuant to an Asset Sale Offer.

Dated: _______________.

------------------------                              --------------------------
Signature of Holder                                   Signature Guaranteed

NOTICE:  The signature to the foregoing  must  correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.

                                      B-13

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