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<SEC-DOCUMENT>0000094845-01-000015.txt : 20010206
<SEC-HEADER>0000094845-01-000015.hdr.sgml : 20010206
ACCESSION NUMBER:		0000094845-01-000015
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		28
CONFORMED PERIOD OF REPORT:	20001126
FILED AS OF DATE:		20010205

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LEVI STRAUSS & CO
		CENTRAL INDEX KEY:			0000094845
		STANDARD INDUSTRIAL CLASSIFICATION:	APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300]
		IRS NUMBER:				940905160
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1130

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		
		SEC FILE NUMBER:	001-06631
		FILM NUMBER:		1524846

	BUSINESS ADDRESS:	
		STREET 1:		1155 BATTERY ST
		CITY:			SAN FRANCISCO
		STATE:			CA
		ZIP:			94111
		BUSINESS PHONE:		4155446000

	MAIL ADDRESS:	
		STREET 1:		1155 BATTERY STREET
		CITY:			SAN FRAINCISCO
		STATE:			CA
		ZIP:			94111
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM 10K DATED NOVEMBER 26, 2000
<TEXT>





                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                                   (Mark One)

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934

                                       or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                   FOR THE FISCAL YEAR ENDED NOVEMBER 26, 2000



                        Commission file number: 333-36234


                               LEVI STRAUSS & CO.
             (Exact Name of Registrant as Specified in Its Charter)

               DELAWARE                                     94-0905160
    (State or Other Jurisdiction of                      (I.R.S. Employer
    Incorporation or Organization)                      Identification No.)

              1155 BATTERY STREET, SAN FRANCISCO, CALIFORNIA 94111
                    (Address of Principal Executive Offices)

                                 (415) 501-6000
              (Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                    Yes  X  No
                                        ---    ---

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (paragraph  229.405 of this chapter) is not contained  herein,
and will not be contained,  to the best of registrant's knowledge, in definitive
proxy or  information  statements  incorporated  by reference in Part III of the
Form 10-K or any amendment to this Form 10-K. [x]

The  Company is  privately  held.  Nearly  all of its common  equity is owned by
members of the families of several  descendants of the Company's  founder,  Levi
Strauss.  There is no trading in the common  equity and  therefore  an aggregate
market value based on sales or bid and asked prices is not determinable.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

Common Stock $.01 par value ------ 37,278,238 shares  outstanding on February 1,
2001

Documents incorporated by reference:  None



<PAGE>



                               LEVI STRAUSS & CO.

                         TABLE OF CONTENTS TO FORM 10-K

                    FOR FISCAL YEAR ENDING NOVEMBER 26, 2000




<TABLE>
<CAPTION>

                                     PART I
                                                                                                           PAGE
<S>  <C>  <C>                                                                                               <C>
Item 1.   Business......................................................................................     3

Item 2.   Properties....................................................................................    12

Item 3.   Legal Proceedings.............................................................................    13

Item 4.   Submission of Matters to a Vote of Security Holders...........................................    13


                                                         PART II
Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters.........................    14

Item 6.   Selected Financial Data.......................................................................    15

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations .........    17

Item 7A.Quantitative and Qualitative Disclosures About Market Risk......................................    33

Item 8.   Financial Statements and Supplementary Data...................................................    38

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..........    72


                                                         PART III
Item 10.  Directors and Executive Officers of the Registrant............................................    73

Item 11.  Executive Compensation........................................................................    77

Item 12.  Security Ownership of Certain Beneficial Owners and Management................................    81

Item 13.  Certain Relationships and Related Transactions................................................    85


                                                         ITEM IV
Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K..............................    86

SIGNATURES..............................................................................................    92

Financial Statement Schedules...........................................................................    94

Supplemental Information................................................................................    95
</TABLE>




                                       2


<PAGE>



                                     PART I

ITEM 1.  BUSINESS

OVERVIEW

     We are one of the world's leading  branded apparel  companies with sales in
more than 80  countries.  We design and market  jeans and  jeans-related  pants,
casual and dress pants,  shirts,  jackets and related accessories for men, women
and children under our Levi's(R),  Dockers(R) and Slates(R) brands. Our products
are  distributed  in the United States  primarily  through  chain  retailers and
department stores and abroad primarily  through  department stores and specialty
retailers.  We also  maintain  a network  of  approximately  750  franchised  or
independently  owned stores  dedicated to our products outside the United States
and operate a small number of company-owned stores.

<TABLE>
<CAPTION>

                         LEVI'S(R) BRAND                    DOCKERS(R) BRAND              SLATES(R) BRAND
                         ---------------                    ----------------              ---------------
<S>                      <C>                                <C>                           <C>
PRODUCTS:                Men's, women's and kids'--         Men's, women's and boys'--    Men's and women's-- dress
                         jeans, jeans-related products,     casual pants, shorts,         pants, skirts, tops, jackets,
                         knits and woven tops, outerwear    skirts, knit and woven        outerwear and accessories
                         and accessories                    tops, outerwear and
                                                            accessories

GEOGRAPHIC MARKETS:      Men's and women's-- global         Men's and women's-- global    Men's and women's-- U.S.
                         Kids'-- primarily U.S.             Boys'-- U.S. only             only

PERCENTAGE OF 2000
NET SALES:               75%                                23%                           2%
</TABLE>


     Our business is currently  organized into three geographic  divisions:  the
Americas,  consisting of the United States,  Canada and Latin  America;  Europe,
including the Middle East and Africa;  and Asia Pacific.  Our  operations in the
United  States are  conducted  primarily  through Levi Strauss & Co.,  while our
operations  outside the United States are conducted  primarily  through  foreign
subsidiaries  owned directly or indirectly by Levi Strauss & Co. In 2000, we had
net  sales of $4.6  billion,  of which the  Americas,  Europe  and Asia  Pacific
accounted for 68%, 24% and 8%,  respectively.  In 1999, we had net sales of $5.1
billion.

OUR BUSINESS STRATEGY

     Our primary  strategic  goals are to continue  stabilizing our business and
position it for profitable  growth.  We believe  achievement of these objectives
will help us increase our financial  strength and  flexibility and meet our goal
of regaining  investment grade ratings on our debt securities.  To achieve these
goals, we have several key business strategies.

REINVIGORATE OUR BRANDS THROUGH BETTER PRODUCT INNOVATION AND INCREASED CONSUMER
AND CHANNEL RELEVANCE.

     We believe that an integrated  presentation of new and innovative  products
and  marketing  programs  targeted to specific  consumer and retail  segments is
crucial to generating consumer demand and increasing sales for our products.  We
intend to:

     o    focus on  continually  updating  our core  products  and  creating new
          products, such as our Levi's(R) Engineered Jeans(TM), that incorporate
          design innovations,  new fabrics and new finishes and that draw on our
          long heritage of originality in product design and fabrication;

     o    design and market  products that are relevant to our various  consumer
          segments  ranging  from  teenagers  and trend  initiators  who  demand
          fashion-forward    styles,   to   urban   professionals   who   desire
          sophisticated  casual wear, as well as to the broad group of consumers
          who want  mainstream,  quality  branded  jeanswear and khaki pants for
          everyday and business wear;

     o    take  advantage  of  consumer  recognition  of our  brands  and market
          opportunities  by expanding our product  offerings in women's apparel,
          tops and licensed merchandise such as outerwear, shoes and belts;

     o    capitalize on our global brand recognition and marketing  capabilities
          by adopting  successful  products and design concepts developed in one
          region and introducing  them to other  geographic  markets in which we
          operate;




                                       3

<PAGE>

o         target our  product  offerings  to specific  distribution  channels in
          order to reach discrete consumer segments,  create differentiation for
          our retail  customers and between our brands,  strengthen our position
          in our  existing  channels and address  shifts in retail  distribution
          channels in both the United States and Europe; and

     o    develop  product-focused  marketing  programs  using both  traditional
          advertising  vehicles  such as  television,  print  and  point-of-sale
          materials  and other  vehicles such as concert  sponsorships,  product
          placement and Internet sites.


ACHIEVE OPERATIONAL EXCELLENCE.

     We  are   implementing   strategies  and  processes  for  more  effectively
anticipating  and fulfilling  product  demand and  replenishing  core items.  We
intend to:

     o    improve the  coordination of our design,  merchandising,  forecasting,
          sourcing and logistics  processes to reduce product lead times, ensure
          product availability and improve fill rates;

     o    improve  the linkage of   product  supply  to  consumer demand and our
          ability to ship product orders in a timely manner;

     o    focus  on  working  capital  control  through  improved   forecasting,
          inventory management and product mix; and

     o    improve  our  product sourcing  and  operating efficiencies to further
          reduce product costs and control operating expenses.


IMPROVE OUR RELATIONSHIPS WITH OUR CUSTOMERS AND UPGRADE THE PRESENTATION OF OUR
PRODUCT AT RETAIL.

     We distribute  our products in a wide variety of retail  formats around the
world including chain and department  stores,  franchise stores dedicated to our
brands and specialty  retailers.  Through better relationships and collaborative
business planning with our customers, we must ensure that the right products are
available  and in-stock at retail and are  presented in ways that enhance  brand
appeal and attract consumers. We intend to:

     o    engage  in more  collaborative  planning  and  performance  monitoring
          processes  with  our  retail   customers  to  achieve  better  product
          presentation, assortment and inventory management;

     o    improve  the  presentation  of  our  product  at  retail  through  new
          retailing formats, better fixturing and visual merchandising, on-floor
          merchandising services and other sales-area upgrade programs;

     o    implement an outlet strategy through new accounts and expanded product
          offerings without incurring capital expenditures;

     o    increase the number of franchised or other retail formats dedicated to
          our Dockers(R)  brand  products  outside the United States in order to
          present the brand in a focused, image-enhancing environment.

OUR BRANDS AND PRODUCTS

     We market a broad line of branded  jeanswear,  casual  wear and dress pants
that appeal to diverse demographic groups in markets around the world. Through a
number of  sub-brands  and product  lines under the  Levi's(R),  Dockers(R)  and
Slates(R)  brands,  we target  specific  consumer  segments and provide  product
differentiation for our retail customers in our selected distribution  channels.
We focus on creating new,  innovative products relevant to our target consumers,
as well as ensuring  that our core,  traditional  products  are updated with new
finishes,  fabrications  and  colors.  We strive to  leverage  our global  brand
recognition,  product  design and  marketing  capabilities  to take products and
design concepts  developed in one region and introduce them in other  geographic
markets.


                                       4

<PAGE>


LEVI'S(R) BRAND

     We market jeans and jeans-related products under the Levi's(R) brand around
the world. Since their invention in 1873, Levi's(R) jeans have become one of the
most  successful  and widely  recognized  brands in the  history of the  apparel
industry. In fiscal year 2000, sales of our Levi's(R) brand products represented
approximately  75% of our net sales, and accounted for  approximately 67% of net
sales  in  the  Americas,   approximately   91%  of  net  sales  in  Europe  and
approximately 95% of net sales in Asia Pacific.

     Our Levi's(R) brand features a wide range of product offerings including:

     o    RED TAB(TM) PRODUCTS.  Our Red Tab(TM) product line, identified by our
          Tab Device  trademark  on the back  pocket,  encompasses  a variety of
          basic jeans with different silhouettes, fits, fabrics (including denim
          and  corduroy)  and  finishes  intended  to appeal to a wide  range of
          consumers.  Our core line is anchored by the classic 501(R) button-fly
          jean,  named by Time  Magazine as the "Best Fashion of the Century" in
          its December 31, 1999  edition.  We  distribute  Red Tab(TM)  products
          worldwide through many of our distribution channels.

     o    LEVI'S(R)  ENGINEERED  JEANS(TM).   Developed  in  Europe,   Levi's(R)
          Engineered  Jeans(TM)  represent our  reinvention of the blue jean and
          the first international  jeanswear launch in our history.  These jeans
          are  ergonomically  engineered  to fit the body's  contours and have a
          three-dimensional  shape that we believe provides  innovative  design,
          unique  style,  superior  comfort  and  ease of  movement.  We  target
          Levi's(R)  Engineered Jeans(TM) to 15- to 24-year-olds in Asia, Europe
          and the Americas primarily through  independent  retailers,  specialty
          stores and Original Levi's Store(R) retail shops.

     o    SILVERTAB(R)   PRODUCTS.   Our   Silvertab(R)   line  targets  15-  to
          19-year-olds and offers a more fashion-forward product range featuring
          technologically  advanced fabrics,  such as microfiber,  nylon ripstop
          and  "oily"  canvas  and  innovative  finishes  for  denim  jeans.  We
          distribute  Silvertab(R)  products primarily through department stores
          and Original Levi's Store(R) retail shops in the Americas.

     o    OTHER  PRODUCTS.  Other Levi's(R)  brand products  include:  Levi's(R)
          Vintage  Clothing for jean  "aficionados",  a premium  line  available
          through high-end specialty stores and independent retailers in Europe,
          Asia and the  United  States;  the  Levi's(R)  Red(TM)  collection,  a
          European-developed  product  designed to reflect both our heritage and
          modern design  concepts;  L2(R) brand that targets 15- to  24-year-old
          suburban youth who want fashionable products at value pricing that are
          distributed  through  chain  stores in the United  States and in Asia;
          and, in conjunction with Philips  Electronics NV,  Levi's(R)  ICD+(TM)
          (Levi's(R)  Industrial  Clothing  Division+(TM)) in Europe features an
          innovative line of jackets that integrate  wearable  electronics  with
          fashion.


DOCKERS(R) BRAND

     We market casual  clothing,  primarily pants and tops, under the Dockers(R)
brand,  in more than 40  countries.  We launched the brand in 1986 to address an
emerging consumer interest in khaki pants. We believe that the Dockers(R) brand,
through  its  product  offering  and  marketing,  played  a  major  role  in the
resurgence of khaki pants and the movement toward casual attire in the workplace
by helping create a standard for business casual  clothing.  According to a 2000
report by the Society for Human  Resource  Managers,  approximately  80% of U.S.
workplaces  today allow casual  business wear at least one day a week. In fiscal
year 2000, sales of Dockers(R) brand products  represented  approximately 23% of
our net sales,  accounting for  approximately  31% of net sales in the Americas,
approximately  9% of net sales in Europe  and  approximately  5% of net sales in
Asia Pacific.

     Our Dockers(R) brand offerings are primarily targeted to men and women ages
25 to 39 and include:

     o    DOCKERS(R)  BRAND.  Dockers(R) brand products are the core line of the
          brand.  They  include  a broad  range of  casual  khaki  pants and are
          complemented  by a variety of tops and  seasonal  pant  products  in a
          range of  fits,  fabrics,  colors  and  styles.  We  distribute  these
          products  in the  Americas,  Europe  and Asia  through  a  variety  of
          channels, including department stores and chain stores.

     o    DOCKERS(R) PREMIUM.  The Dockers(R) Premium pant line provides a range
          of cotton pants  constructed  from premium fabrics with  sophisticated
          details in a range of finishes, fits, styles and colors. We distribute
          these products through department stores in the United States.




                                       5

<PAGE>

     o    DOCKERS(R)  RECODE(TM).  In Spring 2000,  we launched  the  Dockers(R)
          Recode(TM) sub-brand exclusively in U.S. department stores in order to
          appeal  to more  fashion-involved  consumers  who want  modern  casual
          clothes. A slightly more  fashion-

          forward   line  of  pants  and  tops,   the   sub-brand   consists  of
          cotton-blended fabrications in a sophisticated color spectrum. In Fall
          2000,  we  expanded  the  collection  with an  offering  of  sweaters,
          outerwear, shoes and belts marketed by our licensees.

     o    DOCKERS(R)  K-1  KHAKIS.  The brand's  first  global  product  launch,
          Dockers(R)  K-1  Khakis  is a  premium  khaki  pant  inspired  by  the
          authentic  army  khaki and made from the  original  Cramerton(R)  army
          cloth.  In Fall 2000,  we  introduced a complete  collection  with new
          colors and fabrics in shirts, sweaters, belts, outerwear and a variety
          of pants,  all inspired by military and antique  workwear  themes.  We
          distribute  Dockers(R)  K-1 Khakis  through  specialty and  department
          stores in Europe,  Asia and the Americas,  but will  discontinue  this
          line in the United  States in 2001 in order to  heighten  our focus on
          other Dockers(R) lines.

     o    OTHER PRODUCTS. Our other Dockers(R) product lines include Exact(TM) A
          Dockers(R)  Brand,  a collection of more refined  casual dress styling
          available through chain stores;  and Dockers(R) D(TM) products,  a new
          boys' line distributed in the United States targeted towards boys ages
          4 to 14. We work with  established  licensees  to  develop  and market
          complementary products under the Dockers(R) brand, including outerwear
          and leather goods, men's and women's footwear, men's sweaters, hosiery
          and golf apparel.

SLATES(R) BRAND

     We  market  modern,  sophisticated  clothes  for men and  women  under  the
Slates(R) brand in the United States. Launched in Fall 1996, the Slates(R) brand
became a leading men's dress pant brand at department stores by the end of 1997.

     Our Slates(R) brand offerings include:

     o    MEN'S  SLATES(R).  The  men's  Slates(R)  brand  collection  of pants,
          shirts,  sweaters and  outerwear,  combines  contemporary  styles with
          modern fabrics and colors.  We position the brand between casual pants
          and  tailored  clothing  and  design  and market it to meet the 25- to
          34-year-old  consumer's  desire for a younger  and more  sophisticated
          casual  look.  This  brand is  distributed  to  department  stores and
          specialty stores.

     o    WOMEN'S  SLATES(R).  In Fall  2000,  we  added a new  line of  women's
          dress-casual  clothing to the Slates(R)  brand.  The "Slates(R)  Janet
          Howard(R)" line, designed by Janet Howard, targets women ages 24 to 35
          with a designer-inspired  line of dress pants,  skirts, tops, sweaters
          and dress jackets.  We distribute  this line of products to higher-end
          department  stores to fill a gap between the classic and  contemporary
          women's apparel categories.

     o    OTHER  PRODUCTS.  For  men's  products,  we  produce  the pants in the
          Slates(R)  line and work with  established  licensees  to develop  and
          market complementary  products under the Slates(R) brand,  including a
          broad  assortment  of knit and woven  tops,  dress  shirts,  sweaters,
          hosiery and outerwear and, planned for Spring 2001,  ties,  sportcoats
          and suit separates.


SALES, DISTRIBUTION AND CUSTOMERS

     We distribute  our products on a worldwide  basis through  selected  retail
channels, including chain stores, department stores, specialty stores, dedicated
franchised  stores,  outlets,   Internet  sites  and  mail-order  catalogs.  Our
distribution strategy focuses on:

     o    improving  the   presentation   of  our  products  at  retail  through
          introducing  new retailing  formats,  executing new fixturing,  visual
          merchandising  and other  sales-area  upgrade  programs and  providing
          on-floor merchandising services; and

     o    strengthening our relationships with our retail customers through more
          collaborative planning and performance monitoring processes, providing
          sub-brands and products to specific  distribution channels in order to
          create points of differentiation  for our customers and providing them
          with products targeted for their core consumers.


                                       6

<PAGE>


AMERICAS

     In the Americas,  we distribute our products  through national and regional
chains,  department  stores,  specialty  stores and Original Levi's Store(R) and
Dockers(R)  Store retail shops.  We have  approximately  3,000 retail  customers
operating more than 16,800  locations in the United States and Canada.  Sales of
Levi's(R),  Dockers(R)  and  Slates(R)  products  to our  top  five  and  top 10
customers in the United States  accounted for  approximately  36% and 48% of our
total  net sales in  fiscal  year  2000,  and  approximately  54% and 70% of our
Americas net sales in fiscal year 2000, as compared to approximately 34% and 46%
of our total net sales in fiscal year 1999, and approximately 51% and 69% of our
Americas net sales in fiscal year 1999. Our top 10 customers in 2000, on both an
Americas and total company basis, were Designs, Inc., Dillards,  Inc., Federated
Department  Stores,  Inc.,  Goody's Family Clothing,  Inc., J.C. Penney,  Kohl's
Corporation,  The May Department  Stores  Company,  the Mervyn's unit of Target,
Sears, Roebuck & Co. and Specialty  Retailers.  J.C. Penney is the only customer
that represented  more than 10% of our total net sales,  accounting for 12%, 11%
and  12%  of  our  total  net  sales  in  fiscal  years  2000,  1999  and  1998,
respectively.   We  also  target  limited  distribution  premium  products  like
Levi's(R) Vintage Clothing to independent,  image-conscious  specialty stores in
major  metropolitan areas who cater to more  fashion-forward,  trend-influential
consumers.

EUROPE

     Our European  customers  include  large  department  stores,  such as Corte
Ingles in Spain, Galeries Lafayette in France and Karstadt Quelle AG in Germany;
dedicated,  single-brand  Original Levi's  Store(R) and Dockers(R)  Store retail
shops; mail order accounts;  and a substantial  number of independent  retailers
operating  either a single or small  group of  jeans-focused  stores or  general
clothing  stores.  We  depend  for  nearly  half  our  European  sales  on these
independent  retailers,  who are under increasing  pressure from both vertically
integrated   specialty  stores  and  department  stores.  The  more  varied  and
fragmented  nature of European  retailing  means that we are less  dependent  on
major  customers than we are in the United States.  In fiscal year 2000, our top
10 European customers  accounted for approximately 10% of our total European net
sales.

ASIA PACIFIC

     In Asia  Pacific,  we generate over half of our sales through the specialty
store  channel,  which  includes  multi-brand  as  well as  independently  owned
Original Levi's Store(R) retail shops. The rest of our products are sold through
department stores and general  merchandise  stores. As in Europe, the varied and
fragmented  nature of Asian  retailing means we are less dependent on individual
customers in the region.  Our Asia Pacific  business is heavily  weighted toward
Japan, which represented approximately 63% of our 2000 net sales in the region.


DEDICATED STORES

     We have a network of  approximately  750 franchised or other  independently
owned stores  selling  Levi's(R)  brand or Dockers(R)  brand  products under the
"Original Levi's Store(R)",  "Levi's(R)  Store" and "Dockers(R)  Store" names in
Europe,  Asia,  Canada  and Latin  America.  These  dedicated-format  stores are
strategically important as vehicles for demonstrating the breadth of our product
line,  enhancing  brand image and  generating  sales.  These  stores also are an
important  distribution  channel in newer and smaller markets in Eastern Europe,
Asia  Pacific and Latin  America.  We own and  operate a small  number of stores
dedicated to the Levi's(R) brand,  including stores in the United States located
in New York,  Chicago,  Orange  County,  San  Francisco,  San Diego,  Boston and
Seattle and in Europe in London, Milan, Paris and Berlin.

     We also own in the United  States and Japan,  and license  third parties in
the United  States and abroad to operate  outlet stores for the  disposition  of
closeout,  irregular  and return  goods.  Sales in fiscal year 2000  through our
outlet  channels  in  the  United  States  represented  approximately  8% of our
Americas  net sales and  approximately  5% of our  total net  sales.  We use the
outlet  store  channel to support our brands by moving  closeout  and  irregular
goods as quickly as  possible  through  the stores and by  reducing  the flow of
goods to channels  that are not  consistent  with brand  image and  distribution
strategies.   In  order  to  better  meet  consumer  needs  and  to  participate
effectively  in the  value  distribution  channel,  we  supplement  the  product
offering  to the outlet and  related  stores in the United  States by  producing
selected  basic  products,  including  jeans,  khaki  pants  and  denim  shirts,
specifically for those stores.


                                       7

<PAGE>


INTERNET

     We operate  web sites  devoted  to each of the  Levi's(R),  Dockers(R)  and
Slates(R) brands as marketing vehicles to enhance consumer  understanding of our
brands. We do not sell products  directly to consumers through the Internet.  In
the United States,  our products are currently sold online through  specifically
authorized  Internet  sites  that  meet our  standards,  such as  www.macys.com,
operated by Federated, and www.jcpenney.com, operated by J.C. Penney. In Europe,
authorized  dealers and mail order  accounts who meet our standards  relating to
customer service,  return policy, site content,  trademark use and other matters
may sell our products to consumers through their own Internet sites.


ADVERTISING AND PROMOTION

     We make  substantial  investments  in  advertising,  retail  and  promotion
activities in support of our brands to increase consumer  relevance and to drive
consumer demand. We expensed  approximately $402.7 million, or 8.7% of total net
sales, on these activities in fiscal year 2000. We advertise through a broad mix
of media,  including  television,  national  publications,  billboards and other
outdoor vehicles. We execute both global and region-specific  marketing programs
to achieve  consistent brand positioning while allowing  flexibility to optimize
program execution in local markets. Examples of our global marketing initiatives
include our sponsorships of World AIDS Day and advertising  campaigns associated
with the global launch of Levi's(R) Engineered Jeans(TM).

     Our marketing strategy focuses on:

     o    developing  clear  consumer  value  propositions  that  drive  product
          development  and  messaging in order to  differentiate  our brands and
          products;

     o    developing  integrated marketing programs that effectively  coordinate
          product   launches  and  promotions  with  specific   traditional  and
          non-traditional advertising and retail point of sales activities;

     o    creating superior quality, product-focused advertising; and

     o    enhancing presentation of product at retail through innovative  retail
          initiatives.

     We are increasing our use of less traditional marketing vehicles, including
event and music  sponsorships,  product  placement in  television  shows,  music
videos and films and alternative  marketing techniques,  including  street-level
and  nightclub  events and  similar  targeted,  small-scale  activities.  Recent
activities  include  cosponsoring  with Sears the fall tour of the Grammy  award
winner Christina  Aguilera.  The multi-program "Make Them Your Own"(TM) campaign
for the Levi's(R) brand in the United States,  launched in summer 2000, features
print and television advertising, interactive online activities and a customized
tractor-trailer  featuring  games,  product  displays,  video  "style-cam",  and
karaoke that travels to concert venues and retail locations.


COMPETITION

     The worldwide  apparel  industry is highly  competitive and fragmented.  We
compete in all of our markets with numerous  designers,  manufacturers,  private
labels and specialty store retailers,  both domestic and foreign. The success of
our business  depends on our ability to shape and stimulate  consumer tastes and
demands by producing  innovative,  attractive,  and competitively priced fashion
products.  In  fashion-sensitive  markets,  such as the  jeans and  casual  wear
markets,  barriers to entry are sufficiently low so that talented  designers and
others can become meaningful competitors soon after establishing a new label. We
believe that the primary factors upon which we compete are:

     o    anticipating and responding to  changing consumer demands in  a timely
          manner;

     o    maintaining favorable brand recognition;

     o    developing innovative,  high-quality  products in  sizes,  colors  and
          styles that appeal to consumers;

     o    pricing products;




                                       8

<PAGE>

     o    providing strong and effective marketing support;

     o    creating an acceptable value proposition for retail customers;

     o    ensuring product availability and optimizing supply chain efficiencies
          with retailers; and

     o    obtaining sufficient retail floor space and effective presentation  of
          products at retail.

     We believe our competitive strengths include:

     o    strong worldwide brand recognition;

     o    competitive product quality and value;

     o    long-standing relationships with leading department  stores and  other
          chain stores worldwide;

     o    our network of  franchised  and other  Original  Levi's  Store(R)  and
          Dockers(R)  Store  retail  shops in  Europe,  Asia,  Canada  and Latin
          America; and

     o    our commitment to ethical conduct and social responsibility.

     We believe that the total unit sales of Levi's(R) brand jeans in the United
States is second only to the combined  total unit sales in the United  States of
VF Corporation's  principal jeans brands,  Wrangler, Lee and Rustler. We believe
that the total unit sales of Levi's(R)  brand jeans on a pan-European  basis and
on a pan-Asia Pacific basis is greater than the total unit sales of jeans of any
single brand in those  regions and that there is no single  competitor  offering
multiple brands with greater total sales of jeans in either of those regions.


AMERICAS

     We face intense  competition across all of our brands from designer labels,
vertically  integrated specialty stores, mass merchandisers,  private labels and
fashion  labels.  We sell both  basic and  fashion-oriented  products  under the
Levi's(R),  Dockers(R)  and  Slates(R)  brands to retailers in diverse  channels
across a wide range of retail price points. As a result, we face a wide range of
competitors, including:

     o    other jeanswear manufacturers, including VF Corporation,  marketer  of
          the Lee, Wrangler and Rustler brands;

     o    fashion-oriented  designer  apparel  marketers,  including  Polo Ralph
          Lauren Corporation, Calvin Klein, Nautica Enterprises,
          Guess?, Inc. and Tommy Hilfiger Corp.;

     o    vertically   integrated    specialty   stores,   including  Gap  Inc.,
          Abercrombie & Fitch, American Eagle Outfitters Inc., J. Crew
          and Eddie Bauer, Inc.;

     o    lower-volume but high visibility fashion-forward jeanswear brands that
          appeal to the teenage market,  including the FUBU, JNCO,  Lucky,  MUDD
          and Diesel brands;

     o    casual wear manufacturers, including Haggar Corp., Liz Claiborne, Inc.
          and Savane International Corp.;

     o    retailer  private labels,  including J.C. Penney's Arizona  brand  and
          Sears' Canyon River Blues and Canyon River Khakis brands; and

     o    mass merchandisers, including Wal-Mart Stores, Inc., Target and Kmart.


                                       9

<PAGE>



EUROPE

     While there is no one particular brand with a strong pan-European presence,
strong local brands and retailers exist in certain markets,  including Diesel in
Italy and Scandinavia,  Pepe in Spain and Lee Cooper in France.  Zara,  Hennes &
Mauritz AB, Energie and other vertically  integrated  specialty  retailers,  and
athletic wear firms such as adidas-Salomon,  also offer competitive products and
are  an  increasing   competitive  force  in  the  market.  Our  principal  U.S.
competitors,  including  Gap  Inc.  and  VF  Corporation,  are  expanding  their
collective presence in Europe. While these U.S.  competitors  generally lack the
presence in Europe they enjoy in the United States,  we believe they view Europe
as a significant growth  opportunity,  and we anticipate  increased  competition
from them going forward.


ASIA PACIFIC

     Competitors in the jeanswear market consist of both regional  brands,  such
as Edwin, our principal competitor in Japan, and U.S. brands,  including Guess?,
Lee and  Wrangler,  which  offer  basic  products  available  in local  markets.
Competitors  in both  jeanswear  and  casual  apparel  also  include  vertically
integrated specialty stores, such as UNIQLO, Gap Inc., Esprit and Eddie Bauer in
Japan, and Giordano, a more value-focused  retailer that operates throughout the
region.


SOURCING, MANUFACTURING AND RAW MATERIALS

     Our supply chain  strategy  focuses on improving the linkage of our product
supply to  consumer  demand and our ability to ship  product  orders in a timely
manner.  We obtain our products from a combination of  company-owned  facilities
and  independent  manufacturers.  Over the last  three  years,  we  shifted  our
sourcing  base  substantially  toward  outsourcing  by closing 29  company-owned
production and finishing facilities in North America and Europe. We believe that
outsourcing  allows us to maintain  production  flexibility  while  avoiding the
substantial  capital  expenditures  and costs  related  to  maintaining  a large
internal production capability.

     Each of our operating regions operates a supply chain network that provides
product  management,  demand-forecasting,  quality assurance,  manufacturing and
logistics  support to our brands.  Within each of our brands,  merchandisers and
designers  create seasonal  product plans that are intended to reflect  consumer
preferences,  market  trends  and  retail  customer  requirements.   During  the
development phase, the merchandisers and designers work closely with the product
managers to ensure  completion of manufacturing  specifications  and costing for
each product in the seasonal plan.  They also consult with forecast  specialists
and sales representatives to determine the potential unit volume for the fashion
and  replenishment  products  in the plan.  Once the  brand's  seasonal  plan is
finalized, product managers focus on sourcing the products in the plan.

     We purchase the fabric and raw materials used in our business, particularly
denim and twill,  from  several  suppliers,  including  Cone  Mills,  Burlington
Industries,  Galey & Lord,  including  its Swift Denim  subsidiary  and American
Cotton Growers. In addition, we purchase thread, trim, buttons,  zippers,  snaps
and various other product  components  from numerous  suppliers.  We do not have
long-term  raw  materials  or  production  contracts  with any of our  principal
suppliers,  except for Cone Mills,  which is the sole worldwide  supplier of the
denim used for our 501(R) jeans, and which supplied  approximately  24%, 22% and
24% in 2000,  1999 and 1998,  respectively,  of the total  volume of  fabrics we
purchased  worldwide.  Our  contract  with  Cone  Mills  provides  for a rolling
five-year term unless either Cone Mills or we elect not to extend the agreement,
upon which the agreement will terminate at the end of the then-current term. The
contract  also ensures our supply for three years  following a change of control
of Cone Mills. We may terminate the Cone Mills contract at any time upon 30 days
notice. We have not experienced any material  difficulty in obtaining fabric and
other raw materials to meet production needs in the past.

     Our purchased fabrics are shipped directly from fabric manufacturers to our
owned manufacturing plants, to cutting facilities for cutting and shipment on to
third party  contractors  or directly  to third  party  contractors  for garment
construction. In most cases where we use contractors, we retain ownership of the
fabric  throughout  the  manufacturing  process.  We  use  numerous  independent
manufacturers,  principally in Latin America and Asia, for the production of our
garments.  We also use  contractors  who both produce or purchase fabric and sew
the garments. These package contractors represent a small but growing percentage
of  our  production  and  enable  us  to  reduce  working  capital  relating  to
work-in-process  inventories. We typically conduct business with our contractors
on an order-by-order basis. We inspect fabrics and finished goods as part of our
quality control program.

     We require all third party  contractors  who manufacture or finish products
on our behalf to abide by a stringent  code of conduct that sets  guidelines for
employment  practices  such as wages and  benefits,  working  hours,  health and
safety, working age


                                       10

<PAGE>


and disciplinary practices, and for environmental, ethical and legal matters. We
assess working  conditions and  contractors'  compliance with our standards on a
regular basis and implement continuous improvement plans as needed.

     We operate 21 dedicated distribution centers in 18 countries.  Distribution
center  activities   include  receiving  finished  goods  from  our  plants  and
contractors,  inspecting  those products and shipping them to our customers.  In
some instances,  we outsource  distribution  activities to third party logistics
providers.

TRADEMARKS

     We regard our trademarks as our most valuable  assets and believe they have
substantial  value in the  marketing of our products.  Levi's(R),  Silvertab(R),
501(R), L2(R), Dockers(R),  Slates(R), the Arcuate trademark, the Tab Device and
Two  Horse are  among  our core  trademarks.  We  protect  these  trademarks  by
registering them with the U.S. Patent and Trademark Office and with governmental
agencies in other  countries  where our products are  manufactured  and sold. We
work  vigorously  to enforce  and protect  our  trademark  rights by engaging in
regular market  reviews,  helping local law enforcement  authorities  detect and
prosecute counterfeiters, issuing cease-and-desist letters against third parties
infringing or denigrating our trademarks and initiating litigation as necessary.
We also work with trade groups and industry  participants  seeking to strengthen
laws  relating to the  protection  of  intellectual  property  rights in markets
around the world.  We grant  licenses to other parties to  manufacture  and sell
products with our trademarks in product  categories  and in geographic  areas in
which we do not operate.

SEASONALITY AND BACKLOG

     Our sales do not vary substantially by quarter in any of our three regions,
as the apparel  industry has become less seasonal due to more  frequent  selling
seasons and offerings of both basic and fashion oriented merchandise  throughout
the year. In addition, all of our orders are subject to cancellation.  For those
reasons, our order backlog may not be indicative of future shipments.

SOCIAL RESPONSIBILITY

     We have a long-standing  corporate culture characterized by ethical conduct
and social responsibility.  Our culture and values are reflected in policies and
initiatives that we believe  distinguish us from others in the apparel industry.
We were a pioneer in many social and cultural areas:

     o    We were the first  multinational  company to  develop a  comprehensive
          code of conduct  intended to ensure that  workers  making our products
          anywhere  in  the  world  would  do so in  safe  and  healthy  working
          conditions and be treated with dignity and respect.

     o    Our commitment to social justice is highlighted by a unique initiative
          that addresses racial prejudice and seeks to improve race relations by
          supporting  community  organizations  working  together  to  eliminate
          racism.

     o    We were among the first  companies to offer employee  benefits such as
          flexible time-off policies and domestic partner benefits.

     o    We have been a leader in promoting AIDS awareness and education  since
          1982.

     We are active in the communities where we have a presence.  We and the Levi
Strauss Foundation jointly  contributed $17.2 million during fiscal year 2000 to
community  agencies in over 40 countries to support  employee  volunteerism  and
programs in AIDS prevention and care,  economic  empowerment,  youth empowerment
and social justice. In addition,  we support more than 75 community  involvement
teams  worldwide  that  facilitate  employee  volunteerism  and raise  funds for
community projects.

EMPLOYEES

     As  of  November  26,  2000,  we  employed   approximately  17,300  people,
approximately  9,000 of whom were  located  in the  United  States.  Most of our
production  and  distribution  employees  in the United  States  are  covered by
various collective bargaining agreements. Outside the United States, most of our
production and distribution  employees are covered by either  industry-sponsored
and/or  state-sponsored   collective  bargaining  mechanisms.  We  consider  our
relations  with our employees to be good and have not recently  experienced  any
material job actions or labor shortages.


                                       11

<PAGE>


ITEM 2.  PROPERTIES

     We conduct  manufacturing,  distribution and  administrative  activities in
owned and leased  facilities.  We have  renewal  rights in most of our  property
leases.  We  anticipate  that we will be able to  extend  these  leases on terms
satisfactory to us or, if necessary,  locate substitute facilities on acceptable
terms.  We believe our  facilities  and equipment are in good  condition and are
suitable  for  our  needs.   Information  about  manufacturing,   finishing  and
distribution facilities and other key operating properties in use as of November
26, 2000 is summarized in the following table:

<TABLE>
<CAPTION>

      LOCATION                                                                     PRIMARY USE                  LEASED/OWNED
      --------                                                                     -----------                  ------------
      <S>                                                                          <C>                             <C>
      UNITED STATES
      Little Rock, AR..........................................................    Distribution                    Owned
      Hebron, KY...............................................................    Distribution                    Owned
      Canton, MS...............................................................    Distribution                    Owned
      Henderson, NV............................................................    Distribution                    Owned
      San Antonio, TX..........................................................    Finishing                       Owned
      San Antonio, TX..........................................................    Manufacturing                   Owned
      San Francisco, CA........................................................    Manufacturing                   Owned
      Blue Ridge, GA...........................................................    Manufacturing                   Owned
      Powell, TN...............................................................    Manufacturing                   Owned
      Brownsville, TX..........................................................    Manufacturing                   Owned
      El Paso (Kastrin), TX....................................................    Manufacturing                   Owned
      San Benito, TX...........................................................    Manufacturing                   Owned
      Westlake, TX.............................................................    Data Center                     Leased

      OTHER AMERICAS
      Buenos Aires, Argentina..................................................    Distribution                    Leased
      Cotia, Brazil............................................................    Distribution                    Leased
      Rexdale, Canada..........................................................    Distribution                    Owned
      Stoney Creek, Canada.....................................................    Manufacturing                   Owned
      Brantford, Canada........................................................    Finishing                       Leased
      Edmonton, Canada.........................................................    Manufacturing                   Leased
      Naucalpan, Mexico........................................................    Distribution                    Leased

      EUROPE, MIDDLE EAST AND AFRICA
      Schoten, Belgium.........................................................    Distribution                    Leased
      Les Ulis, France.........................................................    Distribution                    Leased
      Heustenstamm, Germany....................................................    Distribution                    Owned
      Kiskunhalas, Hungary.....................................................    Manufacturing, Finishing        Owned
                                                                                   and
                                                                                   Distribution
      Milan, Italy.............................................................    Distribution                    Leased
      Amsterdam, Netherlands...................................................    Distribution                    Leased
      Plock, Poland............................................................    Manufacturing and Finishing     Leased
      Warsaw, Poland...........................................................    Distribution                    Leased
      Dundee, Scotland.........................................................    Manufacturing                   Owned
      Bellshill, Scotland......................................................    Finishing                       Owned
      Northhampton, U.K........................................................    Distribution                    Owned
      Cape Town, South Africa..................................................    Manufacturing, Finishing        Leased
                                                                                   and Distribution
      Sabedell, Spain..........................................................    Distribution                    Leased
      Bonmati, Spain...........................................................    Manufacturing                   Owned
      Olvega, Spain............................................................    Manufacturing                   Owned
      Helsingborg, Sweden......................................................    Distribution                    Owned
      Corlu, Turkey............................................................    Manufacturing, Finishing        Owned
                                                                                   and Distribution

      ASIA PACIFIC
      Auckland, New Zealand....................................................    Distribution                    Leased
      Adelaide, Australia......................................................    Manufacturing and               Owned
                                                                                   Distribution
      Bangalore, India.........................................................    Distribution                    Leased
      Jawa Barat, Indonesia....................................................    Finishing                       Leased
      Hiratsuka Kanagawa, Japan................................................    Distribution                    Owned
      Makati, Philippines......................................................    Distribution                    Leased
      Makati, Philippines......................................................    Manufacturing                   Leased
</TABLE>

                                       12

<PAGE>


     Our global  headquarters and the headquarters of our Americas  business are
both located in leased  premises in San  Francisco,  California.  Our Europe and
Asia Pacific  headquarters  are located in leased premises in Brussels,  Belgium
and Singapore. We also lease or own over 110 administrative and sales offices in
44 countries,  as well as lease a number of small  warehouses in nine countries.
In  addition,  we have 52  company-operated  retail and  outlet  stores in eight
countries in owned and leased premises,  of which 10 stores are outlet stores in
the United  States,  and 15 stores are  located in Poland.  We also own or lease
several facilities we formerly operated and have closed.


ITEM 3.  LEGAL PROCEEDINGS

     We are subject to claims against us, and we make claims against others,  in
the ordinary  course of our business,  including  claims arising from the use of
our  trademarks and with respect to employment  matters.  We do not believe that
the  resolution  of any pending  claims  will  materially  adversely  affect our
business.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of our security holders during our 2000
fiscal fourth quarter.

















                                       13

<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


     (a) Our  shares of common  stock are held by  members  of the  families  of
several descendants of our founder,  Levi Strauss, and by several former members
of our management.  There is no established public trading market for our shares
and none of our shares are  convertible  into shares of any other class of stock
or other securities.

     All shares of our common  stock are  deposited in a voting  trust,  a legal
arrangement  that transfers the voting power of the shares to a trustee or group
of trustees.  The four voting  trustees are Peter E. Haas,  Sr.,  Peter E. Haas,
Jr.,  Robert  D.  Haas and F.  Warren  Hellman.  The  voting  trustees  have the
exclusive  ability to elect and remove  directors,  amend our  by-laws  and take
certain other actions which would  normally be within the power of  stockholders
of a Delaware  corporation.  Our equity  holders  who, as a result of the voting
trust, legally hold "voting trust certificates",  not stock, retain the right to
direct  the   trustees  on   specified   mergers  and   business   combinations,
liquidations,  sales of substantially all of our assets and specified amendments
to our certificate of incorporation.

     The  voting  trust  will  last  until  April  2011,   unless  the  trustees
unanimously  decide, or holders of at least two-thirds of the outstanding voting
trust certificates  decide, to terminate it earlier. If Robert D. Haas ceases to
be a trustee for any reason, then the question of whether to continue the voting
trust will be  decided by the  holders.  If Peter E.  Haas,  Sr.  ceases to be a
trustee, his successor will be his spouse, Miriam L. Haas. The existing trustees
will  select the  successors  to the other  trustees.  The  agreement  among the
stockholders and the trustees  creating the voting trust  contemplates  that, in
selecting  successor  trustees,  the trustees will attempt to select individuals
who share a common  vision with the sponsors of the 1996  transaction  that gave
rise to the  voting  trust,  represent  and  reflect  the  financial  and  other
interests  of the  equity  holders  and bring a balance of  perspectives  to the
trustee group as a whole.  A trustee may be removed if the other three  trustees
unanimously  vote  for  removal  or if  holders  of at least  two-thirds  of the
outstanding voting trust certificates vote for removal.

     Our common  stock,  as noted,  and the voting trust  certificates,  are not
publicly  held or  traded.  All shares and the  voting  trust  certificates  are
subject to a  stockholders'  agreement.  The  agreement,  which expires in April
2016,  limits the transfer of shares and  certificates to other holders,  family
members,  specified  charities and foundations and to us. The agreement does not
provide  for  registration  rights or other  contractual  devices  for forcing a
public sale of shares,  certificates or other access to liquidity. The scheduled
expiration date of the stockholders'  agreement is five years later than that of
the  voting  trust  agreement  in order to permit  an  orderly  transition  from
effective  control  by the  voting  trust  trustees  to  direct  control  by the
stockholders.


     We may hold  "annual  stockholders'  meetings"  to which all  voting  trust
certificate holders are invited to attend.  These meetings are not a "meeting of
stockholders"  in the  traditional  corporate law sense;  under the voting trust
agreement,  the trustees,  not the voting trust certificate  holders,  elect the
directors and vote the shares on most other corporate matters. In addition,  the
meetings are not official formal meetings,  under the voting trust agreement, of
the voting trust  certificate  holders.  Instead,  these annual  gatherings  are
opportunities  for the voting  trust  certificate  holders to interact  with the
board of directors and management and to learn more about our business.

     (b) As of January 1, 2001,  there were 164 record  holders of voting  trust
certificates.

     (c) We did not declare or pay any  dividends in our two most recent  fiscal
years. Our current bank credit  facilities  prohibit our declaring or paying any
dividends  without first  obtaining  consents  from our lenders.  In addition in
January 2001, we entered into  indentures  relating to our 11.625%  senior notes
due 2008  that  prohibit  our  paying  any  dividends  unless  we meet  specific
requirements. For more detailed information about our bank credit facilities and
senior notes, see "Management's  Discussion and Analysis of Financial  Condition
and Results of  Operations  --  Liquidity  and Capital  Resources"  and Notes to
Consolidated Financial Statements.


                                       14

<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

     The following  table sets forth our selected  financial data. The following
selected  statements  of income  data and cash flow data for fiscal  years 2000,
1999, 1998, 1997 and 1996 and the  consolidated  statement of balance sheet data
of such periods are derived from our financial statements that have been audited
by Arthur Andersen LLP, independent public accountants.

     The financial data set forth below should be read in conjunction  with, and
is qualified by reference to, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," our consolidated  financial statements and
the related  notes to those  financial  statements,  included  elsewhere in this
report. Certain prior year amounts have been reclassified to conform to the 2000
presentation.

<TABLE>
<CAPTION>

                                                                    YEAR ENDED
                                                                    ----------
                                        NOVEMBER 26,  NOVEMBER 28, NOVEMBER 29,  NOVEMBER 30, NOVEMBER 24,
                                            2000          1999         1998          1997         1996
                                            ----          ----         ----          ----         ----
                                                              (DOLLARS IN THOUSANDS)
<S>                                        <C>         <C>          <C>           <C>          <C>
STATEMENT OF INCOME DATA:
Net sales........................          $4,645,126  $ 5,139,458  $ 5,958,635   $ 6,861,482  $ 7,136,304
Cost of goods sold...............           2,690,170    3,180,845    3,433,081     3,962,719    4,159,371
                                           ----------  -----------  -----------   -----------  -----------
Gross profit.....................           1,954,956    1,958,613    2,525,554     2,898,763    2,976,933
Marketing, general and
  administrative expenses........           1,481,718    1,629,845    1,834,058     2,045,938    2,029,138
Other operating income                        (32,380)     (24,387)     (25,310)      (26,769)     (28,328)
Excess capacity/restructuring (1)             (33,144)     497,683      250,658       386,792           --
Global Success Sharing Plan(2) ..                  --     (343,873)      90,564       114,833      138,963
Special Compensation Charge(3) ..                  --           --           --            --       76,983
                                           ----------  -----------  -----------   -----------  -----------
Operating income.................             538,762      199,345      375,584       377,969      760,177
Interest expense.................             234,098      182,978      178,035       212,358      145,234
Other (income) expense, net......             (39,016)       7,868       34,849       (18,670)      (4,963)
                                           ----------  -----------  -----------   -----------  -----------
Income before taxes..............             343,680        8,499      162,700       184,281      619,906
Income tax expense...............             120,288        3,144       60,198        46,070      154,977
                                           ----------  -----------  -----------   -----------  -----------
Net income.......................          $  223,392  $     5,355  $   102,502   $   138,211  $   464,929
                                           ==========  ===========  ==========-   ===========  ===========
OTHER FINANCIAL DATA:
EBITDA(4)........................          $  629,743  $   319,447  $   504,357   $   516,863  $   889,714
Adjusted EBITDA(5)...............             596,599      473,257      845,579     1,018,488    1,105,660
Capital expenditures.............              27,955       61,062      116,531       121,595      210,466
Ratio of adjusted EBITDA to
  interest.......................                2.5x         2.6x         4.7x          4.8x         7.6x
Ratio of earnings to fixed
  charges(6).....................                2.0x         1.0x         1.6x          1.6x         3.8x
STATEMENT OF CASH FLOW
  DATA:
Cash flows from operating
  activities.....................          $  305,926  $  (173,772) $   223,769   $   573,890  $   494,138
Cash flows from investing
  activities.....................             154,223       62,357      (82,707)      (76,895)    (242,781)
Cash flows from financing
  activities.....................            (527,062)     224,219     (194,489)     (530,302)  (1,136,300)
BALANCE SHEET DATA:
Cash and cash equivalents.......           $  117,058  $   192,816  $    84,565   $   144,484  $   195,852
Working capital..................             555,062      770,130      637,801       701,535    1,059,940
Total assets.....................           3,205,728    3,670,014    3,867,757     4,012,314    4,167,696
Total debt.......................           2,126,430    2,664,609    2,415,330     2,631,696    3,225,512
Stockholders' deficit(3).........          (1,098,573)  (1,288,562)  (1,313,747)   (1,370,262)  (1,481,577)
</TABLE>


                                       15

<PAGE>


- --------------
(1)  We reduced overhead expenses and eliminated excess  manufacturing  capacity
     through extensive restructuring  initiatives executed during the past three
     years,  including  closing  29 of our owned  and  operated  production  and
     finishing facilities in North America and Europe.
(2)  Our  Global  Success  Sharing  Plan,  adopted  in 1996,  provides  for cash
     payments to our employees in 2002 if we achieve  pre-established  financial
     targets.  We recognized and accrued expenses in 1998, 1997 and 1996 for our
     Global Success Sharing Plan.  During 1999, we concluded that,  based on our
     financial performance, the targets under the plan would not be achieved and
     that the probability of a payment in 2002 is highly unlikely.  As a result,
     in 1999 we reversed into income $343.9  million of accrued  expenses,  less
     miscellaneous  expenses,  previously recorded in connection with the Global
     Success Sharing Plan.
(3)  The special  compensation charge and stockholders'  deficit resulted from a
     1996 transaction in which our stockholders created new long-term governance
     arrangements for us, including the voting trust and stockholders agreement.
     In the 1996 transaction, a group of stockholders of our former parent, Levi
     Strauss Associates Inc.,  established a new company,  LSAI Holding Corp, to
     which they contributed  approximately 70% of the outstanding shares of Levi
     Strauss Associates Inc. Levi Strauss Associates Inc. was then merged with a
     subsidiary  of LSAI  Holding  Corp.  In the merger,  shares of Levi Strauss
     Associates  Inc. not  contributed to LSAI Holding Corp.,  including  shares
     held under several employee benefit and compensation  plans, were converted
     into the right to receive cash, thereby making Levi Strauss Associates Inc.
     a  wholly-owned  subsidiary  of LSAI  Holding  Corp.  Funding  for the cash
     payments  in the  merger was  provided  in part by cash on hand and in part
     from proceeds of approximately $3.3 billion of borrowings under bank credit
     facilities. The special compensation charge resulted from the impact of the
     transaction  on various  employee  plans.  In October  1996,  Levi  Strauss
     Associates  Inc. and LSAI Holding Corp. were merged into Levi Strauss & Co.
     These transactions were accounted for as a reorganization of entities under
     common control.
(4)  EBITDA equals operating income plus depreciation and amortization  expense.
     EBITDA is not  intended  to  represent  cash flow or any other  measure  of
     performance in accordance with generally accepted accounting principles.
(5)  The calculation for adjusted EBITDA is shown below:

<TABLE>
<CAPTION>
                                                                    YEAR ENDED
                                                                    ----------
                                        NOVEMBER 26, NOVEMBER 28, NOVEMBER 29, NOVEMBER 30,  NOVEMBER 24,
                                            2000         1999         1998         1997          1996
                                            ----         -----        ----         ----          ----
                                                             (DOLLARS IN THOUSANDS)
     <S>                                   <C>           <C>          <C>        <C>           <C>
     EBITDA..........................      $629,743      $319,447     $504,357   $  516,863    $  889,714
     Excess capacity
       reduction/restructuring.......       (33,144)      497,683      250,658      386,792            --
     Global Success Sharing Plan.....            --      (343,873)      90,564      114,833       138,963
     Special Compensation Charges....            --            --                       --         76,983
                                           --------      --------     --------   ----------    ----------
     Adjusted EBITDA.................      $596,599      $473,257     $845,579   $1,018,488    $1,105,660
                                           ========      ========     ========   ==========    ==========
</TABLE>

(6)  For the  purpose  of  computing  the ratio of  earnings  to fixed  charges,
     earnings are defined as income from  continuing  operations  before  income
     taxes, plus fixed charges and less capitalized interest.  Fixed charges are
     defined as the sum of  interest,  including  capitalized  interest,  on all
     indebtedness, amortization of debt issuance cost and that portion of rental
     expense which we believe to be representative of an interest factor.











                                       16



<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD-LOOKING STATEMENTS

     This report contains forward-looking statements,  including, in particular,
statements  about  our  plans,  strategies  and  prospects  under  "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations"  and
"Business." Among these forward looking statements are statements  regarding our
anticipated performance in fiscal year 2001, specifically statements relating to
our net sales, gross profit, advertising expense and capital expenditures.


     We  have  based  the  forward-looking  statements  herein  on  our  current
assumptions, expectations and projections about future events. When used in this
report,  the words  "believe,"  "anticipate,"  "intend,"  "estimate,"  "expect,"
"project"  and similar  expressions  are  intended  to identify  forward-looking
statements,  although  not all  forward-looking  statements  contain such words.
These  forward-looking  statements speak only as of the date of this report, and
we  do  not  undertake  any   obligation  to  update  or  revise   publicly  any
forward-looking  statements,  whether  as a result  of new  information,  future
events or  otherwise.  Although we believe  that the  expectations  reflected in
these forward-looking  statements are reasonable,  we can give no assurance that
these  expectations  will prove to be correct or that we will achieve savings or
other  benefits  anticipated  in the  forward-looking  statements.  We  disclose
important  factors,  some of which may be beyond our  control,  that could cause
actual  results to differ  materially  from  management's  expectations  in this
report, including, without limitation:

     o  risks related to the impact of competitive products;

     o  changing fashion trends;

     o  dependence on key distribution channels;

     o  customers and suppliers;

     o  our supply chain executional performance;

     o  ongoing competitive pressures in the apparel industry;

     o  changing international retail environments;

     o  changes in the level of consumer spending or preferences in apparel;

     o  trade restrictions; and

     o  political or financial conditions in countries where our products are
        manufactured.

     For more  information  on these and other  factors,  see "Factors  That May
Affect  Future  Results." We caution  prospective  investors  not to place undue
reliance on these  forward-looking  statements.  All subsequent written and oral
forward-looking  statements  attributable to us are expressly qualified in their
entirety by the cautionary  statements and the risk factors contained throughout
this report.






                                       17


<PAGE>



RESULTS OF OPERATIONS

     The following table sets forth,  for the periods indicated,  selected items
in our consolidated  statements of operations,  expressed as a percentage of net
sales (amounts may not foot due to rounding).

<TABLE>
<CAPTION>

                                                                          YEAR ENDED
                                                                          ----------
                                                          NOVEMBER 26,   NOVEMBER 28,   NOVEMBER 29,
                                                              2000           1999           1998
                                                              -----          -----          -----

<S>                                                           <C>            <C>            <C>
Net sales ............................................        100.0%         100.0%         100.0%
Cost of goods sold....................................         57.9           61.9           57.6
                                                              -----          -----           ----
Gross profit..........................................         42.1           38.1           42.4
Marketing, general and administrative
   expenses...........................................         31.9           31.7           30.8
Other operating income................................         (0.7)          (0.5)          (0.4)
Excess capacity/restructuring charges.................         (0.7)           9.7            4.2
Global Success Sharing Plan...........................           --           (6.7)           1.5
                                                              -----          -----          -----
Operating income......................................         11.6            3.9            6.3
Interest expense......................................          5.0            3.6            3.0
Other (income) expense, net...........................         (0.8)           0.2            0.6
                                                              -----          -----          -----
Income before taxes...................................          7.4            0.2            2.7
Income tax expense....................................          2.6            0.1            1.0
                                                              -----          -----          -----
Net income............................................          4.8%           0.1%           1.7%
                                                              =====          =====          =====
NET SALES SEGMENT DATA:
GEOGRAPHIC
     Americas.........................................         67.8%          66.6%          66.1%
     Europe...........................................         23.8           26.5           27.7
     Asia Pacific.....................................          8.4            7.0            6.2
</TABLE>


YEAR ENDED NOVEMBER 26, 2000 AS COMPARED TO YEAR ENDED NOVEMBER 28, 1999

     NET  SALES.  Total  net sales in fiscal  year 2000  decreased  9.6% to $4.6
billion, as compared to $5.1 billion in fiscal year 1999. This decrease reflects
a combination  of factors  including  volume  declines,  a higher  percentage of
closeout  sales related to our efforts to clear  inventories  of slow moving and
obsolete   fashion  products  earlier  in  the  year,  and  the  impact  of  the
depreciating  Euro. Net sales declined in the Americas and Europe  regions,  but
increased in the Asia Pacific region, as compared to the same period of 1999. If
currency exchange rates were unchanged from the prior year period, net sales for
fiscal year 2000 would have declined approximately 7%.

     Although year over year total net sales  continued to decline,  the rate of
decline  narrowed to 9.6% in fiscal 2000 as compared to 13.7% in fiscal 1999 and
13.2% in fiscal 1998.  We believe  that  positive  consumer  response to our new
product  lines,  stronger  demand for our basic products such as 501(R) jeans in
the U.S. and upgraded core products in Asia, improved product-focused  marketing
support,  stronger retail relationships and incremental progress in our shipping
execution  contributed  to the slowing  decline in sales.  Our  narrowing  sales
decline,  particularly  in a  difficult  retail  environment,  reflects  ongoing
progress  in our  business  turnaround  and efforts to improve  performance.  We
believe we are  positioned  both  operationally  and  financially to work toward
stabilizing our business in fiscal year 2001 and hope to achieve relatively flat
net sales on a constant currency basis, compared to fiscal year 2000.

     In  fiscal  years  2000 and  1999,  we had one  customer  that  represented
approximately 12% and 11%,  respectively,  of total net sales. No other customer
accounted for more than 10% of total net sales.

     In the Americas,  net sales decreased 8.0% to $3.1 billion,  as compared to
$3.4 billion in fiscal year 1999,  due primarily to a drop in volume.  Although,
this  decrease  was  partially  attributable  to a weak apparel  retail  market,
including difficult back-to-school and holiday seasons, we experienced increased
consumer interest in our Levi's(R) brand product innovations,  such as Levi's(R)
Engineered Jeans, and higher volume in Dockers(R) product lines.




                                       18

<PAGE>

     In Europe,  net sales decreased 18.8% to $1.1 billion,  as compared to $1.4
billion in fiscal year 1999. Net sales  decreased  primarily due to a decline in
volume caused by a continued  softening of the European apparel market,  certain
execution  issues  in our  supply  chain,  lower  average  unit  selling  prices
resulting from a higher  percentage of closeouts sales and the reporting  impact
of the  depreciating  Euro. If exchange rates were unchanged from the prior year
period,  the reported net sales  decrease  would have been  approximately  8% in
fiscal year 2000 compared to the prior year period.

     In the Asia Pacific region, net sales increased 9.5% to $392.4 million,  as
compared  to $358.4  million in fiscal year 1999.  The  increase  was  primarily
driven by volume growth in most markets and the effects of  translation  to U.S.
dollar  reported  results.  These  results were achieved  despite  falling stock
markets,  political  turmoil in the Philippines and slowed consumer  spending in
Japan. In Japan,  which accounts for nearly  two-thirds of our business in Asia,
we  experienced  positive  retail and consumer  response to our new products and
upgraded  core  basics.  If exchange  rates were  unchanged  from the prior year
period,  the reported net sales  increase  would have been  approximately  7% in
fiscal year 2000 compared to the prior year period.

     GROSS  PROFIT.  Gross  profit  in  fiscal  year  2000 of $2.0  billion  was
relatively  flat compared to the previous year.  Gross profit as a percentage of
net sales, or gross margin,  increased to 42.1% in fiscal year 2000, as compared
to 38.1% in fiscal year 1999.  The  increase  was  primarily  attributable  to a
better  product mix, as well as improved  sourcing costs and the benefit of cost
reductions  resulting from plant  closures  taken in prior years.  Idle capacity
associated with production  downtime occurred in 1999 as factory  production was
curtailed  prior to fully closing some North  American and European  plants.  In
fiscal  year 1999 we  determined  that the  sell-off  of  obsolete  goods  would
continue  in  fiscal  year  2000  and as a result  we  marked  down  inventories
accordingly. This resulted in higher costs of goods sold in fiscal 1999, despite
the recording of a workers' compensation accrual reversal of approximately $21.0
million. We do not anticipate taking any material restructuring charges relating
to  additional  capacity  reductions  or  reorganization  efforts  in  2001.  We
anticipate  that gross  margin will  continue to be in our target range of 40 to
42% in fiscal year 2001.

     MARKETING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Marketing,  general and
administrative  expenses for fiscal year 2000 decreased 9.1% to $1.5 billion, as
compared to $1.6 billion for the same period last year.  Marketing,  general and
administrative expenses as a percentage of sales for fiscal year 2000 and fiscal
year 1999 were each approximately 32%. The dollar decrease in marketing, general
and administrative expenses was primarily due to our continuing cost containment
efforts,   lower  salaries  and  related  expenses  resulting  from  prior  year
restructuring   initiatives,   lower  sales   volume-related   expenses,   lower
advertising  expenses,  lower information  technology  expenses  associated with
minimal  year  2000  compliance  costs  in 2000  and an  $18.0  million  pension
curtailment  benefit in fiscal year 2000.  These decreases were partially offset
by  increased  costs for  employee  incentive  plans in fiscal  year  2000.  The
increase  in  incentive  plans  during  fiscal  year  2000  was due to  stronger
performance  against  financial  targets.  In  addition,  marketing  general and
administrative expenses in fiscal year 1999 included the benefit from a reversal
of employee incentive costs due to weak performance against financial targets.

     Advertising expense for fiscal year 2000 decreased 17.8% to $402.7 million,
as compared to $490.2 million in the same period in 1999. Advertising expense as
a percentage  of sales in fiscal year 2000  decreased 0.8  percentage  points to
8.7%,  as  compared  to 9.5%  for the  same  period  in 1999.  The  decrease  in
advertising  expense as a percentage of sales for fiscal year 2000,  compared to
the  prior  year  period  was  consistent  with our  plans to  better  focus our
marketing  support  initiatives  and to align  them  more  effectively  with new
product introductions and retail presentation. In fiscal year 2001, we expect to
maintain advertising spending in a range of 8 to 9%, as a percentage of sales.

     OTHER OPERATING INCOME.  For fiscal year 2000,  licensing  income increased
32.8% from the same period in 1999. The increase was primarily due to more focus
on expanding our brand  collection with licensed  merchandise such as outerwear,
shoes and belts.

     EXCESS  CAPACITY/RESTRUCTURING  CHARGES.  For fiscal year 2000, we reversed
charges of $33.1  million  primarily due to periodic  reevaluation  of estimates
related to the  restructuring  initiatives.  In fiscal  year 1999,  we  recorded
charges of $497.7  million  that were  associated  with our  corporate  overhead
restructuring initiatives and plant closures in North America and Europe.

     GLOBAL  SUCCESS  SHARING  PLAN. In fiscal year 2000, we recorded no expense
for Global  Success  Sharing  Plan. In fiscal year 1999, we reversed into income
$343.9  million  of  previously  recorded  expenses  associated  with the Global
Success Sharing Plan. This reversal of the Global Success Sharing Plan liability
was based on our lower estimate of financial  performance  through the year 2001
and the determination that payment in 2002 under the Global Success Sharing Plan
is highly unlikely.

     OPERATING  INCOME.  For fiscal year 2000, we recorded  operating  income of
$538.8  million,  as compared to $199.3 million in the same period in 1999. This
increase  was due to an improved  gross  margin,  lower  marketing,  general and
administrative expenses and the reversal of restructuring charges in fiscal year
2000. In addition, reported results in fiscal year 1999 were

                                       19

<PAGE>

affected by charges related to the  restructuring  initiatives,  net of benefits
for the Global  Success  Sharing Plan  reversal.  Excluding the fiscal year 2000
benefit of $33.1 million  related to the reversal of  restructuring  costs,  the
fiscal year 1999 charge of $497.7 million related to restructuring costs and the
$343.9  million  benefit  related to the Global  Success  Sharing Plan reversal,
operating  income for fiscal year 2000 would have  increased  approximately  43%
compared to the same period in 1999.

     INTEREST EXPENSE.  Interest expense for fiscal year 2000 increased 27.9% to
$234.1 million,  as compared to $183.0 million for the same period in 1999. This
increase was due to higher interest rates associated with new credit facilities,
customer  service  center  equipment  financing  agreements  and  higher  market
interest rates.

     OTHER  INCOME/EXPENSE,  NET. For fiscal year 2000 we recorded $39.0 million
of other income,  net, as compared to an other  expense,  net of $7.9 million in
the same  period in 1999.  The  increase  for  fiscal  year  2000 was  primarily
attributable  to a $26.1  million gain from the sale of two office  buildings in
San  Francisco  located  next to our  corporate  headquarters,  an  increase  in
interest  income and net gains in 2000 compared to net losses in 1999 on foreign
currency hedging  contracts.  Net currency gains and losses are primarily due to
the  fluctuations  of various  currencies  in relation  to our foreign  currency
hedging positions.

     INCOME TAX  EXPENSE.  Income tax  expense  for fiscal  year 2000 was $120.3
million  compared to $3.1 million for the same period in 1999.  The increase for
fiscal  year  2000 was  primarily  due to  higher  earnings  than in  1999.  Our
effective tax rate for fiscal year 2000 was 35%, as compared to 37% for the same
period  in  1999.  The  lower  tax  rate in 2000  was due to a  reassessment  of
potential tax settlements.

     NET INCOME.  Net income for fiscal year 2000  increased  by $218.0  million
from $5.4  million in the same  period in 1999.  Net income for fiscal year 2000
included higher  operating  income,  partially offset by higher interest and tax
expense  compared  to the same  period in 1999.  In  addition,  fiscal year 2000
included  a gain  from  the  sale  of  office  buildings  and  the  reversal  of
restructuring  reserves. The lower net income for the 1999 period was due to the
restructuring  charge of $497.7  million,  partially  offset by the  reversal of
incentive  compensation and Global Success Sharing Plan accruals.  Excluding the
items  in both  fiscal  years  2000 and 1999 for the  reversal  and  charge  for
restructuring  and Global Success  Sharing Plan, net income for fiscal year 2000
would have been $201.8 million, as compared to $102.3 million in the same period
in 1999.


YEAR ENDED NOVEMBER 28, 1999 AS COMPARED TO YEAR ENDED NOVEMBER 29, 1998

     NET  SALES.  Total net sales in fiscal  year 1999  decreased  13.7% to $5.1
billion,  as compared to $6.0  billion in fiscal year 1998.  Net sales  declined
worldwide and in each of our regions in Levi's(R)  brand basic denim products as
the consumer  market trended  towards more fashion  denim,  designer and private
label  products,  as well as non-denim  products.  Factors  contributing  to our
fiscal year 1999 net sales decline for each of our regions were  difficulties in
matching production with demand and a higher percentage of closeout sales needed
to reduce the buildup of inventories. In the Americas, net sales decreased 13.2%
to $3.4 billion, as compared to $3.9 billion in fiscal year 1998. In Europe, net
sales  decreased  17.6% to $1.4  billion,  as compared to $1.7 billion in fiscal
year  1998.  In the Asia  Pacific  region,  net sales  decreased  3.0% to $358.4
million,  as compared to $369.4 million in fiscal year 1998.  Changes in foreign
exchange rates had a minimal impact on total net sales. In fiscal years 1999 and
1998,  we  had  one  customer  that  represented   approximately  11%  and  12%,
respectively,  of total net sales. No other customer accounted for more than 10%
of total net sales.

     GROSS PROFIT.  Gross profit as a percentage of net sales,  or gross margin,
decreased  to 38.1% in fiscal  year 1999,  as  compared  to 42.4% in fiscal year
1998. The decrease was primarily  attributable  to  unfavorable  product mix and
increased production downtime. Idle capacity associated with production downtime
occurred in 1999 as factory production was curtailed prior to fully closing some
North American and European  plants.  In fiscal year 1999 we determined that the
sell-off  of  obsolete  goods  would  continue  in  fiscal  year  2000  and thus
inventories  were marked down  accordingly  resulting  in higher  costs of goods
sold.

     MARKETING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Marketing,  general and
administrative expenses for fiscal year 1999 decreased 11.1% to $1.6 billion, as
compared  to  $1.8  billion  in  fiscal  year  1998.   Marketing,   general  and
administrative  expenses  as a  percentage  of net  sales in  fiscal  year  1999
increased  to 31.7%,  as  compared  to 30.8% in fiscal  year  1998.  The  dollar
decrease  resulted   primarily  from  reduced  selling  and  distribution  costs
associated with lower unit volume  shipments,  decreases in  performance-related
incentives and reductions in  administrative  and overhead  expenses  associated
with cost reduction efforts.  Advertising expenses in fiscal year 1999 increased
5.0% to $490.2  million,  as  compared  to $466.7  million  in fiscal  year 1998
primarily due to various  initiatives  we  implemented  to revitalize our brand.
Advertising initiatives in fiscal year 1999 included worldwide music sponsorship
programs,  a new  Pan-European  marketing  campaign and a renewed  focus on U.S.
Dockers(R) brand promotions.




                                       20

<PAGE>

     OTHER OPERATING INCOME.  For fiscal  year 1999,  licensing income decreased
approximately  3.6% from the same period in 1998. The decrease was primarily due
to less licensing opportunities as a result of a reduced market for our brands.

     EXCESS CAPACITY REDUCTION/RESTRUCTURING  EXPENSES. For fiscal year 1999, we
incurred charges of $497.7 million, as compared to $250.7 million in fiscal year
1998. These charges were associated with the plant closures in North America and
Europe and with our corporate overhead restructuring initiatives.

     GLOBAL  SUCCESS  SHARING PLAN. In fiscal year 1999, we reversed into income
$343.9  million  of  previously  recorded  expenses  associated  with the Global
Success  Sharing Plan, as compared to an expense of $90.6 million  recognized in
fiscal year 1998. This reversal of the Global Success Sharing Plan liability was
based on our lower estimate of financial  performance  through the year 2001 and
the determination  that payment in 2002 under the Global Success Sharing Plan is
highly unlikely.

     OPERATING INCOME.  Operating income for fiscal year 1999 decreased 46.9% to
$199.3 million,  as compared to $375.6 million in fiscal year 1998. The decrease
from fiscal year 1998 was a result of lower  sales and gross  profit,  partially
offset by lower marketing general and administrative costs. Operating income for
fiscal  years 1999 and 1998 was  adversely  impacted by the North  American  and
European plant closures and restructuring initiatives totaling $497.7 million in
fiscal  year 1999 and  $250.7  million  in fiscal  year  1998.  Offsetting  this
decrease in fiscal year 1999 was the reversal of the Global Success Sharing Plan
liability  totaling $343.9 million,  as compared to a charge of $90.6 million in
fiscal year 1998. Excluding the charges for the plant closures and restructuring
initiatives  and the reversal and charge for the Global Success  Sharing Plan in
fiscal  years 1999 and 1998,  operating  income for fiscal  year 1999 would have
decreased to $353.2 million, as compared to $716.8 million in fiscal year 1998.

     INTEREST  EXPENSE.  Interest  expense in fiscal year 1999 increased 2.8% to
$183.0 million, as compared to $178.0 million in fiscal year 1998. This increase
was due to higher average debt outstanding  throughout most of fiscal year 1999.
The  increase  in  outstanding  debt  was  primarily  due to the  cash  outflows
associated with plant closures and restructuring initiatives.

     OTHER EXPENSE,  NET.  Other  expense,  net in fiscal year 1999 decreased to
$7.9 million  compared to $34.9  million in fiscal year 1998.  This decrease was
primarily attributable to net gains on foreign currency contracts in fiscal year
1999,  as  compared to net losses in fiscal year 1998.  Net  currency  gains and
losses are  primarily  due to currency  fluctuations  in relation to our foreign
currency hedging positions.

     INCOME TAX EXPENSE. Income tax expense for fiscal year 1999 decreased 94.8%
to $3.1 million,  as compared to $60.2 million in fiscal year 1998. The decrease
in income tax expense is consistent  with the decrease in income before taxes as
the effective tax rate was 37.0% for both fiscal years.

     NET  INCOME.  Net  income  for  fiscal  year 1999  decreased  94.8% to $5.4
million,  as  compared  to $102.5  million in fiscal  year 1998.  Net income for
fiscal years 1999 and 1998 was adversely  impacted by the pre-tax North American
and  European  plant  closures and  restructuring  initiatives  totaling  $497.7
million in fiscal year 1999 and $250.7  million in fiscal year 1998.  Offsetting
this decrease in fiscal year 1999 was the pre-tax reversal of the Global Success
Sharing Plan liability totaling $343.9 million,  as compared to a pre-tax charge
of $90.6  million  in fiscal  year 1998.  Excluding  the  charges  for the plant
closures  and  restructuring  initiatives  and the  reversal  and charge for the
Global Success Sharing Plan in fiscal years 1999 and 1998, net income for fiscal
year 1999 would have decreased by $215.2 million to $102.3 million,  as compared
to $317.5  million in fiscal year 1998.  The  principal  causes of this decrease
were lower net sales and lower  gross  margin,  which were  partially  offset by
lower marketing, general and administrative expenses.

RESTRUCTURING AND EXCESS CAPACITY REDUCTION

     The  following  is a  summary  of the  actions  taken and  related  charges
associated  with  our  excess  capacity   reductions  and  other   restructuring
activities:

     o    During  September 1999, we announced plans to close one  manufacturing
          facility and further reduce overhead costs by consolidating operations
          in  Europe,  with  an  estimated  displacement  of 960  employees.  We
          recorded an initial charge to set up a reserve of $54.7  million.  The
          manufacturing  facility  was closed in December  1999.  In fiscal year
          2000,  $2.2 million of the remaining  reserve balance was reversed due
          to the periodic  reevaluation  resulting  from updated  estimates  and
          assumptions.  As a  result  of  this  reevaluation,  a  total  of  945
          employees are estimated to be displaced.  As of November 26, 2000, the
          balance  of this  reserve  was $6.3  million,  and  approximately  910
          employees had been displaced.




                                       21

<PAGE>

     o    In  February  1999,  we  announced  the  closure  of 11  manufacturing
          facilities in North America.  Those  facilities were closed by the end
          of  1999,   resulting  in  the  displacement  of  approximately  5,900
          employees. We recorded an initial charge to set up a reserve of $394.1
          million in 1999.  In fiscal year 2000,  $13.3 million of the remaining
          reserve  balance  was  reversed  due  to  the  periodic   reevaluation
          resulting from updated  estimates and  assumptions.  Of this reversal,
          $7.1 million was primarily  associated with employee  benefits and was
          based upon  historical  trends and future  projections  of medical and
          other employee benefits. Of this reversal,  $6.1 million was primarily
          associated  with plant  closure  costs and was based  upon  historical
          trends from previous plant closures.  As of  November  26,  2000,  the
          balance in this reserve was $54.6 million.

     o    In fiscal year 1999, we recorded an initial charge to set up a reserve
          of $48.9 million for  corporate  overhead  reorganization  initiatives
          with an estimated displacement of 930 employees upon completion of the
          reorganization.  In fiscal year 2000,  $9.0  million of the  remaining
          reserve  balance  was  reversed  due  to  the  periodic   reevaluation
          resulting from updated estimates and assumptions.  As a result of this
          reevaluation,  a total of 730 employees are estimated to be displaced.
          As of November 26, 2000, the balance of this reserve was $2.8 million,
          and approximately 670 employees had been displaced.

     o    In fiscal year 1998, we recorded an initial charge to set up a reserve
          of $61.1 million for corporate overhead reorganization initiatives and
          $82.1  million  for  the  closure  of  two  North  American  finishing
          facilities.  The two North America  finishing  facilities  were closed
          during 1999.  Approximately  770 and 990 employees  were  displaced in
          connection   with   the    reorganization   and   facility   closures,
          respectively.  In fiscal  year 2000,  $3.7  million  of the  remaining
          reserve balance for the corporate overhead reorganization  initiatives
          was reversed due to the periodic  reevaluation  resulting from updated
          estimates  and  assumptions.   Of  this  reversal,  $1.8  million  was
          primarily  associated  with  employee  benefits  and  was  based  upon
          historical trends and future projections of medical and other employee
          benefits. Of this reversal, $1.9 million was primarily associated with
          higher sub-lease income than initially projected. In fiscal year 2000,
          a small amount of the remaining  reserve balance for the North America
          finishing  facilities  was reversed  due to the periodic  reevaluation
          resulting from updated  estimates and  assumptions.  This reversal was
          primarily  associated  with  employee  benefits  and  was  based  upon
          historical trends and future projections of medical and other employee
          benefits. As of November 26, 2000, the balances of these reserves were
          $1.9 million and $2.1 million, respectively.

     o    In fiscal year 1998,  we recorded an initial  restructuring  charge to
          set up a reserve of $107.5 million for reorganization  initiatives and
          the  closure of two  manufacturing  and two  finishing  facilities  in
          Europe with an  estimated  displacement  of 1,650  employees.  The two
          manufacturing and two finishing  facilities were closed in 1999. As of
          November  26,  2000,  the balance of this reserve was $1.5 million and
          approximately 1,645 employees had been displaced.

     o    In November  1997,  we announced  the closure of one  finishing and 10
          manufacturing  facilities  in North  America.  Those  facilities  were
          closed  by  the  end  of  1998,   resulting  in  the  displacement  of
          approximately 6,400 employees. We recorded an initial charge to set up
          a reserve of $386.8 million.  In fiscal year 2000, $5.0 million of the
          reserve  balance  was  reversed  due  to  the  periodic   reevaluation
          resulting from updated  estimates and  assumptions.  This reversal was
          primarily  associated with employee benefits that expired during 2000.
          As of November 26, 2000, the balance of this reserve was $2.4 million.

     The following table summarizes the plant closures and restructuring charges
and the resulting reductions:
<TABLE>
<CAPTION>
                                                                                                                      BALANCE AS
                                                                                    INITIAL                              OF
                                                                         INITIAL     ASSET       CASH                NOVEMBER 26,
                                                                       PROVISION   WRITE-OFFS REDUCTIONS  REVERSALS      2000
                                                                       ---------   ---------- ----------  ---------  ------------
                                                                                         (DOLLARS IN THOUSANDS)
<S>                                                                    <C>          <C>        <C>          <C>         <C>
1997 North American Plant Closures.................................... $  386,792   $ 42,689   $336,669     $ 4,987     $ 2,447
1998 North American Plant Closures....................................     82,073     23,399     56,604          13       2,057
1999 North American Plant Closures....................................    394,105     33,430    292,777      13,281      54,617
1998 Corporate Restructuring Initiatives..............................     61,062      2,985     52,469       3,735       1,873
1999 Corporate Restructuring Initiatives..............................     48,889         --     37,164       8,963       2,762
1998 European Restructuring and Plant Closures........................    107,523     10,026     95,989          --       1,508
1999 European Restructuring and Plant Closures........................     54,689      4,500     41,693       2,165       6,331
                                                                       ----------   --------   --------     -------     -------
     Total as of November 26, 2000.................................... $1,135,133   $117,029   $913,365     $33,144     $71,595
                                                                       ==========   ========   ========     =======     =======
</TABLE>

     The majority of the  initiatives are expected to be completed by the end of
2001.





                                       22

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

     Our principal  capital  requirements  have been to fund working capital and
capital  expenditures.  One of our  business  strategies  is to focus on working
capital control through improved  forecasting,  inventory management and product
mix.  We are also  focusing on  controlling  operating  expenses  and using cash
generated from operations to further reduce debt. As of November 26, 2000, total
cash and cash equivalents were $117.1 million, a $75.8 million decrease from the
$192.8 million cash balance reported as of November 28, 1999.

     CASH PROVIDED BY/USED FOR OPERATIONS. Cash provided by operating activities
in fiscal year 2000 was $305.9  million,  as compared to a use of cash of $173.8
million  in  the  same  period  in  1999.  Although  inventory  increased,   the
composition  of our  inventory in fiscal year 2000 was more current and relevant
to the  marketplace  compared to the  composition of inventory in the prior year
period. This reflected our efforts to clear out old merchandise from fiscal year
1999. Inventory decreased on the balance sheet due to the translation effects of
foreign currency rates to the U.S. dollar.

     Income taxes receivable  decreased during fiscal year 2000 primarily due to
income tax refunds of $66.3  million  received in March 2000  associated  with a
carryback  of a net  operating  loss  reported  on our 1999  income tax  return.
Restructuring  reserves and the related net deferred tax assets decreased during
fiscal year 2000 primarily due to spending and accrual  reversals related to the
restructuring  initiatives.  Accrued salaries,  wages and employee benefits, and
long-term  employee benefits  increased during fiscal year 2000 primarily due to
increased  accruals for employee  incentive  plans.  Accrued taxes increased and
other long-term liabilities decreased during fiscal year 2000 due to a tentative
settlement  with the Internal  Revenue Service in connection with an examination
of our income tax returns for the years 1986 to 1989.  The change in other,  net
during fiscal year 2000 was primarily due to the gain  attributable to a sale of
two  office  buildings  in San  Francisco  located  adjacent  to  our  corporate
headquarters.

     Cash used by operating  activities in fiscal year 1999 was $173.8  million,
as compared to cash provided by operating activities of $223.8 million in fiscal
year 1998. This change was primarily due to increased  spending  associated with
plant  closures  and  restructuring  initiatives  and lower sales in fiscal year
1999. The decrease in long-term  employee  related  benefits  during fiscal year
1999  primarily  reflected  the  reversal of the prior  year's  accruals for the
Global Success Sharing Plan and reductions in deferred  compensation.  Inventory
decreased  during fiscal year 1999 primarily due to reduced  production  levels.
The increase in income tax receivable for fiscal year 1999 reflected an expected
income tax refund based upon a carryback of a net operating  loss to be reported
on our income tax return.

     CASH PROVIDED BY/USED FOR INVESTING ACTIVITIES.  Cash provided by investing
activities  during fiscal year 2000 increased to $154.2 million,  as compared to
$62.4 million  during the same period in 1999.  The increase in fiscal year 2000
resulted primarily from proceeds received on increased sales of property,  plant
and  equipment,  higher  realized  gains  on net  investment  hedges  and  lower
purchases of property,  plant and equipment. The higher proceeds received on the
sale of property,  plant and equipment was primarily  attributable  to a sale of
two  office  buildings  in San  Francisco  located  adjacent  to  our  corporate
headquarters.

     Our capital spending for fiscal year 2000 was $28.0 million, as compared to
$61.1  million for fiscal year 1999 and $116.5  million in fiscal year 1998.  We
expect  capital  spending of  approximately  $50.0  million in fiscal year 2001,
primarily   for   maintenance   and  purchase  of  equipment  at  our  remaining
manufacturing  facilities and  distribution  centers,  and for computer  related
equipment  throughout  the world.  As  expected,  we have  dramatically  reduced
capital spending following our 1998 and 1999 plant closures.

     Cash  provided  by  investing  activities  in  fiscal  year  1999 was $62.4
million,  as compared to net cash used by investing  activities of $82.7 million
in fiscal year 1998.  This change was  primarily  due to an increase in proceeds
from the sale of property,  plant and equipment mainly associated with the plant
closures,  and lower  purchases of property,  plant and equipment in fiscal year
1999. In addition,  in fiscal year 1999 we had net realized  gains on hedging of
our net investments, as compared to net losses in fiscal year 1998.

     CASH  PROVIDED  BY/USED FOR FINANCING  ACTIVITIES.  Cash used for financing
activities for fiscal year 2000 was $527.1  million,  as compared to a source of
cash of $224.2 million in the same period in 1999.  Cash was used in fiscal year
2000 for repayment of existing debt.

     Cash  provided  by  financing  activities  in fiscal  year 1999 was  $224.2
million, as compared to net cash used for financing activities of $194.5 million
in fiscal  year 1998.  This  change was  primarily  due to an  increase  in debt
financing in fiscal year 1999.

                                       23

<PAGE>


FINANCIAL CONDITION

     CREDIT  AGREEMENTS.  On January  31,  2000,  we  amended  each of our three
existing  credit  agreements,  and we entered into one new $450.0 million bridge
credit agreement (the "2000 Credit Facility"). The financing package consists of
four  separate  agreements:  (1) a new $450.0  million  bridge  facility to fund
working capital and support letters of credit,  foreign  exchange  contracts and
derivatives,  (2) an amended $300.0 million revolving credit facility, extending
the existing  bridge  facility,  (3) an amended  $545.0  million  364-day credit
facility,   and  (4)  an  amended  $584.0   million   5-year  credit   facility.
Simultaneously  with  entering into these  agreements,  we terminated a domestic
receivables-backed securitization financing.

     In addition,  in December  1999, we entered into a five-year  $89.5 million
credit  facility  secured by most of the equipment  located at our  distribution
centers in Nevada,  Mississippi and Kentucky.  The transaction documents include
customary  covenants  governing our activities,  including,  among other things,
limitations  on our  ability  to sell,  lease,  relocate  or grant  liens on the
equipment held in these customer service centers.

     In  February  2000,  several  of our  European  subsidiaries  entered  into
receivables securitization financing agreements with several lenders under which
those  subsidiaries  may  borrow  up to $125.0  million,  subject  to  specified
operational   conditions.   The  securitization   agreements  contain  customary
termination events for these arrangements,  including the subsidiaries'  failure
to  make  payments  or  otherwise  comply  with  their   obligations  under  the
securitization  agreements,  bankruptcy  events,  material  adverse  changes  in
financial position or receivables collection procedures,  cross default to other
indebtedness,  failure of the portfolio to meet certain performance standards or
a change in control.

     On February 1, 2001,  we  entered into a new $1.05 billion  senior  secured
credit facility to replace the 2000 Credit Facility on more favorable terms. The
new credit  facility  consists of a $700 million  revolving  credit facility and
$350 million of term loans.  This new facility  reduces our borrowing  costs and
extends the maturity of our principal bank credit facility to August 2003.

     The new  facility is secured in  substantially  the same manner as the 2000
Credit   Facility.   Collateral   includes:   domestic   receivables,   domestic
inventories,   certain  domestic  equipment,   trademarks,   other  intellectual
property,  100% of the  stock  in  domestic  subsidiaries,  65% of the  stock of
certain foreign subsidiaries and other assets.  Borrowings under the bank credit
facilities  bears  interest  at LIBOR or the  agent  bank's  base  rate  plus an
incremental borrowing spread.

     The new facility contains customary covenants restricting our activities as
well  as  those  of  our  subsidiaries,  including  limitations  on us  and  our
subsidiaries'  ability to sell assets;  engage in mergers;  enter into operating
leases or capital leases;  enter into  transactions  involving  related parties,
derivatives or letters of credit;  enter into intercompany  transactions;  incur
indebtedness  or grant  liens or negative  pledges on our assets;  make loans or
other  investments;  pay  dividends  or  repurchase  stock or other  securities;
guaranty third party obligations; make capital expenditures; and make changes in
our  corporate  structure.  The credit  agreements  will also contain  financial
covenants that we must satisfy on an ongoing basis,  including  maximum leverage
ratios and minimum coverage ratios.

     Also in January 2001, we issued two series of notes  payable,  U.S.  $380.0
million  Dollar Notes and 125.0 million Euro Notes,  totaling the  equivalent of
$497.5  million to qualified  institutional  investors.  The notes are unsecured
obligations  and may be redeemed at any time after  January 15, 2004.  The notes
are  seven-year  notes  maturing  on January 15,  2008.  Net  proceeds  from the
offering were used to repay a portion of the indebtedness  outstanding under the
2000 Credit Facility.

     The indentures governing the notes contains covenants that limit us and our
subsidiaries'  ability to incur  additional  debt;  pay  dividends or make other
restricted  payments;  consummate specified asset sales; enter into transactions
with affiliates; incur liens, impose restrictions on the ability of a subsidiary
to  pay  dividends  or  make  payments  to us and  our  subsidiaries;  merge  or
consolidate with any other person;  sell,  assign,  transfer,  lease,  convey or
otherwise dispose of all or substantially all of our assets or the assets of our
subsidiaries.  If the notes receive and maintain an  investment  grade rating by
both Standard and Poor's Ratings  Service and Moody's  Investors  Service and we
and our subsidiaries  are and remain in compliance with the indentures,  then we
and our  subsidiaries  will not be required to comply with  specified  covenants
contained in the indenture. (FOR MORE INFORMATION ABOUT OUR CREDIT ARRANGEMENTS,
SEE NOTES 6 AND 18 TO THE CONSOLIDATED FINANCIAL STATEMENTS.)

FOREIGN CURRENCY TRANSLATION

     The  functional  currency  for  most  of  our  foreign  operations  is  the
applicable  local  currency.  For those  operations,  assets and liabilities are
translated  into U.S.  dollars using  period-end  exchange  rates and income and
expense  accounts are translated at average  monthly  exchange  rates.  The U.S.
dollar is the  functional  currency for foreign  operations  in  countries  with
highly


                                       24

<PAGE>

inflationary   economies  and  certain  other   subsidiaries.   The  translation
adjustments for these entities are included in other (income) expense, net.

YEAR 2000

     We   experienced   no   material   disruption   in   customer  or  supplier
relationships,  revenue  patterns or customer buying patterns as a result of the
year 2000  problem.  There have been no losses of revenue  and we do not believe
that any future contingencies  related to year 2000 would have a material impact
on our business.

EFFECTS OF INFLATION

     We believe that the relatively  moderate rates of inflation which have been
experienced  in the  regions  where  most  of our  sales  occur  have  not had a
significant effect on our net sales or profitability.

EURO CONVERSION

     On January 1, 1999,  eleven European Union member states (Germany,  France,
the Netherlands,  Austria, Italy, Spain, Finland, Ireland, Belgium, Portugal and
Luxembourg)  adopted the euro as their common national  currency.  On January 1,
2001, Greece adopted the euro as its common national currency.  Until January 1,
2002,  either the euro or a participating  country's  national  currency will be
accepted as legal tender.  Beginning on January 1, 2002,  euro-denominated bills
and coins will be issued, and by July 1, 2002, only the euro will be accepted as
legal tender.

     We have a  multi-functional  euro project team responsible for ensuring our
ability to operate  effectively  during the euro  transition  phase and  through
final euro conversion.  Our total program costs are not expected to be material.
We have developed marketing and pricing strategies for implementation throughout
the more open European market.

     We are  currently  able to make and  receive  payments  in  euros  and will
convert financial and information  technology systems to be able to use euros as
the base currency in relevant markets prior to January 1, 2002.

     Based on the analysis and actions  taken to date, we do not expect the euro
conversion to materially affect our consolidated financial position,  results of
operations or cash flow.

NEW ACCOUNTING STANDARDS

     In September 2000, the Financial Accounting Standards Board ("FASB") issued
SFAS 140,  "Accounting  for  Transfers  and  Servicing of  Financial  Assets and
Extinguishments  of  Liabilities,"  which  replaces  SFAS 125,  "Accounting  for
Transfers and Services of Financial Assets and  Extinguishments of Liabilities."
This standard revises the methods for accounting for  securitizations  and other
transfers  of  financial  assets and  collateral  as outlined  in SFAS 125,  and
requires  certain  additional  disclosures.   For  transfers  and  servicing  of
financial  assets and  extinguishments  of  liabilities,  this  standard will be
effective for our May 27, 2001  quarterly  financial  statements.  However,  for
disclosures regarding securitizations and collateral, as well as recognition and
reclassification of collateral, this standard will be effective for our November
25, 2001 annual financial statements.  We are currently evaluating the impact of
the adoption of this  standard;  however,  we do not expect the adoption of this
standard  to have a  material  effect on our  financial  position  or results of
operations.

     In June  1998,  the  FASB  issued  SFAS  133,  "Accounting  for  Derivative
Instruments  and  Hedging  Activities."  In June  1999,  the  FASB  delayed  the
effective  date of SFAS 133 to fiscal years  beginning  after June 15, 2000.  We
adopted SFAS 133 and  subsequent  amendments  the first day of fiscal year 2001.
SFAS  133  establishes   accounting  and  reporting   standards  for  derivative
instruments   including  certain  derivative   instruments   embedded  in  other
contracts,  and for  hedging  activities.  In  summary,  SFAS 133  requires  all
derivatives to be recognized as assets or liabilities at fair value.  Fair value
adjustments  are made  either  through  earnings or equity,  depending  upon the
exposure being hedged and the effectiveness of the hedge.

FOREIGN EXCHANGE HEDGING

     The  primary  purpose of  our foreign  exchange  hedging  activities  is to
maximize  our U.S.  dollar  value  over the long  term.  We manage  our  foreign
currency  exposures  in a way that makes it unlikely  that we will obtain  hedge
accounting  treatment  for all of our exposure  management  activities  upon the
adoption of SFAS 133. We attempt to take a long-term view of managing  exposures
on an economic basis,  using forecasts to develop exposure  positions and engage
in active  management of those

                                       25

<PAGE>

exposures  with the  objective of  protecting  future cash flows and  mitigating
risks. We do not hold any derivative instruments for trading purposes.

     As a result,  not all exposure  management  activities and foreign currency
derivative  instruments will qualify for hedge  accounting  treatment under SFAS
133.  Derivative  instruments  utilized in these  transactions will be valued at
fair  value and  changes  in fair value  will be  consequently  classified  into
earnings. Therefore, it is possible that we will experience increased volatility
in earnings.

     We use a  variety of derivative  instruments,  including forward,  swap and
option contracts,  to hedge foreign currency exposures related to sourcing,  net
investment positions, royalties and cash management.

     The derivative  instruments  used to hedge sourcing  exposure are currently
recorded  at their fair value and any  changes  in fair  value are  included  in
earnings.  Under SFAS 133, a majority of these  contracts  would not qualify for
hedge  accounting  treatment.  We have  therefore  chosen to continue to mark to
market  all  sourcing  related  hedge  transactions  at their fair value and any
changes in fair value will be recorded in earnings.  At November  26, 2000,  the
fair value of these derivative instruments hedging sourcing exposure represented
a net asset of $13.7 million, which is recorded on the balance sheet.

     We hedge our net investment position in major currencies  by using forward,
swap and option  contracts.  The  contracts  hedging these net  investments  are
currently in compliance with SFAS 52, "Foreign  Currency  Translation,"  and are
considered net investment  hedges. As a result, the related gains and losses are
categorized  as cumulative  translation  adjustment  in the other  comprehensive
income  section  of  stockholders'   deficit.  This  will  continue  to  be  the
methodology  going forward for the contracts  that qualify for hedge  accounting
treatment  under  SFAS 133.  At  November  26,  2000,  the gains on these  hedge
contracts  amounted  to  $1.4  million  and  are  reflected  in  the  cumulative
translation adjustment section of other comprehensive income.

     The  contracts  hedging   intercompany  royalty  flows  are   currently  in
compliance with SFAS 52, "Foreign  Currency  Translation," and are designated as
net investment hedges.  Therefore,  the related gains and losses are categorized
as cumulative  translation  adjustment in the other comprehensive income section
of stockholders'  deficit.  The transactions  hedging intercompany royalty flows
will be considered cash flow hedges  according to SFAS 133 rules.  Consequently,
gains and losses on the  contracts  that  qualify and are  designated  for hedge
accounting  treatment will be deferred in other  comprehensive  income until the
underlying  royalty flow has been settled.  The fair value of these transactions
at November 26, 2000  amounted to a gain of $1.8  million.  At the  beginning of
fiscal 2001, hedging activity related to outstanding cash flow hedges are valued
at a gain  of $1.0  million  and  will  be  reclassified  into  earnings  as the
underlying hedged items impact earnings.

     The  derivative   instruments   utilized  in   transactions   hedging  cash
management  exposures  are  currently  and,  under SFAS 133, will continue to be
marked to market at their fair value and any changes in fair value are  recorded
in earnings.

     Under SFAS 133,  fair  values of  forward  transactions  and of the forward
portion of swap transactions will be calculated using the discounted  difference
between the contract forward price and the forward price at the closing date for
the remaining life of the contract. Forward points will no longer be recorded as
assets or  liabilities  on the balance sheet and amortized  over the life of the
contract.  Following SFAS 133 valuation  principles,  option  contracts are also
recorded at fair value. Therefore, option premiums will no longer be recorded as
assets or  liabilities  on the balance sheet and amortized  over the life of the
contract.  These  changes in valuation  methods will impact our earnings and the
accumulated other comprehensive income section of stockholders' equity beginning
in fiscal 2001. At adoption of SFAS 133, the earnings impact of these changes in
valuation  methods  is an  estimated  gain of $1.3  million.  In  addition,  the
accumulated  other  comprehensive  income section of  stockholders'  equity will
decrease by approximately $0.7 million.

     INTEREST RATE HEDGING

     We  are exposed to interest rate risk. It is our policy and practice to use
derivative instruments, primarily interest rate swaps and options, to manage and
reduce interest rate  exposures.  Our policy is to manage interest costs using a
mix of fixed and variable debt.

     The fair value  of these derivative  instruments is not currently  recorded
on our  financial  statements.  Under  SFAS 133,  those  interest  rate  hedging
instruments that do not qualify for hedge accounting  treatment will be recorded
on the balance sheet at their fair value. The related changes in fair value will
be included in earnings.  The earnings impact of this adjustment is estimated at
a loss of $1.2 million.


                                       26

<PAGE>


FACTORS THAT MAY AFFECT FUTURE RESULTS

RISKS RELATING TO OUR SUBSTANTIAL DEBT

WE HAVE SUBSTANTIAL DEBT AND INTEREST PAYMENT REQUIREMENTS THAT MAY RESTRICT OUR
FUTURE OPERATIONS AND IMPAIR OUR ABILITY TO MEET OUR OBLIGATIONS.

     Our  substantial  debt may have important  consequences.  For instance,  it
could:

     o    make it more difficult for us to satisfy our financial obligations;

     o    require  us to  dedicate a  substantial  portion of any cash flow from
          operations  to the payment of  interest  and  principal  due under our
          debt, which will reduce funds available for other business purposes;

     o    increase our vulnerability to  general adverse economic  and  industry
          conditions;

     o    limit our  flexibility  in  planning for or reacting to changes in our
          business and the industry in which we operate;

     o    place  us  at  a competitive  disadvantage  compared  to  some of  our
          competitors that have less financial leverage; and

     o    limit our  ability to obtain  additional  financing  required  to fund
          working  capital  and  capital  expenditures  and  for  other  general
          corporate purposes.

     All borrowings  under our bank credit  facilities are, and will continue to
be, at variable  rates of interest.  As a result,  increases in market  interest
rates may require a greater portion of our cash flow to be used to pay interest.

     Our ability to satisfy our obligations and to reduce our total debt depends
on our future operating performance and on economic, financial,  competitive and
other factors, many of which are beyond our control. We cannot provide assurance
that our business will generate  sufficient cash flow or that future  financings
will be available to provide sufficient proceeds to meet these obligations or to
successfully execute our business strategy.

RESTRICTIONS  IN OUR BANK CREDIT  FACILITIES  AND OUR SENIOR NOTES MAY LIMIT OUR
ACTIVITIES.

     Our bank  credit  facilities  and the  indentures  relating  to our 11.625%
senior  notes  due 2008  contain  customary  restrictions,  including  covenants
limiting our ability to incur additional debt,  grant liens,  make  investments,
consolidate,  merge or acquire other businesses,  sell assets, pay dividends and
other distributions,  make capital expenditures and enter into transactions with
affiliates.

     We also are required to meet specified  financial ratios under the terms of
our bank credit  facilities.  These restrictions may make it difficult for us to
successfully  execute  our  business  strategy  or to compete  in the  worldwide
apparel industry with companies not similarly restricted.

     Our bank credit  facilities mature in August 2003, at which time we will be
required to refinance our borrowings  under those  facilities.  We cannot assure
you that we will be able to obtain  replacement  financing  at that time or that
any available replacement financing will be on terms acceptable to us. If we are
unable to obtain acceptable  replacement  financing on or before August 2003, we
will not be able to satisfy our obligations under our bank credit facilities and
may be required to take other actions to avoid  defaulting on those  facilities,
including selling assets or surrendering assets to our lenders,  which would not
otherwise be in our long-term economic interest.

SINCE OUR NOTES ARE EFFECTIVELY  SUBORDINATED TO ALL OF OUR SECURED DEBT AND THE
LIABILITIES  OF OUR  SUBSIDIARIES,  WE MAY NOT  HAVE  SUFFICIENT  ASSETS  TO PAY
AMOUNTS OWED ON THE NOTES IF A DEFAULT OCCURS.

     Our notes due 2003, 2006, and 2008 are general senior unsecured obligations
that  rank  equal in right  of  payment  with  all of our  existing  and  future
unsecured and unsubordinated debt. The notes are effectively subordinated to all
of our secured debt to the extent of the value of the assets securing that debt.
The  notes  are  also  structurally  subordinated  to  all  obligations  of  our
subsidiaries.

     Because our bank credit  facilities  are  secured  obligations,  failure to
comply with the terms of our bank credit  facilities or our inability to pay our
lenders at maturity would entitle those lenders immediately to foreclose on most
of our assets, including our trademarks and the capital stock of all of our U.S.
and most of our  foreign  subsidiaries,  and the  assets  of our  material  U.S.



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<PAGE>

subsidiaries,  which serve as collateral.  In this event,  those secured lenders
would be entitled to be repaid in full from the proceeds of the  liquidation  of
those assets  before those assets would be available for  distribution  to other
creditors, and, lastly, to the holders of our capital stock.

     Holders  of the notes are  creditors  of Levi  Strauss & Co. and not of our
subsidiaries. The ability of our creditors to participate in any distribution of
assets of any of our subsidiaries upon liquidation or bankruptcy will be subject
to the prior claims of that subsidiary's  creditors,  including trade creditors,
and any  prior or equal  claim  of any  equity  holder  of that  subsidiary.  In
addition, the ability of our creditors to participate in distributions of assets
of our subsidiaries will be limited to the extent that the outstanding shares of
capital  stock of any of our  subsidiaries  are either  pledged to secure  other
creditors,  such as under our bank credit facilities, or are not owned by us. As
a result,  creditors receive less,  proportionately,  than our secured creditors
and the creditors of our subsidiaries.

IF OUR FOREIGN  SUBSIDIARIES ARE UNABLE TO DISTRIBUTE CASH TO US WHEN NEEDED, WE
MAY BE UNABLE TO SATISFY OUR OBLIGATIONS UNDER THE NOTES.

     We conduct our foreign  operations through foreign  subsidiaries,  which in
fiscal year 2000 accounted for  approximately 37% of our net sales. As a result,
we depend in part upon dividends or other  intercompany  transfers of funds from
our  foreign  subsidiaries  for the  funds  necessary  to meet our debt  service
obligations.   We  only  receive  the  cash  that  remains   after  our  foreign
subsidiaries satisfy their obligations.  Any agreements our foreign subsidiaries
enter  into with  other  parties,  as well as  applicable  laws and  regulations
limiting the right and ability of non-U.S.  subsidiaries  and  affiliates to pay
dividends and remit earnings to affiliated  companies absent special conditions,
may restrict the ability of our foreign  subsidiaries  to pay  dividends or make
other distributions to us.

RISKS RELATING TO THE INDUSTRY IN WHICH WE COMPETE

WE FACE INTENSE COMPETITION IN THE WORLDWIDE APPAREL INDUSTRY.

     We face a variety of competitive challenges from other domestic and foreign
jeanswear marketers, fashion-oriented apparel marketers, specialty retailers and
retailers of private label jeanswear and casual apparel products,  some of which
have greater financial and marketing resources than we do. We compete with these
companies primarily on the basis of:

     o    anticipating and responding to changing consumer demands in  a  timely
          manner;

     o    maintaining favorable brand recognition;

     o    developing innovative,  high-quality  products in  sizes,  colors  and
          styles that appeal to consumers;

     o    appropriately pricing products;

     o    providing strong and effective marketing support;

     o    creating an acceptable value proposition for retail customers;

     o    ensuring product availability and optimizing supply chain efficiencies
          with retailers; and

     o    obtaining sufficient retail floor space and effective presentation  of
          products at retail.

     We also face increasing competition from companies selling apparel products
through the Internet, where we lack a direct, company-operated selling presence.
Increased  competition  in  the  worldwide  apparel  industry,   including  from
Internet-based  competitors,  could  reduce our sales and  prices and  adversely
affect our results of operations.  In addition,  the worldwide  apparel industry
has  experienced  price  deflation  in recent  years.  This price  deflation  is
attributable to increased competition,  increased product sourcing to lower cost
countries,  growth of the mass merchant  channel of  distribution  and increased
value-consciousness  on the part of consumers.  This downward pressure on prices
may limit our ability to maintain or improve gross margins.  Because of our high
debt  level,  we  may  also  be  less  able  to  respond  effectively  to  these
developments than our competitors who have less financial leverage.

THE SUCCESS OF OUR BUSINESS IS SUBJECT TO CONSTANTLY CHANGING FASHION TRENDS.

     Our success  depends in large part on our ability to  anticipate,  identify
and respond to rapidly changing  consumer demands and fashion trends in a timely
manner. Any failure on our part to anticipate,  identify and respond effectively
to changing  consumer  demands and fashion trends could adversely  affect retail
and consumer  acceptance of our products and leave us with a

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<PAGE>

substantial amount of unsold inventory. If that occurs, we may be forced to rely
on markdowns or promotional sales to dispose of excess,  slow-moving  inventory,
which may harm our business.  At the same time, our focus on tight management of
inventory may result, from time to time, in our not having an adequate supply of
products to meet consumer  demand and cause us to lose sales,  as we experienced
during 2000 with respect to 501(R) jeans in the United  States.  The exposure of
our business to fashion trends and changes in consumer preferences is heightened
by our recent  decision to outsource a  substantially  larger  proportion of our
pants production to offshore manufacturers, as offshore outsourcing may increase
lead times between production decisions and customer delivery.

THE WORLDWIDE APPAREL INDUSTRY IS HEAVILY INFLUENCED BY GENERAL ECONOMIC CYCLES.

     Apparel is a cyclical  industry that is heavily  dependent upon the overall
level of consumer  spending.  Purchases of apparel and related  goods tend to be
highly  correlated with cycles in the disposable  income of our consumers.  As a
result,  any  substantial   deterioration  in  general  economic  conditions  or
increases  in  interest  rates in any of the  regions in which we compete  could
adversely affect the sales of our products.

INCREASES IN THE PRICE OF RAW  MATERIALS  OR THEIR  REDUCED  AVAILABILITY  COULD
INCREASE OUR COST OF SALES AND DECREASE OUR PROFITABILITY.

     The principal  fabrics used in our business are cotton,  synthetics,  wools
and  blends.  The prices we pay for these  fabrics are  dependent  on the market
price for raw materials used to produce them,  primarily  cotton.  The price and
availability  of cotton may fluctuate  significantly,  depending on a variety of
factors,  including crop yields. Any raw material price increases could increase
our cost of sales  and  decrease  our  profitability  unless we are able to pass
higher prices on to our customers. Moreover, any decrease in the availability of
cotton could impair our ability to meet our production  requirements in a timely
manner.

OUR BUSINESS IS SUBJECT TO RISKS ASSOCIATED WITH IMPORTING PRODUCTS.

     We import raw  materials  and finished  garments  into all of our operating
regions. Substantially all of our import operations are subject to:

     o    quotas imposed by  bilateral  textile agreements between the countries
          where our facilities are located and foreign countries;

     o    customs duties imposed on  imported products  by the governments where
          our facilities are located; and

     o    penalties imposed for, or adverse publicity relating to, violations by
          foreign contractors of labor and wage standards.

     In  addition,  the  countries in which our  products  are  manufactured  or
imported may from time to time impose additional new quotas,  duties, tariffs or
other  restrictions on our imports or adversely  modify  existing  restrictions.
Adverse changes in these import costs and restrictions could harm our business.

RISKS RELATING TO OUR BUSINESS

WE MAY BE UNABLE  TO  REVERSE  OR  RECOVER  FROM  RECENT  DECLINES  IN SALES AND
EARNINGS WHICH HAVE IMPAIRED OUR COMPETITIVE AND FINANCIAL POSITIONS.

     Our business has declined in recent years. Specifically, net sales declined
from $7.1 billion in 1996 to $4.6 billion in 2000, a decrease of 35%. Consistent
with these  declining  financial  results,  our market  research  indicates that
during this period we experienced  significant  brand equity and market position
erosion  in all of the  regions in which we  operate,  including  a  substantial
deterioration in the perception of the Levi's(R) brand by younger consumers.  In
addition,  our ability to reverse or recover from  declines in sales  depends in
part on improving  our supply chain,  including our ability to forecast  demand,
plan production,  ship complete and timely orders to our retail customers and to
reduce  product lead times  through  better  execution and  coordination  across
business  functions  from product  design to customer  delivery.  Our  declining
business, and the actions we took in response to that decline, prevented us from
repaying the substantial  debt we incurred in the 1996 transaction as quickly as
we then intended. As a result, our financial condition remains highly leveraged,
reducing  our  operating  flexibility  and  impairing  our ability to respond to
developments  in the worldwide  apparel  industry as  effectively as competitors
that do not have equivalent financial leverage.




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<PAGE>

   In  response  to  these  trends,   we  have  made  substantial   strategic,
operational  and  management  changes  in the past three  years.  We do not know
whether those changes will have the desired  effect on our worldwide  operations
or on the financial results of any of our operating regions.

WE MAY BE  UNABLE  TO  MAINTAIN  OR  INCREASE  OUR  SALES  THROUGH  OUR  CURRENT
DISTRIBUTION CHANNELS.

     In the United States,  chain stores and department stores are currently the
primary  distribution  channels for our  products.  We may be unable to increase
sales of our apparel products through these distribution  channels,  since other
channels,  including vertically  integrated specialty stores and mass merchants,
now  account  for most of the growth in  jeanswear  and casual wear sales in the
United States. Our lack of a substantial  presence in the vertically  integrated
specialty store market, where companies such as Gap Inc. and Abercrombie & Fitch
Co. compete, weakens our ability to market to younger consumers. Moreover, we do
not sell  products  to mass  merchants  in the United  States,  such as Wal-Mart
Stores,  Inc., Target Corporation and Kmart Corporation,  a distribution channel
that continues to increase its share of overall retail spending,  as well as its
share of jeanswear and casual wear sales.

     In Europe we depend  heavily  on  independent  jeanswear  retailers,  which
account  for  approximately  half  of our  sales  in  that  region.  Independent
retailers in Europe have experienced  increasing  difficulty  competing  against
large  department  stores  and  increasingly   prevalent  vertically  integrated
specialty stores, evidenced, according to our internal research, by decreases in
the  last  five  years  in the  percentage  of  total  jeanswear  sales  made by
independent  stores.  Further  declines in the independent  retailer channel may
adversely affect the sales of our products in Europe.

     We also do not have a large portfolio of company-owned  stores and Internet
distribution  channels possessed by some of our competitors,  including Gap Inc.
and other vertically integrated specialty stores. Although we own a small number
of stores  located in  selected  major  urban  areas,  we operate  those  stores
primarily as "flagships"  for marketing and branding  purposes and do not expect
them to produce  substantial  unit  volume or sales.  As a result,  we have less
control than industry  competitors  over the  distribution  and  presentation at
retail of our apparel  products,  which we believe has  adversely  affected  our
performance and could make it more difficult for us to implement our strategy.

A GROUP OF KEY U.S. CUSTOMERS ACCOUNTS FOR A SIGNIFICANT PORTION OF OUR SALES.

     Net sales to our 10  largest  customers,  all of which are  located  in the
United States,  totaled  approximately 48% and 46% of net worldwide sales during
fiscal years 2000 and 1999. One customer,  J.C. Penney Company,  Inc., accounted
for 12% of our fiscal  year 2000 net sales and 11% of our  fiscal  year 1999 net
sales.  Moreover,  we believe  that  consolidation  in the retail  industry  has
centralized  purchasing  decisions  and given  customers  greater  leverage over
suppliers  like us, and we expect that trend to  continue,  including in Europe,
Canada and Mexico.

     While  we  have  long-standing  customer  relationships,  we  do  not  have
long-term contracts with any of them. As a result,  purchases generally occur on
an order-by-order basis, and the relationship, as well as particular orders, can
be terminated by either party at any time. In addition,  during the past several
years,  various  retailers,  including some of our customers,  have  experienced
significant  changes and  difficulties,  including  consolidation  of ownership,
increased centralization of buying decisions,  restructurings,  bankruptcies and
liquidations.  These and other financial  problems of some of our retailers,  as
well as  general  weakness  in the  retail  environment,  increase  the  risk of
extending credit to these retailers.  A significant adverse change in a customer
relationship  or in a customer's  financial  position could cause us to limit or
discontinue  business with that customer,  require us to assume more credit risk
relating to that customer's  receivables or limit our ability to collect amounts
related to  previous  purchases  by that  customer,  all of which could harm our
business and financial condition.

WE RELY ON INDEPENDENT MANUFACTURERS FOR MOST OF OUR PRODUCTION.

     Our  reliance  on  independent   manufacturers  for  the  majority  of  our
production could harm our operations.  We depend upon our contract manufacturers
to  secure  a  sufficient  supply  of  raw  materials  and  maintain  sufficient
manufacturing  and  shipping  capacity.  This  dependence  could  subject  us to
difficulty in obtaining  timely delivery of products of acceptable  quality.  In
addition, a contractor's failure to ship products to us in a timely manner or to
meet the required  quality  standards  could cause us to miss the delivery  date
requirements of our customers.  The failure to make timely  deliveries may cause
our  customers  to  cancel   orders,   refuse  to  accept   deliveries,   impose
non-compliance charges through invoice deductions or other charge-backs,  demand
reduced  prices or reduce  future  orders,  any of which  could  harm our sales,
reputation and overall profitability.

     We  require   contractors  to  meet  our  standards  in  terms  of  working
conditions,  environmental protection and other matters before we are willing to
place business with them. As such, we may not be able to obtain the  lowest-cost
production.  In addition,

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<PAGE>

any failure by our independent  manufacturers  to adhere to labor or other laws,
or any divergence of any independent  manufacturer's  labor practices from those
generally  considered  ethical in the United States,  and the potential negative
publicity  relating  to any  of  these  events,  could  harm  our  business  and
reputation.

     We  do  not  have  long-term   contracts   with  any  of  our   independent
manufacturers,  and any of these manufacturers may unilaterally  terminate their
relationship  with us at any time. In addition,  the recent trend in the apparel
industry   towards   outsourcing   has   intensified   competition  for  quality
contractors,   some  of  which  have   long-standing   relationships   with  our
competitors.  To the extent we are not able to secure or maintain  relationships
with  manufacturers  that are able to fulfill our  requirements,  our operations
would be harmed.

WE RELY ON A FEW KEY SUPPLIERS FOR A LARGE PORTION OF OUR FABRIC PURCHASES.

     Three vendors,  Cone Mills  Corporation,  Burlington  Industries,  Inc. and
Galey & Lord, Inc., including its Swift Denim subsidiary, supplied approximately
53% of our total volume of fabric  purchases  worldwide in 2000. Cone Mills, our
largest supplier, supplies various fabrics to us and is the sole supplier of the
denim  used for our  501(R)  jeans.  Purchases  from Cone  Mills  accounted  for
approximately  24% of our total fabric  purchases in 2000. Our supply  agreement
with Cone Mills  provides for a rolling  five-year term unless either Cone Mills
or we elect not to extend the agreement, upon which the agreement will terminate
at the end of the  then-current  term.  Cone Mills and we may also terminate the
agreement  in the event of  bankruptcy  or  insolvency  of the other  party or a
material  breach by the other that is not cured within a specified  time period.
We may also  terminate  the  agreement  at any time upon 30 days  notice to Cone
Mills.  We do not have  long-term  supply  agreements  with any other  principal
suppliers,  and we compete with other apparel companies for supply capacity.  We
cannot provide assurance that we will be able to obtain adequate supply if there
occurs a significant disruption in any of our supplier relationships,  including
any disruption  caused by a change of control,  bankruptcy or other financial or
operating difficulty of any of our suppliers,  or in the markets for the fabrics
we purchase,  including  disruptions arising from mill closures or consolidation
resulting from excess industry  capacity or otherwise.  Any of those disruptions
could impair our ability to deliver products to customers in a timely manner and
harm our business.

WE HAVE RECENTLY MADE SIGNIFICANT CHANGES IN OUR SENIOR MANAGEMENT TEAM, AND OUR
CURRENT SENIOR MANAGEMENT TEAM HAS LIMITED APPAREL INDUSTRY EXPERIENCE.

     We have replaced five members of our senior  management  team with external
hires  during  the  past  two  years  and  created  one new  position.  With two
exceptions,  none of the  recent  additions  to our  management  team has  prior
experience  in the apparel  industry.  This  includes  our  president  and chief
executive officer,  Philip Marineau, and the head of our worldwide supply chain,
Karen  Duvall.  In  addition,  during that period we made  several key  internal
appointments,  including president of the U.S. Levi's(R) brand, president of the
U.S. Dockers(R) and Slates(R) brands and president of our European business.  We
cannot provide  assurance that our management  team will be able to successfully
execute our  strategy,  and our business and  financial  condition may suffer if
they fail to do so.

THE  SUCCESS OF OUR  BUSINESS  DEPENDS ON OUR  ABILITY TO ATTRACT AND RETAIN KEY
PERSONNEL.

     We compete for the services of qualified personnel. Our inability to retain
and attract qualified personnel or the loss of any of our current key executives
or key members of our design,  merchandising  or marketing  staff could harm our
business.  Our  ability  to retain  and  attract  qualified  employees  has been
adversely  affected by the San Francisco  location of our corporate and Americas
headquarters,  including the high cost of living and competitive labor market in
the San Francisco and Silicon Valley area.  Other factors that have affected our
ability to retain and attract employees  include the disruption  associated with
our restructuring  initiatives,  our deteriorating  financial position in recent
years and our lack of stock option or other equity-based  compensation  programs
and  resulting  reliance  on  cash  incentive  programs  tied  to our  financial
performance.

OUR SUCCESS  DEPENDS ON THE  CONTINUED  PROTECTION OF OUR  TRADEMARKS  AND OTHER
PROPRIETARY INTELLECTUAL PROPERTY RIGHTS.

     Our trademarks and other intellectual  property rights are important to our
success  and  competitive  position,  and  the  loss  or  inability  to  enforce
trademarks and other  proprietary  intellectual  property  rights could harm our
business. We devote substantial resources to the establishment and protection of
our trademarks and other proprietary intellectual property rights on a worldwide
basis. We cannot provide assurance that our efforts to establish and protect our
trademarks and other proprietary  intellectual  property rights will be adequate
to prevent imitation of our products by others or to prevent others from seeking
to block sales of our  products.  Moreover,  we cannot  provide  assurance  that
others will not assert  rights in, or  ownership  of, our  trademarks  and other
proprietary  intellectual  property  or that we  will  be able  successfully  to
resolve those claims.  In addition,  the laws of some foreign  countries may not
allow us to protect  our  proprietary  rights to the same extent as we do in the
United  States and other


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<PAGE>

countries.  Because  our  brand  recognition  is such an  important  part of our
strategy, we are especially dependent upon the protection of our trademarks.

OUR INTERNATIONAL OPERATIONS EXPOSE US TO POLITICAL AND ECONOMIC RISKS.

     In fiscal  year 2000,  approximately  37% of our net sales  were  generated
outside the United  States,  and a substantial  amount of our products came from
sources outside of the country of distribution.  As a result,  we are subject to
the risks of doing business abroad, including:

     o    political and economic instability;

     o    exchange controls;

     o    language and other cultural barriers;

     o    foreign tax treaties and policies; and

     o    restrictions on the transfer of funds to or from foreign countries.

     Our  financial  performance  on a U.S.  dollar  denominated  basis  is also
subject to fluctuations in currency  exchange rates. For example,  during fiscal
year 2000,  changes in  foreign  currency  rates,  particularly  the Euro,  were
primarily  responsible for  approximately  44% of the net sales decline from the
prior year period for our Europe division.  Approximately  $131.4 million of the
decrease in total net sales for fiscal year 2000, as compared to the same period
in 1999, was due to the effects of translating non-U.S.  currency reported sales
results into U.S. dollars. From time to time we enter into agreements seeking to
reduce our foreign currency  exposure,  but we cannot provide assurance that our
efforts will be successful.

OUR EARNINGS MAY FLUCTUATE BECAUSE OF OUR EXPOSURE MANAGEMENT POLICIES.

     We manage our foreign  currency  exposures  in a way that makes it unlikely
that  we  will  obtain  hedge  accounting  treatment  for  all of  our  exposure
management  activities  upon the adoption of  Statement of Financial  Accounting
Standards No. 133 ("SFAS  133"),  "Accounting  for  Derivative  Instruments  and
Hedging  Activities."  We take a long-term  view of managing our exposures on an
economic  basis.  We use forecasts to develop  exposure  positions and engage in
active  management of those  exposures  with the objective of protecting  future
cash flows and mitigating risks. As a result, not all of our exposure management
activities and foreign  currency  derivative  instruments will qualify for hedge
accounting  treatment  under SFAS 133.  We would be  required  to mark to market
those exposure  management  instruments that do not qualify for hedge accounting
treatment  and, as a result,  it is possible that we will  experience  increased
volatility in our earnings. We adopted SFAS 133 and its subsequent amendments on
November 27, 2000.

OUR APPROACH TO CORPORATE  GOVERNANCE  MAY LEAD US TO TAKE ACTIONS THAT CONFLICT
WITH OUR CREDITORS' INTEREST AS HOLDERS OF NOTES.

     All of our  common  stock  is  owned  by a  voting  trust  described  under
"Principal  Stockholders."  Four voting  trustees have the exclusive  ability to
elect and remove directors, amend our by-laws and take other actions which would
normally be within the power of stockholders of a Delaware corporation. Although
the voting trust  agreement  gives the holders of two-thirds of the  outstanding
voting trust  certificates the power to remove trustees and terminate the voting
trust,  three of the  trustees,  as a group based on their  ownership  of voting
trust  certificates,  have the ability to block all efforts by the two-thirds of
the holders of the voting  trust  certificates  to remove a trustee or terminate
the voting trust. In addition,  the  concentration  of voting trust  certificate
ownership in a small group of holders,  including  these three  trustees,  gives
this group the voting power to block stockholder action on matters for which the
holders of the voting  trust  certificates  are  entitled to vote and direct the
trustees under the voting trust agreement.

     Our principal  stockholders created the voting trust in part to ensure that
we would continue to operate in a socially  responsible manner while seeking the
greatest   long-term   benefit  for  our   stockholders,   employees  and  other
stakeholders  and  constituencies.  We measure our success not only by growth in
economic  value,  but also by our  reputation,  the quality of our  constituency
relationships  and our  commitment  to social  responsibility.  As a result,  we
cannot provide  assurance that the voting  trustees will cause us to be operated
and managed in a manner that benefits our creditors or that the interests of the
voting  trustees or our  principal  equity  holders  will not  diverge  from our
creditors.



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<PAGE>





ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

DERIVATIVE FINANCIAL INSTRUMENTS

     We are  exposed to market  risk  primarily  related  to  foreign  exchange,
interest rates and the price of cotton.  We actively manage foreign currency and
interest  rate risk with the  objective of reducing  fluctuations  in actual and
anticipated  cash flows by  entering  into a variety of  derivative  instruments
including  spot,  forward,  options  and swaps.  We  currently  do not hedge our
exposure to the price of cotton with derivative instruments.


FOREIGN EXCHANGE RISK

     Foreign  exchange  market  risk  exposures  are  primarily  related to cash
management   activities,   raw  material  and  finished  goods  purchases,   net
investments and royalty flows from affiliates.










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<PAGE>


     The following table presents notional  amounts,  average exchange rates and
fair values for forward and swap  contracts by currency.  All amounts are stated
in U.S.  dollar  equivalents.  The  notional  amount  represents  the  total net
position  outstanding as of the stated date. A positive amount represents a long
position in U.S. dollars, while a negative amount represents a short position in
U.S. dollars,  versus the relevant currency.  The net position is the sum of all
buy  transactions  minus the sum of all sell  transactions.  The unrealized gain
(loss) is the fair value of the outstanding  position.  The average forward rate
is the  forward  rate  weighted  by the  total of the  transacted  amounts.  All
transactions will mature before August 2001.

<TABLE>
<CAPTION>

                    OUTSTANDING FORWARD AND SWAP TRANSACTIONS
                   (DOLLARS IN THOUSANDS EXCEPT AVERAGE RATES)

                                                                                          AS OF         AS OF
                                                                                       NOVEMBER 26, NOVEMBER 28,
                                  CURRENCY                            DATA                2000          1999
                                  ---------                          ------               ----          ----
      <S>                                                      <C>                         <C>         <C>
      Australian Dollar.....................................   Notional amount             $ (3,522)   $ (16,528)
                                                               Unrealized gain                  (23)         230
                                                               Average forward rate            0.52         0.65

      Canadian Dollar.......................................   Notional amount             $(11,021)   $ (50,360)
                                                               Unrealized gain                  (41)          64
                                                               Average forward rate            1.56         1.46

      Euro . ...............................................   Notional amount             $(69,045)   $(137,416)
                                                               Unrealized gain                5,439       18,672
                                                               Average forward rate            0.83         1.06

      British Pound.........................................   Notional amount             $(65,862)   $ (81,591)
                                                               Unrealized gain                1,413          675
                                                               Average forward rate            1.43         1.62

      Japanese Yen..........................................   Notional amount             $(54,168)   $(115,369)
                                                               Unrealized gain (loss)         2,198       (3,175)
                                                               Average forward rate          107.57       106.47

      Mexican Peso..........................................   Notional amount             $ (1,511)   $  (7,339)
                                                               Unrealized gain (loss)          (194)        (110)
                                                               Average forward rate             9.8         9.47

      Swedish Krona.........................................   Notional amount             $(54,630)   $ (94,675)
                                                               Unrealized gain                  501          655
                                                               Average forward rate           10.16         8.32

      Other Currencies......................................   Notional amount             $  1,785    $ (10,406)
                                                               Unrealized gain (loss)           300          (79)
                                                               Average forward rate             N/A          N/A
                                                                                           --------    ---------

           Total Unrealized Gain............................                               $  9,593    $  16,932
                                                                                           ========    =========
</TABLE>


     The following table presents notional  amounts,  average strike rates, book
values and fair values of outstanding foreign currency options.  All amounts are
stated in U.S. dollar equivalents.  The notional amount represents the total net
position  outstanding  as of the stated date should the option be  exercised.  A
positive  amount  represents a long position in U.S.  dollars,  while a negative
amount  represents  a  short  position  in U.S.  dollars,  versus  the  relevant
currency. The carrying value is the amount reported in our financial statements.
It equals the sum of the  non-amortized  portion of the option  premium  and the
intrinsic  value of the  option.  The  market  value  represents  the fair value
reported by our counterparties. The average strike rate is weighted by the total
of the notional amounts. All transactions will expire before June 2001.


                                       34

<PAGE>

<TABLE>
<CAPTION>

                        OUTSTANDING OPTIONS TRANSACTIONS
                   (DOLLARS IN THOUSANDS EXCEPT AVERAGE RATES)

                                                                                              AS OF         AS OF
                                                                                           NOVEMBER 26, NOVEMBER 28,
                               CURRENCY                                  DATA                 2000          1999
                               ---------                                 -----                ----          ----
      <S>                                                      <C>                           <C>           <C>
      Australian Dollar..................................      Notional amount               $ 12,750      $ 3,585
                                                               Carrying value                      30           30
                                                               Market value                        75         (250)
                                                               Average strike rate               0.52         0.65

      Canadian Dollar....................................      Notional amount                $10,000      $30,000
                                                               Carrying value                     217            6
                                                               Market value                       158           25
                                                               Average strike rate               1.53         1.48

      Euro     ..........................................      Notional amount               $634,588     $365,006
                                                               Carrying value                   5,341        9,374
                                                               Market value                     5,091        6,181
                                                               Average strike rate               0.88         1.06

      British Pound......................................      Notional amount                 (8,444)          --
                                                               Carrying value                      --           (2)
                                                               Market value                        --           53
                                                               Average strike rate               1.32         1.61

      Hong Kong Dollar...................................      Notional amount               $     --     $  3,000
                                                               Carrying value                      --           --
                                                               Market value                        --           (2)
                                                               Average strike rate                 --         7.93

      Japanese Yen.......................................      Notional amount               $ 20,000      $55,000
                                                               Carrying value                   1,853       (1,602)
                                                               Market value                     1,041       (3,749)
                                                               Average strike rate             109.18       111.83

      Swedish Krona......................................      Notional amount               $     --     $ 30,902
                                                               Carrying value                      --           --
                                                               Market value                        --           30
                                                               Average strike rate                 --         8.40

      Mexican Peso.......................................      Notional amount               $  5,000     $     --
                                                               Carrying value                     (77)          --
                                                               Market value                       (76)          --
                                                               Average strike rate               9.84           --

      South Africa Rand..................................      Notional amount               $     --     $     --
                                                               Carrying value                     (55)          --
                                                               Market value                        --           --
                                                               Average strike rate               7.69           --
                                                                                             --------     --------

           Total Carrying Value..........................                                    $  7,309     $  7,806
                                                                                             ========     ========

           Total Market Value............................                                    $  6,289     $  2,288
                                                                                             ========     ========
</TABLE>


                                       35

<PAGE>


INTEREST RATE RISK

     We have an  interest  rate risk  management  policy  designed to manage the
interest rate risk on our borrowings by entering into a variety of interest rate
derivatives.

     The following  table provides  information  about our derivative  financial
instruments  and other  financial  instruments  that are sensitive to changes in
interest rates. For debt  obligations,  the table presents  principal cash flows
and related  weighted  average  interest rates by expected  maturity dates.  For
interest rate swaps,  the table presents  notional amounts and interest rates by
contractual  maturity dates. The applicable  floating rate index is included for
variable rate instruments.  Notional amounts are the amounts  outstanding at the
end of the stated period. All amounts are stated in U.S. dollar equivalents.

<TABLE>
<CAPTION>
                   INTEREST RATE TABLE AS OF NOVEMBER 26, 2000
                 (DOLLARS IN THOUSANDS UNLESS OTHERWISE STATED)


                                                             YEAR ENDED
                                                -----------------------------------------
                                                                                                           FAIR
                                                                                                          VALUE
                              2000         2001       2002       2003      2004      2005      2006        2000
                           ---------   ----------   --------- --------- --------- --------- ---------   ---------

<S>                        <C>         <C>         <C>        <C>       <C>       <C>       <C>         <C>
DEBT INSTRUMENTS
Fixed Rate (US$)...........$  856,637  $  850,548  $  844,774 $ 488,465 $ 481,571 $ 450,000        --   $  685,031
  Average Interest Rate....      7.05%       7.03%       7.02%     7.15%     7.13%     7.00%       --           --
Fixed Rate (Yen 20 billion)$  184,043  $  184,043  $  184,043 $ 184,043 $ 184,043 $ 184,043 $ 184,043   $  133,945
  Average Interest Rate....      4.25%       4.25%       4.25%     4.25%     4.25%     4.25%     4.25%          --
Variable Rate (US$)........$1,071,185  $1,069,417  $   68,143 $  56,889 $  24,365        --        --   $1,071,185
  Average Interest Rate*...      8.85%       8.85%       7.64%     8.06%     9.68%       --        --           --


INTEREST RATE DERIVATIVE
  FINANCIAL INSTRUMENTS
  RELATED TO DEBT
Interest  Rate  Options
Collar = Locked fixed
payer rate in 6.72%-7.20%
range/Receive variable
3 month LIBOR,
combined with Receive
8.25% fix/Pay variable
3 month LIBOR              $   75,000  $   75,000           -         -         -         -         -   $      (85)
Combination Pay fix 7%/
Receive fix 8%  vs
variable 3 month LIBOR     $   75,000  $   75,000           -         -         -         -         -   $        2
Combination Pay fix 8.10%/
Pay fix 6.72% vs Receive 3
month LIBOR                $   75,000  $   75,000           -         -         -         -         -   $     (170)

Collar = Locked fixed
payer rate  in average
6.75%-7.20%  range         $  200,000  $  200,000           -         -         -         -         -   $     (537)


- --------------
<FN>
*Assumes no change in short-term interest rates
</FN>
</TABLE>






                                       36

<PAGE>

<TABLE>
<CAPTION>
                   INTEREST RATE TABLE AS OF NOVEMBER 28, 1999
                 (DOLLARS IN THOUSANDS UNLESS OTHERWISE STATED)



                                                                         YEAR ENDED                             FAIR
                                                                        ------------                            VALUE
                                    1999         2000       2001       2002       2003       2004      2005      1999
                                   -----        -----      -----      -----      -----      -----     -----     -----
<S>                              <C>           <C>        <C>        <C>        <C>        <C>        <C>       <C>
DEBT INSTRUMENTS
Fixed Rate (US$)................ $  800,000    $800,000   $800,000   $800,000   $450,000   $450,000   $450,000  $  626,307
  Average Interest Rate.........       6.91%       6.91%      6.91%      6.91%      7.00%      7.00%      7.00%         --
Fixed Rate (Yen 20 billion)..... $  188,679    $188,679   $188,679   $188,679   $188,679   $188,679   $188,679  $  148,113
  Average Interest Rate.........       4.25%       4.25%      4.25%      4.25%      4.25%      4.25%      4.25%         --
Variable Rate (US$)............. $1,642,836    $631,800   $631,800         --         --         --         --  $1,650,315
  Average Interest Rate*........       6.12%       6.16%      6.16%        --         --         --         --          --
INTEREST RATE DERIVATIVE
FINANCIAL INSTRUMENTS RELATED
TO DEBT
Interest Rate Swaps
  Payer swaps (Pay fix/Receive
    variable)................... $  425,000          --         --         --         --         --         --  $   (2,119)
  Average rate received = US$ 3
    month LIBOR.................       5.49%         --         --         --         --         --         --          --
  Average rate paid.............       6.72%         --         --         --         --         --         --          --
  Receiver swaps (Receive
    fix/Pay variable)........... $  325,000    $325,000   $325,000   $325,000   $200,000   $200,000   $200,000  $   (1,596)
    Average rate received.......       6.91%       6.84%      6.84%      6.84%      6.80%      6.80%      6.80%         --
  Average rate paid = US$ 3
    month LIBOR.................    +5.69bp     +6.15bp    +6.15bp    +6.15bp   +10.00bp   +10.00bp   +10.00bp          --
  Receiver swaps (Receive fix/
    Pay variable) with periodic
    `Knock-Out' option.......... $   50,000    $ 50,000   $ 50,000   $ 50,000         --         --         --  $   (1,124)
  Average rate received.........       6.58%       6.58%      6.58%      6.58%        --         --         --          --
  Average rate paid = US$ 6
    month LIBOR.................       6.13%         --         --         --         --         --         --          --

- --------------
<FN>
* Assumes no change in short-term interest rates
</FN>
</TABLE>



                                       37

<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of
Levi Strauss & Co.:

     We have  audited  the  accompanying  consolidated  balance  sheets  of Levi
Strauss & Co. (a Delaware  corporation) and subsidiaries as of November 26, 2000
and  November  28,  1999,  and the related  consolidated  statements  of income,
stockholders'  deficit and cash flows for each of the three  fiscal years in the
period  ended   November  26,  2000.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all  material  respects,  the  financial  position of Levi  Strauss & Co. and
subsidiaries  as of November 26, 2000 and November 28, 1999,  and the results of
their  operations and their cash flows for each of the three fiscal years in the
period  ended  November  26,  2000  in  conformity  with  accounting  principles
generally accepted in the United States.

     Our audit was made for the  purpose  of  forming  an  opinion  on the basic
financial  statements  taken as a whole.  Schedule  II  listed  in the  index of
financial  statements  (not  presented  herein) is presented  for the purpose of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures  applied in the audit of the basic  financial  statements and, in our
opinion,  fairly states in all material  respects the financial data required to
be set forth therein in relation to the basic  financial  statements  taken as a
whole.


                               ARTHUR ANDERSEN LLP

San Francisco, California
January 17, 2001, except with respect to the matters discussed in Note 18, as to
which the date is February 1, 2001.



                                       38


<PAGE>

<TABLE>
<CAPTION>

                       LEVI STRAUSS & CO. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

                                                                                                  NOVEMBER 26,  NOVEMBER 28,
                                                                                                      2000         1999
                                             ASSETS                                                   ----         ----
<S>                                                                                               <C>          <C>
Current Assets:
     Cash and cash equivalents ...............................................................    $   117,058  $   192,816
     Trade receivables, net of allowance for doubtful accounts of $29,717 in 2000 and
       $30,017 in 1999........................................................................        660,128      759,273
     Income taxes receivable..................................................................             --       70,000
     Inventories:
         Raw materials........................................................................        120,760      137,082
         Work-in-process......................................................................         84,871      100,523
         Finished goods.......................................................................        446,618      433,882
                                                                                                  -----------  -----------
              Total inventories...............................................................        652,249      671,487
     Deferred tax assets......................................................................        250,817      300,972
     Other current assets.....................................................................        168,621      172,195
                                                                                                  -----------  -----------
              Total current assets............................................................      1,848,873    2,166,743
Property, plant and equipment, net of accumulated depreciation of $495,986 in 2000 and
   $548,437 in 1999...........................................................................        574,039      714,523
Goodwill and other intangibles, net of accumulated amortization of $164,826 in 2000 and
   $158,052 in 1999...........................................................................        264,956      275,318
Non-current deferred tax assets...............................................................        439,692      453,235
Other assets..................................................................................         78,168       60,195
                                                                                                  -----------  -----------
              TOTAL ASSETS....................................................................    $ 3,205,728  $ 3,670,014
                                                                                                  ===========  ===========


                              LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
     Current maturities of long-term debt and short-term borrowings...........................    $   231,290  $   233,992
     Accounts payable.........................................................................        268,473      262,389
     Restructuring reserves...................................................................         71,595      288,281
     Accrued liabilities......................................................................        395,660      415,273
     Accrued salaries, wages and employee benefits............................................        257,021      194,130
     Accrued taxes............................................................................         69,772        2,548
                                                                                                  -----------  -----------
              Total current liabilities.......................................................      1,293,811    1,396,613
Long-term debt, less current maturities.......................................................      1,895,140    2,430,617
Postretirement medical benefits...............................................................        545,574      541,815
Long-term employee related benefits...........................................................        358,849      325,518
Long-term tax liabilities.....................................................................        166,854      216,542
Other long-term liabilities...................................................................         20,588       20,696
Minority interest ............................................................................         23,485       26,775
                                                                                                  -----------  -----------
              Total liabilities...............................................................      4,304,301    4,958,576
                                                                                                  -----------  -----------

Stockholders' Deficit:
     Common stock--$.01 par value; 270,000,000 shares authorized; 37,278,238 shares
       issued and outstanding.................................................................            373          373
     Additional paid-in capital...............................................................         88,808       88,812
     Accumulated deficit......................................................................     (1,171,864)  (1,395,256)
     Accumulated other comprehensive income (loss)............................................        (15,890)      17,509
                                                                                                  -----------  -----------
              Stockholders' deficit...........................................................     (1,098,573)  (1,288,562)
                                                                                                  -----------  -----------
              TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT.....................................    $ 3,205,728  $ 3,670,014
                                                                                                  ===========  ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.



                                       39

<PAGE>

<TABLE>
<CAPTION>

                       LEVI STRAUSS & CO. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                                   YEAR ENDED     YEAR ENDED     YEAR ENDED
                                                                                  NOVEMBER 26,   NOVEMBER 28,   NOVEMBER 29,
                                                                                      2000           1999           1998
                                                                                      ----           ----           ----
<S>                                                                                <C>           <C>              <C>
Net sales....................................................................      $ 4,645,126   $ 5,139,458      $ 5,958,635
Cost of goods sold...........................................................        2,690,170     3,180,845        3,433,081
                                                                                   -----------   -----------      -----------
     Gross profit............................................................        1,954,956     1,958,613        2,525,554
Marketing, general and administrative expenses...............................        1,481,718     1,629,845        1,834,058
Other operating income.......................................................          (32,380)      (24,387)         (25,310)
Excess capacity reduction/restructuring......................................          (33,144)      497,683          250,658
Global Success Sharing Plan..................................................              --       (343,873)          90,564
                                                                                   -----------   -----------      -----------
     Operating income........................................................          538,762       199,345          375,584
Interest expense.............................................................          234,098       182,978          178,035
Other (income) expense, net..................................................          (39,016)        7,868           34,849
                                                                                   -----------   -----------      -----------
     Income before taxes.....................................................          343,680         8,499          162,700
Provision for taxes..........................................................          120,288         3,144           60,198
                                                                                   -----------   -----------      -----------
     Net income..............................................................      $   223,392   $     5,355      $   102,502
                                                                                   ===========   ===========      ===========
Earnings per share -- basic and diluted......................................      $      5.99   $      0.14      $      2.75
                                                                                   ===========   ===========      ===========



Weighted-average common shares outstanding...................................      37,278,238     37,278,238       37,278,238
                                                                                   ==========     ==========       ==========
</TABLE>





   The accompanying notes are an integral part of these financial statements.




                                       40


<PAGE>

<TABLE>
<CAPTION>

                       LEVI STRAUSS & CO. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                             (DOLLARS IN THOUSANDS)

                                                                                                     ACCUMULATED
                                                                          ADDITIONAL                    OTHER
                                                                  COMMON   PAID-IN   ACCUMULATED    COMPREHENSIVE STOCKHOLDERS'
                                                                   STOCK   CAPITAL     DEFICIT      INCOME (LOSS)    DEFICIT
                                                                   -----   -------     -------      -------------    -------
<S>                                                                 <C>     <C>        <C>               <C>        <C>
BALANCE AT NOVEMBER 30, 1997...................................     $373    $88,812    $(1,503,113)      $ 43,666   $(1,370,262)
                                                                    ----    -------    ------------      --------   -----------
Net income.....................................................       --         --        102,502             --       102,502
Translation adjustment (net of tax of
   $3,811).....................................................       --         --             --        (45,987)      (45,987)
                                                                    ----    -------    ------------      --------   -----------
 Total comprehensive income.....................................      --         --        102,502        (45,987)       56,515
                                                                    ----    -------    ------------      --------   -----------
 BALANCE AT NOVEMBER 29, 1998...................................     373     88,812     (1,400,611)        (2,321)   (1,313,747)
                                                                    ----    -------    -----------       --------   -----------
Net income.....................................................       --         --          5,355             --         5,355
Minimum pension liability (net of tax benefit of $457).........       --         --             --           (778)         (778)
Translation adjustment (net of tax of
   $8,686).....................................................       --         --             --         20,608        20,608
                                                                    ----    -------    -----------       --------   -----------
Total comprehensive income.....................................       --         --          5,355         19,830        25,185
                                                                    ----    -------    -----------       --------   -----------
BALANCE AT NOVEMBER 28, 1999...................................      373     88,812     (1,395,256)        17,509    (1,288,562)
                                                                    ----    -------    -----------       --------   -----------
Net income.....................................................       --         --        223,392             --       223,392
Treasury stock.................................................       --         (4)            --             --            (4)
Minimum pension liability (net of tax of
   $457).......................................................       --         --             --            778           778
Translation adjustment (net of tax of benefit
   $21,216)....................................................       --         --             --        (34,177)      (34,177)
                                                                    ----    -------    -----------       --------   -----------
Total comprehensive income.....................................       --         (4)       223,392        (33,399)      189,989
                                                                    ----    -------    -----------       --------   -----------
BALANCE AT NOVEMBER 26, 2000...................................     $373    $88,808    $(1,171,864)      $(15,890)  $(1,098,573)
                                                                    ====    =======    ============      ========   ===========
</TABLE>






   The accompanying notes are an integral part of these financial statements.





                                       41

<PAGE>

<TABLE>
<CAPTION>

                       LEVI STRAUSS & CO. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

                                                                                   YEAR ENDED      YEAR ENDED     YEAR ENDED
                                                                                  NOVEMBER 26,    NOVEMBER 28,   NOVEMBER 29,
                                                                                      2000            1999           1998
                                                                                      ----            ----           ----
<S>                                                                                  <C>             <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................................................       $ 223,392       $   5,355     $ 102,502
Adjustments to reconcile net cash provided by (used for) operating
   activities:
     Depreciation and amortization...........................................           90,981         120,102       128,773
     Gain on dispositions of property, plant and equipment...................          (24,683)         (3,802)       (1,807)
     Unrealized foreign exchange (gains) losses..............................           (5,194)        (10,130)       27,219
     Decrease in trade receivables...........................................           54,032          57,643        31,806
     Decrease (increase) in income taxes receivable..........................           70,000         (70,000)           --
     (Increase) decrease in inventories......................................          (20,949)        106,979        45,754
     Increase in other current assets........................................          (17,974)        (47,284)      (29,410)
     (Increase) decrease in other long-term assets...........................          (22,436)         18,572         5,679
     Decrease (increase) in net deferred tax assets..........................           55,179          29,340       (43,761)
     Increase in accounts payable and accrued liabilities....................           33,073          11,362        31,595
     (Decrease) increase in restructuring reserves...........................         (216,686)         43,630       (99,452)
     Increase (decrease) in accrued salaries, wages and employee benefits....           70,859         (22,974)      (23,404)
     Increase (decrease) in accrued taxes....................................           49,618         (32,640)      (22,520)
     Increase (decrease) in long-term employee related benefits..............           43,320        (376,204)      127,823
     (Decrease) increase in other long-term liabilities......................          (52,075)            149       (27,893)
     Other, net..............................................................          (24,531)         (3,870)      (29,135)
                                                                                     ---------       ---------     ---------
          Net cash provided by (used for) operating activities...............          305,926        (173,772)      223,769
                                                                                     ---------       ---------     ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment...................................          (27,955)        (61,062)     (116,531)
Proceeds from sale of property, plant and equipment..........................          114,048          69,455        31,185
Decrease (increase) in net investment hedges.................................           67,978          53,736        (2,532)
Other, net    ...............................................................              152             228         5,171
                                                                                     ---------       ---------     ---------
          Net cash provided by (used for) investing activities...............          154,223          62,357       (82,707)
                                                                                     ---------       ---------     ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt.....................................          376,196       1,462,052     1,959,611
Repayments of long-term debt.................................................         (903,371)     (1,230,145)   (2,037,627)
Net increase (decrease) in short-term borrowings.............................              118          (7,688)     (116,437)
Other, net ..................................................................               (5)             --           (36)
                                                                                     ---------       ---------     ---------
          Net cash (used for) provided by financing activities...............         (527,062)        224,219      (194,489)
                                                                                     ---------       ---------     ---------
Effect of exchange rate changes on cash......................................           (8,845)         (4,553)       (6,492)
                                                                                     ---------       ---------     ---------
          Net (decrease) increase in cash and cash equivalents...............          (75,758)        108,251       (59,919)
Beginning cash and cash equivalents..........................................          192,816          84,565       144,484
                                                                                     ---------       ---------     ---------
ENDING CASH AND CASH EQUIVALENTS.............................................        $ 117,058       $ 192,816     $  84,565
                                                                                     =========       =========     =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
     Interest................................................................         $202,355       $ 172,688     $ 167,907
     Income taxes............................................................           56,982          82,675       146,717
     Restructuring initiatives...............................................          183,542         416,123       313,700
</TABLE>

   The accompanying notes are an integral part of these financial statements.



                                       42
<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements of Levi Strauss & Co. and its wholly-
owned  and  majority-owned   foreign  and  domestic  subsidiaries  ("LS&CO."  or
"Company")  are  prepared  in  conformity  with  generally  accepted  accounting
principles in the United States ("U.S."). All significant  intercompany balances
and  transactions  have been  eliminated.  LS&CO. is privately held primarily by
descendants and relatives of its founder, Levi Strauss.

     The Company's  fiscal year  consists of 52 or 53 weeks,  ending on the last
Sunday of November in each year. The 2000,  1999 and 1998 fiscal years consisted
of 52 weeks and ended  November  26,  2000,  November  28, 1999 and November 29,
1998,  respectively.  The fiscal year end for certain  foreign  subsidiaries  is
November 30 due to certain local statutory requirements. All references to years
relate to fiscal years rather than calendar years.

     Certain  prior year amounts have been  reclassified  to conform to the 2000
presentation.

ESTIMATES

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect the amounts reported in the financial statements and the
related notes to the financial statements.  Changes in such estimates,  based on
more accurate future information, may affect amounts reported in future periods.

NATURE OF OPERATIONS

     The Company is one of the world's leading  branded  apparel  companies with
operations in more than 40 countries  and sales in more than 80  countries.  The
Company  designs and markets  jeans and  jeans-related  pants,  casual and dress
pants,  shirts,  jackets and related  accessories,  for men, women and children,
under the Levi's(R),  Dockers(R) and Slates(R)  brands.  The Company markets its
Levi's(R)  and  Dockers(R)  brand  products  in three  geographic  regions:  the
Americas,  Europe and Asia Pacific. The Slates(R) brand products are marketed in
the United States.  As of November 26, 2000, the Company employed  approximately
17,300 people.

     The  stockholders'  deficit  resulted  from a 1996 transaction in which the
Company's stockholders created new long-term governance arrangements,  including
the voting trust and stockholders  agreement.  As a result, shares of stock of a
former parent company, Levi Strauss Associates Inc., including shares held under
several employee benefit and compensation  plans,  were converted into the right
to receive  cash.  The funding for the cash  payments  in this  arrangement  was
provided in part by cash on hand and in part from proceeds of approximately $3.3
billion of borrowings  under bank credit  facilities.  The Company's  ability to
satisfy its  obligations  and to reduce its total debt depends on the  Company's
future operating performance and on economic,  financial,  competitive and other
factors, many of which are beyond the Company's control.

     The  Company  relies  on  a  number  of  suppliers  for  its  manufacturing
processes,  particularly Cone Mills Corporation,  which has been and remains the
sole  supplier of the denim used for 501(R)  jeans  through the  Company's  only
long-term  supply  contract.  In 2000,  1999 and 1998,  Cone  Mills  Corporation
supplied  approximately 24%, 22% and 24%,  respectively,  of the total volume of
fabrics purchased  worldwide by the Company.  The loss of Cone Mills Corporation
or other  principal  suppliers  could  have an adverse  effect on the  Company's
results of operations.

     A group of key U.S.  customers  accounts for a  significant  portion of the
Company's total net sales. Net sales to the Company's 10 largest customers,  all
of which are located in the United  States,  total  approximately  48, 46 and 43
percent  of net  worldwide  sales  during  fiscal  years  2000,  1999 and  1998,
respectively.


                                       43

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



     Most of the Company's  production and  distribution  employees in  the U.S.
are covered by various collective bargaining agreements.  Outside the U.S., most
of the Company's  production  and  distribution  employees are covered by either
industry-sponsored and/or state-sponsored  collective bargaining mechanisms. The
Company  considers  its  relations  with its  employees  to be good and have not
recently experienced any material job actions or labor shortages.

REVENUE RECOGNITION

     Revenue from the sale of product is recognized upon shipment of products to
customers.  Allowances for estimated  returns and discounts are recognized  when
sales are recorded.  Provisions for returns and discounts are estimated based on
various market data,  historical  trends and information from customers.  Actual
returns and discounts do not materially differ from estimates.

ADVERTISING COSTS

     In accordance with SOP 93-7,  "Reporting on Advertising Costs," the Company
expenses  advertising  costs as  incurred.  Advertising  expense is  recorded in
marketing,  general and administrative expenses. For fiscal years 2000, 1999 and
1998 total  advertising  expense was $402.7  million,  $490.2 million and $466.7
million, respectively.

OTHER OPERATING INCOME

     Other operating income consists principally of licensing fees.

MINORITY INTEREST

     Minority interest is included in other (income) expense,  net, and includes
a 16.4%  minority  interest  of Levi  Strauss  Japan K.K.  and a 49.0%  minority
interest of Levi Strauss Istanbul Konfeksigon.

EARNINGS PER SHARE

     Basic  earnings per share ("EPS") is computed by dividing net income by the
weighted-average number of common shares outstanding for the period and excludes
the dilutive effect of common shares that could  potentially be issued.  Diluted
EPS is computed by dividing net income by the weighted-average  number of common
shares  outstanding plus all potential  dilutive common shares. The Company does
not have any potentially dilutive securities.  Therefore,  basic and diluted EPS
are the  same.  The  weighted-average  number of common  shares  outstanding  is
37,278,238 for all periods presented.

CASH AND CASH EQUIVALENTS

     The  Company  considers  all highly  liquid  investments  with an  original
maturity of three months or less to be cash  equivalents.  Cash  equivalents are
stated at amortized cost, which approximates fair market value.

INVENTORY VALUATION

     Inventories  are  valued at the lower of average  cost or market  value and
include materials,  labor and manufacturing overhead. Market value is calculated
on the basis of anticipated selling price less allowances to maintain a targeted
gross margin for each product.

PROPERTY, PLANT AND EQUIPMENT

     Property,  plant  and  equipment  are  carried  at cost,  less  accumulated
depreciation.  The  cost  is  depreciated  on a  straight-line  basis  over  the
estimated useful lives of the related assets.  Buildings are depreciated over 40
years, and leasehold improvements are depreciated over the lesser of the life of
the  improvement  or the initial lease term.  Machinery  and equipment  includes
furniture  and  fixtures,   automobiles  and  trucks,   and  computers  and  are
depreciated over a range from three to twenty years.




                                       44

<PAGE>

                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     The Company adopted Statement of Position ("SOP") 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use," in the first
quarter of fiscal  year  2000.  SOP 98-1  requires  certain  costs for  computer
software  developed or obtained for internal use to be capitalized.  Capitalized
software is carried at cost less accumulated  amortization and is amortized over
three years on a straight-line basis.

GOODWILL AND OTHER INTANGIBLE ASSETS

     Goodwill  and other  intangibles  are  carried  at cost,  less  accumulated
amortization.  Goodwill resulted  primarily from a 1985 acquisition of LS&CO. by
Levi Strauss  Associates  Inc., a former  parent  company that was  subsequently
merged into the Company in 1996.  Goodwill is being amortized on a straight-line
basis over 40 years through the year 2025. Other  intangibles  consist primarily
of tradenames, which were valued as a result of the 1985 acquisition. Tradenames
and other intangibles are being amortized over the estimated useful lives of the
related assets, which range from six to 40 years.

LONG-LIVED ASSETS

     In accordance with Statement of Financial Accounting Standards No. ("SFAS")
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed  of," the Company  reviews  long-lived  assets,  including
goodwill and other  intangibles,  for impairment  whenever  events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  If the carrying  amount of an asset  exceeds the  expected  future
undiscounted cash flows, the Company measures and records an impairment loss for
the excess of the carrying value of the asset over its fair value.

INCOME TAXES

     Deferred  income tax assets and liabilities are recognized for the expected
future tax  consequences  attributable  to  temporary  differences  between  the
financial  statement  carrying  amounts of existing  assets and  liabilities and
their  respective tax bases.  Deferred tax assets and  liabilities  are measured
using the enacted tax rates  expected to apply to taxable income in the years in
which those temporary differences are expected to reverse.

TRANSLATION ADJUSTMENT

     The functional currency for most of the Company's foreign operations is the
applicable  local  currency.  For those  operations,  assets and liabilities are
translated  into U.S.  dollars using  period-end  exchange  rates and income and
expense  accounts are translated at average monthly  exchange rates. Net changes
resulting  from such  translations  are  recorded  as a  separate  component  of
accumulated other comprehensive income in the consolidated financial statements.

     The U.S.  dollar is the  functional  currency  for  foreign  operations  in
countries with highly inflationary economies and certain other subsidiaries. The
translation  adjustments  for these  entities  are  included  in other  (income)
expense, net.

SELF-INSURANCE

     The Company is partially self-insured for workers' compensation and certain
employee  health  benefits.  Accruals for losses are made based on the Company's
claims experience and actuarial  assumptions followed in the insurance industry.
Actual losses could differ from accrued amounts.


SECURITIZATIONS

     The Company accounts for  securitization of receivables in accordance  with
SFAS 125,  "Accounting  for  Transfers  and  Services  of  Financial  Assets and
Extinguishments  of Liabilities."  (SEE "NEW ACCOUNTING  STANDARDS" BELOW ON THE
ISSUANCE OF SFAS 140,  "ACCOUNTING  FOR  TRANSFERS  AND  SERVICING  OF FINANCIAL
ASSETS AND EXTINGUISHMENTS OF LIABILITIES.")

INTEREST RATE SWAPS

     The Company enters into interest rate swap  transactions to manage interest
rate  exposures  on its debt.  Net  interest  receivable  or payable on the swap
transactions is included in interest  expense.  Gains or losses that result from
the early  termination  of swap


                                       45

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

agreements are deferred and amortized over the shorter of the original  maturity
date of the swap or the remaining term of the associated  debt as a component of
interest  expense.  (SEE "NEW ACCOUNTING  STANDARDS" BELOW FOR DISCLOSURE ON THE
ADOPTION  OF SFAS  133,  "ACCOUNTING  FOR  DERIVATIVE  INSTRUMENTS  AND  HEDGING
ACTIVITIES.")

FOREIGN EXCHANGE CONTRACTS

     The Company enters into foreign  exchange  contracts to hedge against known
foreign currency denominated exposures,  particularly dividends and intercompany
royalties,  loans,  sourcing and other  transactions with its foreign affiliates
and licensees. The accounting treatment of these instruments is dependent on the
exposure being hedged.  Forward and swap transactions hedging the Company's cash
management and sourcing  exposures are reported at market value,  with gains and
losses  included in current  earnings in other  (income)  expense,  net.  Option
premiums on these hedges is amortized  straight-line over the life of the option
and is also included in other (income) expense, net. The intrinsic value is used
to mark the option value to market through current earnings.

     Forward and swap transactions hedging net investments in foreign affiliates
and  royalties  are also reported at market value but the market gain or loss is
included in translation  adjustment,  a component of comprehensive income, which
is included in  stockholders'  deficit on the balance sheet.  Similarly,  option
premiums  on  hedges of net  investments  and  royalties  are  amortized  to the
translation  equity account.  The intrinsic value of the options is used to mark
the  instruments to market at each  financial  statement date with the change in
value recorded in translation adjustment.  At November 26, 2000 and November 28,
1999, the net effect of exchange rate changes  related to net  investment  hedge
transactions  was  a  $57.2  million  increase  and  a  $27.0  million  increase
respectively,  to the translation  adjustment.  (SEE "NEW ACCOUNTING  STANDARDS"
BELOW FOR  DISCLOSURE ON THE ADOPTION OF SFAS 133,  "ACCOUNTING  FOR  DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES.")

NEW ACCOUNTING STANDARDS

     In September 2000, the Financial Accounting Standards Board ("FASB") issued
SFAS 140,  "Accounting  for  Transfers  and  Servicing of  Financial  Assets and
Extinguishments  of  Liabilities,"  which  replaces  SFAS 125,  "Accounting  for
Transfers and Services of Financial Assets and  Extinguishments of Liabilities."
This standard revises the methods for accounting for  securitizations  and other
transfers  of  financial  assets and  collateral  as outlined  in SFAS 125,  and
requires  certain  additional  disclosures.   For  transfers  and  servicing  of
financial  assets and  extinguishments  of  liabilities,  this  standard will be
effective  for  the  Company's  May 27,  2001  quarterly  financial  statements.
However, for disclosures  regarding  securitizations and collateral,  as well as
recognition and reclassification of collateral,  this standard will be effective
for the Company's November 25, 2001 annual financial statements.  The Company is
currently  evaluating the impact of the adoption of this standard;  however,  it
does not expect the adoption of this  standard to have a material  effect on its
financial position or results of operations.

     In June  1998,  the  FASB  issued  SFAS  133,  "Accounting  for  Derivative
Instruments  and  Hedging  Activities."  In June  1999,  the  FASB  delayed  the
effective  date of SFAS 133 to fiscal years  beginning  after June 15, 2000. The
Company adopted SFAS 133 and subsequent  amendments the first day of fiscal year
2001.  SFAS 133  establishes  accounting and reporting  standards for derivative
instruments   including  certain  derivative   instruments   embedded  in  other
contracts,  and for  hedging  activities.  In  summary,  SFAS 133  requires  all
derivatives to be recognized as assets or liabilities at fair value.  Fair value
adjustments  are made  either  through  earnings or equity,  depending  upon the
exposure being hedged and the effectiveness of the hedge.

FOREIGN EXCHANGE HEDGING

     The primary purpose of the Company's foreign exchange hedging activities is
to maximize the U.S. dollar value of the Company over the long term. The Company
manages its foreign  currency  exposures in a way that makes it unlikely that it
will  obtain  hedge  accounting  treatment  for all of its  exposure  management
activities  upon the  adoption  of SFAS  133.  The  Company  attempts  to take a
long-term view of managing  exposures on an economic  basis,  using forecasts to
develop exposure  positions and engages in active  management of those exposures
with the objective of protecting  future cash flows and  mitigating  risks.  The
Company does not hold any derivative instruments for trading purposes.

     As a result, not all exposure  management  activities  and foreign currency
derivative  instruments will qualify for hedge  accounting  treatment under SFAS
133.  Derivative  instruments  utilized in these  transactions will be valued at
fair  value and  changes  in fair value  will be  consequently  classified  into
earnings.  Therefore,  it is possible that the Company will experience increased
volatility in earnings.



                                       46

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     The Company uses a variety of derivative  instruments,  including  forward,
swap and  option  contracts,  to hedge  foreign  currency  exposures  related to
sourcing, net investment positions, royalties and cash management.

     The derivative  instruments used to hedge sourcing  exposure  are currently
recorded  at their fair value and any  changes  in fair  value are  included  in
earnings.  Under SFAS 133, a majority of these  contracts  would not qualify for
hedge accounting treatment. The Company has therefore chosen to continue to mark
to market all sourcing  related hedge  transactions  at their fair value and any
changes in fair value will be recorded in earnings.  At November  26, 2000,  the
fair value of these derivative instruments hedging sourcing exposure represented
a net asset of $13.7 million, which is recorded on the balance sheet.

     The Company  hedges its net  investment  position in  major  currencies  by
using  forward,  swap and option  contracts.  The  contracts  hedging  these net
investments  are  currently  in  compliance  with  SFAS  52,  "Foreign  Currency
Translation," and are considered net investment hedges. As a result, the related
gains and losses are  categorized  as cumulative  translation  adjustment in the
other comprehensive income section of stockholders'  deficit. This will continue
to be the  methodology  going forward for the  contracts  that qualify for hedge
accounting  treatment  under SFAS 133. At November 26, 2000,  the gains on these
hedge  contracts  amounted to $1.4 million and are  reflected in the  cumulative
translation adjustment section of other comprehensive income.

     The  contracts  hedging   intercompany  royalty  flows  are  currently   in
compliance with SFAS 52, "Foreign  Currency  Translation," and are designated as
net investment hedges.  Therefore,  the related gains and losses are categorized
as cumulative  translation  adjustment in the other comprehensive income section
of stockholders'  deficit.  The transactions  hedging intercompany royalty flows
will be considered cash flow hedges  according to SFAS 133 rules.  Consequently,
gains and losses on the  contracts  that  qualify and are  designated  for hedge
accounting  treatment will be deferred in other  comprehensive  income until the
underlying  royalty flow has been settled.  The fair value of these transactions
at November 26, 2000  amounted to a gain of $1.8  million.  At the  beginning of
fiscal 2001, hedging activity related to outstanding cash flow hedges are valued
at a gain  of $1.0  million  and  will  be  reclassified  into  earnings  as the
underlying hedged items impact earnings.

     The  derivative   instruments   utilized  in  transactions   hedging   cash
management  exposures  are  currently  and,  under SFAS 133, will continue to be
marked to market at their fair value and any changes in fair value are  recorded
in earnings.

     Under SFAS 133,  fair  values of forward  transactions  and of  the forward
portion of swap transactions will be calculated using the discounted  difference
between the contract forward price and the forward price at the closing date for
the remaining life of the contract. Forward points will no longer be recorded as
assets or  liabilities  on the balance sheet and amortized  over the life of the
contract.  Following SFAS 133 valuation  principles,  option  contracts are also
recorded at fair value. Therefore, option premiums will no longer be recorded as
assets or  liabilities  on the balance sheet and amortized  over the life of the
contract.  These changes in valuation methods will impact the Company's earnings
and the accumulated other comprehensive  income section of stockholders'  equity
beginning in fiscal 2001. At adoption of SFAS 133, the earnings  impact of these
changes in valuation methods is an estimated gain of $1.3 million.  Additionally
the accumulated other comprehensive  income section of stockholders' equity will
decrease by approximately $0.7 million.

INTEREST RATE HEDGING

     The Company is  exposed to interest rate risk.  It is the Company's  policy
and practice to use derivative  instruments,  primarily  interest rate swaps and
options,  to manage and reduce interest rate exposures.  The Company's policy is
to manage interest costs using a mix of fixed and variable debt.

     The fair value of  these derivative  instruments is not currently  recorded
on the  Company's  financial  statements.  Under SFAS 133,  those  interest rate
hedging  instruments that do not qualify for hedge accounting  treatment will be
recorded on the balance sheet at their fair value.  The related  changes in fair
value will be included in earnings.  The earnings  impact of this  adjustment is
estimated at a loss of $1.2 million.



                                       47


<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



NOTE 2: EXCESS CAPACITY REDUCTIONS/RESTRUCTURING RESERVES

NORTH AMERICA PLANT CLOSURES

     Over the last  three  years,  the  Company  has  closed 29 of its owned and
operated  production  and  finishing  facilities  in North America and Europe in
order to reduce costs, eliminate excess capacity and align its sourcing strategy
with  changes in the  industry  and in  consumer  demand.  Plant  closures  were
announced in November 1997, in which ten  manufacturing  facilities as well as a
finishing  center  in the  U.S.  were  closed  by the  end of  1998,  displacing
approximately 6,400 employees.  The Company recorded an initial charge of $386.8
million in 1997 that  consisted of $42.7  million for asset  write-offs,  $327.8
million  for  severance  and  employee  benefits  and  $16.3  million  for other
restructuring  costs.  In fiscal year 2000,  $5.0 million of the reserve balance
was reversed due to the periodic  reevaluation  resulting from updated estimates
and assumptions.  This reversal was primarily  associated with employee benefits
that expired during 2000. The ending  balances for this reserve are displayed in
the table below.

     In line with the above plans,  the Company  announced in November  1998 the
closure of two more finishing centers in the U.S. that were closed by the end of
1999,  displacing  approximately 990 employees.  The Company recorded an initial
charge  of $82.1  million  in 1998 that  consisted  of $23.4  million  for asset
write-offs,  $56.5 million for severance and employee  benefits and $2.2 million
for other  restructuring  costs.  In fiscal  year  2000,  a small  amount of the
remaining  reserve  balance  was  reversed  due  to  the  periodic  reevaluation
resulting from updated  estimates and  assumptions.  This reversal was primarily
associated  with  employee  benefits  and was based upon  historical  trends and
future projections of medical and other employee  benefits.  The ending balances
for this reserve are displayed in the table below.

     Also in conjunction with such plans, the Company announced in February 1999
the closure of 11 additional manufacturing facilities in North America that were
closed by the end of 1999, displacing approximately 5,900 employees. The Company
recorded an initial  charge of $394.1  million in 1999 that  consisted  of $33.4
million for asset write-offs, $299.4 million for severance and employee benefits
and $61.3  million for other  restructuring  costs.  In fiscal year 2000,  $13.3
million of the  remaining  reserve  balance  was  reversed  due to the  periodic
reevaluation resulting from updated estimates and assumptions. Of this reversal,
$7.1 million was primarily  associated with employee benefits and was based upon
historical trends and future projections of medical and other employee benefits.
Of this reversal, $6.1 million was primarily associated with plant closure costs
and was based upon historical  trends from previous plant  closures.  The ending
balances of this reserve are displayed in the table below.

<TABLE>
<CAPTION>

1997 NORTH AMERICA PLANT CLOSURES


                                               BALANCE                               BALANCE                            BALANCE
                                                  AT                                   AT                                 AT
                                               11/29/98    CHARGES     REDUCTIONS    11/28/99   REVERSALS  REDUCTIONS   11/26/00
                                               --------    -------     ----------    --------   ---------  ----------   --------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                              <C>          <C>        <C>          <C>       <C>         <C>          <C>
Severance and employee
   benefits................................      $30,582      $ --       $(17,830)    $12,752   $(4,987)    $(7,544)     $  221
Other restructuring costs..................       11,863        --         (8,925)      2,938        --        (712)      2,226
                                                 -------      ----       --------     -------   -------     -------      ------
     Total.................................      $42,445      $ --       $(26,755)    $15,690   $(4,987)    $(8,256)     $2,447
                                                 =======      ====       ========     =======   =======     =======      ======
</TABLE>




                                       48


<PAGE>

                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>

1998 NORTH AMERICA PLANT CLOSURES

                                               BALANCE                                BALANCE                           BALANCE
                                                  AT                                    AT                                 AT
                                               11/29/98    CHARGES     REDUCTIONS    11/28/99   REVERSALS  REDUCTIONS   11/26/00
                                               --------    -------     ----------    --------   ---------  ----------   --------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                              <C>          <C>        <C>          <C>       <C>         <C>          <C>
Severance and employee
   benefits.................................     $54,552      $ --       $ (50,407)   $4,145    $  (13)     $(2,683)     $ 1,449
Other restructuring costs...................       1,902        --            (101)    1,801        --       (1,193)         608
                                                 -------      ----       ---------    ------    ------      -------      -------
     Total..................................     $56,454      $ --       $ (50,508)   $5,946    $  (13)     $(3,876)     $ 2,057
                                                 =======      ====       =========    ======    ======      =======      =======
</TABLE>

<TABLE>
<CAPTION>

1999 NORTH AMERICA PLANT CLOSURES

                                               BALANCE                               BALANCE                            BALANCE
                                                  AT                                    AT                                AT
                                               11/29/98    CHARGES     REDUCTIONS    11/28/99   REVERSALS  REDUCTIONS   11/26/00
                                               --------    -------     ----------    --------   ---------  ----------   --------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                              <C>          <C>        <C>          <C>       <C>         <C>          <C>
Severance and employee
   benefits.................................     $    --      $299,368   $(183,131)   $116,237  $(7,132)    $(89,253)    $19,852
Other restructuring costs...................          --        61,307     (17,865)     43,442   (6,149)      (2,528)     34,765
                                                 -------      --------   ---------    --------  --------    ---------    -------
     Total..................................     $    --      $360,675   $(200,996)   $159,679  $(13,281)   $(91,781)    $54,617
                                                 =======      ========   =========    ========  ========    ========     =======
</TABLE>


CORPORATE REORGANIZATION INITIATIVES

     In  1998,  the  Company   instituted   various   corporate   reorganization
initiatives,   displacing   approximately  770  employees.  The  goal  of  these
initiatives was to reduce overhead costs and consolidate operations. The Company
recorded initial charges of $61.1 million in 1998 that consisted of $3.0 million
for asset write-offs, $50.1 million for severance and employee benefits and $7.9
million for other restructuring  costs. In fiscal year 2000, $3.7 million of the
remaining  reserve  balance  was  reversed  due  to  the  periodic  reevaluation
resulting from updated estimates and assumptions. Of this reversal, $1.8 million
was primarily  associated  with employee  benefits and was based upon historical
trends and future  projections of medical and other employee  benefits.  Of this
reversal,  $1.9 million was primarily  associated with higher  sub-lease  income
than initially projected.  The ending balances for this reserve are displayed in
the table below.

     In line with such overhead reorganization initiatives, the Company recorded
additional  charges of $48.9 million in 1999 that consisted of $45.0 million for
severance and employee benefits and $3.9 million for other  restructuring  costs
and an  estimated  displacement  of 930  employees.  In fiscal  year 2000,  $9.0
million of the  remaining  reserve  balance  was  reversed  due to the  periodic
reevaluation  resulting from updated  estimates and assumptions.  As a result of
this reevaluation, a total of 730 employees are estimated to be displaced. As of
November 26, 2000,  approximately  670 employees had been displaced.  The ending
balances for this reserve are displayed in the table below.

<TABLE>
<CAPTION>

1998 CORPORATE REORGANIZATION INITIATIVES

                                            BALANCE                             BALANCE                            BALANCE
                                              AT                                  AT                                  AT
                                           11/29/98     CHARGES    REDUCTIONS   11/28/99  REVERSALS   REDUCTIONS   11/26/00
                                           --------     -------    ----------   --------  ---------   ----------   --------
                                                                       (DOLLARS IN THOUSANDS)
<S>                                         <C>            <C>       <C>        <C>       <C>          <C>           <C>
Severance and employee benefits.........    $50,139        $ --      $(45,893)  $ 4,246   $(1,838)     $(2,308)      $  100
Other restructuring costs...............      7,198          --          (786)    6,412    (1,897)      (2,742)       1,773
                                            -------        ----      --------   -------   -------      -------       ------
     Total..............................    $57,337        $ --      $(46,679)  $10,658   $(3,735)     $(5,050)      $1,873
                                            =======        ====      ========   =======   =======      =======       ======
</TABLE>



                                       49


<PAGE>


                      LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


<TABLE>
<CAPTION>
1999 CORPORATE REORGANIZATION INITIATIVES

                                            BALANCE                             BALANCE                            BALANCE
                                              AT                                  AT                                  AT
                                           11/29/98     CHARGES    REDUCTIONS   11/28/99  REVERSALS   REDUCTIONS   11/26/00
                                           --------     -------    ----------   --------  ---------   ----------   --------
                                                                        (DOLLARS IN THOUSANDS)
<S>                                         <C>          <C>         <C>        <C>       <C>          <C>           <C>
Severance and employee benefits..........   $    --      $44,952     $(1,402)   $43,550   $(7,695)     $(33,093)     $2,762
Other restructuring costs................        --        3,937      (2,257)     1,680    (1,268)         (412)         --
                                            -------      -------     -------    -------   -------      --------      ------
     Total...............................   $    --      $48,889     $(3,659)   $45,230   $(8,963)     $(33,505)     $2,762
                                            =======      =======     =======    =======   =======      ========      ======
</TABLE>

EUROPE REORGANIZATION AND PLANT CLOSURES

     In September 1998 the Company  announced  plans to close two  manufacturing
and two finishing  facilities,  and  reorganize  operations  throughout  Europe,
displacing approximately 1,650 employees. These plans were prompted by decreased
demand for denim jeans products and a resulting  over-capacity  in the Company's
European owned and operated plants. The production facilities were closed by the
end of 1999.  The Company  recorded an initial  charge of $107.5 million in 1998
that  consisted  of $10.0  million for asset  write-offs  and $97.5  million for
severance and employee benefits.  As of November 26, 2000,  approximately  1,645
employees had been displaced. The ending balances for this reserve are displayed
in the table below.

     In  conjunction  with  such  plans in  Europe,  the  Company  announced  in
September  1999 plans to close a production  facility  and reduce  capacity at a
finishing  facility in the United Kingdom,  to further reduce overhead costs and
consolidate  operations,  and  to  displace  approximately  960  employees.  The
production facility was closed in December 1999. The Company recorded an initial
charge  of $54.7  million  in 1999  that  consisted  of $4.5  million  for asset
write-offs,  $48.2 million for severance and employee  benefits and $2.0 million
for other  restructuring  costs.  In  fiscal  year  2000,  $2.2  million  of the
remaining  reserve  balance  was  reversed  due  to  the  periodic  reevaluation
resulting  from  updated  estimates  and  assumptions.   As  a  result  of  this
reevaluation,  a total of 945 employees  are  estimated to be  displaced.  As of
November 26, 2000,  approximately  910 employees had been displaced.  The ending
balances for this initial charge are displayed in the table below.

<TABLE>
<CAPTION>

1998 EUROPE REORGANIZATION AND PLANT CLOSURES

                                         BALANCE                                BALANCE                              BALANCE
                                            AT                                    AT                                   AT
                                         11/29/98     CHARGES    REDUCTIONS     11/28/99    REVERSALS   REDUCTIONS   11/26/00
                                         --------     -------    ----------     --------    ---------   ----------   --------
                                                                      (DOLLARS IN THOUSANDS)
<S>                                       <C>         <C>         <C>            <C>           <C>       <C>          <C>
Severance and employee benefits......     $88,415     $ --        $(77,762)      $10,653       $ --      $(9,145)     $1,508
                                          -------     -----       --------       -------       ----      -------      ------
     Total...........................     $88,415     $ --        $(77,762)      $10,653       $ --      $(9,145)     $1,508
                                          =======     =====       ========       =======       ====      =======      ======
</TABLE>

<TABLE>
<CAPTION>

1999 EUROPE REORGANIZATION AND PLANT CLOSURES

                                         BALANCE                                BALANCE                             BALANCE
                                            AT                                    AT                                   AT
                                         11/29/98     CHARGES    REDUCTIONS     11/28/99    REVERSALS   REDUCTIONS   11/26/00
                                         --------     -------    ----------     --------    ---------   ----------  ---------
                                                                     (DOLLARS IN THOUSANDS)
<S>                                       <C>         <C>         <C>           <C>          <C>         <C>          <C>
Severance and employee benefits......     $ --        $ 48,160    $(9,747)      $38,413      $(2,165)    $(30,557)    $5,691
Other restructuring costs............       --           2,029        (17)        2,012           --       (1,372)       640
                                          ----        --------    -------       -------      -------     --------     ------
     Total...........................     $ --        $ 50,189    $(9,764)      $40,425      $(2,165)    $(31,929)    $6,331
                                          ====        ========    =======       =======      =======     ========     ======
</TABLE>

     Severance and employee benefits relate to severance packages, out-placement
and  career  counseling  for  employees  affected  by the  plant  closures,  and
reorganization  initiatives.  Reductions  consist of payments for  severance and
employee benefits,  other  restructuring  costs and actual losses on disposal of
assets.  The balance of severance and employee benefits and other  restructuring
costs are  included  under  restructuring  reserves  on the balance  sheet.  The
majority of the initiatives are expected to be completed by the end of 2001.



                                       50

<PAGE>


                      LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


NOTE 3: INCOME TAXES

     The U.S. and non-U.S. components of income before taxes are as follows:
<TABLE>
<CAPTION>
                                                                                 2000          1999        1998
                                                                                 ----          ----        ----
                                                                                     (DOLLARS IN THOUSANDS)
           <S>                                                                   <C>          <C>         <C>
           U.S. ......................................................           $185,161     $  6,025    $ 61,197
           Non-U.S. ..................................................            158,519        2,474     101,503
                                                                                 --------     --------    --------
                Total.................................................           $343,680     $  8,499    $162,700
                                                                                 ========     ========    ========
</TABLE>

     The provision for taxes consists of the following:

<TABLE>
<CAPTION>
                                                                                 2000          1999        1998
                                                                                 ----          ----        ----
                                                                                  (DOLLARS IN THOUSANDS)
      <S>                                                                       <C>           <C>         <C>
      Federal-U.S.
           Current....................................................           $ (9,417)    $(53,441)   $(36,879)
           Deferred...................................................             23,851       20,589       1,812
                                                                                 --------      -------     -------
                                                                                 $ 14,434     $(32,852)   $(35,067)
                                                                                 ========     ========    ========
      State-U.S.
           Current....................................................           $  3,758     $   (521)   $    458
           Deferred...................................................              6,552          776       4,423
                                                                                 --------     --------    --------
                                                                                 $ 10,310     $    255    $  4,881
                                                                                 ========     ========    ========
       Non-U.S.
           Current....................................................           $ 62,249     $ 32,663    $132,089
           Deferred...................................................             33,295        3,078     (41,705)
                                                                                 --------     --------    --------
                                                                                 $ 95,544     $ 35,741    $ 90,384
                                                                                 ========     ========    ========

      Total
           Current....................................................           $ 56,590     $(21,299)   $ 95,668
           Deferred...................................................             63,698       24,443     (35,470)
                                                                                 --------     --------    --------
                                                                                 $120,288     $  3,144    $ 60,198
                                                                                 ========     ========    ========
</TABLE>


     At  November  26, 2000,  cumulative  non-U.S. operating  losses  of  $150.3
million  generated  by the Company  were  available  to reduce  future  non-U.S.
taxable income.  Approximately  $109.5 million of the non-U.S.  operating losses
expire between the years 2001 and 2010 and the remainder of the non-U.S.  losses
carry-forward indefinitely.

     Income taxes due to  translation  adjustment,  recorded in the  translation
equity  adjustment,  was $21.2 million,  $8.7 million and $3.8 million for 2000,
1999 and 1998, respectively.

     Temporary   differences   which  give  rise  to  deferred  tax  assets  and
liabilities at November 26, 2000 and November 28, 1999 were as follows:



                                       51


<PAGE>


                      LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>

                                                                                       2000            1999
                                                                                     DEFERRED        DEFERRED
                                                                                    TAX ASSETS      TAX ASSETS
                                                                                   (LIABILITIES)  (LIABILITIES)
                                                                                   -------------  -------------
                                                                                       (DOLLARS IN THOUSANDS)
             <S>                                                                      <C>            <C>
             Postretirement benefits.............................................     $ 207,318      $ 215,361
             Employee compensation and benefit plans.............................       159,321        146,261
             Inventory...........................................................        55,876         86,311
             Depreciation and amortization.......................................        (8,765)         4,713
             Foreign exchange gains/losses.......................................       (36,364)       (36,834)
             Restructuring and special charges...................................        32,366        102,501
             Tax on unremitted non-U.S. earnings.................................       149,174        153,551
             State income tax....................................................       (20,693)       (21,352)
             Foreign losses......................................................        33,000         30,000
             Foreign tax credit carryforward.....................................        78,984         55,745
             Alternative minimum tax credit carryforward.........................        26,362          6,845
             Other...............................................................        71,930         66,105
             Less valuation allowance............................................       (58,000)       (55,000)
                                                                                      ---------      ---------
                                                                                      $ 690,509      $ 754,207
                                                                                      =========      =========
</TABLE>

     The $58.0  million  deferred tax  valuation  allowance at November 26, 2000
represents  the portion of the  Company's  consolidated  deferred tax assets for
which the Company,  based upon its projections as of that date, does not believe
that the realization is more likely than not.

     The  Company's  effective  income tax rate for fiscal years 2000,  1999 and
1998 differs from the statutory federal income tax rate as follows:

<TABLE>
<CAPTION>
                                                                                                2000        1999       1998
                                                                                                ----        ----       ----
           <S>                                                                                   <C>        <C>        <C>
           Statutory rate..................................................................      35.0%      35.0%      35.0%
           Changes resulting from:
                State income taxes, net of federal income tax benefit......................       2.0        2.0        2.0
                Change in valuation allowance..............................................       0.7       15.2        6.0
                Acquisition-related book and tax bases differences.........................       1.1       43.6        2.3
                Reversal of prior years' accruals..........................................      (3.6)     (55.0)     (11.3)
                Other, net.................................................................      (0.2)      (3.8)       3.0
                                                                                                 ----       ----       ----
           Effective rate..................................................................      35.0%      37.0%      37.0%
                                                                                                 ====       ====       ====
</TABLE>

     The  consolidated  U.S.  income tax returns of the Company for 1986 through
1999 are under examination by the Internal Revenue Service ("IRS").  A tentative
settlement agreement covering most issues has been reached with the IRS covering
the years 1986 through 1989. The Company believes it has made adequate provision
for income taxes and interest for all periods under review.

NOTE 4: PROPERTY, PLANT AND EQUIPMENT

     The components of property, plant and equipment ("PP&E") are as follows:

<TABLE>
<CAPTION>

                                                                                      2000              1999
                                                                                      ----              ----
                                                                                    (DOLLARS IN THOUSANDS)
              <S>                                                                   <C>              <C>
              Land ........................................................         $   34,458       $   48,483
              Buildings and leasehold improvements.........................            416,935          566,046
              Machinery and equipment......................................            610,599          643,463
              Construction in progress.....................................              8,033            4,968
                                                                                    ----------       ----------
                   Total PP&E..............................................          1,070,025        1,262,960
              Accumulated depreciation.....................................           (495,986)        (548,437)
                                                                                    ----------       ----------
              PP&E, net....................................................         $  574,039       $  714,523
                                                                                    ==========       ==========
</TABLE>


                                       52

<PAGE>


                      LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


     As a result of the excess capacity reduction and reorganization initiatives
charges  (SEE NOTE 2 TO THE  CONSOLIDATED  FINANCIAL  STATEMENTS),  the  Company
recognized  impairment  losses  in 1999  and  1998 of $37.9  million  and  $36.4
million,  respectively,  related to certain plant assets.  The impairment losses
were recorded as a reduction of the book value of machinery and equipment in the
table above. The adjustment to net realizable value was determined by estimating
the proceeds realizable on sale or lease of these assets.

     As of November 26, 2000,  the Company had  approximately  $12.0  million of
PP&E, net, available for sale.

     Depreciation  expense  for 2000,  1999 and 1998 was $80.2  million,  $108.7
million and $114.3 million, respectively.

     Construction in progress at November 26, 2000 related to various  projects.
It is  estimated  that  approximately  $6.0 million in costs will be incurred to
complete these projects in 2001.  These projects consist of sales office capital
improvements,  sourcing projects,  internally  developed software and facilities
infrastructure. Construction in progress at November 28, 1999 related to various
projects that were completed and placed into service in 2000.

NOTE 5: GOODWILL AND OTHER INTANGIBLE ASSETS

     The components of goodwill and other intangible assets are as follows:

<TABLE>
<CAPTION>
                                                                                       2000          1999
                                                                                       ----          ----
                                                                                    (DOLLARS IN THOUSANDS)
              <S>                                                                     <C>          <C>
              Goodwill...........................................................     $ 351,474    $ 351,474
              Tradenames and other intangibles...................................        78,308       81,896
                                                                                      ---------    ---------
                   Total intangible assets.......................................       429,782      433,370
              Accumulated amortization related to goodwill.......................      (133,995)    (125,208)
              Other accumulated amortization.....................................       (30,831)     (32,844)
                                                                                      ---------    ---------
              Intangible assets, net.............................................     $ 264,956    $ 275,318
                                                                                      =========    =========
</TABLE>


     The Company  reduced  other  intangibles  by $3.6  million to remove  fully
amortized assets in 2000. In 1999, there was an impairment loss of $13.6 million
related to obsolete technology that was recorded in other (income) expense, net.

     Amortization  expense  for  2000,  1999 and 1998 was $10.8  million,  $11.4
million and $14.4 million, respectively.








                                       53

<PAGE>


                      LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



NOTE 6: DEBT AND LINES OF CREDIT

     Debt and lines of credit are summarized below:

<TABLE>
<CAPTION>

                                                                                                     2000          1999
                                                                                                     ----          ----
                                                                                                  (DOLLARS IN THOUSANDS)
      <S>                                                                                         <C>         <C>
      LONG-TERM DEBT:
      Unsecured:
           Credit facilities................................................................      $       --  $1,417,000
           Notes:
                6.80%, due 2003.............................................................         348,559     348,065
                7.00%, due 2006.............................................................         447,207     446,735
           Yen-denominated eurobond:
                4.25%, due 2016.............................................................         183,486     188,679
                                                                                                  ----------  ----------
                                                                                                     979,252   2,400,479
      Secured:
           Credit Facilities................................................................         988,639          --
           Customer Service Center Equipment Financing......................................          85,013          --
           European Receivables-backed securitization financing agreement...................          31,148          --
           Domestic Receivables-backed securitization financing agreement...................              --     214,000
           Industrial development revenue refunding bond....................................          10,000      10,000
           Notes payable, at various rates, due in installments through 2006................           1,295       6,331
                                                                                                  ----------  ----------
                                                                                                   2,095,347   2,630,810
     Current maturities.....................................................................        (200,207)   (200,193)
                                                                                                  ----------  ----------
                     Total..................................................................      $1,895,140  $2,430,617
                                                                                                  ==========  ==========
      UNUSED LINES OF CREDIT:
           Long-term    ....................................................................      $       --  $       --
           Short-term   ....................................................................         469,992     201,689
                                                                                                  ----------  ----------
                     Total..................................................................      $  469,992   $ 201,689
                                                                                                  ==========  ==========
</TABLE>

NOTES EXCHANGE OFFER

      In May 2000, the Company filed a registration  statement on Form S-4 under
the  Securities  Act of 1933,  as amended  (the  "Securities  Act") with the SEC
relating  to an  exchange  offer of its 6.80% notes due 2003 and 7.00% notes due
2006 (see "1996 Notes Offering" below). The exchange offer gave holders of these
notes the opportunity to exchange these old notes, which were issued on November
6, 1996 under Rule 144A of the Securities Act, for new notes that are registered
under the  Securities  Act of 1933.  The new notes are identical in all material
respects to the old notes except that the new notes are registered.

     The  exchange  offer ended on June 20,  2000.  As a result of the  exchange
offer, all but $20 thousand of the $350.0 million aggregate  principal amount of
6.80% old notes due 2003 were  exchanged for the 6.80%  exchange notes due 2003;
and all $450.0  million  aggregate  principal  amount of the 7.00% old notes due
2006 were exchanged for the 7.00% exchange notes due 2006.

      The  Company  was not  obligated  by any  agreement  including  its credit
facility  agreements to engage in the exchange offer. The Company  initiated the
exchange  offer to give holders of these notes the  opportunity  to exchange the
old notes for registered notes.

1996 NOTES OFFERING

     In 1996,  the Company  issued two series of notes payable  totaling  $800.0
million to qualified  institutional investors in reliance on Rule 144A under the
U.S.  Securities and Exchange Act of 1933 (the "Notes Offering").  The notes are
unsecured  obligations  of the Company and are not subject to redemption  before
maturity.  The issuance was divided into two series:  $350.0 million  seven-year
notes  maturing in November 2003 and $450.0  million  ten-year notes maturing in
November  2006.  The seven- and ten-year  notes bear interest at 6.80% and 7.00%
per annum, respectively, payable semi-annually in May and November of each year.
Discounts  of $8.2 million on the original  issue are being  amortized  over the
term of the notes  using an  approximate


                                       54

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

effective-interest  rate method.  Net proceeds from the Notes Offering were used
to repay a portion of the indebtedness  outstanding under a 1996 credit facility
agreement.

YEN-DENOMINATED EUROBOND PLACEMENT

     In 1996,  the Company  issued a 20 billion  yen principal  amount  eurobond
(equivalent  to  approximately  $180.0  million at the time of issuance)  due in
November 2016, with interest  payable at 4.25% per annum. The bond is redeemable
at the option of the Company at a  make-whole  redemption  price  commencing  in
2006.  Net  proceeds  from the  placement  were used to repay a  portion  of the
indebtedness outstanding under a 1996 credit facility agreement.

CREDIT FACILITIES

     On January  31,  2000 the  Company  amended  three of its  credit  facility
agreements  and entered into one new agreement to reflect its current  financial
position and extend maturity dates (the "2000 Credit  Facility").  The financing
package  consists of four separate  agreements:  (1) a new $450.0 million bridge
facility to fund working capital and support letters of credit, foreign exchange
contracts  and  derivatives,  (2) an amended  $300.0  million  revolving  credit
facility,  extending the existing bridge facility, (3) an amended $545.0 million
364-day  credit  facility,  and (4) an  amended  $584.0  million  5-year  credit
facility.  Simultaneously  with  entering  into these  agreements,  the  Company
terminated a domestic receivables-backed securitization financing.

     All  four  facilities  are  secured  by  domestic   receivables,   domestic
inventories,   certain  domestic  equipment,   trademarks,   other  intellectual
property,  100% of the  stock  in  domestic  subsidiaries,  65% of the  stock of
certain foreign  subsidiaries and other assets. The maturity date for all credit
facilities is January 31, 2002. Borrowings under the bank credit facilities bear
interest at LIBOR or the agent  bank's base rate plus an  incremental  borrowing
spread.  For the bridge  facility,  the spread is 3.00% over LIBOR or 1.75% over
the base rate.  For each of the three  amended  facilities,  the spread is 3.25%
over LIBOR or 2.00% over the base rate.

     In addition,  if by February 1, 2001 the Company has not  completed  one or
more private or public capital-raising  transactions yielding net proceeds of at
least $300.0 million,  which are required to be used to reduce commitments under
the bank credit  facilities,  the Company will be required to pay its lenders an
additional  borrowing  spread of 1.00% on outstanding  borrowings under the bank
credit facilities,  plus a one-time additional fee of 2.00% of total commitments
as of January 31,  2001.  The  Company's  borrowing  spread will be increased by
0.25%  quarterly  until those  capital-raising  transactions  are completed.  In
February  2001,  the Company  entered into a new $1.05  billion  senior  secured
credit  facility to replace the 2000 Credit  Facility on more  favorable  terms.
Also in January 2001,  the Company  issued two series of notes payable  totaling
the equivalent of $497.5 million to qualified institutional investors. (SEE NOTE
18 TO THE CONSOLIDATED FINANCIAL STATEMENTS.)

     The  credit  agreements  relating  to  the  2000  Credit  Facility  contain
customary covenants restricting the Company's activities as well as those of its
subsidiaries,  including  limitations  on the  Company's  and its  subsidiaries'
ability  to sell  assets;  engage in  mergers;  enter into  operating  leases or
capital leases; enter into transactions  involving related parties,  derivatives
or letters of credit; enter into intercompany  transactions;  incur indebtedness
or grant liens or negative pledges on the Company's assets;  make loans or other
investments;  pay dividends or repurchase  stock or other  securities;  guaranty
third party  obligations;  make  capital  expenditures;  and make changes in the
Company's  corporate  structure.  The credit  agreements also contain  financial
covenants that the Company must satisfy on an ongoing basis, including a maximum
leverage  ratio,  a  minimum   coverage  ratio  and  a  minimum   earnings  base
calculation.  The Company was in compliance with financial covenants required by
the credit facility agreements as of November 26, 2000.





                                       55


<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



CUSTOMER SERVICE CENTER EQUIPMENT FINANCING

     In December 1999 the Company entered into a secured  financing  transaction
consisting of a five-year credit facility secured by owned equipment at Customer
Service Centers located in Nevada, Mississippi and Kentucky. The amount financed
in  December  1999 was  $89.5  million,  comprised  of a $59.5  million  tranche
("Tranche  1") and a $30.0  million  tranche  ("Tranche  2").  Borrowings  under
Tranche 1 have a fixed interest rate equal to the yield of a four-year  Treasury
note plus an incremental  borrowing  spread.  Borrowings  under Tranche 2 have a
floating  quarterly  interest rate equal to the 90 day LIBOR plus an incremental
borrowing  spread based on the Company's  leverage ratio at that time.  Proceeds
from  the  borrowings  were  used  to  reduce  the  commitment  amounts  of  the
then-existing credit facilities.

EUROPEAN RECEIVABLES SECURITIZATION AGREEMENTS

     In February 2000,  several of the Company's European  subsidiaries  entered
into  receivable  securitization  financing  agreements  with several lenders to
borrow up to $125.0 million. Any borrowings under the facilities must be used to
reduce the commitment levels under the Company's bank credit facilities.  During
November  2000,  36.5 million euro (or  approximately  $30.7  million at time of
borrowing)  were borrowed  under these  agreements at initial  interest rates of
6.72%.  Interest  rates under this  agreement  are variable  based on commercial
paper market  conditions,  and the debt ratings of the  underlying  conduit.  In
December 2000, an additional 10.4 million euro (equivalent to approximately $9.3
million at time of borrowing) at an initial  interest rate of 6.70% was borrowed
under these agreements.  Borrowings are collateralized by a security interest in
the receivables of these  subsidiaries.  These  securitizations did not meet the
criteria for sales  accounting  under SFAS 125 and therefore have been accounted
for as a secured borrowing.

INDUSTRIAL DEVELOPMENT REVENUE REFUNDING BOND

     In 1995, the City of Canton,  Mississippi issued an industrial  development
revenue  refunding  bond  with a  principal  amount  of $10.0  million,  and the
proceeds  were  loaned to the Company to help  finance  the cost of  acquiring a
customer  service  center in  Canton.  Interest  payments  are due  monthly at a
variable rate based upon the J.J. Kenny Index, reset weekly at a maximum rate of
13.00%,  and the principal  amount is due June 1, 2003. The bond is secured by a
letter of credit  that  expires  on June 15,  2001,  which the  Company  has the
opportunity to extend or renew.

DOMESTIC RECEIVABLES-BACKED SECURITIZATION FINANCING AGREEMENT

     The  Company  terminated  its  domestic  receivables-backed  securitization
financing  agreement in January 2000 in connection with the 2000 Credit Facility
amendment (see above).  During April 1999,  the Company,  through a wholly owned
special purpose entity, Levi Strauss Funding Corp. ("LSFC"), entered into a U.S.
receivables-backed  securitization  financing  agreement.  LSFC's sole  business
consisted of purchasing  receivables from the Company and its affiliates as part
of this  financing  transaction.  LSFC was a separate  corporation  with its own
separate creditors who, in any liquidation of the Company or its affiliates, was
entitled to be satisfied  out of LSFC's  assets prior to any value in LSFC being
available to the equity holders of LSFC.  Under the terms of the agreement as of
November  28,  1999,  borrowings  of $214.0  million  were  collateralized  by a
security interest in LSFC's  receivables.  The maximum amount outstanding varied
based upon the level of eligible receivables as defined under the agreement. The
Company intended to extend the commitment  period beyond one year as of November
28, 1999,  and therefore  borrowings  under this  agreement  were  classified as
long-term  debt.  The net  borrowings  from this  facility  were used to repay a
portion of the indebtedness  outstanding in the credit  facilities during fiscal
year 1999.  The fees under this  agreement  were variable  based on  outstanding
receivables and the Company's debt ratings.  Interest rates ranged from 4.90% to
5.54% with an effective weighted average interest rate of 5.69% during 1999.




                                       56

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



PRINCIPAL SHORT-TERM AND LONG-TERM DEBT PAYMENTS

     As of November 26, 2000,  the required  aggregate  short-term and long-term
debt principal payments for the next five years and thereafter are as follows:

                                                                 PRINCIPAL
                                                                 PAYMENTS
                                                                 --------
                                                               (DOLLARS IN
            YEAR                                                THOUSANDS)
            ----
            2001 ........................................       $  194,763
            2002*........................................          838,629
            2003 ........................................          397,506
            2004 ........................................            8,521
            2005 ........................................           56,202
            Thereafter...................................          630,809
                                                                ----------
                 Total...................................       $2,126,430
                                                                ==========
- --------------

* The 2000 Credit  Facility  has  payment  terms  maturing in 2002.  The Company
  intends and is able to extend these borrowings using various funding vehicles.
  In February 2001, the Company  entered into a new $1.05 billion senior secured
  credit facility to replace the 2000 Credit  Facility on more favorable  terms.
  Also in January 2001, the Company issued two series of notes payable  totaling
  the equivalent of $497.5 million to qualified  institutional  investors.  (SEE
  NOTE 18 TO THE CONSOLIDATED FINANCIAL STATEMENTS.)

SHORT-TERM CREDIT LINES AND STAND-BY LETTERS OF CREDIT

     At November 26, 2000, the Company had unsecured and uncommitted  short-term
credit lines  available  totaling $17.5 million at various  rates.  These credit
arrangements  may be canceled by the bank lenders upon notice and generally have
no compensating balance requirements or commitment fees.

     At November 26, 2000 and November 28, 1999,  the Company had $193.4 million
and $89.4  million,  respectively,  of standby  letters of credit  with  various
international  banks,  of which $52.5 million and $70.6  million,  respectively,
serves as guarantees by the creditor banks to cover U.S.  workers'  compensation
claims. In addition, $109.6 million of these standby letters of credit under the
secured bank credit  facility  support  short-term  credit lines at November 26,
2000. The Company pays fees on the standby letters of credit. Borrowings against
the letters of credit are subject to interest at various rates.

INTEREST RATE SWAPS

     The Company is exposed to interest rate risk.  It is the  Company's  policy
and practice to use derivative  instruments,  primarily  interest rate swaps and
options, to manage and reduce interest rate exposures.

     At November 26, 2000,  the Company had  no interest rate swap  transactions
outstanding.  During the fourth quarter of 2000, interest rate swap transactions
outstanding  with the total  notional  principal  amount of $425.0  million that
converted  floating  rate  liabilities  to fixed  rates  matured and the Company
terminated  $375.0 million of its swap  transactions  that converted  fixed rate
liabilities to floating rates. The Company has entered into interest rate option
structures  (caps and floors) to reduce or neutralize the exposure to changes in
variable  interest  rates.  The structures  represent an  outstanding  amount of
$425.0 million and cover a series of variable cash flows through November 2001.

     The  Company is exposed to credit  loss in the event of  nonperformance  by
the counterparties to the interest rate derivative  transactions.  However,  the
Company believes these  counterparties are creditworthy  financial  institutions
and does not anticipate nonperformance.



                                       57


<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



INTEREST RATES ON BORROWINGS

     The Company's  weighted  average  interest  rate on borrowings  outstanding
during 2000 and 1999,  including the impact of interest rate swap  transactions,
was 9.50% and 6.95%, respectively.


NOTE 7: COMMITMENTS AND CONTINGENCIES

FOREIGN EXCHANGE CONTRACTS

         At November  26, 2000,  the Company had U.S.  dollar  forward  currency
contracts  to sell the  aggregate  equivalent  of $621.4  million and to buy the
aggregate  equivalent  of $363.4  million of  various  foreign  currencies.  The
Company  also  had  Euro  forward  currency  contracts  to  sell  the  aggregate
equivalent of $58.5 million and to buy the aggregate equivalent of $32.9 million
of various foreign currencies.  Additionally, the Company had U.S. dollar option
contracts  to sell  the  aggregate  equivalent  of $1.3  billion  and to buy the
aggregate  equivalent  of $661.2  million of  various  foreign  currencies.  The
Company  also had Euro option  contracts to buy the foreign  currency  aggregate
equivalent of $8.4 million.  These  contracts are at various  exchange rates and
expire at various dates through August 2001.

     Most  option  transactions,  included  in the  amounts  above,  are for the
exchange of Euro and U.S.  dollar.  At November 26, 2000, the Company had bought
U.S.  dollar options to sell the equivalent of $537.2 million  against the Euro.
To finance  the option  premiums  related to these  options,  the  Company  sold
options  having the  obligation  to buy Euro for an  equivalent of $97.3 million
U.S. dollars.

     The  Company's  market risk is  generally  related to  fluctuations  in the
currency  exchange rates.  The Company is exposed to credit loss in the event of
nonperformance by the counterparties to the foreign exchange contracts. However,
the  Company   believes  these   counterparties   are   creditworthy   financial
institutions and does not anticipate nonperformance.

OTHER CONTINGENCIES

     In the ordinary  course of its  business,  the Company has pending  various
cases involving  contractual  matters,  employee-related  matters,  distribution
questions,  product liability claims,  trademark infringement and other matters.
The Company does not believe there are any pending legal  proceedings  that will
have a  material  impact on the  Company's  financial  position  or  results  of
operations.

     The  operations  and  properties of the Company  comply with all applicable
federal, state and local laws enacted for the protection of the environment, and
with permits and  approvals  issued in  connection  therewith,  except where the
failure to comply would not  reasonably  be expected to have a material  adverse
effect on the  Company's  financial  position or business  operations.  Based on
current  available  information,  the Company does not consider  there to be any
circumstances  existing that would be reasonably  likely to form the basis of an
action  against the  Company  that could have a material  adverse  effect on the
Company's financial position or business operations.



                                       58


<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



NOTE 8: FAIR VALUE OF FINANCIAL INSTRUMENTS

     The  estimated  fair  value  of  certain  financial  instruments  has  been
determined by the Company using  available  market  information  and appropriate
valuation   methodologies.   However,   considerable  judgment  is  required  in
interpreting  market data.  Accordingly,  the estimates presented herein are not
necessarily  indicative  of the  amounts  that the  Company  could  realize in a
current market exchange.

     The  carrying  amount  and  estimated  fair  value (in each case  including
accrued interest) of the Company's financial instrument assets and (liabilities)
at November 26, 2000 and November 28, 1999 are as follows:

<TABLE>
<CAPTION>

                                                                   NOVEMBER 26, 2000            NOVEMBER 28,1999
                                                                   -----------------            ----------------
                                                                CARRYING      ESTIMATED     CARRYING      ESTIMATED
                                                                 VALUE       FAIR VALUE      VALUE       FAIR VALUE
                                                                 -----       ----------      -----       ----------
                                                                              (DOLLARS IN THOUSANDS)
      <S>                                                      <C>            <C>           <C>            <C>
      DEBT INSTRUMENTS:
           Credit facilities................................   $(1,000,131)   $(1,000,131)  $(1,424,449)   $(1,424,449)
           Yen-denominated eurobond placement...............      (184,043)      (133,945)     (189,274)      (148,113)
           Notes offering...................................      (799,606)      (628,000)     (798,640)      (626,307)
           European Receivables-backed securitization.......       (31,148)       (31,148)          --             --
           Domestic Receivables-backed securitization.......            --             --      (215,836)      (215,836)
           Industrial development revenue refunding
              bond..........................................       (10,036)       (10,036)      (10,030)       (10,030)
           Customer service center equipment financing......       (86,901)       (86,901)          --             --
     CURRENCY AND INTEREST RATE HEDGES:
           Foreign exchange forward contracts...............   $     9,830    $     9,593    $   16,972     $   16,932
           Foreign exchange option contracts................         7,309          6,289         7,806          2,288
           Interest rate swap contracts.....................            --             --        (2,224)        (4,839)
           Interest rate option contracts...................          (457)          (789)           --             --
</TABLE>

      Quoted  market prices or dealer quotes are used to determine the estimated
fair value of foreign  exchange  contracts,  option  contracts and interest rate
swap  contracts.  Dealer  quotes  and  other  valuation  methods,  such  as  the
discounted  value of future cash flows,  replacement  cost, and termination cost
have been used to determine the estimated  fair value for long-term debt and the
remaining  financial   instruments.   The  carrying  values  of  cash  and  cash
equivalents, trade receivables,  current assets, certain current and non-current
maturities of long-term debt,  short-term  borrowings and taxes approximate fair
value.

     The  fair  value  estimates  presented  herein  are  based  on  information
available to the Company as of November 26, 2000 and November 28, 1999. Although
the  Company is not aware of any  factors  that would  substantially  affect the
estimated  fair value  amounts,  such amounts have not been updated  since those
dates and, therefore, the current estimates of fair value at dates subsequent to
November  26, 2000 and  November  28, 1999 may differ  substantially  from these
amounts.  Additionally, the aggregation of the fair value calculations presented
herein do not represent and should not be construed to represent the  underlying
value of the Company.



                                       59

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



NOTE 9: LEASES

     The Company is obligated  under  operating  leases for  facilities,  office
space and equipment.  At November 26, 2000,  obligations  under long-term leases
are as follows:

                                                                     MINIMUM
                                                                      LEASE
                                                                    PAYMENTS
                                                                    --------
                                                                  (DOLLARS IN
                                                                   THOUSANDS)

            2001 ...............................................      $ 61,879
            2002 ...............................................        58,413
            2003 ...............................................        52,885
            2004 ...............................................        48,322
            2005 ...............................................        45,851
            Remaining years.....................................       208,768
                                                                      --------
                 Total minimum lease payments...................      $476,118
                                                                      ========

     The total minimum lease payments on operating  leases have not been reduced
by estimated future income of $15.9 million from non-cancelable subleases.

     In general, leases relating to real estate include renewal options of up to
approximately 20 years, except for the San Francisco  headquarters office lease,
which contains  multiple renewal options of up to 78 years.  Some leases contain
escalation  clauses relating to increases in operating costs.  Certain operating
leases  provide the Company with an option to purchase  the  property  after the
initial lease term at the then prevailing market value. Rental expense for 2000,
1999 and 1998 was $78.1 million, $86.1 million and $80.2 million, respectively.


NOTE 10: PENSION AND POSTRETIREMENT BENEFIT PLANS

     The Company has numerous  non-contributory defined benefit retirement plans
covering  substantially  all employees.  It is the Company's  policy to fund its
retirement plans based on actuarial recommendations,  consistent with applicable
laws and  income tax  regulations.  Plan  assets,  which may be  denominated  in
foreign currencies and issued by foreign issuers,  are invested in a diversified
portfolio of securities  including  stocks,  bonds, real estate investment funds
and cash equivalents. Benefits payable under the plans are based on either years
of service or final  average  compensation.  The  Company  retains  the right to
amend, curtail or discontinue any aspect of the plans at any time.

     The Company also sponsors  other  retirement  plans,  primarily for foreign
employees.  Expense for these plans in 2000, 1999 and 1998 totaled $5.0 million,
$12.0 million and $7.5 million, respectively.

     The  Company  maintains  two plans that  provide  postretirement  benefits,
principally  health  care,  to  substantially  all  domestic  retirees and their
qualified dependents.  These plans have been established with the intention that
they will  continue  indefinitely.  However,  the  Company  retains the right to
amend,  curtail or  discontinue  any aspect of the plans at any time.  Under the
Company's  current  policies,  employees become eligible for these benefits when
they reach age 55 with 15 years of credited service.  The plans are contributory
and contain certain cost-sharing features,  such as deductibles and coinsurance.
The Company's policy is to fund  postretirement  benefits as claims and premiums
are paid. In November  2000,  the Company  announced a plan change for those who
retire after March 31, 1989.  These changes were  effective  January 1, 2001 and
resulted in increased  contributions  from retirees for medical coverage and the
elimination of any dental subsidies.

     The Company instituted early retirement  programs offered to those affected
by  the   Company's   excess   capacity   reduction   initiatives   and  various
reorganization   initiatives   (SEE  NOTE  2  TO  THE   CONSOLIDATED   FINANCIAL
STATEMENTS).  A reduced  benefit is payable under the programs  based on reduced
years of age and service than under the defined benefit  retirement plans. These
programs  resulted in the  recognition of net  curtailment  gains and losses and
early retirement incentives.



                                       60

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>

                                                                       PENSION BENEFITS        POSTRETIREMENT BENEFITS
                                                                       ----------------        -----------------------
                                                                 NOVEMBER 26,  NOVEMBER 28,   NOVEMBER 26,  NOVEMBER 28,
                                                                     2000          1999          2000          1999
                                                                     ----          ----          ----          ----
                                                                                  (DOLLARS IN THOUSANDS)
<S>                                                                  <C>           <C>          <C>            <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year........................      $669,440      $631,788     $ 525,065      $ 483,708
Service cost...................................................        18,661        23,743         7,006          7,480
Interest cost..................................................        43,678        43,154        34,943         33,485
Plan participants' contributions...............................           267           337         1,596          1,140
Plan amendments................................................            --            --       (27,740)            --
Actuarial (gain) loss..........................................       (74,274)      (23,140)       10,577          9,698
Net curtailment (gain) loss....................................       (18,184)       21,973            --         13,774
Settlement (gain) loss.........................................          (187)          540            --             --
Benefits paid*.................................................       (37,341)      (28,955)      (32,330)       (24,220)
                                                                     --------      --------     ---------      ---------
Benefit obligation at end of year..............................       602,060       669,440       519,117        525,065
                                                                     --------      --------     ---------      ---------
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year.................       572,576       500,789            --             --
Actual return on plan assets...................................        91,631        94,976            --             --
Employer contribution..........................................        12,817         5,429        30,734         23,080
Plan participants' contributions...............................           267           337         1,596          1,140
Benefits paid*.................................................       (37,341)      (28,955)      (32,330)       (24,220)
                                                                     --------      --------     ---------      ---------
Fair value of plan assets at end of year.......................       639,950       572,576            --             --
                                                                     --------      --------     ---------      ---------
Funded status..................................................        37,891       (96,864)     (519,117)      (525,065)
Unrecognized actuarial gain....................................      (136,913)       (9,247)      (31,221)       (41,724)
Unrecognized prior service cost................................        13,306         6,737       (27,740)            --
                                                                     --------      --------     ---------      ---------
Net amount recognized..........................................      $(85,716)     $(99,374)    $(578,078)     $(566,789)
                                                                     ========      ========     =========      =========
</TABLE>

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

* Pension benefits are paid by a trust.  Postretirement benefits are paid by the
Company.

<TABLE>
<CAPTION>

                                                                         PENSION BENEFITS       POSTRETIREMENT BENEFITS
                                                                         ----------------       -----------------------
                                                                         2000        1999         2000          1999
                                                                         ----        ----         ----          ----
                                                                                    (DOLLARS IN THOUSANDS)
<S>                                                                    <C>         <C>          <C>            <C>
Amounts recognized in the consolidated balance sheets Consist of:
     Prepaid benefit cost...........................................   $  3,282    $   1,882    $      --      $      --
     Accrued benefit cost (including short-term)....................    (95,635)    (107,352)    (578,078)      (566,789)
     Intangible asset...............................................      6,637        4,861           --             --
     Accumulated other comprehensive income.........................         --        1,235           --             --
                                                                       ---------   ---------    ---------      ---------
Net amount recognized...............................................   $(85,716)   $ (99,374)   $(578,078)     $(566,789)
                                                                       =========   =========    =========      =========
WEIGHTED-AVERAGE ASSUMPTIONS:
Discount rate.......................................................       8.0%         7.0%         8.0%          7.0%
Expected return on plan assets......................................       9.0%         9.0%          --            --
Rate of compensation increase.......................................       6.0%         6.0%          --            --
</TABLE>

         For postretirement  benefits  measurement  purposes,  a 9.50% and 4.75%
annual  rate of  increase  in the per  capita  cost of covered  health  care and
Medicare  Part B  benefits,  respectively,  were  assumed  for  2000,  declining
gradually  to 5.50%  and  2.75% by the year 2009 and  remaining  at those  rates
thereafter.




                                       61

<PAGE>

                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)




<TABLE>
<CAPTION>
                                                                               PENSION BENEFITS
                                                                               ----------------
                                                                          2000        1999       1998
                                                                          ----        ----       ----
                                                                            (DOLLARS IN THOUSANDS)
         <S>                                                             <C>         <C>       <C>
         COMPONENTS OF NET PERIODIC BENEFIT COST:
         Service cost................................................    $18,661     $23,743   $31,553
         Interest cost...............................................     43,678      43,154    41,073
         Expected return on plan assets..............................    (52,337)    (44,871)  (42,698)
         Amortization of prior service cost..........................      2,052       2,309     2,947
         Recognized actuarial (gain) loss............................       (670)       (487)       10
         Net curtailment (gain) loss.................................    (18,184)     21,973     2,030
         Settlement (gain) loss......................................       (187)        540        --
                                                                         -------     -------   -------
         Net periodic benefit cost...................................    $(6,987)    $46,361   $34,915
                                                                         =======     =======   =======
</TABLE>

<TABLE>
<CAPTION>

                                                                           POSTRETIREMENT BENEFITS
                                                                           -----------------------
                                                                          2000        1999       1998
                                                                          ----        ----       ----
                                                                            (DOLLARS IN THOUSANDS)
         <S>                                                             <C>          <C>      <C>
         COMPONENTS OF NET PERIODIC BENEFIT COST:
         Service cost................................................    $ 7,006      $ 7,480  $10,565
         Interest cost...............................................     34,943       33,485   35,098
         Expected return on plan assets..............................         --           --       --
         Amortization of prior service cost..........................         --           --       --
         Recognized actuarial gain...................................         --         (345)      --
         Net curtailment loss........................................         --       13,774      964
                                                                         -------      -------  -------
         Net periodic benefit cost...................................    $41,949      $54,394  $46,627
                                                                         =======      =======  =======
</TABLE>

     The projected benefit obligation,  accumulated benefit obligation, and fair
value of plan assets for the pension plan with accumulated  benefit  obligations
in excess of plan  assets were $66.2  million,  $57.8  million,  and $0 million,
respectively,  as of November 26, 2000, and $235.0 million,  $223.8 million, and
$163.8 million, respectively, as of November 28, 1999.

     Assumed  health  care  cost trend  rates have a  significant  effect on the
amounts  reported  for the health care plan.  A  one-percentage-point  change in
assumed  health  care cost  trend  rates  would  have the  following  effects to
postretirement benefits:

<TABLE>
<CAPTION>

                                                                    1-PERCENTAGE-POINT  1-PERCENTAGE-POINT
                                                                         INCREASE            DECREASE
                                                                         --------            --------
                                                                            (DOLLARS IN THOUSANDS)
<S>                                                                       <C>                <C>
Effect on total of service and interest cost components.........          $ 5,934            $ (4,894)
Effect on the postretirement benefit obligation.................           60,197             (53,251)
</TABLE>

NOTE 11: EMPLOYEE INVESTMENT PLANS

         The Company  maintains three employee  investment  plans.  The Employee
Investment  Plan of Levi  Strauss  & Co.  ("EIP")  and the  Levi  Strauss  & Co.
Employee Long-Term Investment and Savings Plan ("ELTIS") are two qualified plans
that cover eligible  compensated Home Office employees and U.S. field employees.
The Capital  Accumulation Plan of Levi Strauss & Co. ("CAP") is a non-qualified,
self-directed investment program for highly compensated employees (as defined by
the Internal Revenue Code).

         Total amounts charged to expense for these plans in 2000, 1999 and 1998
were $12.8 million, $14.4 million and $19.7 million, respectively.

EIP/ELTIS

     Under EIP and ELTIS, eligible employees may contribute and direct up to 10%
of their annual  compensation  to various  investments  among a series of mutual
funds. The Company may match 50% of the  contributions  made by employees to all
funds maintained under the qualified plans.  Employees are always 100% vested in
the Company match.  The ELTIS also includes a company  profit sharing  provision
with payments made at the sole discretion of the board of directors. The EIP and
the ELTIS


                                       62

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


allow  employees  a choice of either  pre-tax  or  after-tax  contributions.  In
December 2000, the Company announced changes to the EIP plan that were effective
January 1, 2001. These changes allow eligible employees to contribute and direct
up to 15% of their annual  compensation to various investments among a series of
mutual funds. The Company may continue to match 50% of the contributions made by
employees to all funds  maintained under the qualified plans up to the first 10%
of contributions made by employees.

CAP

     The CAP allows eligible employees to contribute on an after-tax basis up to
10% of their annual compensation to an individual retail brokerage account.  The
Company generally matches 75% of these  contributions  made by employees in cash
to each  employee's  account.  Employees  are always  100% vested in the Company
match. All investment  decisions,  related  commissions and charges,  investment
results and tax reporting  requirements are the  responsibility of the employee,
not the  Company.  Associated  with the  changes in the EIP plan above that were
effective January 1, 2001, eligible employees will be eligible to participate in
the CAP plan after reaching certain contribution  thresholds in the EIP plan and
salary thresholds.


NOTE 12: EMPLOYEE COMPENSATION PLANS

PARTNERS IN PERFORMANCE PLAN

     The  Partners in  Performance  Plan  ("PIP") is a program for all  salaried
worldwide  employees and is intended to align the  objectives of employees  with
the   strategic   objectives  of  the  Company  and  interests  of  the  Company
stockholders.

ANNUAL INCENTIVE PLAN

     The Annual  Incentive  Plan  ("AIP"),  the  short-term  portion of PIP,  is
intended to reward individual and team contributions to the Company's objectives
during the year. The amount of incentive earned depends upon the performance and
salary  grade level of the  individual  and also  depends on  corporate,  group,
division  and  affiliate  financial  results  against  pre-established  targets.
Provisions  for AIP are  recorded  in  accrued  salaries,  wages  and  employees
benefits.  Total amounts charged to expense for 2000 and 1998 were $65.1 million
and  $24.9   million,   respectively.   In  1999,   the  Company  did  not  meet
pre-established targets for AIP and did not record an expense for 1999.

LONG-TERM INCENTIVE PLANS

         Leadership  Shares  ("LS") is a feature  of PIP and was  introduced  in
early 1999. LS replaced the  executive  Long-Term  Incentive  Plan ("LTIP") with
1999 LS grants partially based on individual executive performance during fiscal
year 1998. It places greater  emphasis on an individual's  ability to contribute
and affect the Company's  long-term  strategic  objectives.  LS is a performance
unit plan which grants units or "shares" at an initial  value of $0 each.  These
"shares" are not stock and do not represent equity interests in the Company.

     A  competitive  level  of  five-year   Company  financial   performance  is
determined by examining expected value growth at other companies. This growth is
then tied to competitive  external  long-term  incentive pay so that the Company
will pay its  executives  at  competitive  levels when they achieve  competitive
growth.  At the end of each fiscal  year, a share value will be  determined  and
communicated to participants. The shares vest in one-third increments at the end
of the third,  fourth and fifth  fiscal  years of the  performance  period.  The
Company accounts for the expense related to LS on a straight-line basis based on
estimates of future performance against plan targets.

     LTIP, which previously  represented the portion of PIP related to long-term
incentives,  ended for all employees during fiscal year 1999 and was replaced by
LS for  employees  at  management  levels.  These  incentives  were  awarded  as
performance  units with each grant's unit value  measured based on the Company's
three-year  cumulative  earnings  performance  and return on investment  against
pre-established  targets.  Awards  were based on an  individual's  grade  level,
salary and performance and are paid in one-third annual increments  beginning in
the year following the three-year  performance cycle of the grant. Existing LTIP
units  that  were  previously  granted  will be paid out  according  to the plan
schedule.




                                       63

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


     The  Special  Long-Term  Incentive  Plan  ("SLTIP")  is intended to provide
incentive  and reward  performance  over time for certain  key senior  employees
above and beyond  PIP  awards.  Awards  under this plan have the same grant unit
value,  vesting  period and pay-out cycle as grants made under LTIP. A Long-Term
Performance  Plan  ("LTPP"),  which  awarded  grants in 1994 and 1995,  finished
paying out in 2000.

     Total net amounts charged to expense for these long-term incentive plans in
2000 and 1998 were $72.7 million and $14.9 million,  respectively.  In 1999, the
Company did not meet some of the  pre-established  targets  for these  long-term
incentive plans and therefore reversed a portion of prior year accruals totaling
$32.5 million.

OTHER COMPENSATION PLANS

GLOBAL SUCCESS SHARING PLAN

     The Global  Success  Sharing  Plan  ("GSSP")  was  adopted in  1996 and was
designed  to allow  all  eligible  employees  to share in the  Company's  future
success by providing a cash payment based on the achievement of  pre-established
financial targets.  The plan called for an aggregate cash payment,  ranging from
3% to 10% of the  achieved  cumulative  cash flow  (defined as  earnings  before
interest, taxes, depreciation,  amortization and certain other items) to be paid
by the Company to all eligible  employees,  assuming a minimum  cumulative  cash
flow is reached.  If the Company were to meet its planned  target,  an estimated
payment   of  $758.0   million   could  be  due  in  2002   (exclusive   of  all
employer-related  taxes).  However, in 1999, the Company lowered its estimate of
financial  performance through the year 2001 and determined that payment in 2002
is highly  unlikely and therefore the Company did not recognize any GSSP expense
in 2000.  In 1999,  the Company  reversed  prior years' GSSP  accruals  totaling
$343.9 million,  less miscellaneous  plan expenses.  The total amount charged to
expense for this plan in 1998 was $90.6 million.

CASH PERFORMANCE SHARING PLAN

     The Cash  Performance  Sharing  Plan  awards a cash  payment to  production
employees  worldwide based on a percentage of annual salary and certain earnings
criteria. The largest individual plan is the U.S. Field Profit Sharing Plan that
covers approximately 5,600 U.S. employees.  Total amounts charged to expense for
this plan in 2000 were $9.2 million.  The Company did not meet certain  earnings
criteria established by the plan and therefore no expense was recognized for the
1999 plan.  The total  amount  charged to expense for this plan in 1998 was $6.9
million.

KEY EMPLOYEE RECOGNITION AND COMMITMENT PLAN

     The Key Employee  Recognition  and  Commitment  Plan ("KEP") was adopted in
1996  and was  designed  to  recognize  and  reward  key  employees  for  making
significant  contributions  to the Company's  future  success.  Units awarded to
employees  under the plan are  subject  to a  four-year  vesting  period,  which
commenced in fiscal 1997.  Units are exercisable in one-third  increments at the
end of fiscal years 2001 through 2003 upon reaching a certain minimum cumulative
earnings  criteria  threshold at each fiscal  year-end.  Employees  may elect to
defer the  exercise of each  one-third  increment  until final  payment in 2004.
Payments may occur  earlier  under  certain  circumstances.  Unit values will be
directly  related to the excess over the threshold of the  cumulative  cash flow
(defined as earnings before interest, taxes,  depreciation,  amortization,  GSSP
and certain other items) generated by the Company at the end of the fiscal years
2001 through  2003.  The Company did not  recognize  any KEP expense in 2000. In
1999, the Company lowered its estimate of financial performance through the year
2003 and, consequently,  decreased the KEP accrual rate to 0% and reversed prior
years KEP accruals  totaling  $13.6  million.  The amount charged to expense for
this plan in 1998 was $5.9 million.

SPECIAL DEFERRAL PLAN

     The Special  Deferral Plan ("SDP") was adopted during 1996 and was designed
to replace the Company's Stock Appreciation Rights Plan ("SARs").  Existing SARs
were  transferred in the SDP at a value of $265 per share. The SDP had grants in
1992 and 1994,  both of which were fully vested as of November 26, 2000. The SDP
bases the  appreciation/depreciation of units on certain tracked mutual funds or
the prime rate, at the election of the employee.

     There were no additional grants under the SDP in 2000 and 1999. During 2000
and 1999, SDP grants  exercised  resulted in cash  disbursements of $9.8 million
and $10.6 million, respectively.




                                       64

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


     The amounts  charged (net of  forfeitures) to expense for the plan in 2000,
1999 and 1998 were $1.0 million, $(2.3) million and $8.0 million, respectively.

NOTE 13: LONG-TERM EMPLOYEE RELATED BENEFITS

     Long-term employee related benefits are as follows:

                                                           2000           1999
                                                           ----           ----
                                                              (DOLLARS IN
                                                               THOUSANDS)
            Workers' compensation.......................    $59,307      $64,004
            Long-term performance programs..............     80,549        8,511
            Deferred compensation.......................     93,681      105,025
            Pension and profit sharing..................    125,312      147,978
                                                           --------     --------
                 Total..................................   $358,849     $325,518
                                                           ========     ========

     Included in the liability for workers'  compensation  are accrued  expenses
related to the  Company's  program that  provides for early  identification  and
treatment  of  employee  injuries.  Changes in the  Company's  safety  programs,
medical and disability management and the long-term effects of statutory changes
have decreased workers' compensation costs substantially from historical trends.
Provisions  for workers'  compensation  of $13.6  million and $29.7 million were
recorded  during  fiscal  years  2000  and  1999,  respectively.   Payments  and
reclassifications   to  current   liabilities   represented   a   reduction   of
approximately $28.0 million in fiscal year 2000 and $33.0 million in fiscal year
1999.  Fiscal year 1999 also  included a reduction of $21.0  million  related to
reversals of previously estimated costs.  Long-term performance programs include
accrued  liabilities for LS and LTIP (SEE NOTE 12 TO THE CONSOLIDATED  FINANCIAL
STATEMENTS).

NOTE 14: COMMON STOCK

     The Company has a capital  structure  consisting of 270,000,000  authorized
shares of common stock, par value $.01 per share, of which 37,278,238 shares are
issued and outstanding.

NOTE 15: RELATED PARTIES

COMPENSATION OF DIRECTORS

     Directors  of the Company who are also  stockholders  or  employees  of the
Company do not receive  compensation for their services as directors.  Directors
who are not  stockholders  or  employees  (Angela  Glover  Blackwell,  James  C.
Gaither, Peter A. Georgescu,  Patricia Salas Pineda, T. Gary Rogers and G. Craig
Sullivan)  receive annual  compensation of  approximately  $62,000.  This amount
includes an annual  retainer  fee of $6,000,  meeting fees of $1,000 per meeting
day attended  and  long-term  variable pay in the form of 1,800 LS units,  for a
target  value of  $45,000  per year (SEE NOTE 12 TO THE  CONSOLIDATED  FINANCIAL
STATEMENTS).  In November 2000, the Personnel  Committee approved an increase in
directors'  annual  retainer fee from $6,000 to $36,000.  The actual  amount for
each of the above payments varies depending on the years of service,  the number
of meetings  attended  and the actual value of the granted  units upon  vesting.
Directors in their first six years of service  receive a cash amount  equivalent
to the target value of their long-term  variable pay or $45,000.  This amount is
decreased by 1/3 each year at the start of actual payments from LTIP.  Directors
who are not employees or  stockholders  also receive travel  accident  insurance
while  on  Company  business  and are  eligible  to  participate  in a  deferred
compensation plan.

     Messrs. Gaither, Georgescu, Rogers, and Sullivan and Ms. Blackwell and  Ms.
Pineda each received 1,800 LS units in 2000. Mr. Gaither,  Ms. Blackwell and Ms.
Pineda each received 1,800 LS units in 1999. In 2000, Ms. Blackwell, Mr. Gaither
and Ms. Pineda each received  payments of $30,637 under LTIP and LTPP  combined.
In 1999, Mr. Gaither,  Ms. Blackwell and Ms. Pineda each received payments under
LTIP and LTPP of approximately $59,000.


OTHER TRANSACTIONS

     F.  Warren  Hellman,  a director  of the  Company  is a general  partner of
Hellman & Friedman LLC, an investment  banking firm, and has provided  financial
advisory services to the Company in the past.  However,  the Company did not pay
any fees to


                                       65

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


Hellman & Friedman LLC during fiscal years 2000,  1999 and 1998. At November 26,
2000 and November 28, 1999,  Mr.  Hellman and his family,  other  partners,  and
former  partners of Hellman & Friedman  LLC  beneficially  owned an aggregate of
less than 5% of the outstanding common stock of the Company.

     James C. Gaither, a director of the Company, is a senior counsel of the law
firm Cooley  Godward LLP.  The firm  provided  legal  services to the Company in
2000,  1999 and 1998 and received in fees  approximately  $60,000,  $165,000 and
$74,000, respectively.


ESTATE TAX REPURCHASE POLICY

     The  Company  has  a  policy  under  which  it  will,  subject  to  certain
conditions,  repurchase  a portion  of the  shares  offered  by the  estate of a
deceased stockholder in order to generate funds for payment of estate taxes.

     The purchase price will be based on a valuation received from an investment
banking or appraisal firm.  Estate  repurchase  transactions will be subject to,
among other things, compliance with applicable laws governing stock repurchases,
board approval, and restrictions under the Company's credit facilities (SEE NOTE
6 TO THE  CONSOLIDATED  FINANCIAL  STATEMENTS).  The  policy  does not  create a
contractual  obligation on the Company.  No shares have been  repurchased  under
this policy for 2000, 1999 and 1998.

NOTE 16: BUSINESS SEGMENT INFORMATION

     The  Company  manages its only  segment,  the  apparel  business,  based on
geographic regions consisting of the Americas, which includes the United States,
Canada and Latin America;  Europe, the Middle East and Africa; and Asia Pacific.
All Other  consists of functions  that are directed by the corporate  office and
are not allocated to a specific geographic region. Under Geographic  Information
for all periods presented,  no other single country other than the United States
had net sales exceeding 10% of consolidated net sales.

     The Company designs and markets jeans and jeans-related  pants,  casual and
dress  pants,  shirts,  jackets  and  related  accessories,  for men,  women and
children,  under the Company's  Levi's(R),  Dockers(R) and Slates(R) brands. Its
products are distributed in the United States primarily  through chain retailers
and department stores and abroad through department stores,  specialty retailers
and franchised stores. The Company also maintains a network of approximately 750
franchised or  independently  owned stores dedicated to its products outside the
United  States and  operates  a small  number of  company-owned  stores in eight
countries.  The Company obtains its products from a combination of company-owned
facilities and independent manufacturers.

     The Company evaluates performance and allocates resources based on regional
profits or losses. The accounting  policies of the regions are the same as those
described in Note 1,  "Summary of  Significant  Accounting  Policies."  Regional
profits exclude net interest  expense,  special  compensation  program expenses,
excess capacity reduction/restructuring charges and expenses that are controlled
at the corporate level.  Management financial  information for the Company is as
follows:


                                       66

<PAGE>

                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


<TABLE>
<CAPTION>

                                                                                         ASIA
                                                             AMERICAS      EUROPE      PACIFIC    ALL OTHER  CONSOLIDATED
                                                             --------      ------      -------    ---------  ------------
                                                                               (DOLLARS IN THOUSANDS)

2000:
<S>                                                           <C>          <C>           <C>        <C>        <C>
Net sales from external customers.........................    $3,148,219   $1,104,522    $392,385   $   --     $4,645,126
Intercompany sales........................................        65,600      911,489      33,523       --      1,010,612
Depreciation and amortization expense.....................        64,109       21,151       5,721       --         90,981
Earnings contribution.....................................       449,900      225,800      55,300       --        731,000
Interest expense..........................................           --           --          --    234,098       234,098
Excess capacity reduction/restructuring...................           --           --          --    (33,144)      (33,144)
Corporate and other expenses..............................           --           --          --    186,366       186,366
     Income before income taxes...........................           --           --          --        --        343,680
Total regional assets.....................................     5,187,778    1,461,877     471,068       --      7,120,723
Elimination of intercompany assets........................           --           --          --        --      3,914,994
     Total assets.........................................           --           --          --        --      3,205,728
Expenditures for long-lived assets........................        16,900        8,323       2,732       --         27,955
<CAPTION>

                                                                                UNITED        FOREIGN
                                                                                STATES       COUNTRIES      CONSOLIDATED
                                                                                ------       ---------      ------------
GEOGRAPHIC INFORMATION:
<S>                                                                           <C>             <C>              <C>
Net sales.................................................................    $2,923,799      $1,721,327       $4,645,126
Long-lived assets.........................................................     1,141,523         358,281        1,499,804

<CAPTION>
                                                                                     ASIA          ALL
                                                         AMERICAS      EUROPE      PACIFIC       OTHER      CONSOLIDATED
                                                         --------      ------      -------       -----      ------------
                                                                             (DOLLARS IN THOUSANDS)
1999:
<S>                                                     <C>           <C>           <C>            <C>      <C>
Net sales from external customers...................    $3,420,326    $1,360,782    $358,350       $  --    $5,139,458
Intercompany sales..................................        50,584     1,045,119      38,923          --     1,134,626
Depreciation and amortization expense...............        86,078        27,474       6,550          --       120,102
Earnings contribution...............................       279,900       242,700      28,500          --       551,100
Interest expense....................................           --            --          --      182,978       182,978
Excess capacity reduction/restructuring.............           --            --          --      497,683       497,683
Global Success Sharing Plan.........................           --            --          --     (343,873)     (343,873)
Corporate and other expenses........................           --            --          --      205,813       205,813
     Income before income taxes.....................           --            --          --           --         8,499
Total regional assets...............................     4,701,974     1,625,396     576,533          --     6,903,903
Elimination of intercompany assets..................           --            --          --           --     3,233,889
     Total assets...................................           --            --          --           --     3,670,014
Expenditures for long-lived assets..................        36,578        20,518       3,966          --        61,062

<CAPTION>

                                                                               UNITED         FOREIGN
                                                                               STATES        COUNTRIES      CONSOLIDATED
                                                                               ------        ---------      ------------
GEOGRAPHIC INFORMATION:
<S>                                                                          <C>              <C>             <C>
Net sales................................................................... $3,201,809       $1,937,649      $5,139,458
Long-lived assets...........................................................  1,273,304          423,026       1,696,330
</TABLE>




                                       67

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
                                                                                      ASIA         ALL
                                                         AMERICAS       EUROPE      PACIFIC       OTHER      CONSOLIDATED
                                                         --------       ------      -------       -----      ------------
                                                                             (DOLLARS IN THOUSANDS)
1998:
<S>                                                      <C>          <C>           <C>             <C>       <C>
Net sales from external customers.....................   $3,938,786   $1,650,479    $369,370        $ --      $5,958,635
Intercompany sales....................................       81,583    1,124,962      45,322          --       1,251,867
Depreciation and amortization expense.................       93,588       29,607       5,578          --         128,773
Earnings contribution.................................      420,700      361,700      53,100          --         835,500
Interest expense......................................          --           --          --       178,035        178,035
Excess capacity reduction/restructuring...............          --           --          --       250,658        250,658
Global Success Sharing Plan...........................          --           --          --        90,564         90,564
Corporate and other expenses..........................          --           --          --       153,543        153,543
     Income before income taxes.......................          --           --          --           --         162,700
Total regional assets.................................    4,319,535    1,895,210     312,358          --       6,527,103
Elimination of intercompany assets....................          --           --          --           --       2,659,345
     Total assets.....................................          --           --          --           --       3,867,757
Expenditures for long-lived assets....................       57,417       54,439       4,675          --         116,531
<CAPTION>

                                                                               UNITED         FOREIGN          STATES
                                                                               STATES       COUNTRIES      CONSOLIDATED
                                                                               ------       ---------      ------------
GEOGRAPHIC INFORMATION:
<S>                                                                          <C>              <C>             <C>
Net sales................................................................... $3,672,295       $2,286,340      $5,958,635
Long-lived assets...........................................................  1,541,011          471,838       2,012,849
</TABLE>

     For 2000,  1999 and 1998,  the Company had one  customer  that  represented
approximately  12%, 11% and 12%,  respectively,  of net sales. No other customer
accounted for more than 10% of net sales.




                                       68

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



NOTE 17: QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>

                                                                       FIRST          SECOND         THIRD         FOURTH
                                                                      QUARTER        QUARTER        QUARTER       QUARTER
                                                                      -------        -------        -------       -------
                                                                        (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
2000
<S>                                                                  <C>            <C>          <C>             <C>
Net sales........................................................    $1,082,437     $1,149,044   $1,127,740      $1,285,905
Cost of goods sold...............................................       632,442        661,469      663,418         732,841
                                                                     ----------     ----------   ----------      ----------
Gross profit.....................................................       449,995        487,575      464,322         553,064
Marketing, general and administrative............................       322,111        367,417      358,524         433,666
Other operating income...........................................        (4,183)        (6,265)     (10,404)        (11,528)
Excess capacity/restructuring....................................            --             --           --         (33,144)
                                                                     ----------     ----------   ----------      ----------
Operating income.................................................       132,067        126,423      116,202         164,070
Interest expense.................................................        56,782         60,989       59,406          56,921
Other income, net................................................       (24,958)        (3,835)      (1,359)         (8,864)
                                                                     ----------     ----------   ----------      ----------
Income before taxes..............................................       100,243         69,269       58,155         116,013
Income tax expense...............................................        35,084         24,245       20,354          40,605
                                                                     ----------     ----------   ----------      ----------
Net income.......................................................     $  65,159     $   45,024   $   37,801      $   75,408
                                                                      =========     ==========   ==========      ==========
Earnings per share--basic and diluted.............................    $    1.75     $     1.21   $     1.01      $     2.02
                                                                      =========     ==========   ==========      ==========
<CAPTION>
1999
<S>                                                                  <C>            <C>          <C>             <C>
Net sales........................................................    $1,278,322     $1,227,910   $1,226,413      $1,406,813
Cost of goods sold...............................................       814,673        737,303      747,766         881,103
                                                                     ----------     ----------   ----------      ----------
Gross profit.....................................................       463,649        490,607      478,647         525,710
Marketing, general and administrative............................       419,085        407,677      338,223         464,860
Other operating income...........................................        (5,733)        (5,349)      (5,025)         (8,280)
Excess capacity/restructuring....................................       394,105         11,780           --          91,798
Global Success Sharing Plan......................................            --             --           --        (343,873)
                                                                     ----------     ----------   ----------      ----------
Operating income (loss)..........................................      (343,808)        76,499      145,449         321,205
Interest expense.................................................        43,157         43,819       45,742          50,260
Other (income) expense, net......................................       (10,394)       (15,582)      12,164          21,680
                                                                     ----------     ----------   ----------      ----------
Income (loss) before taxes.......................................      (376,571)        48,262       87,543         249,265
Income tax expense (benefit).....................................      (139,331)        17,857       32,391          92,227
                                                                     ----------     ----------   ----------      ----------
Net income (loss)................................................    $ (237,240)    $   30,405   $   55,152      $  157,038
                                                                     ==========     ==========   ==========      ==========
Earnings (loss) per share--basic and diluted......................   $    (6.36)    $     0.82   $     1.48      $     4.21
                                                                     ==========     ==========   ==========      ==========
</TABLE>

      During the  fourth  quarter  of fiscal  2000,  the  Company  recorded  the
reversal of $33.1  million of  restructuring  costs.  This reversal was based on
periodic  evaluation of current  restructuring  assumptions and estimates.  (SEE
NOTE 2 TO THE CONSOLIDATED FINANCIAL STATEMENTS.)

      Additionally,  in connection with physical inventories,  actuarial studies
of  postretirement  benefits  and  workers'  compensation,  and reviews of other
liabilities,  the Company recorded  adjustments related to warranty  provisions,
physical inventory provisions and postretirement  benefits in the fourth quarter
of fiscal 2000 that  resulted in a net  increase of  approximately  8 percent to
fourth quarter operating income.




                                       69



<PAGE>

                      LEVI STRAUSS & CO. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


NOTE 18: SUBSEQUENT EVENTS

SENIOR NOTES OFFERING

     On January  18,  2001,  the  Company  issued  two  series of notes  payable
totaling the equivalent of $497.5 million to qualified  institutional  investors
in  reliance  on Rule 144A under the  Securities  Act and  outside  the U. S. in
accordance  with  Regulation  S under  the  Securities  Act (the  "Senior  Notes
Offering").  The notes  are  unsecured  obligations  of the  Company  and may be
redeemed at any time after  January 15,  2005.  The issuance is divided into two
series: U.S. $380.0 million Dollar Notes and 125 million Euro Notes. Both series
of notes are seven-year  notes maturing on January 15, 2008 and bear interest at
11.625% per annum, payable semi-annually in January and July of each year. These
notes were offered at a discount of $5.2  million to be amortized  over the term
of the notes. Costs  representing  underwriting fees and other expenses of $14.4
million on the original issue will be amortized over the term of the notes.  Net
proceeds  from the  offering  were used to repay a portion  of the  indebtedness
outstanding under the 2000 Credit Facility.

     The  indentures  governing  the  notes  contain  covenants  that  limit the
Company's and its subsidiaries'  ability to incur additional debt; pay dividends
or make other restricted payments;  consummate specified asset sales; enter into
transactions with affiliates; incur liens, impose restrictions on the ability of
a  subsidiary  to pay  dividends  or  make  payments  to  the  Company  and  its
subsidiaries;  merge  or  consolidate  with  any  other  person;  sell,  assign,
transfer,  lease, convey or otherwise dispose of all or substantially all of the
Company's  assets or the assets of the  Company's  subsidiaries.  If the Company
experiences  a change in  control as defined  in the  indentures  governing  the
notes,  the Company will be required  under the  indentures  to make an offer to
repurchase  the  notes at a price  equal to 101% of the  principal  amount  plus
accrued  and unpaid  interest,  if any, to the date of  repurchase. If the notes
receive and  maintain an  investment  grade  rating by both  Standard and Poor's
Ratings  Service  and  Moody's   Investors  Service  and  the  Company  and  its
subsidiaries are and remain in compliance with the indentures,  then the Company
and its  subsidiaries  will not be required to comply with  specified  covenants
contained in the indenture.

     Under an agreement to  be entered into with the initial  purchasers  of the
notes,  the  Company  will be  obligated  to file and  cause to be  effective  a
registration  statement  under the  Securities  Act with  respect to an offer to
exchange  the  notes  for  notes   registered  under  the  Securities  Act  with
substantially  identical terms to the notes, except that the registered exchange
notes will generally be freely transferable,  and, in certain circumstances,  to
file and cause to be filed a shelf  registration  statement  with respect to the
resale of the notes.  The interest rate on the notes will be subject to increase
under  particular  circumstances  if the Company is not in compliance with these
obligations.

SENIOR SECURED CREDIT FACILITY

     On February 1, 2001,  the Company  entered  into a new $1.05 billion senior
secured  credit  facility to replace the 2000 Credit  Facility on more favorable
terms.  The new credit  facility  consists of a $700  million  revolving  credit
facility and $350 million of term loans. This new facility reduces the Company's
borrowing costs and extends the maturity of the Company's  principal bank credit
facility to August 2003.

     The new  facility is secured in  substantially  the same manner as the 2000
Credit   Facility.   Collateral   includes:   domestic   receivables,   domestic
inventories,   certain  domestic  equipment,   trademarks,   other  intellectual
property,  100% of the  stock  in  domestic  subsidiaries,  65% of the  stock of
certain foreign subsidiaries and other assets.  Borrowings under the bank credit
facilities  bear  interest  at LIBOR  or the  agent  bank's  base  rate  plus an
incremental borrowing spread.

     The new facility  contains  customary  covenants  restricting the Company's
activities as well as those of its  subsidiaries,  including  limitations on the
Company's and its subsidiaries' ability to sell assets; engage in mergers; enter
into  operating  leases or capital  leases;  enter into  transactions  involving
related  parties,  derivatives  or letters of  credit;  enter into  intercompany
transactions;  incur  indebtedness  or grant  liens or  negative  pledges on the
Company's assets;  make loans or other investments;  pay dividends or repurchase
stock or other  securities;  guaranty  third  party  obligations;  make  capital
expenditures;  and make changes in the Company's corporate structure. The credit
agreements also contain financial  covenants that the Company must satisfy on an
ongoing basis, including maximum leverage ratios and minimum coverage ratios.


                                       70


<PAGE>

     The following is a pro forma table as of November 26, 2000, of the required
aggregate  short-term and long-term  debt  principal  payments for the next five
years and  thereafter  that  includes the senior  notes  offering and the senior
secured credit facility.

                                                                 PRINCIPAL
                                                                 PAYMENTS
                                                                 --------
                                                               (DOLLARS IN
            YEAR                                                THOUSANDS)
            ----
            2001 ........................................       $   77,616
            2002 ........................................           89,637
            2003 ........................................          783,702
            2004 ........................................            8,521
            2005 ........................................           56,202
            Thereafter...................................        1,123,190
                                                                ----------
                 Total...................................       $2,138,868
                                                                ==========

                                       71


<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINAN-
         CIAL DISCLOSURE

None



                                       72


<PAGE>


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

     Set forth below is  information  concerning  our  directors  and  executive
officers as of January 1, 2001.

<TABLE>
<CAPTION>


 NAME                                                   AGE OFFICE AND POSITION
 ----                                                   --- -------------------
<S>                                                     <C> <C>

Peter E. Haas, Sr. ..................................   82  Director, Chairman of the Executive Committee
Robert D. Haas.......................................   58  Director, Chairman of the Board of Directors
Philip A. Marineau...................................   54  Director, President and Chief Executive Officer
Angela Glover Blackwell..............................   55  Director
Robert E. Friedman...................................   51  Director
Tully M. Friedman....................................   58  Director
James C. Gaither.....................................   63  Director
Peter A. Georgescu...................................   61  Director
Peter E. Haas, Jr. ..................................   53  Director
Walter J. Haas.......................................   51  Director
F. Warren Hellman....................................   66  Director
Patricia Salas Pineda................................   49  Director
T. Gary Rogers.......................................   58  Director
G. Craig Sullivan....................................   60  Director
R. John Anderson.....................................   49  Senior Vice President and President, Levi Strauss Asia Pacific
David G. Bergen......................................   45  Senior Vice President and Chief Information Officer
William B. Chiasson..................................   48  Senior Vice President and Chief Financial Officer
Karen Duvall.........................................   37  Senior Vice President, Worldwide Supply Chain
James Lewis..........................................   50  Senior Vice President and President, Levi Strauss Americas
Joseph Middleton.....................................   45  Senior Vice President and President, Levi Strauss Europe,
                                                            Middle East, Africa
Albert F. Moreno.....................................   57  Senior Vice President, General Counsel and Assistant
                                                            Secretary
Fred Paulenich.......................................   36  Senior Vice President, Worldwide Human Resources

</TABLE>


     All  members  of the Haas  family  are  descendants  of our  founder,  Levi
Strauss. Peter E. Haas, Sr. is the father of Peter E. Haas, Jr. and the uncle of
Robert D. Haas and Walter J. Haas.  Robert E. Friedman is a descendant of Daniel
E.  Koshland,  who  joined  his  brother-in-law,  Walter A.  Haas,  Sr.,  in our
management in 1922.

     PETER E. HAAS, SR. became Chairman of the Executive  Committee of our Board
of Directors in 1989 after  serving as Chairman of our Board since 1981.  He has
been a member of our Board since 1948. He joined us in 1945, became President in
1970 and Chief  Executive  Officer in 1976.  Mr.  Haas is a former  Director  of
American  Telephone and Telegraph Co., Crocker National  Corporation and Crocker
National Bank.

     ROBERT D. HAAS is the Chairman of our Board.  He was named Chairman in 1989
and served as Chief  Executive  Officer from 1984 until 1999. Mr. Haas joined us
in 1973 and served in a variety of marketing,  planning and operating  positions
before becoming Chief Executive Officer.

     PHILIP A.  MARINEAU,  a director  since 1999,  is our  President  and Chief
Executive Officer. Prior to joining us, Mr. Marineau was the President and Chief
Executive  Officer of Pepsi-Cola  North America from 1997 to 1999.  From 1996 to
1997,  Mr.  Marineau was  President  and Chief  Operating  Officer of Dean Foods
Company.  From 1972 to 1996,  Mr.  Marineau held a series of positions at Quaker
Oats Company including President and Chief Operating Officer from 1993 to 1996.

     ANGELA GLOVER BLACKWELL, a director since 1994, is founder and president of
PolicyLink,  a nonprofit  research,  advocacy  and  communications  organization
devoted to eliminating poverty and strengthening communities. From 1995 to 1998,
Ms. Blackwell was Senior Vice President of the Rockefeller  Foundation where she
oversaw the foundation's domestic and cultural divisions.  Ms. Blackwell was the
founder  of  Oakland,   California's  Urban  Strategies   Council,  a  nonprofit
organization focused on reducing persistent urban poverty.

     ROBERT E.  FRIEDMAN,  a director since 1998, is founder and Chairman of the
Board of the Corporation for Enterprise  Development,  a Washington,  D.C.-based
not-for-profit   economic   development   research,   technical  assistance  and
demonstration

                                       73

<PAGE>

organization   which  he  founded  in  1979.  The   Corporation  for  Enterprise
Development   works  with  public  and  private   policymakers  in  governments,
international organizations, corporations, private foundations, labor unions and
community groups to design and implement economic development strategies.

     TULLY M. FRIEDMAN,  a director since 1985, is Chairman and Chief  Executive
Officer of Friedman  Fleischer & Lowe LLC, a private equity  investment  firm he
founded in 1997.  Formerly,  Mr.  Friedman  was a founding  partner of Hellman &
Friedman,  a private  investment firm formed in 1984. Prior to forming Hellman &
Friedman in 1984,  he was a managing  director  and  general  partner of Salomon
Brothers  Inc. Mr.  Friedman  currently  serves on the board of directors of The
Clorox Company, Mattel, Inc., McKesson Corporation, Archimedes Technology Group,
Brand Farm, Inc. and Advanced Career Technologies, Inc.

     JAMES C. GAITHER,  a director  since 1988,  is Managing  Director of Sutter
Hill Ventures,  a venture capital  investment firm and senior counsel of the law
firm of Cooley Godward LLP in San Francisco, California. Prior to joining Cooley
Godward in 1969,  he served as law clerk to the  Honorable  Earl  Warren,  Chief
Justice  of the United  States,  special  assistant  to the  Assistant  Attorney
General in the U.S.  Department of Justice and staff  assistant to the President
of the United States,  Lyndon B. Johnson. Mr. Gaither is currently a director of
Basic  American,  Inc.,  Blue Martini  Software,  Nvidia  Corporation and Siebel
Systems, Inc.

     PETER A. GEORGESCU, a director since February 2000, is Chairman Emeritus of
Young & Rubicam Inc. (now WPP Group plc), a global advertising agency.  Prior to
his  retirement  in January  2000,  Mr.  Georgescu  served as Chairman and Chief
Executive Officer of Young & Rubicam since 1993 and, prior to that, as President
of Y&R Inc. from 1990 to 1993, Y&R  Advertising  from 1986 to 1990 and President
of its Young & Rubicam  international  division from 1982 to 1986. Mr. Georgescu
is currently a director of IFF Corporation and Briggs & Stratton, Inc.

     PETER E. HAAS, JR., a director since 1985, is a director or trustee of each
of the Levi Strauss Foundation,  Red Tab Foundation,  San Francisco  Foundation,
The Stern Grove Festival  Foundation,  Walter and Elise Haas Fund and the Novato
Youth Center Honorary Board. Mr. Haas was one of our managers from 1972 to 1989.
He was  Director of Product  Integrity of The Jeans  Company,  one of our former
operating  units,  from  1984 to  1989.  He  served  as  Director  of  Materials
Management for Levi Strauss USA in 1982 and Vice  President and General  Manager
in the Menswear Division in 1980.

     WALTER J.  HAAS,  a  director  since  1995,  served as  Chairman  and Chief
Executive  Officer  of the  Oakland  A's  Baseball  Company  from  1993 to 1995,
President and Chief Executive  Officer from 1991 to 1993 and in other management
positions with the club from 1980 to 1991.

     F.  WARREN  HELLMAN,  a director  since 1985,  has served as  chairman  and
general partner of Hellman & Friedman LLC, a private  investment firm, since its
inception in 1984.  Previously,  he was a general  partner of Hellman Ferri (now
Matrix  Partners) and managing  director of Lehman  Brothers Kuhn Loeb, Inc. Mr.
Hellman is  currently a director of Il Fornaio  (America)  Corp.,  DN&E Walter &
Co., WPP Group plc and Sugar Bowl Corporation.

     PATRICIA  SALAS PINEDA,  a director since 1991, is currently Vice President
of Legal, Human Resources,  Government  Relations and Environmental  Affairs and
Corporate  Secretary of New United Motor  Manufacturing,  Inc. She has held this
position  since 1996.  Prior to assuming  that  position,  she served as General
Counsel  from 1990 to 1996.  Ms.  Pineda  is  currently  a  trustee  of the RAND
Corporation and a director of the James Irvine Foundation.

     T. GARY ROGERS,  a director  since 1998, is Chairman of the Board and Chief
Executive Officer of Dreyer's Grand Ice Cream, Inc., a manufacturer and marketer
of premium ice cream  products.  He has held this position since 1977. He serves
as a director  of  Shorenstein  Company,  L.P.,  Stanislaus  Food  Products  and
Gardonjim Farms.

     G. CRAIG  SULLIVAN,  a director  since  1998,  is Chairman of the Board and
Chief Executive  Officer of The Clorox Company,  a major consumer products firm.
Prior to his election as Vice Chairman and Chief Executive  Officer of Clorox in
1992,  Mr.  Sullivan was group vice president  with overall  responsibility  for
manufacturing and marketing,  the company's laundry and cleaning products in the
United States,  the international  business,  the manufacturing and marketing of
products  for the  food  service  industry  and  the  corporate  purchasing  and
distribution functions.

     R. JOHN ANDERSON, President of our Asia Pacific Division since 1998, joined
us in 1979. Mr. Anderson served as General Manager of Levi Strauss Canada and as
President of Levi  Strauss  Canada and Latin  America from 1996 to 1998.  He has
held a series  of  merchandising  positions  with us in  Europe  and the  United
States, including Vice President,  Merchandising and Product Development for the
Levi's(R) brand in 1995.



                                       74

<PAGE>

     DAVID G. BERGEN, our Chief Information Officer, joined us in November 2000.
He was most  recently  senior vice  president and chief  information  officer of
CarStation.com.  From 1998 to 2000,  Mr.  Bergen was senior vice  president  and
chief information  officer of LVMH, Inc. Prior to joining LVMH, Inc., Mr. Bergen
held a series of management  positions at GAP Inc., including most recently Vice
President of Application Development.

     WILLIAM B. CHIASSON, our Senior Vice President and Chief Financial Officer,
joined us in 1998. From 1988 to 1998, Mr.  Chiasson held various  positions with
Kraft Foods Inc., a subsidiary of Philip Morris Companies, including Senior Vice
President of Finance and Information  Systems.  Prior to joining Kraft Foods, he
was Vice President and Controller for Baxter  Healthcare  Corporation,  Hospital
Group.

     KAREN DUVALL,  our Senior Vice President of Worldwide Supply Chain,  joined
us in 2000.  Ms.  Duvall  was Vice  President  of Global  Operations  for Warner
Lambert  Company,  a major  pharmaceutical  firm,  from 1997 to 2000.  At Warner
Lambert,  Ms.  Duvall also served as Director of Global  Sourcing for  Marketing
Services  from 1996 to 1997.  From 1994 to 1996,  Ms.  Duvall  was a  management
consultant at Booz Allen & Hamilton.

     JAMES  LEWIS,  our  Senior  Vice  President  and  President,  Levi  Strauss
Americas, joined us in 2000. From 1995 to 2000, Mr. Lewis held various positions
with Liz Claiborne,  Inc., including Group President (responsible for all of Liz
Claiborne's  operating  units),  Group  President for the Liz Claiborne  women's
casual apparel division and Division  President for LizWear.  Before joining Liz
Claiborne,  Mr.  Lewis  was  Senior  Vice  President,  Merchandise,  Design  and
Production Planning for Haggar Clothing Company for ten years.

     JOSEPH  MIDDLETON,  our Senior Vice President and President of Levi Strauss
Europe,  Middle  East and  Africa  since  1999,  joined us in 1981.  He held the
position of General Manager of the Dockers(R) brand in Europe from 1993 to 1999,
General  Manager of Levi  Strauss New Zealand from 1990 to 1993 and a variety of
other positions from 1981 to 1990.

     ALBERT F. MORENO, our Senior Vice President and General Counsel since 1996,
joined us in 1978.  He held the position of Chief Counsel for Levi Strauss North
America from 1994 to 1996 and Deputy General  Counsel from 1985 to 1994. He is a
member of the Board of Directors of Xcel Energy, Inc.

     FRED  PAULENICH,  our Senior Vice President of Worldwide  Human  Resources,
joined us in 2000.  Prior to joining us, Mr.  Paulenich  was Vice  President and
Chief  Personnel  Officer of  Pepsi-Cola  North  America  from 1999 to 2000.  At
Pepsi-Cola,  he  has  held a  series  of  management  positions  including  Vice
President of  Headquarters  Human Resources from 1996 to 1998 and Vice President
of Personnel from 1995 to 1996.


OUR BOARD OF DIRECTORS

     Our board of directors has 14 members.  Directors  are elected  annually by
the trustees of the voting trust and serve for one-year terms.  Directors may be
removed, with or without cause, by the trustees of the voting trust.

     COMMITTEES. Our board of directors currently has three committees.

o         AUDIT.  Our  audit  committee   reviews,   with  management  and  with
          independent  and  internal  auditors,  our  accounting  and  reporting
          policies and  internal  controls,  the scope,  cost and outcome of the
          independent audit and the selection of an auditor.

         --Members:Blackwell, T. Friedman, Georgescu, P.E. Haas, Jr., W.J. Haas,
           Hellman, Pineda and Sullivan.

o         PERSONNEL.  Our personnel committee reviews our employee  compensation
          and  benefit  programs,  approves  and  monitors  incentive  programs,
          establishes  the  compensation  of and  approves the  perquisites  and
          reimbursed expenses for members of senior management and administers a
          number of our executive and employee compensation plans.

         --Members: R. Friedman, Gaither, Georgescu, Hellman, Pineda, Rogers and
           Sullivan.

o         CORPORATE ETHICS AND SOCIAL  RESPONSIBILITY.  Our corporate ethics and
          social responsibility committee reviews our efforts to meet our social
          responsibilities and to maintain policies, programs and practices that
          conform  with moral,  legal and social  standards.  In  addition,  the
          corporate ethics and social responsibility  committee also reviews our


                                       75

<PAGE>

          employment practices,  our equal employment opportunity compliance and
          compliance  with our code of worldwide  business ethics and recommends
          contributions   to  outside   beneficiaries   and  the  Levi   Strauss
          Foundation.

         --Members:Blackwell, R. Friedman, T. Friedman, Gaither, Georgescu, P.E.
           Haas, Jr., P.E. Haas, Sr., R.D. Haas, W.J. Haas, Marineau and Rogers.

     COMPENSATION.  Directors  who are also  stockholders  or  employees  do not
receive  compensation  for their  services as  directors.  Directors who are not
stockholders or employees,  Mr. Gaither, Ms. Blackwell,  Ms. Pineda, Mr. Rogers,
Mr. Sullivan and Mr.  Georgescu,  receive annual  compensation of  approximately
$62,000. This amount includes an annual retainer fee of $6,000,  meeting fees of
$1,000 per meeting day attended and long-term  variable pay in the form of 1,800
Leadership  Shares  units,  for a target value of $45,000 per year.  In November
2000, the Personnel Committee approved an increase in directors' annual retainer
to $36,000.  The actual amount for each payment varies depending on the years of
service,  the number of meetings  attended  and the actual  value of the granted
units upon vesting.  Directors,  in their first six years of service,  receive a
cash amount  equivalent to the target value of their  long-term  variable pay or
$45,000.  This  amount  is  decreased  by 1/3 each  year at the  start of actual
payments from the Long-Term Incentive Plan.

     Mr. Gaither, Mr. Georgescu,  Ms. Blackwell,  Ms. Pineda, Mr. Rogers and Mr.
Sullivan each received 1,800 Leadership  Shares units in 2000. Mr. Gaither,  Ms.
Blackwell and Ms. Pineda each received  payments  under the Long-Term  Incentive
Plan  and the  Long-Term  Performance  Plan of  approximately  $30,637  in 2000.
Directors who are not employees or stockholders are eligible to participate in a
deferred compensation plan.


PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The  members of our  personnel  committee  in 2000 were Mr.  Friedman,  Mr.
Gaither, Mr. Georgescu, Mr. Hellman, Ms. Pineda, Mr. Rogers and Mr. Sullivan.

     Mr.  Hellman is chairman  and a general  partner of Hellman &  Friedman,  a
private  investment firm that has provided  financial advisory services to us in
the past. We did not pay any fees to Hellman & Friedman during fiscal year 2000.
Mr. Gaither is senior counsel of the law firm Cooley Godward LLP. Cooley Godward
provided  legal  services to us in 2000 and  received  approximately  $60,000 in
fees.

                                       76

<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION


EXECUTIVE COMPENSATION

         This table provides  compensation  information  for our chief executive
officer  and  other  executive  officers  who were our most  highly  compensated
officers in 2000.

<TABLE>
<CAPTION>


                                                          SUMMARY COMPENSATION TABLE

                                                                                   LONG-TERM
                                                    ANNUAL COMPENSATION          COMPENSATION
                                                ----------------------------     ------------
                                                                                                       ALL OTHER
NAME/PRINCIPAL POSITION                 YEAR       SALARY      BONUS (1)       LTIP PAYOUTS (2)     COMPENSATION (3)
- ------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>       <C>           <C>            <C>                    <C>

Philip A. Marineau                      2000      $1,000,000    $2,250,000         $     --           $1,173,761
President and Chief Executive           1999         153,846         --                  --            3,172,234
Officer (4)

Robert D. Haas                          2000       1,050,000     1,800,000               --               78,750
Chairman of the Board                   1999       1,248,462         --             187,000               90,000

William B. Chiasson                     2000         475,969       661,650               --              351,558
Senior Vice President and               1999         450,449         --                  --                   --
Chief Financial Officer

James Lewis                             2000         432,692       412,500               --              816,243
Senior Vice President and               1999           --            --                  --                   --
President, Levi Strauss Americas (5)

Albert F. Moreno                        2000         351,731       429,550               --               23,742
Senior Vice President and               1999         299,322         --              24,959               22,588
General Counsel

</TABLE>


__________________

(1)  We pay annual bonuses under our Annual Incentive Plan. The Annual Incentive
     Plan is  intended  to reward  individual  contributions  to our  objectives
     during  the  year.  The  amount  of  incentive   earned  depends  upon  the
     performance  and salary grade level of the  individual  and also depends on
     corporate,   group,   division  and  affiliate  financial  results  against
     pre-established targets. We did not pay any bonuses for 1999 performance.

(2)  These reflect  amounts  earned  during 2000 under our  Long-Term  Incentive
     Plan, a performance  unit plan now replaced by our Leadership  Shares Plan.
     Under  the  Long-Term  Incentive  Plan,  we  granted  performance  units to
     participants  with an  initial  target  value.  At the end of a  three-year
     measurement  period,  we  determine  the actual per unit value based on our
     estimated  relative  shareholder  return and return on investment over that
     period.  Once  valued,  we  pay  out  the  unit  value  in  cash  in  equal
     installments over a three-year period.  Interest at the prime rate is added
     to the second and third installments. The amounts shown in the table relate
     to the  1998  to  2000  measurement  period  and  will  be  paid  in  equal
     installments in 2001, 2002 and 2003. Due to performance during this period,
     we estimate the current value of the 1998 grant to be $0 per unit.  Messrs.
     Marineau, Chiasson and Lewis were not employed by us at the time this grant
     was made.

(3)  For all officers except Mr. Lewis, the amounts shown include  contributions
     we made on their  behalf to our  Capital  Accumulation  Plan.  The  Capital
     Accumulation Plan is a non-qualified  investment plan that permits eligible
     employees  to  contribute  up to ten percent of their pay, on an  after-tax
     basis,  to an  individual  retail  brokerage  account  established  in  the
     employee's name. We generally match 75% of the employee's contributions. We
     established the Capital  Accumulation  Plan because  Internal  Revenue Code
     rules limit savings opportunities under tax-qualified plans for a number of
     our  employees.  The 1999  amount  shown for Mr.  Marineau  reflects a $3.0
     million signing bonus under his employment  agreement and  reimbursement of
     relocation  expenses.  The 2000  amount  shown  for Mr.  Marineau  reflects
     relocation-related  income of $1,095,877 as well as a Capital  Accumulation
     Plan  contribution  of  $77,885.  The  2000  amount  shown for Mr. Chiasson
     reflects a  special  payment of  $326,250  to replace  forfeited  long-term
     grants  from  a  previous employer and a Capital


                                       77

<PAGE>


     Accumulation  Plan  match of $25,308.  The  2000 amount shown for Mr. Lewis
     reflects  a  hiring  bonus  of $614,398  and relocation-related expenses of
     $201,845.

(4)      Mr. Marineau joined us on September 27, 1999.

(5)      Mr. Lewis joined us on April 24, 2000.

<TABLE>
<CAPTION>


                               LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR (2000)

                                                                                    ESTIMATED FUTURE PAYOUTS (1)
                                                                                  ----------------------------------
                                        NUMBER OF LEADERSHIP       PERFORMANCE
NAME/PRINCIPAL POSITION                    SHARES AWARDED           PERIOD (2)       MINIMUM ($)      TARGET
- --------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                  <C>             <C>              <C>

Philip A. Marineau                              980,000              5 years               --        $24,500,000
President and Chief Executive
Officer (3)

Robert D. Haas                                   90,000              5 years               --          2,250,000
Chairman of the Board

William B. Chiasson                             108,000              5 years               --          2,700,000
Senior Vice President and
Chief Financial Officer

James Lewis                                     108,000              5 years               --          2,700,000
Senior Vice President and
President, Levi Strauss Americas (4)

Albert F. Moreno                                 40,000              5 years               --          1,000,000
Senior Vice President and
General Counsel

</TABLE>

__________________

(1)  The Leadership Shares Plan is a long-term cash performance unit plan. Under
     this plan, we establish a five-year  financial  performance target for each
     grant  based  on,  among  other  things,   our   performance  and  expected
     shareholder value growth at comparable  companies.  The actual value of the
     units  is  determined   based  on  performance   against  these   measures.
     Performance  at the target  level  will  yield a per unit value of $25.  If
     performance does not meet a threshold standard, then the units will have no
     value.  Performance above target yields correspondingly larger unit values;
     there is no limit on maximum award potential.

(2)  The  performance  period is five years  from the time of award.  The awards
     vest in one-third increments on the last day of the third, fourth and fifth
     fiscal years of the performance period.  Unless deferred, we pay the awards
     in the year after they vest.

(3)  As provided in Mr.  Marineau's  employment  agreement,  in February 2000 we
     granted him 170,000  Leadership  Shares  units as his annual  grant for the
     year. We also granted him an additional  810,000 Leadership Shares units to
     compensate  him for the potential  value of stock options he forfeited upon
     leaving his previous employer to join us.

(4)  As  provided in Mr.  Lewis'  employment  agreement,  we granted him 108,000
     Leadership Shares units upon his joining  us.  This  award  reflects  three
     elements:  a regular annual grant of 42,500 units, a special  sign-on grant
     of 40,000 units and a replacement  for options  forfeited  upon leaving his
     previous employer of 25,500 units.

                                       78

<PAGE>


                               PENSION PLAN TABLE

         The following table shows the estimated  annual  benefits  payable upon
retirement  under our Home Office Pension Plan,  benefit  restoration  plans and
deferred   compensation   plan  to   persons   in   various   compensation   and
years-of-service  classifications  prior to mandatory  offset of Social Security
benefits:

<TABLE>
<CAPTION>


- ---------------------------------------------------------------------------------------------------------------
                                                         YEARS OF SERVICE
           COVERED   ------------------------------------------------------------------------------------------
      COMPENSATION         5          10           15           20           25           30           35
- ---------------------------------------------------------------------------------------------------------------
<S>     <C>               <C>         <C>          <C>          <C>          <C>          <C>          <C>

        150,000           15,000      30,000       45,000       60,000       75,000       76,875       78,750
        225,000           22,500      45,000       67,500       90,000      112,500      115,313      118,125
        300,000           30,000      60,000       90,000      120,000      150,000      153,750      157,500
        375,000           37,500      75,000      112,500      150,000      187,500      192,188      196,875
        450,000           45,000      90,000      135,000      180,000      225,000      230,625      236,250
        525,000           52,500     105,000      157,500      210,000      262,500      269,063      275,625
        600,000           60,000     120,000      180,000      240,000      300,000      307,500      315,000
        675,000           67,500     135,000      202,500      270,000      337,500      345,938      354,375
        750,000           75,000     150,000      225,000      300,000      375,000      384,375      393,750
        825,000           82,500     165,000      247,500      330,000      412,500      422,813      433,125
        900,000           90,000     180,000      270,000      360,000      450,000      461,250      472,500
        975,000           97,500     195,000      292,500      390,000      487,500      499,688      511,875
      1,050,000          105,000     210,000      315,000      420,000      525,000      538,125      551,250
      1,125,000          112,500     225,000      337,500      450,000      562,500      576,563      590,625
      1,200,000          120,000     240,000      360,000      480,000      600,000      615,000      630,000
      1,275,000          127,500     255,000      382,500      510,000      637,500      653,438      669,375
- ---------------------------------------------------------------------------------------------------------------

</TABLE>


         The table  assumes  retirement  at the age of 65,  with  payment to the
employee in the form of a single-life annuity. As of year-end 2000, the credited
years of service for Messrs. Marineau, Haas, Chiasson, Lewis  and Moreno were 1,
27, 2, 0 and 22,  respectively.  The 2000  compensation  covered by the  Pension
Plan,  Benefit  Restoration  Plan and  Deferred  Compensation  Plan for  Messrs.
Marineau, Haas,  Chiasson,  Lewis  and Moreno were $1.00 million, $1.05 million,
$475,969, $0 and  $351,731, respectively.  Mr. Lewis joined us on April 24, 2000
and does not yet have a credited year of service.

EMPLOYMENT AGREEMENTS

         PHILIP MARINEAU.  We have an employment agreement with Philip Marineau,
our President and Chief Executive Officer.  The agreement provides for a minimum
base salary of $1.00 million in accordance with our executive  salary policy and
a target  annual cash bonus of 90% of base salary,  with a maximum bonus of 180%
of base salary.  In addition,  Mr.  Marineau is eligible to  participate  in all
other  executive  compensation  and benefit  programs,  including the Leadership
Shares Plan. Under the employment agreement, we made a one-time grant of 810,000
Leadership  Shares  units to  compensate  him for the  potential  value of stock
options he  forfeited  upon  leaving his  previous  employer to join us. We also
provide under the agreement a supplemental pension benefit to Mr. Marineau.

         The agreement  terminates in September  2002 but extends  automatically
after this date until  terminated by either Mr. Marineau or us. We may terminate
the agreement upon Mr. Marineau's death or disability,  for cause (as defined in
the  agreement),  and  without  cause  upon 30 days  notice.  Mr.  Marineau  may
terminate the  agreement for good reason (as defined in the  agreement) or other
than for good reason upon 30 days notice to us. The  consequences of termination
depend on the basis for the termination:

         o    If we terminate  without cause or if Mr.  Marineau  terminates for
              good  reason,  Mr.  Marineau  will be entitled  to: (i)  severance
              payments equal to three times the sum of his base salary as of the
              termination  date plus his most  recent  target  or,  if  greater,
              annual   bonus,   (ii)   amounts   accrued  or  earned  under  our
              compensation  and benefit  plans and (iii) an amount in respect of
              the  Leadership   Shares  units  granted  in  the  one-time  grant
              described above.

         o    If we terminate for cause or if Mr. Marineau  terminates for other
              than good reason,  then the agreement will  terminate  without our
              having further  obligations to Mr. Marineau other than for amounts
              accrued or earned  under

                                       79

<PAGE>

              our  compensation  and  benefit  programs (which does not  include
              unvested Leadership Shares  units  or  target  bonus  amounts  not
              payable as of the date of termination).

         o    If we terminate for any reason other than cause or if Mr. Marineau
              terminates  for good  reason  within 12  months  after a change in
              control  (as  defined  in the  agreement),  Mr.  Marineau  will be
              entitled to: (i) severance  payments  equal to three times the sum
              of his base salary as of the termination date plus his most recent
              target or, if  greater,  annual  bonus,  (ii)  amounts  accrued or
              earned under our compensation  and benefit plans,  (iii) an amount
              in respect of the Leadership  Shares units granted in the one-time
              grant  described  above,  (iv) full and  immediate  vesting in all
              outstanding  Leadership  Shares  grants;  (v) full  and  immediate
              vesting  in his  supplemental  pension  benefit;  and  (vi) if any
              amounts  paid are  treated as  parachute  payments  (as defined in
              Section  280G(b)(2) of the Internal Revenue Code), an amount equal
              to the applicable  excise tax and any taxes on this  reimbursement
              payment.

         JAMES LEWIS.  We have an  employment  agreement  with James Lewis,  our
Senior Vice  President,  and  President,  Levi Strauss  Americas.  The agreement
provides  for a minimum  base  salary of $750,000  per year with a bonus  target
equal to 55% of base salary,  and a maximum  bonus equal to 110% of base salary.
For fiscal year 2000,  which is the first year of Mr. Lewis'  employment,  he is
guaranteed  under the agreement to earn at least his target bonus amount;  later
years' bonus payouts are not guaranteed. Under the agreement, Mr. Lewis received
a one-time lump sum of $300,000 net of taxes to assist with relocation expenses.

         Mr.  Lewis  is  eligible  to   participate  in  all  of  our  executive
compensation and benefit  programs,  including the Leadership Shares Plan. Under
his employment agreement, Mr. Lewis received 108,000 Leadership Shares units for
his 2000 grant.  This award reflects three  elements:  a signing bonus, a normal
grant for the year and a  replacement  for options  forfeited  upon  leaving his
previous employer to join us. In addition,  in 2001 we will compensate Mr. Lewis
for other  incentive  amounts he forfeited  upon leaving his previous  employer.
Under the terms of the agreement,  Mr. Lewis will be eligible for a supplemental
pension  benefit.  If Mr.  Marineau leaves us during the first five years of Mr.
Lewis'  employment and Mr. Lewis remains with us through that five-year  period,
Mr. Lewis will receive an  additional  five years of credited  service under the
supplemental pension benefit.

         The  agreement  has a  five-year  term  ending  in April  2005.  We may
terminate Mr. Lewis' employment  agreement upon death or disability,  for cause,
as defined in the  agreement,  or without cause upon 60 days' notice.  Mr. Lewis
may terminate the agreement  for good reason,  as defined in the  agreement,  or
other  than for good  reason  upon 60 days'  notice to us. The  consequences  of
termination depend on the basis for the termination:

         o    If we terminate  without cause or if Mr. Lewis terminates for good
              reason,  Mr.  Lewis will be entitled  to: (i)  severance  payments
              equal  to  two  times  the  sum  of  his  base  salary  as of  the
              termination  date plus his most recent target bonus;  (ii) payment
              in respect of the vested portions of his Leadership  Shares units;
              (iii) in the case of  termination  by Mr.  Lewis for good  reason,
              full and immediate  vesting in all outstanding  Leadership  Shares
              units and immediate vesting in his supplemental retirement benefit
              unless at the time of  termination  Mr.  Marineau is no longer the
              chief executive officer;  and (iv) amounts accrued or earned under
              our compensation and benefit plans.

         o    If we  terminate  for cause or if Mr. Lewis  terminates  for other
              than good reason,  then the agreement will  terminate  without our
              having further obligations to Mr. Lewis other than payment of base
              salary and accrued  vacation  pay through the date of  termination
              and vested amounts under our compensation and benefit plans.

         o    If within 12 months  following a change in control,  as defined in
              the agreement, we terminate for any reason other than for cause or
              if Mr.  Lewis  terminates  due to good  reason,  Mr. Lewis will be
              entitled  to:  (i) two times the sum of his base  salary as of the
              termination   date  plus  his  most  recent  target  bonus,   (ii)
              accelerated vesting of his unvested Leadership Shares units; (iii)
              full vesting in his supplemental pension benefit; and (iv) amounts
              accrued or earned under our  compensation  and benefit plans.  Mr.
              Lewis  in his  sole  discretion  shall  be  able to  accept  these
              benefits or choose to have these  benefits  capped at the Internal
              Revenue Service limit in order to avoid excise taxes.

                                       80


<PAGE>


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     All shares of our common  stock are  deposited in a voting  trust,  a legal
arrangement  that transfers the voting power of the shares to a trustee or group
of trustees.  The four voting  trustees are Peter E. Haas,  Sr.,  Peter E. Haas,
Jr.,  Robert  D.  Haas and F.  Warren  Hellman.  The  voting  trustees  have the
exclusive  ability to elect and remove  directors,  amend our  by-laws  and take
certain other actions which would  normally be within the power of  stockholders
of a Delaware  corporation.  Our equity  holders  who, as a result of the voting
trust, legally hold "voting trust certificates",  not stock, retain the right to
direct  the   trustees  on   specified   mergers  and   business   combinations,
liquidations,  sales of substantially all of our assets and specified amendments
to our certificate of incorporation.

     The  voting  trust  will  last  until  April  2011,   unless  the  trustees
unanimously  decide, or holders of at least two-thirds of the outstanding voting
trust certificates  decide, to terminate it earlier. If Robert D. Haas ceases to
be a trustee for any reason, then the question of whether to continue the voting
trust will be  decided by the  holders.  If Peter E.  Haas,  Sr.  ceases to be a
trustee, his successor will be his spouse, Miriam L. Haas. The existing trustees
will  select the  successors  to the other  trustees.  The  agreement  among the
stockholders and the trustees  creating the voting trust  contemplates  that, in
selecting  successor  trustees,  the trustees will attempt to select individuals
who share a common  vision with the sponsors of the 1996  transaction  that gave
rise to the  voting  trust,  represent  and  reflect  the  financial  and  other
interests  of the  equity  holders  and bring a balance of  perspectives  to the
trustee group as a whole.  A trustee may be removed if the other three  trustees
unanimously  vote  for  removal  or if  holders  of at least  two-thirds  of the
outstanding voting trust certificates vote for removal.

     The table on the following page contains  information  about the beneficial
ownership of our voting trust certificates as of January 1, 2001, by:

         o    Each of our directors and each of our five most highly compensated
              officers;

         o    Each person  known by us to own  beneficially  more than 5% of our
              voting trust certificates; and

         o    All of our directors and officers as a group.

     Under the rules of the  Commission,  a person is deemed to be a "beneficial
owner" of a security if that person has or shares "voting power", which includes
the  power to vote or to  direct  the  voting of the  security,  or  "investment
power",  which includes the power to dispose of or to direct the  disposition of
the security. A person is also deemed to be a beneficial owner of any securities
of which that person has a right to acquire beneficial ownership within 60 days.
Under these rules,  more than one person may be deemed a beneficial owner of the
same  securities  and a  person  may  be  deemed  to be a  beneficial  owner  of
securities as to which that person has no economic interest. Except as described
in the  footnotes to the table below,  the  individuals  named in the table have
sole voting and investment  power with respect to all voting trust  certificates
beneficially owned by them, subject to community property laws where applicable.

                                       81


<PAGE>

<TABLE>
<CAPTION>

                                                                                                               PERCENTAGE OF
                                                                                          NUMBER OF VOTING     VOTING TRUST
                                                                                          TRUST CERTIFICATES   CERTIFICATES
      NAME                                                                                BENEFICIALLY OWNED   OUTSTANDING
      ----                                                                                -------------------  -----------
<S>                                                                                           <C>                 <C>

      Peter E. Haas, Sr. .............................................................        8,376,426(1)        22.47%
      Peter E. Haas, Jr. .............................................................        4,642,472(2)        12.45%
      Josephine B. Haas...............................................................        4,103,750(3)        11.01%
      Robert D. Haas..................................................................        3,723,679(4)         9.99%
      Evelyn D. Haas..................................................................        3,515,116(5)         9.43%
      Miriam L. Haas..................................................................        2,980,200(6)         7.99%
      Margaret E. Haas................................................................        2,643,110(7)         7.09%
      Robert E. Friedman..............................................................        1,320,134(8)         3.54%
      F. Warren Hellman...............................................................          527,342(9)         1.41%
      Walter J. Haas..................................................................          258,348(10)          *
      Tully M. Friedman...............................................................          246,196(11)          *
      James C. Gaither................................................................            --                --
      Peter A. Georgescu(12)..........................................................            --                --
      Angela Glover Blackwell.........................................................            --                --
      Philip A. Marineau..............................................................            --                --
      Patricia Salas Pineda...........................................................            --                --
      T. Gary Rogers..................................................................            --                --
      G. Craig Sullivan...............................................................            --                --
      William B. Chiasson.............................................................            --                --


      Directors and executive officers as a group (22 persons)(13)....................        19,094,597          51.22%

</TABLE>

__________________

  * Represents beneficial ownership of less than 1%.

  (1)  Includes  670,000  voting  trust  certificates  held by a  trust  for the
       benefit of Josephine  B. Haas,  former  spouse of Mr. Haas.  Mr. Haas has
       sole voting power and Mrs.  Josephine B. Haas has sole  investing  powers
       with  respect to those  voting  trust  certificates.  Excludes  2,980,200
       voting trust  certificates  held by Mr. Haas' wife,  Miriam L. Haas. Also
       excludes  3,515,116 voting trust  certificates  held by a trust for which
       Mr. Haas is co-trustee.  Mr. Haas disclaims beneficial ownership of those
       voting trust certificates.

  (2)  Includes a total of 2,243,684 voting trust certificates held by Mr. Haas'
       wife,  children  and trusts for the benefit of his children for which Mr.
       Haas is trustee;  61,709 voting trust  certificates  held by trusts,  for
       which Mr.  Haas is  trustee,  for the  benefit of  Michael  S. Haas;  and
       148,500  voting  trust  certificates  held by a  charitable  annuity lead
       trust.  Mr. Haas  disclaims  beneficial  ownership of all of those voting
       trust  certificates.  Includes 300,272 voting trust  certificates held by
       the Josephine B. Haas Family Partnership,  for which Mr. Haas is managing
       general partner.

  (3)  Includes  721,029 voting trust  certificates  held by a trust,  for which
       Mrs.  Haas is  trustee,  for the  benefit of  Michael  S. Haas.  Excludes
       1,203,255 voting trust  certificates held by a trust, for which Mrs. Haas
       is co-trustee,  for the benefit of Margaret E. Haas.  Mrs. Haas disclaims
       ownership  of all of those voting trust  certificates.  Includes  300,272
       voting  trust   certificates   held  by  the  Josephine  B.  Haas  Family
       Partnership, for which Mrs. Haas is a limited partner.

  (4)  Includes  527,674  voting  trust  certificates  owned by the  spouse  and
       daughter of Mr. Haas and by trusts for the benefit of his  daughter.  Mr.
       Haas disclaims beneficial ownership of those voting trust certificates.

  (5)  These voting trust  certificates are held by the Walter A. Haas, Jr. QTIP
       Trust, for which Evelyn D. Haas and Peter E. Haas, Sr. are co-trustees.

  (6)  Excludes 40,000 voting trust  certificates  held by Mrs. Haas' sons. Mrs.
       Haas disclaims  beneficial  ownership of those voting trust certificates.
       Excludes  7,706,426 voting trust  certificates held by Peter E. Haas, Sr.
       Mrs.  Haas   disclaims   beneficial   ownership  of  those  voting  trust
       certificates.

  (7)  Includes 1,439 voting trust  certificates held by a trust for the benefit
       of Ms. Haas' son. Ms. Haas disclaims beneficial ownership of those voting
       trust certificates.

  (8)  Includes 92,500 voting trust certificates held by Mr. Friedman's children
       and by trusts,  for which Mr. Friedman is co-trustee,  for the benefit of
       his children and 195,834 voting trust  certificates  held by trusts,  for
       which Mr.  Friedman  is  co-trustee,  for the  benefit of Mr.  Friedman's
       nieces and nephew. Mr. Friedman disclaims  beneficial  ownership of those
       voting trust  certificates.  Includes 1,010,000 voting trust certificates
       held by Copper Reservoir, a California limited partnership, for which Mr.
       Friedman is a general partner.



                                       82

<PAGE>

  (9)  Excludes 360,314 voting trust certificates held by a trust, for which Mr.
       Hellman is co-trustee, for the benefit of the daughter of Robert D. Haas.
       Mr.  Hellman  disclaims   beneficial  ownership  of  those  voting  trust
       certificates.

  (10) Includes 248,348 voting trust  certificates held by trusts, for which Mr.
       Haas is trustee or co-trustee, for the benefit of Mr. Haas' children. Mr.
       Haas disclaims beneficial ownership of those voting trust certificates.

  (11) Includes 24,115 voting trust  certificates held by a trust, for which Mr.
       Friedman is trustee,  for the benefit of Mr.  Friedman's former wife, Ann
       Barry.  Also  includes  25,000  voting  trust  certificates  held  by The
       Friedman Family Partnership.  Mr. Friedman disclaims beneficial ownership
       of  all  but  500  of  the  Friedman  Family   Partnership  voting  trust
       certificates.

  (12) Mr. Georgescu was elected to the Board on February 10, 2000.

  (13) As of  January 1, 2001,  there  were 164 record  holders of voting  trust
       certificates.

     The  percentage  of  beneficial  ownership  shown in the  table is based on
37,278,238  shares  of  common  stock  and  related  voting  trust  certificates
outstanding as of January 1, 2001. The business  address of all persons  listed,
including  the trustees  under the voting  trust,  is 1155 Battery  Street,  San
Francisco, California 94111.


STOCKHOLDERS' AGREEMENT

     Our common stock and the voting trust certificates are not publicly held or
traded.  All  shares  and  the  voting  trust  certificates  are  subject  to  a
stockholders' agreement. The agreement,  which expires in April 2016, limits the
transfer of shares and certificates to other holders, family members,  specified
charities  and  foundations  and to us.  The  agreement  does  not  provide  for
registration  rights or other  contractual  devices for forcing a public sale of
shares, certificates or other access to liquidity. The scheduled expiration date
of the stockholders' agreement is five years later than that of the voting trust
agreement in order to permit an orderly transition from effective control by the
voting trust trustees to direct control by the stockholders.


ESTATE TAX REPURCHASE POLICY

     We have a policy  under  which we will  repurchase  a portion of the shares
offered by the estate of a deceased  stockholder  in order to generate funds for
payment  of  estate  taxes.  The  purchase  price  will be based on a  valuation
received  from an  investment  banking  or  appraisal  firm.  Estate  repurchase
transactions are subject to applicable laws governing stock  repurchases,  board
approval  and  restrictions  under  our  credit  agreements.   Our  bank  credit
facilities  prohibit  repurchases  without the consent of the  lenders,  and the
indentures  relating  to our  11.625%  notes due 2008 limit our  ability to make
repurchases.  (SEE NOTE 18 TO THE CONSOLIDATED FINANCIAL STATEMENTS.) The policy
does not create a contractual  obligation on our part. We may amend or terminate
this policy at any time. No shares were  repurchased  under this policy in 2000,
1999 or 1998.


VALUATION POLICY

     We  have a  policy  under  which  we  obtain,  and  make  available  to our
stockholders,  an annual valuation of our voting trust certificates.  The policy
provides  that we will make  reasonable  efforts to defend  valuations we obtain
which are challenged in any tax or regulatory proceeding involving a stockholder
(including an estate) that used the  valuation  and that was  challenged on that
use. The policy provides that we will not indemnify any stockholder  against any
judgment  or  settlement   amounts  or  expenses   specific  to  any  individual
stockholder arising from the use of a valuation.  We may amend or terminate this
policy at any time.


VOTING TRUSTEE COMPENSATION

     The voting trust  agreement  provides that trustees who are also beneficial
owners of 1% or more of our stock are not  entitled  to  compensation  for their
services as trustees.  Trustees who are not beneficial owners of more than 1% of
our outstanding stock may receive such compensation, upon approval of our Board.
All trustees are entitled to reimbursement for reasonable  expenses and charges,
which may be incurred in carrying out their  duties as trustees.  Of the current
trustees,  Mr. Hellman  beneficially owns less than 1% of our outstanding stock.
He is not currently receiving compensation from us for his service as a trustee.
All of the other trustees each beneficially owns more than 1% of our outstanding
stock.

                                       83

<PAGE>


VOTING TRUSTEE INDEMNIFICATION

     Under the voting trust  agreement,  the trustees are not liable to us or to
the holders of voting trust  certificates  for any actions  undertaken  in their
capacity as trustees,  except in cases of willful  misconduct.  The voting trust
will indemnify the trustees in respect of actions taken by them under the voting
trust  agreement  in their  capacity  as  trustees,  except in cases of  willful
misconduct.

     We have agreed to  reimburse  the voting  trust for any amounts paid by the
trust as a result of its indemnity obligation on behalf of the trustees.


LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

     As  permitted  by Delaware  law, we have  included  in our  certificate  of
incorporation  a provision to  eliminate  generally  the  personal  liability of
directors for monetary  damages for breach or alleged breach of their  fiduciary
duties as directors.  In addition,  our by-laws  provide that we are required to
indemnify our officers and directors under a number of circumstances,  including
circumstances in which indemnification would otherwise be discretionary,  and we
are required to advance  expenses to our  officers and  directors as incurred in
connection with proceedings  against them for which they may be indemnified.  In
addition,  our board of directors adopted resolutions making clear that officers
and directors of our foreign  subsidiaries are covered by these  indemnification
provisions.  We are  not  aware  of any  pending  or  threatened  litigation  or
proceeding  involving  a director,  officer,  employee or agent of ours in which
indemnification   would  be  required  or  permitted.   We  believe  that  these
indemnification provisions are necessary to attract and retain qualified persons
as directors and officers.

     Insofar as indemnification  for liabilities under the Securities Act may be
granted to  directors,  officers or persons  controlling  us under the foregoing
provisions,  we have been  informed that in the opinion of the  Commission  this
indemnification  is against public policy as expressed in the Securities Act and
is therefore unenforceable.



                                       84

<PAGE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     F. Warren Hellman, one of our directors,  is a general partner of Hellman &
Friedman LLC, a private  investment  firm that has provided  financial  advisory
services  to us in the past.  We did not pay any fees to Hellman & Friedman  LLC
during the years 2000, 1999 and 1998.

     James C. Gaither,  one of our directors,  is senior counsel of the law firm
Cooley Godward LLP.  Cooley Godward  provided legal services to us in 2000, 1999
and 1998, for which we paid fees of approximately $60,000,  $165,000 and $74,000
in those years.



















                                       85


<PAGE>


     ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      List the following documents filed as a part of the report:

1.       Financial Statements
         The following consolidated financial statements of the Company are
         included in Item 8:
         Report of Independent Public Accountants
         Consolidated Balance Sheets
         Consolidated Statements of Income
         Consolidated Statements of Stockholders' Deficit
         Consolidated Statements of Cash Flows
         Notes to Consolidated Financial Statements
         Quarterly Financial Data (Unaudited)

2.       Financial Statement Schedule
         Schedule II - Valuation and Qualifying Accounts.......Form 10-K page 94

         All  other   schedules   have  been   omitted   because  they  are
         inapplicable,  not required or the  information is included in the
         Consolidated Financial Statements or Notes thereto.

3.       Exhibits

3.1              Restated   Certificate  of  Incorporation  of  the  Registrant.
                 Previously  filed as Exhibit 3.1 to  Registrant's  Registration
                 Statement on Form S-4 filed with the Commission on May 3, 2000.

3.2              Bylaws of the Registrant. Previously filed as Exhibit 3.2 to
                 Registrant's Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000.

4.1              Indenture, dated as of November 6, 1996, between the Registrant
                 and  Citibank,  N.A.,  relating to the 6.80% Notes due 2003 and
                 the 7.00%  Notes due 2006.  Previously  filed as Exhibit 4.1 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000.

4.2              Fiscal Agency Agreement, dated as of November 21, 1996, between
                 the Registrant and Citibank,  N.A., relating to 20  billion yen
                 4.25%  bonds  due  2016.  Previously  filed as  Exhibit  4.2 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000.

4.3              Lease Intended as Security, dated as of December 3, 1996, among
                 the Registrant,  First Security Bank,  National  Association as
                 Agent and named  lessors.  Previously  filed as Exhibit  4.3 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000.

4.4              Supplemental Indenture, dated as  of May 16, 2000,  between the
                 Registrant and Citibank,  N.A., relating to the 6.80% Notes due
                 2003 and the 7.00% Notes due 2006.  Previously filed as Exhibit
                 4.4 to Amendment No. 1 to Registrant's  Registration  Statement
                 on Form S-4 filed with the Commission on May 17, 2000.

4.5              Purchase Agreement,  dated as  of January 12, 2001,  among  the
                 Registrant  and Salomon Smith Barney Inc. and the other Initial
                 Purchases  named  therein,  relating  to the 11.625% US  Dollar
                 Notes due 2008 and the  11.625%  Euro  Notes  due  2008.  Filed
                 herewith.

4.6              Registration Rights Agreement, dated of January 18, 2001,  bet-
                 ween the  Registrant  and Salomon  Smith  Barney  Inc. and  the
                 other Initial Purchases named therein, relating to the  11.625%
                 US Dollar Notes due 2008. Filed herewith.

4.7              Registration Rights Agreement, dated of January 18, 2001,  bet-
                 ween the  Registrant  and Salomon  Smith  Barney  Inc. and  the
                 other Initial Purchases named therein, relating to the  11.625%
                 Euro Notes due 2008. Filed herewith.

                                       86

<PAGE>

4.8              U.S. Dollar Indenture, dated of January 18, 2001,  between  the
                 Registrant  and  Citibank,  N.A.,  relating  to the  11.625% US
                 Dollar Notes due 2008. Filed herewith.

4.9              Euro Indenture, dated of January 18, 2001,  between  the Regis-
                 trant and Citibank, N.A., relating to the  11.625%  Euro  Notes
                 due 2008. Filed herewith.

9                Voting Trust Agreement, dated as of April 15, 1996, among LSAI
                 Holding Corp. (predecessor of the Registrant),  Robert D. Haas,
                 Peter E. Haas, Sr., Peter E. Haas,  Jr., F. Warren Hellman,  as
                 voting  trustees,  and the  stockholders.  Previously  filed as
                 Exhibit 9 to  Registrant's  Registration  Statement on Form S-4
                 filed with the Commission on May 3, 2000.

10.1             Stockholders Agreement, dated as of April 15, 1996,  among LSAI
                 Holding  Corp.   (predecessor   of  the   Registrant)  and  the
                 stockholders.  Previously filed as Exhibit 10.1 to Registrant's
                 Registration Statement on Form S-4 filed with the Commission on
                 May 3, 2000.

10.2             Bridge Credit  Agreement,  dated as of January 31, 2000,  among
                 the Registrant,  the Financial  Institutions  party thereto and
                 Bank of  America,  N.A.  Previously  filed as  Exhibit  10.2 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000.

10.3             Pledge and Security Agreement,  dated as  of  January 31, 2000,
                 between the  Registrant  and Bank of America,  N.A.  Previously
                 filed as Exhibit 10.3 to Registrant's Registration Statement on
                 Form S-4 filed with the Commission on May 3, 2000.

10.4             Guaranty, dated as of January 31, 2000, between certain  subsi-
                 diaries of the Registrant and Bank of America,  N.A. Previously
                 filed as Exhibit 10.4 to Registrant's Registration Statement on
                 Form S-4 filed with the Commission on May 3, 2000.

10.5             Limited Waiver, dated  as  of  February 29, 2000,  between  the
                 Registrant  and  Bank of  America,  N.A.  Previously  filed  as
                 Exhibit 10.5 to Registrant's Registration Statement on Form S-4
                 filed with the Commission on May 3, 2000.

10.6             Amended  and  Restated 1997 364-Day Credit Agreement among  the
                 Registrant, the Lenders party thereto and Bank of America, N.A.
                 Previously  filed as Exhibit 10.6 to Registrant's  Registration
                 Statement on Form S-4 filed with the Commission on May 3, 2000.

10.7             Pledge and  Security  Agreement,  dated as of January 31, 2000,
                 between the  Registrant  and Bank of America,  N.A.  Previously
                 filed as Exhibit 10.7 to Registrant's Registration Statement on
                 Form S-4 filed with the Commission on May 3, 2000.

10.8             Guaranty, dated as of January 31, 2000,  between certain subsi-
                 diaries of the Registrant and Bank of America,  N.A. Previously
                 filed as Exhibit 10.8 to Registrant's Registration Statement on
                 Form S-4 filed with the Commission on May 3, 2000.

10.9             Amended and Restated 1999 180-Day  Credit  Agreement  among the
                 Registrant,  the Lenders  parties  thereto and Bank of America,
                 N.A.   Previously   filed  as  Exhibit  10.9  to   Registrant's
                 Registration Statement on Form S-4 filed with the Commission on
                 May 3, 2000.

10.10            Pledge and Security Agreement,  dated  as  of January 31, 2000,
                 between the  Registrant  and Bank of America,  N.A.  Previously
                 filed as Exhibit 10.10 to Registrant's  Registration  Statement
                 on Form S-4 filed with the Commission on May 3, 2000.

10.11            Guaranty, dated  as of January 31, 2000, between certain subsi-
                 diaries of the Registrant and Bank of America,  N.A. Previously
                 filed as Exhibit 10.11 to Registrant's  Registration  Statement
                 on Form S-4 filed with the Commission on May 3, 2000.

10.12            Limited Waiver, dated as of February 29, 2000, between the
                 Registrant  and  Bank of  America,  N.A.  Previously  filed  as
                 Exhibit 10.12 to  Registrant's  Registration  Statement on Form
                 S-4 filed with the Commission on May 3, 2000.

                                       87

<PAGE>


10.13            1997 Second Amended and  Restated Credit Agreement, dated as of
                 January 31, 2000,  among the  Registrant,  the Lenders  parties
                 thereto and Bank of America,  N.A.  Previously filed as Exhibit
                 10.13 to Registrant's  Registration Statement on Form S-4 filed
                 with the Commission on May 3, 2000.

10.14            Pledge  and  Security Agreement,  dated as of January 31, 2000,
                 between the  Registrant  and Bank of America,  N.A.  Previously
                 filed as Exhibit 10.14 to Registrant's  Registration  Statement
                 on Form S-4 filed with the Commission on May 3, 2000.

10.15            Guaranty,  dated  as  of  January  31, 2000,  between   certain
                 subsidiaries  of the  Registrant  and  Bank  of  America,  N.A.
                 Previously filed as Exhibit 10.15 to Registrant's  Registration
                 Statement on Form S-4 filed with the Commission on May 3, 2000.

10.16            Form of European  Receivables  Agreement,  dated February 2000,
                 between the Registrant  and Tulip Asset  Purchase  Company B.V.
                 Previously filed as Exhibit 10.16 to Registrant's  Registration
                 Statement on Form S-4 filed with the Commission on May 3, 2000.

10.17            Form  of  European  Servicing  Agreement,  dated  January 2000,
                 between  Registrant  and  Tulip  Asset  Purchase  Company  B.V.
                 Previously filed as Exhibit 10.17 to Registrant's  Registration
                 Statement on Form S-4 filed with the Commission on May 3, 2000.

10.18            Supply  Agreement,  dated  as of  March  30,  1992,  and  First
                 Amendment to Supply Agreement,  between the Registrant and Cone
                 Mills  Corporation.   Previously  filed  as  Exhibit  10.18  to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000.

10.19            Home Office Pension Plan. Previously filed as Exhibit  10.19 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.20            Employee Investment Plan. Previously filed as Exhibit  10.20 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.21            Capital Accumulation Plan. Previously filed as Exhibit 10.21 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.22            Special Deferral Plan.  Previously  filed as  Exhibit  10.22 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.23            Key Employee Recognition and Commitment Plan. Previously  filed
                 as Exhibit 10.23 to Registrant's Registration Statement on Form
                 S-4 filed with the Commission on May 3, 2000. *

10.24            Global Success Sharing Plan.  Previously filed as Exhibit 10.24
                 to Registrant's  Registration  Statement on Form S-4 filed with
                 the Commission on May 3, 2000. *

10.25            Deferred Compensation Plan for Executives.  Previously filed as
                 Exhibit 10.25 to  Registrant's  Registration  Statement on Form
                 S-4 filed with the Commission on May 3, 2000. *

10.26            Deferred Compensation Plan  for  Outside Directors.  Previously
                 filed as Exhibit 10.26 to Registrant's  Registration  Statement
                 on Form S-4 filed with the Commission on May 3, 2000. *

10.27            Excess Benefit Restoration Plan.  Previously  filed  as Exhibit
                 10.27 to Registrant's  Registration Statement on Form S-4 filed
                 with the Commission on May 3, 2000. *

10.28            Supplemental  Benefit  Restoration Plan.  Previously  filed  as
                 Exhibit 10.28 to  Registrant's  Registration  Statement on Form
                 S-4 filed with the Commission on May 3, 2000. *



                                       88

<PAGE>

10.29            Leadership Shares Plan. Previously filed as  Exhibit  10.29 to
                 Registrant's  Registration  Statement on Form  S-4  filed  with
                 the Commission on May 3, 2000. *

10.30            Annual  Incentive  Plan. Previously  filed  as Exhibit 10.30 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.31            Long-Term Incentive Plan.  Previously filed as Exhibit 10.31 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.32            Long-Term Performance Plan. Previously  filed as  Exhibit 10.32
                 to Registrant's  Registration  Statement on Form S-4 filed with
                 the Commission on May 3, 2000. *

10.33            Employment Agreement, dated as of  September 30, 1999,  between
                 the Registrant and Philip Marineau. Previously filed as Exhibit
                 10.33 to Registrant's  Registration Statement on Form S-4 filed
                 with the Commission on May 3, 2000. *

10.34            Supplemental  Executive  Retirement  Agreement,   dated  as  of
                 January 1,  1998,  between  the  Registrant  and Gordon  Shank.
                 Previously filed as Exhibit 10.34 to Registrant's  Registration
                 Statement on Form S-4 filed with the Commission on May 3, 2000.
                 *

10.35            Form of Indemnification Agreement,  dated  as  of  November 30,
                 1995,  for  members  of  the  Special  Committee  of  Board  of
                 Directors  created by the Board of  Directors  on November  30,
                 1995.   Previously  filed  as  Exhibit  10.35  to  Registrant's
                 Registration Statement on Form S-4 filed with the Commission on
                 May 3, 2000. *

10.36            Discretionary Supplemental Executive Retirement  Plan  Arrange-
                 ment for  Selected  Executive  Officers.  Previously  filed  as
                 Exhibit 10.36 to Amendment No. 1 to  Registrant's  Registration
                 Statement on Form S-4 filed with  the  Commission  on  May  17,
                 2000. *

10.37            Employment Agreement, dated  as of  May 15, 2000,  between  the
                 Registrant and James Lewis.  Previously  filed as Exhibit 10.37
                 to Amendment No. 1 to  Registrant's  Registration  Statement on
                 Form S-4 filed with the Commission on May 17, 2000. *

10.38            First Amendment to Bridge Credit Agreement and  Limited Waiver,
                 dated  July  31,  2000,  between  the  Registrant  and  Bank of
                 America,  N.A. Previously filed as Exhibit 10.1 to Registrant's
                 Quarterly  Report on Form 10-Q  filed  with the  Commission  on
                 September 29, 2000.

10.39            First Amendment to  Amended  and  Restated  1997 364 Day Credit
                 Agreement and Limited Waiver,  dated July 31, 2000, between the
                 Registrant  and  Bank of  America,  N.A.  Previously  filed  as
                 Exhibit  10.2 to  Registrant's  Quarterly  Report  on Form 10-Q
                 filed with the Commission on September 29, 2000.

10.40            First Amendment to  Amended and  Restated  1999  180 Day Credit
                 Agreement and Limited Waiver,  dated July 31, 2000, between the
                 Registrant  and  Bank of  America,  N.A.  Previously  filed  as
                 Exhibit  10.3 to  Registrant's  Quarterly  Report  on Form 10-Q
                 filed with the Commission on September 29, 2000.

10.41            First  Amendment  to 1997 Second  Amended and  Restated  Credit
                 Agreement and Limited Waiver,  dated July 31, 2000, between the
                 Registrant  and  Bank of  America,  N.A.  Previously  filed  as
                 Exhibit  10.4 to  Registrant's  Quarterly  Report  on Form 10-Q
                 filed with the Commission on September 29, 2000.

10.42            Amendment to Deferred  Compensation Plan for Executives  effec-
                 tive March 1, 2000. Filed herewith. *

10.43            Amendments to Employee Investment Plan effective April 3, 2000.
                 Filed herewith. *



                                       89

<PAGE>

10.44            Amendments  to  Capital Accumulation  Plan  effective  April 3,
                 2000.  Filed herewith. *

10.45            Amendment to  Deferred  Compensation Plan for Executives effec-
                 tive August 1, 2000.  Filed herewith. *

10.46            Amendment to Employee  Investment  Plan  effective November 28,
                 2000.  Filed herewith. *

10.47            Amendments to Capital Accumulation Plan,  Supplemental  Benefit
                 Restoration  Plan,  and  Employee   Investment  Plan  effective
                 January 1, 2001. Filed herewith. *

10.48            Amendments  to  Employee Investment Plan  effective  January 1,
                 2001.  Filed herewith. *

10.49            Amendment to  Capital  Accumulation  Plan,  Plan  Document  and
                 Employee Booklet effective January 1, 2001.  Filed herewith. *

10.50            Second Amendment to Bridge Credit Agreement and Limited Waiver,
                 dated  September 29, 2000,  between the  Registrant and Bank of
                 America, N.A. Filed herewith.

10.51            Second  Amendment to Amended and  Restated  1997 364 Day Credit
                 Agreement and Limited Waiver, dated September 29, 2000, between
                 the Registrant and Bank of America, N.A. Filed herewith.

10.52            Second  Amendment to Amended and  Restated  1999 180 Day Credit
                 Agreement and Limited Waiver, dated September 29, 2000, between
                 the Registrant and Bank of America, N.A. Filed herewith.

10.53            Second  Amendment to 1997 Second  Amended and  Restated  Credit
                 Agreement and Limited Waiver, dated September 29, 2000, between
                 the Registrant and Bank of America, N.A. Filed herewith.

10.54            Third  Amendment  to  Amended  and Restated 1999 180 Day Credit
                 Agreement, dated as of October 13, 2000, between the Registrant
                 and Bank of America, N.A. Filed herewith.

10.55            Third Amendment to Amended  and  Restated 1997  364  Day Credit
                 Agreement, dated as of October 13, 2000, between the Registrant
                 and Bank of America, N.A. Filed herewith.

10.56            Third Amendment to  1997  Second Amended  and  Restated  Credit
                 Agreement,   dated   as  of  October  13,  2000,   between  the
                 Registrant and Bank of America, N.A. Filed herewith.

10.57            Credit  Agreement,  dated  as  of  February  1, 2001, among the
                 Registrant,   the  Initial  Lenders  and  Issuing  Banks  named
                 therein,  Bank of America,  N.A., as Administrative  Agency and
                 Collateral  Agent,  Bank of America  Securities LLC and Salomon
                 Smith Barney Inc.,  as  Co-Arrangers  and Joint Book  Managers,
                 Citicorp USA, Inc., as Syndication  Agent, and The Bank of Nova
                 Scotia, as Documentation Agent. Filed herewith.

10.58            Pledge  and  Security  Agreement, dated as of February 1, 2001,
                 among the  Registrant,  certain  subsidiaries of the Registrant
                 and Bank of American, N.A., as agent. Filed herewith.

10.59            Subsidiary  Guaranty,  dated  as  of  February 1, 2001, between
                 certain  subsidiaries  of the  Registrant and Bank of American,
                 N.A., as agent. Filed herewith.



                                       90

<PAGE>

10.60            Forms of  Amendments  to  European  Receivables  and Servicing
                 Agreements among Registrant, certain subsidiaries of Registrant
                 and Tulip Asset Purchase  B.V. effective  November  22,  2000.
                 Filed herewith.

12               Statements re: Computation of Ratios.  Filed herewith.

21               Subsidiaries of the Registrant.  Filed herewith.

24               Power of Attorney.  Contained in signature pages hereto.

27               Financial Data Schedule.  Filed herewith.


      * Management contract, compensatory plan or arrangement.


(b)     Reports on Form 8-K

        Current Report on Form 8-K on October 24, 2000 filed pursuant to  Item 5
        of the report, containing a copy of the Company's  press  release  dated
        October 24, 2000  and  titled "Adverse  Market  Conditions  Prompt Levi
        Strauss & Co. to Postpone Private Placement of Senior Notes."

        Current Report on Form 8-K on December 27, 2000 filed pursuant to Item 5
        of the report, containing a copy of the Company's  press  release dated
        December 26, 2000 and titled "Levi Strauss & Co. Obtains Commitment for
        New $1.5 Billion Senior Secured Credit Facility."

        Current Report on Form 8-K on January 10, 2001 filed pursuant to  Item 5
        of the report, containing a copy of the Company's  press  release dated
        January 10, 2001 and titled  "Levi  Strauss  &  Co.  Fourth-Quarter  and
        Fiscal 2000 Financial Results  Show  Substantial  Progress  in  Business
        Turnaround."

        Current Report on Form 8-K on January 11, 2001 filed pursuant to  Item 5
        of the report, containing a copy of the Company's  press  release dated
        January 10, 2001 and titled  "Levi  Strauss  &  Co.  Fourth-Quarter  and
        Fiscal 2000 Financial Results  Show  Substantial  Progress  in  Business
        Turnaround." In the press release, certain previously reported financial
        information for the fourth quarter and fiscal year 1999 was reclassified
        to conform to the fiscal year 2000 financial statement presentation.

        Current Report on Form 8-K on January 11, 2001 filed pursuant to  Item 5
        of the report, containing a copy of the Company's  press  release dated
        January 11, 2001 and titled  "Levi  Strauss  &  Co.  to Relaunch Private
        Placement of Senior Notes Due 2008."

        Current Report on Form 8-K on February 1, 2001 filed pursuant to  Item 5
        of the report, containing a copy of the Company's  press  release dated
        February 1, 2001 and titled  "Levi  Strauss & Co. Receives $1.05 Billion
        Senior Secured Credit Facility; Completes $500 Million Bond Offering."


                                       91


<PAGE>


                                   SIGNATURES

     Pursuant to the  requirements  of Section 13 or 15(d) of the Securities Act
of 1934,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                               LEVI STRAUSS & CO.


                               By: /s/ WILLIAM B. CHIASSON
                                   -----------------------------
                                       William B. Chiasson
                                       Senior Vice President and
                                       Chief Financial Officer

                               Date:   FEBRUARY 1, 2001


         KNOW  ALL MEN BY THESE  PRESENTS,  that  each  person  whose  signature
appears below constitutes and appoints William B. Chiasson, Gary W. Grellman and
Jay A.  Mitchell,  and each of them, his or her  attorney-in-fact  with power of
substitution  for him or her in any and all capacities,  to sign any amendments,
supplements  or other  documents  relating to this Annual Report on Form 10-K he
deems necessary or appropriate, and to file the same, with exhibits thereto, and
other  documents  in  connection  therewith,  with the  Securities  and Exchange
Commission,  hereby ratifying and confirming all that such  attorney-in-fact  or
his substitute may do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following  persons on behalf of the  registrant  and in
the capacities and on the dates indicated.

                    SIGNATURE                           TITLE
                    ---------                           -----

/s/ ROBERT D. HAAS                               Chairman of the Board
- ----------------------------------------------   Date:  February 1, 2001
              Robert D. Haas


/s/ PHILIP A. MARINEAU                           Director, President and
- ----------------------------------------------   Chief Executive
              Philip A. Marineau                 Officer
                                                 Date:  February 1, 2001

/s/ PETER E. HAAS, SR.                           Director
- ---------------------------------------------    Date:  February 1, 2001
              Peter E. Haas, Sr.


                                                 Director
- ----------------------------------------------   Date:  February 1, 2001
              Angela Glover Blackwell


/s/ ROBERT E. FRIEDMAN                           Director
- ----------------------------------------------   Date:  February 1, 2001
              Robert E. Friedman

/s/ TULLY M. FRIEDMAN                            Director
- ----------------------------------------------   Date:  February 1, 2001
              Tully M. Friedman

/s/ JAMES C. GAITHER                             Director
- ----------------------------------------------   Date:  February 1, 2001
              James C. Gaither


                                       92

<PAGE>


                   SIGNATURE                          TITLE
                   ---------                          -----



/s/ PETER A. GEORGESCU                           Director
- ----------------------------------------------   Date:  February 1, 2001
              Peter A. Georgescu


/s/ PETER E. HAAS, JR.                           Director
- ----------------------------------------------   Date:  February 1, 2001
              Peter E. Haas, Jr.



/s/ WALTER J. HAAS                               Director
- ----------------------------------------------   Date:  February 1, 2001
              Walter J. Haas


/s/ F. WARREN HELLMAN                            Director
- ----------------------------------------------   Date:  February 1, 2001
              F. Warren Hellman


/s/ PATRICIA SALAS PINEDA                        Director
- ---------------------------------------------    Date:  February 1, 2001
              Patricia Salas Pineda


/s/ T. GARY ROGERS                               Director
- ----------------------------------------------   Date:  February 1, 2001
              T. Gary Rogers


/s/ G. CRAIG SULLIVAN                            Director
- ----------------------------------------------   Date:  February 1, 2001
              G. Craig Sullivan


/s/ GARY W. GRELLMAN                             Vice President and Controller
- ----------------------------------------------   (Principal Accounting Officer)
              Gary W. Grellman                   Date:  February 1, 2001


                                       93

<PAGE>



                                                                     SCHEDULE II

                       LEVI STRAUSS & CO. AND SUBSIDIARIES

                        VALUATION AND QUALIFYING ACCOUNTS
                             (Dollars in Thousands)

                       BALANCE AT     ADDITIONS                    BALANCE AT
  ALLOWANCE FOR        BEGINNING     CHARGED TO      DEDUCTIONS      END OF
DOUBTFUL ACCOUNTS      OF PERIOD      EXPENSES      TO RESERVES      PERIOD
- -----------------     ----------     ----------     -----------     ----------

November 26, 2000        $30,017        $12,171        $12,471       $29,717
                         =======        =======        =======       =======
November 28, 1999         39,987          5,396         15,366        30,017
                         =======        =======        =======       =======
November 29, 1998         31,620          9,762          1,395        39,987
                         =======        =======        =======       =======






                                       94


<PAGE>

                            SUPPLEMENTAL INFORMATION

The Company will furnish an annual report to security holders subsequent to this
filing.






                                       95





<PAGE>


                                  EXHIBIT INDEX

3.1              Restated   Certificate  of  Incorporation  of  the  Registrant.
                 Previously  filed as Exhibit 3.1 to  Registrant's  Registration
                 Statement on Form S-4 filed with the Commission on May 3, 2000.

3.2              Bylaws of the Registrant.  Previously  filed as  Exhibit 3.2 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000.

4.1              Indenture, dated as of November 6, 1996, between the Registrant
                 and  Citibank,  N.A.,  relating to the 6.80% Notes due 2003 and
                 the 7.00%  Notes due 2006.  Previously  filed as Exhibit 4.1 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000.

4.2              Fiscal Agency Agreement, dated as of November 21, 1996, between
                 the Registrant and Citibank,  N.A., relating to 20  billion yen
                 4.25%  bonds  due  2016.  Previously  filed as  Exhibit  4.2 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000.

4.3              Lease Intended as Security, dated as of December 3, 1996, among
                 the Registrant,  First Security Bank,  National  Association as
                 Agent and named  lessors.  Previously  filed as Exhibit  4.3 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000.

4.4              Supplemental Indenture, dated as  of May 16, 2000,  between the
                 Registrant and Citibank,  N.A., relating to the 6.80% Notes due
                 2003 and the 7.00% Notes due 2006.  Previously filed as Exhibit
                 4.4 to Amendment No. 1 to Registrant's  Registration  Statement
                 on Form S-4 filed with the Commission on May 17, 2000.

4.5              Purchase Agreement,  dated  as of January 12, 2001,  among  the
                 Registrant  and Salomon Smith Barney Inc. and the other Initial
                 Purchases  named  therein,  relating  to the 11.625% US  Dollar
                 Notes due 2008 and the  11.625%  Euro  Notes  due  2008.  Filed
                 herewith.

4.6              Registration  Rights  Agreement,  dated  of  January  18, 2001,
                 between the Registrant  and Salomon Smith Barney  Inc. and  the
                 other Initial Purchases named therein, relating to the  11.625%
                 US Dollar Notes due 2008. Filed herewith.

4.7              Registration  Rights  Agreement,  dated  of  January  18, 2001,
                 between the Registrant  and Salomon Smith Barney  Inc. and  the
                 other Initial Purchases named therein, relating to the  11.625%
                 Euro Notes due 2008. Filed herewith.

4.8              U.S. Dollar Indenture,  dated  of January 18, 2001, between the
                 Registrant  and  Citibank,  N.A.,  relating  to the  11.625% US
                 Dollar Notes due 2008. Filed herewith.

4.9              Euro  Indenture,   dated  of  January  18, 2001,   between  the
                 Registrant  and  Citibank,  N.A., relating to the 11.625%  Euro
                 Notes due 2008. Filed herewith.

9                Voting Trust Agreement, dated as of April 15, 1996,  among LSAI
                 Holding Corp. (predecessor of the Registrant),  Robert D. Haas,
                 Peter E. Haas, Sr., Peter E. Haas,  Jr., F. Warren Hellman,  as
                 voting  trustees,  and the  stockholders.  Previously  filed as
                 Exhibit 9 to  Registrant's  Registration  Statement on Form S-4
                 filed with the Commission on May 3, 2000.

10.1             Stockholders Agreement, dated as of April 15, 1996,  among LSAI
                 Holding  Corp.   (predecessor   of  the   Registrant)  and  the
                 stockholders.  Previously filed as Exhibit 10.1 to Registrant's
                 Registration Statement on Form S-4 filed with the Commission on
                 May 3, 2000.

10.2             Bridge Credit  Agreement,  dated as of January 31, 2000,  among
                 the Registrant,  the Financial  Institutions  party thereto and
                 Bank of  America,  N.A.  Previously  filed as  Exhibit  10.2 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000.

                                       96

<PAGE>

10.3             Pledge and Security Agreement,  dated  as  of January 31, 2000,
                 between the  Registrant  and Bank of America,  N.A.  Previously
                 filed as Exhibit 10.3 to Registrant's Registration Statement on
                 Form S-4 filed with the Commission on May 3, 2000.

10.4             Guaranty, dated as of January 31, 2000,  between certain subsi-
                 diaries of the Registrant and Bank of America,  N.A. Previously
                 filed as Exhibit 10.4 to Registrant's Registration Statement on
                 Form S-4 filed with the Commission on May 3, 2000.

10.5             Limited Waiver,  dated  as  of February 29, 2000,  between  the
                 Registrant  and  Bank of  America,  N.A.  Previously  filed  as
                 Exhibit 10.5 to Registrant's Registration Statement on Form S-4
                 filed with the Commission on May 3, 2000.

10.6             Amended  and  Restated 1997 364-Day Credit Agreement among  the
                 Registrant, the Lenders party thereto and Bank of America, N.A.
                 Previously  filed as Exhibit 10.6 to Registrant's  Registration
                 Statement on Form S-4 filed with the Commission on May 3, 2000.

10.7             Pledge and Security Agreement,  dated  as  of January 31, 2000,
                 between the  Registrant  and Bank of America,  N.A.  Previously
                 filed as Exhibit 10.7 to Registrant's Registration Statement on
                 Form S-4 filed with the Commission on May 3, 2000.

10.8             Guaranty, dated as of January 31, 2000,  between certain subsi-
                 diaries of the Registrant and Bank of America,  N.A. Previously
                 filed as Exhibit 10.8 to Registrant's Registration Statement on
                 Form S-4 filed with the Commission on May 3, 2000.

10.9             Amended and Restated 1999 180-Day  Credit  Agreement  among the
                 Registrant,  the Lenders  parties  thereto and Bank of America,
                 N.A.   Previously   filed  as  Exhibit  10.9  to   Registrant's
                 Registration Statement on Form S-4 filed with the Commission on
                 May 3, 2000.

10.10            Pledge and Security Agreement,  dated  as  of January 31, 2000,
                 between the  Registrant  and Bank of America,  N.A.  Previously
                 filed as Exhibit 10.10 to Registrant's  Registration  Statement
                 on Form S-4 filed with the Commission on May 3, 2000.

10.11            Guaranty, dated as of January 31, 2000,  between certain subsi-
                 diaries of the Registrant and Bank of America,  N.A. Previously
                 filed as Exhibit 10.11 to Registrant's  Registration  Statement
                 on Form S-4 filed with the Commission on May 3, 2000.

10.12            Limited Waiver,  dated  as  of February 29, 2000,  between  the
                 Registrant  and  Bank of  America,  N.A.  Previously  filed  as
                 Exhibit 10.12 to  Registrant's  Registration  Statement on Form
                 S-4 filed with the Commission on May 3, 2000.

10.13            1997 Second Amended and Restated Credit Agreement, dated  as of
                 January 31, 2000,  among the  Registrant,  the Lenders  parties
                 thereto and Bank of America,  N.A.  Previously filed as Exhibit
                 10.13 to Registrant's  Registration Statement on Form S-4 filed
                 with the Commission on May 3, 2000.

10.14            Pledge and Security Agreement,  dated  as  of January 31, 2000,
                 between the  Registrant  and Bank of America,  N.A.  Previously
                 filed as Exhibit 10.14 to Registrant's  Registration  Statement
                 on Form S-4 filed with the Commission on May 3, 2000.

10.15            Guaranty, dated as of January 31, 2000, between certain  subsi-
                 diaries of the Registrant and Bank of America,  N.A. Previously
                 filed as Exhibit 10.15 to Registrant's  Registration  Statement
                 on Form S-4 filed with the Commission on May 3, 2000.

10.16            Form of European Receivables Agreement, dated February 2000,
                 between the Registrant  and Tulip Asset  Purchase  Company B.V.
                 Previously filed as Exhibit 10.16 to Registrant's  Registration
                 Statement on Form S-4 filed with the Commission on May 3, 2000.

                                       97

<PAGE>

10.17            Form of European Servicing Agreement, dated January 2000,  bet-
                 ween   Registrant  and  Tulip  Asset   Purchase   Company  B.V.
                 Previously filed as Exhibit 10.17 to Registrant's  Registration
                 Statement on Form S-4 filed with the Commission on May 3, 2000.

10.18            Supply  Agreement,  dated  as of  March  30,  1992,  and  First
                 Amendment to Supply Agreement,  between the Registrant and Cone
                 Mills  Corporation.   Previously  filed  as  Exhibit  10.18  to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000.

10.19            Home Office Pension Plan.  Previously filed as Exhibit 10.19 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.20            Employee Investment Plan.  Previously filed as Exhibit 10.20 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.21            Capital Accumulation Plan. Previously filed as Exhibit 10.21 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.22            Special Deferral Plan.  Previously  filed  as  Exhibit 10.22 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.23            Key Employee Recognition and Commitment Plan.  Previously filed
                 as Exhibit 10.23 to Registrant's Registration Statement on Form
                 S-4 filed with the Commission on May 3, 2000. *

10.24            Global Success Sharing Plan.  Previously filed as Exhibit 10.24
                 to Registrant's  Registration  Statement on Form S-4 filed with
                 the Commission on May 3, 2000. *

10.25            Deferred Compensation Plan for Executives.  Previously filed as
                 Exhibit 10.25 to  Registrant's  Registration  Statement on Form
                 S-4 filed with the Commission on May 3, 2000. *

10.26            Deferred Compensation  Plan  for Outside Directors.  Previously
                 filed as Exhibit 10.26 to Registrant's  Registration  Statement
                 on Form S-4 filed with the Commission on May 3, 2000. *

10.27            Excess Benefit  Restoration  Plan.  Previously filed as Exhibit
                 10.27 to Registrant's  Registration Statement on Form S-4 filed
                 with the Commission on May 3, 2000. *

10.28            Supplemental  Benefit  Restoration  Plan.  Previously  filed as
                 Exhibit 10.28 to  Registrant's  Registration  Statement on Form
                 S-4 filed with the Commission on May 3, 2000. *

10.29            Leadership  Shares  Plan.  Previously filed as Exhibit 10.29 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.30            Annual Incentive Plan.  Previously  file  as  Exhibit  10.30 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.31            Long-Term Incentive Plan.  Previously filed as Exhibit 10.31 to
                 Registrant's  Registration Statement on Form S-4 filed with the
                 Commission on May 3, 2000. *

10.32            Long-Term Performance Plan.  Previously  filed as Exhibit 10.32
                 to Registrant's  Registration  Statement on Form S-4 filed with
                 the Commission on May 3, 2000. *

10.33            Employment Agreement,  dated  as of September 30, 1999, between
                 the Registrant and Philip Marineau. Previously filed as Exhibit
                 10.33 to Registrant's  Registration Statement on Form S-4 filed
                 with the Commission on May 3, 2000. *

10.34            Supplemental  Executive  Retirement  Agreement,   dated  as  of
                 January 1,  1998,  between  the  Registrant  and Gordon  Shank.
                 Previously filed as Exhibit 10.34 to Registrant's  Registration
                 Statement on Form S-4 filed with the Commission on May 3, 2000.
                 *

                                       98

<PAGE>

10.35            Form of Indemnification Agreement,  dated  as  of  November 30,
                 1995,  for  members  of  the  Special  Committee  of  Board  of
                 Directors  created by the Board of  Directors  on November  30,
                 1995.   Previously  filed  as  Exhibit  10.35  to  Registrant's
                 Registration Statement on Form S-4 filed with the Commission on
                 May 3, 2000. *

10.36            Discretionary  Supplemental Executive Retirement Plan  Arrange-
                 ment  for  Selected  Executive  Officers.  Previously  filed as
                 Exhibit 10.36 to Amendment No. 1 to  Registrant's  Registration
                 Statement  on Form S-4  filed  with the  Commission  on May 17,
                 2000. *

10.37            Employment Agreement,  dated  as  of  May 15, 2000, between the
                 Registrant and James Lewis.  Previously  filed as Exhibit 10.37
                 to Amendment No. 1 to  Registrant's  Registration  Statement on
                 Form S-4 filed with the Commission on May 17, 2000. *

10.38            First Amendment to Bridge Credit Agreement and Limited Waiver,
                 dated  July  31,  2000,  between  the  Registrant  and  Bank of
                 America,  N.A. Previously filed as Exhibit 10.1 to Registrant's
                 Quarterly  Report on Form 10-Q  filed  with the  Commission  on
                 September 29, 2000.

10.39            First  Amendment  to  Amended  and Restated 1997 364 Day Credit
                 Agreement and Limited Waiver,  dated July 31, 2000, between the
                 Registrant  and  Bank of  America,  N.A.  Previously  filed  as
                 Exhibit  10.2 to  Registrant's  Quarterly  Report  on Form 10-Q
                 filed with the Commission on September 29, 2000.

10.40            First Amendment  to  Amended  and  Restated 1999 180 Day Credit
                 Agreement and Limited Waiver,  dated July 31, 2000, between the
                 Registrant  and  Bank of  America,  N.A.  Previously  filed  as
                 Exhibit  10.3 to  Registrant's  Quarterly  Report  on Form 10-Q
                 filed with the Commission on September 29, 2000.

10.41            First  Amendment  to 1997 Second  Amended and  Restated  Credit
                 Agreement and Limited Waiver,  dated July 31, 2000, between the
                 Registrant  and  Bank of  America,  N.A.  Previously  filed  as
                 Exhibit  10.4 to  Registrant's  Quarterly  Report  on Form 10-Q
                 filed with the Commission on September 29, 2000.

10.42            Amendment to  Deferred Compensation  Plan for Executives effec-
                 tive March 1, 2000. Filed herewith. *

10.43            Amendments to Employee Investment Plan effective April 3, 2000.
                 Filed herewith. *

10.44            Amendments  to  Capital  Accumulation  Plan  effective April 3,
                 2000.  Filed herewith. *

10.45            Amendment  to  Deferred Compensation Plan for Executives effec-
                 tive August 1, 2000.  Filed herewith. *

10.46            Amendment  to  Employee  Investment Plan effective November 28,
                 2000.  Filed herewith. *

10.47            Amendments  to Capital Accumulation Plan,  Supplemental Benefit
                 Restoration  Plan,  and  Employee   Investment  Plan  effective
                 January 1, 2001. Filed herewith. *

10.48            Amendments to  Employee  Investment  Plan  effective January 1,
                 2001.  Filed herewith. *

10.49            Amendment  to  Capital  Accumulation  Plan,  Plan  Document and
                 Employee Booklet effective January 1, 2001.  Filed herewith. *

10.50            Second Amendment to Bridge Credit Agreement and Limited Waiver,
                 dated September 29, 2000, between the Registrant and Bank of
                 America, N.A.  Filed herewith.



                                       99

<PAGE>

10.51            Second  Amendment to Amended and  Restated  1997 364 Day Credit
                 Agreement and Limited Waiver, dated September 29, 2000, between
                 the Registrant and Bank of America, N.A. Filed herewith.

10.52            Second  Amendment to Amended and  Restated  1999 180 Day Credit
                 Agreement and Limited Waiver, dated September 29, 2000, between
                 the Registrant and Bank of America, N.A. Filed herewith.

10.53            Second  Amendment to 1997 Second  Amended and  Restated  Credit
                 Agreement and Limited Waiver, dated September 29, 2000, between
                 the Registrant and Bank of America, N.A. Filed herewith.

10.54            Third  Amendment  to  Amended  and Restated 1999 180 Day Credit
                 Agreement, dated as of October 13, 2000, between the Registrant
                 and Bank of America, N.A. Filed herewith.

10.55            Third  Amendment  to  Amended  and Restated 1997 364 Day Credit
                 Agreement, dated as of October 13, 2000, between the Registrant
                 and Bank of America, N.A. Filed herewith.

10.56            Third Amendment to  1997 Second  Amended  and  Restated Credit
                 Agreement, dated as of October 13, 2000, between the Registrant
                 and Bank of America, N.A. Filed herewith.

10.57            Credit Agreement,  dated  as  of  February 1, 2001,  among the
                 Registrant,   the  Initial  Lenders  and  Issuing  Banks  named
                 therein,  Bank of America,  N.A., as Administrative  Agency and
                 Collateral  Agent,  Bank of America  Securities LLC and Salomon
                 Smith Barney Inc.,  as  Co-Arrangers  and Joint Book  Managers,
                 Citicorp USA, Inc., as Syndication  Agent, and The Bank of Nova
                 Scotia, as Documentation Agent. Filed herewith.

10.58            Pledge  and  Security  Agreement, dated as of February 1, 2001,
                 among the  Registrant,  certain  subsidiaries of the Registrant
                 and Bank of American, N.A., as agent. Filed herewith.

10.59            Subsidiary  Guaranty,  dated  as  of February 1, 2001,  between
                 certain  subsidiaries  of the  Registrant and Bank of American,
                 N.A., as agent. Filed herewith.

10.60            Forms of  Amendments  to  European  Receivables  and  Servicing
                 Agreements among Registrant, certain subsidiaries of Registrant
                 and Tulip Asset Purchase  B.V.  effective  November  22,  2000.
                 Filed herewith.

12               Statements re: Computation of Ratios.  Filed herewith.

21               Subsidiaries of the Registrant.  Filed herewith.

24               Power of Attorney.  Contained in signature pages hereto.

27               Financial Data Schedule.  Filed herewith.


 * Management contract, compensatory plan or arrangement.

                                       100








</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.5
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>PURCHASE AGREEMENT, DATED AS OF JANUARY 12, 2001
<TEXT>



                                                                  EXECUTION COPY
                                                                  --------------

                               LEVI STRAUSS & CO.

                                  $498,975,000

                   $380,000,000 11 5/8% Senior Notes Due 2008
                 125,000,000 Euro Dollars 11 5/8% Senior Notes Due 2008

                               PURCHASE AGREEMENT
                                                              New York, New York
                                                                January 12, 2001

Salomon Smith Barney Inc.
Banc of America Securities LLC
Scotia Capital (USA) Inc.
Chase Securities Inc.
Banc One Capital Markets, Inc.

As Representatives of the Initial Purchasers
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York  10013

Ladies and Gentlemen:

                 Levi  Strauss & Co., a  corporation  organized  under the laws
of  Delaware  (the  "Company"),  proposes  to  issue  an  sell  to  the  several
parties named in Schedule I hereto (the "Initial Purchasers"), for whom you (the
"Representatives")are  acting as representatives,  $380,000,000 principal amount
of its 11 5/8% Senior Notes Due 2008 (the "Dollar Notes") and  125,000,000  euro
dollars  principal amount of its 11 5/8% Senior Notes due 2008 (the "Euro Notes"
and together with the Dollar Notes, the "Securities").  The Securities are to be
issued  under two  indentures,  one with regard to the Dollar Notes and one with
regard to the Euro Notes (the "Indentures"),  both dated as of January 18, 2001,
between the Company and Citibank,  N.A., as trustee (the "Trustee").  The Dollar
Notes  and the  Euro  Notes  each  have the  benefit  of a  Registration  Rights
Agreement (together,  the "Registration Rights Agreements"),  each dated January
18, 2001, between the Company and the Initial Purchasers,  pursuant to which the
Company has agreed to register the Securities under the Act subject to the terms
and conditions therein specified.  To the extent there are no additional parties
listed on  Schedule I other than you,  the term  Representatives  as used herein
shall mean you as the  Initial  Purchasers,  and the terms  Representatives  and
Initial  Purchasers  shall mean  either the  singular  or plural as the  context
requires. The use of the neuter in this Agreement shall include the feminine and
masculine wherever appropriate. Certain terms used herein are defined in Section
17 hereof.

                 The  sale of  the Securities to the Initial  Purchasers will be
made without  registration  of  the  Securities  under the  Act in reliance upon
exemptions from the registration requirements of the Act.

                 In connection with the sale of the Securities, the Company  has
 prepared a preliminary offering  memorandum,  dated October 3, 2000 (as amended
 or supplemented at the Execution Time,  including any and all exhibits  thereto
 and  any  information  incorporated  by  reference  therein,  the  "Preliminary
 Memorandum"), and a final offering memorandum, dated January 12, 2001 (as

                                       1

<PAGE>


amended or supplemented  at the Execution  Time,  including any and all exhibits
thereto  and any  information  incorporated  by  reference  therein,  the "Final
Memorandum").  Each of the Preliminary  Memorandum and the Final Memorandum sets
forth certain information concerning the Company and the Securities. The Company
hereby confirms that it has authorized the use of the Preliminary Memorandum and
the Final  Memorandum,  and any amendment or supplement  thereto,  in connection
with the offer and sale of the  Securities  by the  Initial  Purchasers.  Unless
stated  to the  contrary,  references  herein  to the  Final  Memorandum  at the
Execution  Time  are not  meant  to  include  any  information  incorporated  by
reference therein subsequent to the Execution Time, and any references herein to
the  terms  "amend",  "amendment"  or  "supplement"  with  respect  to the Final
Memorandum  shall be deemed to refer to and include any information  filed under
the Exchange Act  subsequent  to the  Execution  Time which is  incorporated  by
reference therein.

                  1.  Representations and Warranties.  The Company represents
                      ------------------------------
and warrants to each Initial Purchaser as set forth below in this Section 1.

                  (a) The Preliminary  Memorandum,  at the date thereof, did not
         contain any untrue  statement  of a material  fact or omit to state any
         material fact necessary to make the statements therein, in the light of
         the  circumstances  under which they were made, not misleading.  At the
         Execution  Time  and on the  Closing  Date (as  defined  in  Section  3
         hereof),  the Final Memorandum did not, and will not (and any amendment
         or supplement thereto, at the date thereof and at the Closing Date will
         not),  contain any untrue statement of a material fact or omit to state
         any material  fact  necessary to make the  statements  therein,  in the
         light of the circumstances  under which they were made, not misleading;
         provided, however, that the Company makes no representation or warranty
         -----------------
         as to the  information  contained  in or omitted  from the  Preliminary
         Memorandum  or the Final  Memorandum,  or any  amendment or  supplement
         thereto, in reliance upon and in conformity with information  furnished
         in writing to the  Company  by or on behalf of the  Initial  Purchasers
         through the Representatives specifically for inclusion therein.

                  (b) Neither the Company,  nor any of its  Affiliates,  nor any
         person   acting  on  its  or  their  behalf  (other  than  the  Initial
         Purchasers,  as to whom  the  Company  makes no  representations)  has,
         directly  or  indirectly,  made  offers  or sales of any  security,  or
         solicited offers to buy any security,  under  circumstances  that would
         require the registration of the Securities under the Act.

                  (c) Neither the Company,  nor any of its  Affiliates,  nor any
         person   acting  on  its  or  their  behalf  (other  than  the  Initial
         Purchasers,  as to whom  the  Company  makes  no  representations)  has
         engaged in any form of  general  solicitation  or  general  advertising
         (within the meaning of Regulation  D) in  connection  with any offer or
         sale of the Securities in the United States.

                  (d) The  Securities  satisfy  the  eligibility requirements of
         Rule 144A(d)(3) under the Act.

                  (e) Neither the Company,  nor any of its  Affiliates,  nor any
         person   acting  on  its  or  their  behalf  (other  than  the  Initial
         Purchasers,  as to whom  the  Company  makes  no  representations)  has
         engaged in any directed selling efforts with respect to the Securities,
         and  each  of  them  has  complied   with  the  offering   restrictions
         requirements  of  Regulation S. Terms used in this  paragraph  have the
         meanings given to them by Regulation S.

                  (f) The Company has been  advised by The Portal  Market of the
         NASD that both the Dollar Notes and the Euro Notes have been designated
         Portal-eligible securities in accordance with the rules and regulations
         of the NASD and the Company  has  applied to

                                       2

<PAGE>

         have  the Dollar  Notes and  the Euro  Notes  listed on the  Luxembourg
         Stock  Exchange and has been advised by  the Luxembourg  Stock Exchange
         that both the Dollar Notes and the Euro Notes are eligible for approval
         subject to notice of  issuance and  the Company's  compliance with  the
         rules and  regulations  of that exchange.

                  (g) The  Company  is  not,  and  after  giving  effect  to the
         offering and sale of the Securities and the application of the proceeds
         thereof  as  described  in  the  Final   Memorandum  will  not  be,  an
         "investment  company" within the meaning of the Investment Company Act,
         without  taking  account of any exemption  arising out of the number of
         holders of the Company's securities.

                  (h) The Company is subject to and in full  compliance with the
         reporting  requirements  of Section 13 or Section 15(d) of the Exchange
         Act.

                  (i) The  Company  has not paid or agreed to pay to any  person
         any compensation  for soliciting  another to purchase any securities of
         the Company (except as contemplated by this Agreement).

                  (j) The Company has not taken,  directly  or  indirectly,  any
         action designed to or that would constitute or that might reasonably be
         expected to cause or result in, under the  Exchange  Act or  otherwise,
         the  stabilization  or manipulation of the price of any security of the
         Company to facilitate the sale or resale of the Securities.

                  (k) Each of the  Company  and its  subsidiaries  has been duly
         incorporated  or organized and is validly  existing as a corporation or
         other  valid  legal  entity  in good  standing  under  the  laws of the
         jurisdiction  in which it is chartered or organized with full corporate
         or company power and authority to own or lease, as the case may be, and
         to operate its  properties and conduct its business as described in the
         Final  Memorandum,  and is duly  qualified  to do business as a foreign
         corporation  or other valid legal entity and is in good standing  under
         the laws of each jurisdiction which requires such qualification, except
         in  jurisdictions  in which the failure to be so  qualified or to be in
         good standing has not had and would not  reasonably be expected to have
         a Material Adverse Effect. For purposes of this Agreement,  a "Material
         Adverse Effect" shall mean a material  adverse effect on, or a material
         adverse change in, the condition  (financial or otherwise),  prospects,
         earnings,  business or properties of the Company and its  subsidiaries,
         taken as a whole.

                  (l)  All the  outstanding  shares  of  capital  stock  of each
         subsidiary  have been duly and  validly  authorized  and issued and are
         fully paid and nonassessable, and, except as otherwise set forth in the
         Final Memorandum and other than the Company's subsidiaries in Japan and
         Turkey, all outstanding shares of capital stock of the subsidiaries are
         owned  by  the  Company   either   directly  or  through  wholly  owned
         subsidiaries  free and clear of any perfected  security interest or any
         other security interests, claims, liens or encumbrances.

                  (m) The Company's  authorized equity  capitalization is as set
         forth in the Final  Memorandum,  and the Voting Trust Agreement entered
         into as of April 15, 1996 among the Voting Trustees and stockholders of
         the  Company  conforms  in all  material  respects  to the  description
         thereof contained in the Final Memorandum.

                  (n) The statements in the Final  Memorandum under the headings
         "Important Federal Income Tax Considerations",  "Description of Notes",
         "Exchange   Offer;   Registration   Rights",    "Business--Trademarks",
         "Business--Legal Proceedings" and "Risk Factors--Our success depends on
         the  continued  protection  of our  trademarks  and  other  proprietary
         intellectual  property  rights",  insofar as such statements  summarize
         legal matters, agreements,

                                       3

<PAGE>


         documents  or  proceedings discussed   therein,  are, in all  materiaL
         respects, accurate and fair  summaries  of such legal  matters,
         agreements,  documents or proceedings.

                  (o) This  Agreement  has been duly  authorized,  executed  and
         delivered by the Company; the Indentures have been duly authorized and,
         assuming  due  authorization,  execution  and  delivery  thereof by the
         Trustee,  when executed and delivered by the Company,  will  constitute
         legal, valid and binding instruments enforceable against the Company in
         accordance  with  their  terms  (subject,  as  to  the  enforcement  of
         remedies,  to  applicable   bankruptcy,   reorganization,   insolvency,
         moratorium or other laws  affecting  creditors'  rights  generally from
         time to time in  effect  and to  general  principles  of  equity);  the
         Securities   have  been  duly   authorized,   and,  when  executed  and
         authenticated  in accordance  with the provisions of the Indentures and
         delivered  to and paid for by the  Initial  Purchasers,  will have been
         duly  executed  and  delivered by the Company and will  constitute  the
         legal,  valid and binding  obligations  of the Company  entitled to the
         benefits of the applicable Indenture (subject, as to the enforcement of
         remedies,  to applicable  bankruptcy,  insolvency,  moratorium or other
         laws affecting  creditors' rights generally from time to time in effect
         and to general  principles  of  equity);  and the  Registration  Rights
         Agreements  have been duly  authorized,  executed and  delivered by the
         Company and, assuming due authorization, execution and delivery thereof
         by the other  parties  thereto,  constitute  legal,  valid and  binding
         instruments  enforceable  against the Company in accordance  with their
         terms  (subject,  as to the  enforcement  of  remedies,  to  applicable
         bankruptcy,  reorganization,   insolvency,  moratorium  or  other  laws
         affecting  creditors'  rights generally from time to time in effect and
         to general principles of equity).

                  (p) No consent, approval, authorization,  filing with or order
         of any court or  governmental  agency or body is required in connection
         with the transactions  contemplated  herein or in the Indentures or the
         Registration  Rights Agreements,  except such as will be obtained under
         the Act and the Trust Indenture Act in connection with the transactions
         contemplated by the Registration  Rights  Agreements and such as may be
         required under the blue sky or securities  laws of any  jurisdiction in
         connection with the transactions contemplated by this Agreement and the
         Registration Rights Agreements.

                  (q) Neither the execution and delivery of the Indentures, this
         Agreement or the Registration Rights Agreements,  the issue and sale of
         the Securities,  nor the  consummation of any other of the transactions
         herein or therein contemplated, nor the fulfillment of the terms hereof
         or thereof will conflict  with,  result in a breach or violation of, or
         imposition  of any lien,  charge or  encumbrance  upon any  property or
         assets of the Company or any of its  subsidiaries  pursuant to, (i) the
         charter or by-laws of the Company or any of its subsidiaries;  (ii) the
         terms of any indenture,  contract, lease, mortgage, deed of trust, note
         agreement,  loan agreement or other agreement,  obligation,  condition,
         covenant or instrument to which the Company or any of its  subsidiaries
         is a party or bound or to which any of their  respective  properties is
         subject; or (iii) any statute, law, rule, regulation,  judgment,  order
         or decree  applicable to the Company or any of its  subsidiaries of any
         court,  regulatory  body,  administrative  agency,  governmental  body,
         arbitrator or other authority of the United States or any state thereof
         having jurisdiction over the Company, any of its subsidiaries or any of
         their respective properties or to the Company's knowledge, any statute,
         law,  rule,  regulation,  judgment,  order or decree  applicable to the
         Company  or any of its  subsidiaries  of any  court,  regulatory  body,
         administrative agency, governmental body, arbitrator or other authority
         outside of the United States having jurisdiction over the Company,  any
         of its subsidiaries or any of their respective properties, except, with
         respect to (x) clause (ii) and (y) any statute, law, rule,  regulation,
         judgment,  order or  decree  applicable  to the  Company  or any of its
         subsidiaries  of any court,  regulatory  body,  administrative  agency,
         governmental body,  arbitrator or other authority outside of the United
         States described in clause (iii) as to which

                                       4

<PAGE>


         the Company  has  no  knowledge, for conflicts, violations, breaches or
         impositions that  would  not reasonably be expected to have a Material
         Adverse Effect.

                  (r)  The  consolidated  historical  financial  statements  and
         schedules of the Company and its consolidated  subsidiaries included in
         the Final  Memorandum  present  fairly  in all  material  respects  the
         financial  condition,  results  of  operations  and  cash  flows of the
         Company  as of the dates and for the  periods  indicated,  comply as to
         form with the applicable  accounting  requirements  of the Act and have
         been  prepared  in  conformity  with  generally   accepted   accounting
         principles  applied  on  a  consistent  basis  throughout  the  periods
         involved  (except  as  otherwise  noted  therein);   and  the  selected
         financial  data  set  forth  under  the  caption  "Selected  Historical
         Consolidated  Financial  Information"  in the Final  Memorandum  fairly
         present,  on the basis stated in the Final Memorandum,  the information
         included therein.

                  (s) No action,  suit or  proceeding  by or before any court or
         governmental agency,  authority or body or any arbitrator involving the
         Company or any of its  subsidiaries or its or their property is pending
         or, to the best  knowledge  of the Company,  threatened  that (i) could
         reasonably  be  expected  to  have a  material  adverse  effect  on the
         performance  of this  Agreement,  the  Indentures  or the  Registration
         Rights  Agreements,  or the  consummation  of  any of the  transactions
         contemplated hereby or thereby; or (ii) could reasonably be expected to
         have  a  Material   Adverse   Effect,   whether  or  not  arising  from
         transactions in the ordinary course of business, except as set forth in
         or contemplated in the Final Memorandum  (exclusive of any amendment or
         supplement thereto).

                  (t) The Company  and each of its  subsidiaries  own,  lease or
         license all such  properties  as are  necessary to the conduct of their
         respective operations as presently conducted.

                  (u) Neither the Company nor any  subsidiary is in violation or
         default of (i) any  provision of its charter or bylaws;  (ii) the terms
         of any  indenture,  contract,  lease,  mortgage,  deed of  trust,  note
         agreement,  loan agreement or other agreement,  obligation,  condition,
         covenant or  instrument to which it is a party or bound or to which its
         property is  subject;  or (iii) any  statute,  law,  rule,  regulation,
         judgment,  order or  decree  applicable  to the  Company  or any of its
         subsidiaries  of any court,  regulatory  body,  administrative  agency,
         governmental  body,  arbitrator or other authority having  jurisdiction
         over  the  Company  or such  subsidiary  or any of its  properties,  as
         applicable,  other than such  violations or defaults the  occurrence of
         which  would not  reasonably  be  expected  to have a Material  Adverse
         Effect,  whether or not arising from the  transactions  in the ordinary
         course of business.

                  (v) Arthur Andersen, LLP, who have certified certain financial
         statements  of  the  Company  and  its  consolidated  subsidiaries  and
         delivered  their  report  with  respect  to  the  audited  consolidated
         financial  statements and schedules  included in the Final  Memorandum,
         are independent  public  accountants with respect to the Company within
         the  meaning  of  the  Act  and  the  applicable  published  rules  and
         regulations thereunder.

                  (w) To the Company's knowledge, there are no material stamp or
         other issuance or transfer  taxes or duties or other  material  similar
         fees or charges  required to be paid in  connection  with the execution
         and  delivery of this  Agreement or the issuance or sale by the Company
         of the Securities.

                  (x) The  Company  has filed all  foreign,  federal,  state and
         local  tax  returns  that are  required  to be  filed or has  requested
         extensions  thereof (except in any case in which the failure so to file
         would not have a  Material  Adverse Effect, whether or not arising from

                                       5

<PAGE>


         transactions in the ordinary course of business, except as set forth in
         or contemplated in the Final  Memorandum (exclusive of any amendment or
         supplement  thereto) and has paid  all taxes  required to be paid by it
         and any other  assessment,  fine  or penalty  levied against it, to the
         extent that any of the  foregoing  is due and  payable,  except for any
         such tax or other assessment,  fine  or penalty that is currently being
         contested  in good  faith or as  would   not  have a  Material  Adverse
         Effect,  whether or not  arising  from   transactions  in the  ordinary
         course of  business,  except as set   forth in or  contemplated  in the
         Final Memorandum (exclusive of any amendment or supplement thereto).

                  (y) No labor  problem or  dispute  with the  employees  of the
         Company or any of its subsidiaries exists or is threatened or imminent,
         and  the  Company  is not  aware  of any  existing  or  imminent  labor
         disturbance  by the  employees  of  any  of  its  or its  subsidiaries'
         principal  suppliers,  contractors  or customers  that in any such case
         could have a Material  Adverse  Effect,  whether  or not  arising  from
         transactions in the ordinary course of business, except as set forth in
         or contemplated in the Final Memorandum  (exclusive of any amendment or
         supplement thereto).

                  (z) The  Company and each of its  subsidiaries  are insured by
         insurers of recognized financial responsibility against such losses and
         risks  and  in  such  amounts  as  are  prudent  and  customary  in the
         businesses  in which they are engaged;  all  policies of insurance  and
         fidelity  or  surety   bonds   insuring  the  Company  or  any  of  its
         subsidiaries  or  their  respective  businesses,   assets,   employees,
         officers and  directors  are in full force and effect;  the Company and
         its  subsidiaries are in compliance with the terms of such policies and
         instruments  in all  material  respects;  except  as  would  not have a
         Material  Adverse Effect,  there are no claims by the Company or any of
         its  subsidiaries  under any such policy or  instrument as to which any
         insurance company is denying liability or defending under a reservation
         of rights clause;  and neither the Company nor any such  subsidiary has
         any  reason to believe  that it will not be able to renew its  existing
         insurance  coverage  as and when  such  coverage  expires  or to obtain
         similar  coverage from similar insurers as may be necessary to continue
         its business at a cost that would not have a Material  Adverse  Effect,
         whether or not arising  from  transactions  in the  ordinary  course of
         business,  except  as  set  forth  in  or  contemplated  in  the  Final
         Memorandum (exclusive of any amendment or supplement thereto).

                  (aa) No subsidiary  of the Company is currently  contractually
         prohibited,  directly or  indirectly,  from paying any dividends to the
         Company,  from  making  any  other  distribution  on such  subsidiary's
         capital  stock,  from  repaying to the Company any loans or advances to
         such  subsidiary  from the  Company  or from  transferring  any of such
         subsidiary's  property or assets to the Company or any other subsidiary
         of the Company,  except as described  in or  contemplated  by the Final
         Memorandum  or the  Company's  Bridge  Credit  Agreement,  with Bank of
         America, N.A. as administrative agent and collateral agent, dated as of
         January 31, 2000, as amended,  the Company's  Amended and Restated 1999
         180 Day Credit Agreement,  with Bank of America, N.A. as administrative
         agent and collateral  agent,  dated as of January 31, 2000, as amended,
         the Company's Amended and Restated 1997 364 Day Credit Agreement,  with
         Bank of America,  N.A. as  administrative  agent and collateral  agent,
         dated as of January 31, 2000, as amended, and the Company's 1997 Second
         Amended and Restated Credit  Agreement,  with Bank of America,  N.A. as
         administrative agent and collateral agent dated as of January 31, 2000,
         as amended (the "Existing Bank Credit Facilities").

                  (bb) The Company and its  subsidiaries  possess all  licenses,
         certificates,   permits   and  other   authorizations   issued  by  the
         appropriate federal,  state or foreign regulatory authorities necessary
         to conduct  their  respective  businesses,  other  than such  licenses,
         certificates,  permits or other authorizations, the failure of which to
         possess would not have a Material

                                       6

<PAGE>


         Adverse Effect, and neither the Company nor  any  such  subsidiary  has
         received  any  notice of  proceedings  relating  to the  revocation  or
         modification of any such   certificate,  authorization or permit which,
         singly or in the aggregate,  if the subject of an unfavorable decision,
         ruling or finding,  would have  a Material  Adverse Effect,  whether or
         not arising  from  transactions   in the  ordinary  course of business,
         except  as  set  forth  in or   contemplated  in the  Final  Memorandum
         (exclusive of any amendment or supplement thereto).

                  (cc) The  Company  and  each of its  subsidiaries  maintain  a
         system of internal accounting controls sufficient to provide reasonable
         assurance  that  (i)  transactions  are  executed  in  accordance  with
         management's general or specific authorizations;  (ii) transactions are
         recorded as necessary to permit preparation of financial  statements in
         conformity  with  generally  accepted  accounting   principles  and  to
         maintain asset  accountability;  and (iii) the recorded  accountability
         for assets is compared with the existing assets at reasonable intervals
         and appropriate action is taken with respect to any differences.

                  (dd) In the  ordinary  course  of its  business,  the  Company
         periodically reviews the effect of applicable foreign,  federal,  state
         and local laws and  regulations  relating  to the  protection  of human
         health and safety,  the environment or hazardous or toxic substances or
         wastes,  pollutants  or  contaminants  ("Environmental  Laws")  on  the
         business,   operations   and   properties   of  the   Company  and  its
         subsidiaries,  in the  course  of which  it  identifies  and  evaluates
         associated costs and liabilities  (including,  without limitation,  any
         capital or operating  expenditures  required for  clean-up,  closure of
         properties  or  compliance  with  Environmental  Laws,  or any  permit,
         license or approval,  any related  constraints on operating  activities
         and any potential  liabilities to third parties);  on the basis of such
         review, the Company has reasonably concluded that such associated costs
         and liabilities would not, singly or in the aggregate,  have a Material
         Adverse  Effect,  whether  or  not  arising  from  transactions  in the
         ordinary course of business,  except as set forth in or contemplated in
         the  Final  Memorandum   (exclusive  of  any  amendment  or  supplement
         thereto).

                  (ee) Except as would not have a Material Adverse Effect,  each
         of the Company and its subsidiaries  has fulfilled its obligations,  if
         any, under the minimum  funding  standards of Section 302 of the United
         States  Employee  Retirement  Income  Security Act of 1974,  as amended
         ("ERISA"), and the regulations and published interpretations thereunder
         with  respect to each "plan" (as  defined in Section  3(3) of ERISA and
         such regulations and published  interpretations)  in which employees of
         the Company and its  subsidiaries  are eligible to participate and each
         such plan is in compliance in all material  respects with the presently
         applicable  provisions  of ERISA  and such  regulations  and  published
         interpretations; the Company and its subsidiaries have not incurred any
         unpaid  liability to the Pension Benefit  Guaranty  Corporation  (other
         than for the payment of premiums in the ordinary course) or to any such
         plan under Title IV of ERISA.

                  (ff) The  subsidiaries  listed on Annex A attached  hereto are
         the only  significant  subsidiaries  of the  Company as defined by Rule
         l-02 of Regulation S-X under the Act (the "Subsidiaries").

                  (gg) The Company and its subsidiaries own, possess, license or
         have other rights to use, on  reasonable  terms,  all  patents,  patent
         applications,   trade  and  service  marks  (including  the  Levi's(R),
         Dockers(R)   and   Slates(R)   trademarks),   trade  and  service  mark
         registrations,  trade names, copyrights,  licenses,  inventions,  trade
         secrets,   technology,   know-how  and  other   intellectual   property
         (collectively,  the "Intellectual  Property") necessary for the conduct
         of the  Company's  business  as now  conducted  free  and  clear of any
         material security interests,  claims, liens or encumbrances,  except as
         would  not  have  a  Material  Adverse  Effect  or as set  forth  in or
         contemplated in (i) the Final Memorandum (exclusive of any amendment or

                                       7

<PAGE>


         supplement  thereto) or (ii) the Existing Bank Credit  Facilities,  and
         none  of the  Intellectual  Property,  to  the  best  knowledge  of the
         Company,  conflicts with the valid  trademark,  trade name,  copyright,
         patent,  patent  right or  intangible  asset of any other Person to the
         extent that such conflict has or would have a Material Adverse Effect.

                  Any  certificate  signed by any  officer  of the  Company  and
 delivered  to the  Representatives  or counsel  for the Initial  Purchasers  in
 connection with the offering of the Securities shall be deemed a representation
 and warranty by the Company,  as to matters  covered  thereby,  to each Initial
 Purchaser.

                  2.  Purchase and Sale. Subject to the terms and conditions and
                      -----------------
in  reliance  upon the  representations  and  warranties  herein set forth,  the
Company  agrees to sell to each Initial  Purchaser,  and each Initial  Purchaser
agrees, severally and not jointly, to purchase from the Company:

                  (a) at a purchase  price of 96.337%  of the  principal  amount
         thereof,  plus accrued  interest,  if any, from January 18, 2001 to the
         Closing Date,  the principal  amount of Dollar Notes set forth opposite
         such Initial Purchaser's name on Schedule I hereto, and

                  (b) at a purchase  price of 96.873%  of the  principal  amount
         thereof,  plus accrued  interest,  if any, from January 18, 2001 to the
         Closing  Date,  the principal  amount of Euro Notes set forth  opposite
         such Initial Purchaser's name on Schedule I hereto.

                  3.  Delivery  and  Payment.  Delivery  of and  payment for the
                      ----------------------
Securities shall be made at 10:00 A.M., New York City time, on January 18, 2001,
or at such time on such later date (not later than three Business Days after the
foregoing date) as the Representatives shall designate,  which date and time may
be  postponed  by agreement  between the  Representatives  and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing  Date").  Delivery of the Securities
shall be made to the  Representatives for the respective accounts of the several
Initial Purchasers against payment by the several Initial Purchasers through the
Representatives  of the  purchase  price  thereof  to or upon  the  order of the
Company by wire transfer  payable in same-day funds to the account  specified by
the Company.  Delivery of the Dollar Notes shall be made through the  facilities
of The  Depository  Trust  Company and  delivery of the Euro Notes shall be made
through the  facilities of the  Euroclear  System and  Clearstream,  Luxembourg,
unless the Representatives shall otherwise instruct.

                  4.  Offering by Initial Purchasers.  Each Initial Purchaser,
                      ------------------------------
severally and not jointly, represents and warrants to and agrees with the
Company that:

                  (a) It has not  offered  or sold,  and will not offer or sell,
         any Securities except (i) to those persons it reasonably believes to be
         qualified  institutional buyers (as defined in Rule 144A under the Act)
         and that, in connection  with each such sale, it has taken or will take
         reasonable  steps to ensure that the  purchaser of such  Securities  is
         aware that such sale is being made in reliance on Rule 144A; or (ii) in
         accordance with the restrictions set forth in Exhibit A hereto.

                  (b) Neither it nor any person acting on its behalf has made or
         will make  offers or sales of the  Securities  in the United  States by
         means  of any  form of  general  solicitation  or  general  advertising
         (within the meaning of Regulation D) in the United States.

                  5.  Agreements. The Company agrees with each Initial Purchaser
                      ----------
that:

                  (a) The Company will furnish to each Initial  Purchaser and to
         counsel for the Initial Purchasers,  without charge,  during the period
         referred to in paragraph (c) below, as many

                                       8

<PAGE>

         copies of the Final Memorandum and any amendments and supplements there
         to as you may reasonably request.

                  (b) The  Company  will  not  amend  or  supplement  the  Final
         Memorandum,  other than by filing documents under the Exchange Act that
         are  incorporated  by  reference  therein,  without  the prior  written
         consent of the Representatives;  provided,  however, that, prior to the
                                          --------   -------
         completion  of the  distribution  of  the  Securities  by  the  Initial
         Purchasers (as determined by the Initial Purchasers),  the Company will
         not file any document  under the Exchange Act that is  incorporated  by
         reference  in the  Final  Memorandum  unless,  prior  to such  proposed
         filing,  the Company has furnished the  Representatives  with a copy of
         such  document  for  their  review  and the  Representatives  have  not
         reasonably  objected to the filing of such  document.  The Company will
         promptly advise the  Representatives  when any document filed under the
         Exchange Act that is incorporated by reference in the Final  Memorandum
         shall have been filed with the Commission.

                  (c) If at any time prior to the  completion of the sale of the
         Securities   by  the  Initial   Purchasers   (as   determined   by  the
         Representatives),  any  event  occurs  as a result  of which  the Final
         Memorandum,  as then amended or supplemented,  would include any untrue
         statement  of a  material  fact or  omit to  state  any  material  fact
         necessary  to  make  the  statements  therein,  in  the  light  of  the
         circumstances  under  which they were made,  not  misleading,  or if it
         shall be  necessary  to amend or  supplement  the Final  Memorandum  to
         comply with  applicable  law, the Company  promptly (i) will notify the
         Representatives  of any such event; (ii) subject to the requirements of
         paragraph  (b)  of  this  Section  5,  will  prepare  an  amendment  or
         supplement  that will correct such statement or omission or effect such
         compliance;  and (iii) will supply any  supplemented  or amended  Final
         Memorandum  to the  several  Initial  Purchasers  and  counsel  for the
         Initial  Purchasers  without  charge  in  such  quantities  as you  may
         reasonably request.

                  (d)  The  Company  will  arrange,   if   necessary,   for  the
         qualification  of the  Securities  for sale by the  Initial  Purchasers
         under  the laws of such  jurisdictions  in the  United  States  and the
         European Union as the Representatives may reasonably designate and will
         maintain such qualifications in effect so long as required for the sale
         of the  Securities;  provided  that in no event  shall the  Company  be
                              --------
         obligated to qualify to do business in any jurisdiction where it is not
         now so qualified or to take any action that would subject it to service
         of process in suits,  other than those  arising out of the  offering or
         sale of the  Securities,  in any  jurisdiction  where  it is not now so
         subject.  The Company will promptly advise the  Representatives  of the
         receipt  by  the  Company  of  any  notification  with  respect  to the
         suspension  of the  qualification  of the  Securities  for  sale in any
         jurisdiction  or the  initiation or  threatening  of any proceeding for
         such purpose.

                  (e) The  Company  will  not,  and will not  permit  any of its
         Affiliates (other than the Initial  Purchasers,  as to whom the Company
         makes no covenant) to, resell,  under  circumstances that would require
         the  registration of the Securities  under the Act, any Securities that
         have been acquired by any of them.

                  (f) Neither the Company, nor any of its Affiliates (other than
         the Initial Purchasers,  as to whom the Company makes no covenant), nor
         any person acting on its or their behalf will,  directly or indirectly,
         make  offers or sales of any  security,  or  solicit  offers to buy any
         security,  under  circumstances  that would require the registration of
         the Securities under the Act.

                  (g) Neither the Company, nor any of its Affiliates (other than
         the Initial Purchasers,  as to whom the Company makes no covenant), nor
         any person acting on its or their behalf

                                       9

<PAGE>


         will engage in any form of general solicitation or general  advertising
         (within the  meaning  of  Regulation  D) in  connection  with  any
         offer or sale of the Securities in the United States.

                  (h)  So  long  as  any  of  the  Securities  are   "restricted
         securities"  within the meaning of Rule  144(a)(3)  under the Act,  the
         Company  will,  during any period in which it is not  subject to and in
         compliance  with  Section 13 or 15(d) of the  Exchange Act or it is not
         exempt from such reporting  requirements  pursuant to and in compliance
         with Rule 12g3-2(b)  under the Exchange Act,  provide to each holder of
         such  restricted  securities  and to  each  prospective  purchaser  (as
         designated  by such  holder) of such  restricted  securities,  upon the
         request  of such  holder  or  prospective  purchaser,  any  information
         required to be provided by Rule 144A(d)(4) under the Act. This covenant
         is intended to be for the benefit of the holders,  and the  prospective
         purchasers  designated  by  such  holders,  from  time  to time of such
         restricted securities.

                  (i) Neither the Company,  nor any of its  Affiliates,  nor any
         person  acting  on its or their  behalf  will  engage  in any  directed
         selling efforts with respect to the  Securities,  and each of them will
         comply with the offering  restrictions  requirements  of  Regulation S.
         Terms  used  in this  paragraph  have  the  meanings  given  to them by
         Regulation S.

                  (j) The Company will  cooperate with the  Representatives  and
         use its best  efforts to (i) permit the Dollar Notes to be eligible for
         clearance and  settlement  through The Depository  Trust Company,  (ii)
         permit the Euro  Notes to be  eligible  for  clearance  and  settlement
         through the  Euroclear  System and  Clearstream,  Luxembourg  and (iii)
         cause  both the  Dollar  Notes and the Euro  Notes to be  approved  for
         listing on the Luxembourg Stock Exchange.

                  (k) The Company will not offer, sell,  contract to sell, grant
         any other  option to purchase  or  otherwise  dispose  of,  directly or
         indirectly,  or  announce  the  offering  of,  or  file a  registration
         statement for, any debt securities  issued or guaranteed by the Company
         or any of its  direct  or  indirect  subsidiaries,  or  enter  into any
         agreement to do any of the foregoing (other than (x) the Securities and
         the New Securities (as defined in the Registration  Rights Agreements),
         (y) pursuant to any credit facility  permitted under the Indentures and
         (z)  purchase  money  debt  and  any  other  non-capital  markets  debt
         permitted  under the  Indentures) for a period of 90 days from the date
         the Securities are issued without the prior written  consent of Salomon
         Smith Barney Inc.

                  (l) The Company  will not take,  directly or  indirectly,  any
         action designed to or that would constitute or that might reasonably be
         expected to cause or result in, under the  Exchange  Act or  otherwise,
         the  stabilization  or manipulation of the price of any security of the
         Company to facilitate the sale or resale of the Securities.

                  (m) The Company will not, at any time prior to the  expiration
         of three  years  after the  Closing  Date,  be or  become  an  open-end
         investment  company,  unit investment trust or face-amount  certificate
         company that is or is required to be registered  under Section 8 of the
         Investment  Company  Act,  and  will  not  be or  become  a  closed-end
         investment  company  required  to  be  registered  but  not  registered
         thereunder.

                  (n) The Company agrees to pay the costs and expenses  relating
         to the following matters: (i) the preparation of the Indentures and the
         Registration Rights Agreements,  the issuance of the Securities and the
         fees of the Trustee; (ii) the preparation,  printing or reproduction of
         the Preliminary  Memorandum and Final  Memorandum and each amendment or
         supplement to either of them; (iii) the printing (or  reproduction) and
         delivery  (including  postage,  air  freight  charges  and  charges for
         counting and packaging) of such copies of the

                                       10

<PAGE>

         Preliminary  Memorandum  and Final  Memorandum,  and all  amendments or
         supplements  to either of them,  as may,  in each case,  be  reasonably
         requested  for use in  connection  with  the  offering  and sale of the
         Securities; (iv) the preparation,  printing,  authentication,  issuance
         and delivery of certificates for the Securities, including any stamp or
         transfer taxes in connection with the original issuance and sale of the
         Securities;  (v) the  printing (or  reproduction)  and delivery of this
         Agreement,  any  blue  sky  memorandum  and  all  other  agreements  or
         documents  printed (or reproduced) and delivered in connection with the
         offering of the Securities;  (vi) any  registration or qualification of
         the Securities for offer and sale under the securities or blue sky laws
         of the several states  (including  filing fees and the reasonable  fees
         and  expenses of counsel for the  Initial  Purchasers  relating to such
         registration  and  qualification);  (vii)  admitting the Securities for
         trading in The Portal  Market of the NASD and on the  Luxembourg  Stock
         Exchange;  (viii) the  transportation and other expenses incurred by or
         on behalf of Company  representatives  in connection with presentations
         to prospective purchasers of the Securities; (ix) the fees and expenses
         of the  Company's  accountants  and the fees and  expenses  of  counsel
         (including  local and special  counsel)  for the  Company;  and (x) all
         other costs and expenses  incident to the performance by the Company of
         its obligations hereunder.  It is understood,  however, that, except as
         provided  in this  Section,  and  Sections 7 and 8 hereof,  the Initial
         Purchasers will pay all of their own costs and expenses,  including the
         fees of their counsel, Cravath, Swaine & Moore.

                  6.  Conditions to the  Obligations of the Initial  Purchasers.
                      ---------------------------------------------------------
The  obligations of the Initial  Purchasers to purchase the Securities  shall be
subject to the accuracy of the representations and warranties on the part of the
Company  contained  herein at the  Execution  Time and the Closing  Date, to the
accuracy of the statements of the Company made in any  certificates  pursuant to
the provisions  hereof,  to the  performance  by the Company of its  obligations
hereunder and to the following additional conditions:

                  (a) The  Company  shall have  requested  and caused  Wachtell,
         Lipton,  Rosen & Katz,  counsel  for the  Company,  to  furnish  to the
         Representatives  its opinion,  dated the Closing Date and  addressed to
         the Representatives, to the effect that:

                           (i)  the  Indentures   have  been  duly   authorized,
                  executed  and  delivered,  and,  assuming  due  authorization,
                  execution and delivery by the Trustee, constitute legal, valid
                  and  binding  instruments  enforceable  against the Company in
                  accordance with their terms (subject, as to the enforcement of
                  remedies,    to   applicable    bankruptcy,    reorganization,
                  insolvency,  moratorium  or other  laws  affecting  creditors'
                  rights  generally  from time to time in effect  and to general
                  principles of equity, including, without limitation,  concepts
                  of materiality,  reasonableness,  good faith and fair dealing,
                  regardless of whether  considered in a proceeding in equity or
                  at law); the Securities have been duly and validly  authorized
                  and, when executed and  authenticated  in accordance  with the
                  provisions of the  Indentures and delivered to and paid for by
                  the Initial  Purchasers under this Agreement,  will constitute
                  legal,  valid and binding  obligations of the Company entitled
                  to  the  benefits  of  the  Indentures  (subject,  as  to  the
                  enforcement   of   remedies,    to   applicable    bankruptcy,
                  reorganization, insolvency, moratorium or other laws affecting
                  creditors' rights generally from time to time in effect and to
                  general principles of equity,  including,  without limitation,
                  concepts of materiality,  reasonableness,  good faith and fair
                  dealing,  regardless of whether  considered in a proceeding in
                  equity or at law); the  Registration  Rights  Agreements  have
                  been duly authorized, executed and delivered and, assuming due
                  authorization,  execution  and  delivery by the other  parties
                  thereto,  constitute  legal,  valid  and  binding  instruments
                  enforceable against the Company in accordance with their terms
                  (subject,  as to the  enforcement  of remedies,  to applicable
                  bankruptcy,  reorganization,  insolvency,  moratorium or other
                  laws affecting

                                       11


<PAGE>



                  creditors'  rights  generally  from  time  to time  in  effect
                  and to general principles of equity, including,  without
                  limitation, concepts of materiality, reasonableness,
                  good faith and fair dealing, regardless of whether considered
                  in a proceeding in equity or at law); and the statements set
                  forth  under the heading "Description of Notes" and "Exchange
                  Offer;  Registration Rights" in the Final  Memorandum, insofar
                  as such  statements  purport to  summarize  certain provisions
                  of the  Securities,  the  Indentures  and  the  Registration
                  Rights Agreements,   provide,  in  all  material  respects,
                  a  fair  summary  of  such provisions;

                           (ii) the statements in the Final Memorandum under the
                  heading "Important Federal Income Tax Considerations", insofar
                  as  such  statements  summarize  legal  matters,   agreements,
                  documents or proceedings  discussed therein,  are accurate and
                  fair summaries of such legal matters, agreements, documents or
                  proceedings;

                           (iii) such  counsel has acted as special  counsel for
                  the Company in connection with the  transactions  contemplated
                  by the Purchase Agreement,  and does not and has not acted for
                  the Company as regular outside counsel for litigation,  ERISA,
                  antitrust,  intellectual  property,  commercial,  corporate or
                  other  matters,  and  has  participated  in  conferences  with
                  officers  and  other   representatives  of  the  Company,  and
                  representatives and counsel to the Initial Purchasers,  all of
                  whom  participated in the preparation of the Final Memorandum,
                  at which conferences the contents of the Final Memorandum were
                  discussed,  and, although it has not  independently  verified,
                  and is not passing upon and assumes no responsibility for, the
                  accuracy,  completeness or fairness of, or otherwise verified,
                  the statements  made in, the Final  Memorandum,  no facts have
                  come to its attention  which lead it to believe that the Final
                  Memorandum  (other than the financial  statements  and related
                  notes thereto and the other  financial,  statistical,  reserve
                  and  accounting  data  included  in or omitted  from the Final
                  Memorandum,  all as to which it expresses no opinion),  on the
                  date  thereof  or at the  Closing  Date  contained  an  untrue
                  statement  of a  material  fact or omitted to state a material
                  fact  necessary in order to make the  statements  therein,  in
                  light of the  circumstances  under  which they were made,  not
                  misleading;

                           (iv)  this   Agreement  has  been  duly   authorized,
                  executed and delivered by the Company;

                           (v)  neither  the   execution  and  delivery  of  the
                  Indentures,   this  Agreement  or  the   Registration   Rights
                  Agreements,  the  issue  and sale of the  Securities,  nor the
                  consummation  of any  other  of  the  transactions  herein  or
                  therein contemplated,  nor the fulfillment of the terms hereof
                  or thereof will conflict with, result in a breach or violation
                  of, or imposition of any lien,  charge or encumbrance upon any
                  property  or asset of the  Company or any of its  subsidiaries
                  pursuant to, (i) the charter or by-laws of the  Company;  (ii)
                  the terms of the Company's  Existing  Bank Credit  Facilities,
                  including any covenant  contained  therein;  or (iii) any law,
                  rule  or  regulation  of  the  United  States   applicable  to
                  securities  transactions or the General Corporation Law of the
                  State of Delaware;

                           (vi) assuming the accuracy of the representations and
                  warranties  and  compliance  with  the  agreements   contained
                  herein,  no registration of the Securities  under the Act, and
                  no  qualification  of an indenture  under the Trust  Indenture
                  Act,  is  required  for the  offer  and  sale  by the  Initial
                  Purchasers  of the  Securities in the manner  contemplated  by
                  this Agreement; and

                                       12

<PAGE>


                           (vii) the Company is not and,  after giving effect to
                  the offering and sale of the Securities and the application of
                  the proceeds  thereof as  described  in the Final  Memorandum,
                  will  not  be  an  "investment  company"  as  defined  in  the
                  Investment Company Act without taking account of any exemption
                  arising  out  of  the  number  of  holders  of  the  Company's
                  securities.

                  In  rendering  such  opinion,  such counsel may rely (A) as to
matters  involving the  application of laws of any  jurisdiction  other than the
States of Delaware and New York or the Federal laws of the United States, to the
extent they deem proper and specified in such opinion, upon the opinion of other
counsel  of  good  standing  whom  they  believe  to be  reliable  and  who  are
satisfactory  to counsel  for the Initial  Purchasers;  and (B) as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of
the  Company  and  public   officials.   Such  opinion  may  contain   customary
assumptions, exceptions, limitations, qualifications and comments. References to
the Final  Memorandum  in this Section 6(a) include any  amendment or supplement
thereto at the Closing Date.

                  (b) The  Company  shall have  requested  and caused  Albert F.
         Moreno,  Esq.,  Senior  Vice  President  and  General  Counsel  for the
         Company,  to  furnish to the  Representatives  his  opinion,  dated the
         Closing Date and addressed to the Representatives, to the effect that:

                           (i) each of the Company and the  subsidiaries  listed
                  on Annex A (individually, a "Subsidiary" and collectively, the
                  "Subsidiaries") has been duly incorporated or organized and is
                  validly  existing as a corporation or other valid legal entity
                  in good standing under the laws of the  jurisdiction  in which
                  it is chartered or organized,  with full  corporate or company
                  power and  authority to own or lease,  as the case may be, and
                  to  operate  its   properties  and  conduct  its  business  as
                  described in the Final Memorandum, and is duly qualified to do
                  business as a foreign  corporation or other valid legal entity
                  and is in good  standing  under the laws of each  jurisdiction
                  which requires such qualification,  except in jurisdictions in
                  which the failure to be so qualified or to be in good standing
                  has not had and would not  reasonably  be  expected  to have a
                  Material Adverse Effect;

                           (ii) all the  outstanding  shares of capital stock of
                  the  Company  and each  Subsidiary  have been duly and validly
                  authorized  and issued  and are fully paid and  nonassessable,
                  and, except as otherwise set forth in the Final Memorandum and
                  other than the Company's subsidiaries in Japan and Turkey, all
                  outstanding  shares of capital stock of the  Subsidiaries  are
                  owned by the Company  either  directly or through wholly owned
                  subsidiaries free and clear of any perfected security interest
                  and, to the knowledge of such counsel,  after due inquiry, any
                  other security interests, claims, liens or encumbrances;

                           (iii) the Company's authorized equity  capitalization
                  is as set forth in the Final Memorandum;

                           (iv) to the best knowledge of such counsel,  there is
                  no pending or  threatened  action,  suit or  proceeding  by or
                  before any court or governmental agency,  authority or body or
                  any   arbitrator   involving   the   Company  or  any  of  its
                  subsidiaries  or its or their  property that is not adequately
                  disclosed  in the  Final  Memorandum,  except in each case for
                  such  proceedings  that,  if  the  subject  of an  unfavorable
                  decision,  ruling  or  finding  would  not  singly  or in  the
                  aggregate, result in a Material Adverse Effect;

                           (v) such counsel has no reason to believe that at the
                  Execution  Time and on the Closing  Date the Final  Memorandum
                  contained or contains any untrue statement

                                       13

<PAGE>


                  of a material  fact or omitted or omits to state any  material
                  fact necessary to make the statements therein, in the light of
                  the  circumstances  under which they were made, not misleading
                  (in each case,  other than the financial  statements and other
                  financial  information  contained  therein,  as to which  such
                  counsel need express no opinion);

                           (vi) assuming the accuracy of the representations and
                  warranties  of the  Initial  Purchasers  in  Section 4 of this
                  Agreement, no consent, approval, authorization, filing with or
                  order of any court or governmental  agency or body is required
                  in connection with the transactions  contemplated herein or in
                  the Indentures and the Registration Rights Agreements,  except
                  such as will be obtained under the Act and the Trust Indenture
                  Act in connection  with the  transactions  contemplated by the
                  Registration  Rights  Agreements  and such as may be  required
                  under the blue sky or securities  laws of any  jurisdiction in
                  connection   with  the   transactions   contemplated  by  this
                  Agreement  and the  Registration  Rights  Agreements  and such
                  other  approvals  (specified  in such  opinion)  as have  been
                  obtained; and

                           (vii)  neither  the  execution  and  delivery  of the
                  Indentures,   this  Agreement  or  the   Registration   Rights
                  Agreements,  the  issue  and sale of the  Securities,  nor the
                  consummation  of any  other  of  the  transactions  herein  or
                  therein contemplated,  nor the fulfillment of the terms hereof
                  or thereof will conflict with, result in a breach or violation
                  of, or imposition of any lien,  charge or encumbrance upon any
                  property  or asset of the  Company or any of its  subsidiaries
                  pursuant  to, (i) the charter or by-laws of the Company or any
                  of  its  subsidiaries;   (ii)  the  terms  of  any  indenture,
                  contract, lease, mortgage, deed of trust, note agreement, loan
                  agreement or other agreement, obligation,  condition, covenant
                  or instrument to which the Company or any of its  subsidiaries
                  is a party  or  bound  or to  which  any of  their  respective
                  properties  is  subject;  or (iii)  any  statute,  law,  rule,
                  regulation,  judgment,  order  or  decree  applicable  to  the
                  Company or any of its  subsidiaries  of any court,  regulatory
                  body, administrative agency,  governmental body, arbitrator or
                  other  authority  of the  United  States or any state  thereof
                  having jurisdiction over the Company,  any of its subsidiaries
                  or any of their  respective  properties or to the knowledge of
                  such counsel, any statute,  law, rule,  regulation,  judgment,
                  order  or  decree  applicable  to  the  Company  or any of its
                  subsidiaries  of any court,  regulatory  body,  administrative
                  agency,  governmental  body,  arbitrator  or  other  authority
                  outside  of the United  States  having  jurisdiction  over the
                  Company,  any of its  subsidiaries or any of their  respective
                  properties,  except,  with  respect to (x) clause (ii) and (y)
                  any statute, law, rule, regulation,  judgment, order or decree
                  applicable  to the Company or any of its  subsidiaries  of any
                  court,  regulatory body,  administrative agency,  governmental
                  body,  arbitrator  or other  authority  outside  of the United
                  States  described in clause (iii) as to which such counsel has
                  no  knowledge,   for   conflicts,   violations,   breaches  or
                  impositions  that would not  reasonably  be expected to have a
                  Material Adverse Effect.

                  In  rendering  such  opinion,  such counsel may rely (A) as to
matters  involving the  application of laws of any  jurisdiction  other than the
States of Delaware and California or the Federal laws of the United  States,  to
the extent he deems proper and  specified in such  opinion,  upon the opinion of
other  counsel of good  standing  whom he believes  to be  reliable  and who are
satisfactory  to counsel  for the Initial  Purchasers;  and (B) as to matters of
fact,  to the  extent he deems  proper,  on  certificates  of other  responsible
officers of the Company and public officials. Such opinion may contain customary
assumptions, exceptions, limitations, qualifications and comments. References to
the Final  Memorandum  in this Section 6(a) include any  amendment or supplement
thereto at the Closing Date.

                                       14

<PAGE>

                  (c) The  Representatives  shall have  received  from  Cravath,
         Swaine & Moore,  counsel for the Initial  Purchasers,  such  opinion or
         opinions,  dated the Closing Date and addressed to the Representatives,
         with  respect  to  the  issuance  and  sale  of  the  Securities,   the
         Indentures,  the Registration  Rights Agreements,  the Final Memorandum
         (as  amended or  supplemented  at the Closing  Date) and other  related
         matters as the Representatives may reasonably require,  and the Company
         shall have furnished to such counsel such documents as they request for
         the purpose of enabling them to pass upon such matters.

                  (d) The Company shall have furnished to the  Representatives a
         certificate of the Company,  signed by the Chief Financial  Officer and
         the  Treasurer,  dated the Closing Date, to the effect that the signers
         of such certificate have carefully  examined the Final Memorandum,  any
         amendment or supplement to the Final  Memorandum and this Agreement and
         that:

                           (i) the representations and warranties of the Company
                  in  this  Agreement  are  true  and  correct  in all  material
                  respects on and as of the Closing Date with the same effect as
                  if made on the Closing  Date,  and the Company has complied in
                  all material  respects with all the  agreements  and satisfied
                  all the  conditions  on its part to be  performed or satisfied
                  hereunder at or prior to the Closing Date; and

                           (ii)  since  the  date of the most  recent  financial
                  statements included in the Final Memorandum  (exclusive of any
                  amendment or supplement  thereto),  there has been no material
                  adverse  change in the  condition  (financial  or  otherwise),
                  prospects, earnings, business or properties of the Company and
                  its  subsidiaries,  taken as a whole,  whether or not  arising
                  from  transactions in the ordinary course of business,  except
                  as  set  forth  in or  contemplated  by the  Final  Memorandum
                  (exclusive of any amendment or supplement thereto).

                  (e) At the Execution Time and at the Closing Date, the Company
         shall have requested and caused Arthur Andersen,  LLP to furnish to the
         Representatives  letters,  dated  respectively as of the Execution Time
         and as of the Closing Date, in form and substance  satisfactory  to the
         Representatives,  confirming  that  they  are  independent  accountants
         within the meaning of the Act and the Exchange  Act and the  respective
         applicable rules and regulations adopted by the Commission  thereunder,
         that they have  performed a review of the unaudited  interim  financial
         information of the Company for the  nine-month  period ended August 27,
         2000 and as at August 27, 2000 and stating in effect that:

                           (i) in their opinion the audited financial statements
                  and financial  statement schedules included or incorporated in
                  the Final Memorandum and reported on by them comply as to form
                  in  all  material  respects  with  the  applicable  accounting
                  requirements  of the  Exchange  Act and the related  rules and
                  regulations  adopted by the Commission  thereunder  that would
                  apply to the Final  Memorandum if the Final  Memorandum were a
                  prospectus  included in a  registration  statement on Form S-1
                  under the Act;

                           (ii)  on  the  basis  of  a  reading  of  the  latest
                  unaudited  financial  statements made available by the Company
                  and its subsidiaries; their limited review, in accordance with
                  the  standards   established   under   Statement  on  Auditing
                  Standards   No.  71,  of  the  unaudited   interim   financial
                  information  for the  nine-month  period ended August 27, 2000
                  and as at  August  27,  2000,  as  indicated  in their  report
                  included or incorporated in the Final Memorandum; carrying out
                  certain  specified  procedures  (but  not  an  examination  in
                  accordance with generally  accepted auditing  standards) which
                  would not  necessarily  reveal  matters of  significance  with
                  respect

                                       15

<PAGE>


                  to the  comments  set forth in such  letter;  a reading of the
                  minutes  of the meetings of the  stockholders,  directors  and
                  executive,  audit and  personnel committees  of the  Company
                  and the  Subsidiaries;  and  inquiries  of  certain officials
                  of the Company who have  responsibility  for financial and
                  accounting matters  of the  Company  and its  subsidiaries  as
                  to  transactions  and events subsequent to November 28, 1999,
                  nothing came to their  attention  which caused them to believe
                  that:

                                 (1)   any   unaudited   financial   statements
                           included or incorporated  in the  Final  Memorandum
                           do not  comply  in form in all material respects with
                           applicable accounting  requirements and with the
                           related rules and regulations adopted by the
                           Commission with respect to financial  statements
                           included or incorporated in quarterly reports on
                           Form 10-Q under the Exchange Act; and said unaudited
                           financial statements are not in conformity  with
                           generally accepted accounting principles applied on a
                           basis substantially consistent with that of the
                           audited financial statements included or incorporated
                           in the Final Memorandum;

                                 (2)   with respect to the period  subsequent to
                           August 27, 2000, there were any  changes,  at a
                           specified  date not more than five days prior to the
                           date of the letter,  in the long-term  debt of the
                           Company and its  subsidiaries  or capital  stock of
                           the Company or decreases in the stockholders' deficit
                           of the Company as compared with the amounts shown on
                           the August 27, 2000  consolidated  balance  sheet
                           included or incorporated in the Final Memorandum, or
                           for the period from August 28, 2000 to such specified
                           date there were any decreases,  as compared with the
                           corresponding  period in the preceding quarter in net
                           sales,  gross profit,  operating income,  interest
                           expense, income before taxes or in total or per share
                           amounts  of net  income  of the  Company  and its
                           subsidiaries,  except in all  instances  for changes
                           or  decreases set forth in such letter, in which case
                           the letter shall be accompanied by an  explanation by
                           the Company as to the  significance  thereof unless
                           said explanation is not deemed necessary by the
                           Representatives; or

                                 (3) the  information  included in response to
                           Regulation  S-K, Item 301 (Selected  Financial Data),
                           Item 402 (Executive  Compensation) and  Item  503(d)
                           (Ratio  of  Earnings  to  Fixed  Charges)  is not in
                           conformity with the disclosure requirements of
                           Regulation S-K; and

                           (iii) they have  performed  certain  other  specified
                  procedures as a result of which they  determined  that certain
                  information of an accounting,  financial or statistical nature
                  (which is  limited to  accounting,  financial  or  statistical
                  information derived from the general accounting records of the
                  Company  and  its   subsidiaries)   set  forth  in  the  Final
                  Memorandum,  including  the  information  set forth  under the
                  captions  "Summary",  "Risk  Factors",   "Selected  Historical
                  Consolidated Financial Information",  "Management's Discussion
                  and Analysis of Financial Condition and Results of Operations"
                  and  "Business"  in  the  Final  Memorandum,  the  information
                  included  in the  "Management's  Discussion  and  Analysis  of
                  Financial  Condition  and Results of  Operations"  included or
                  incorporated in the Company's  Quarterly Reports on Form 10-Q,
                  incorporated in the Final Memorandum and information  included
                  in the Company's  Current Reports on Form 8-K, dated September
                  19, 2000, June 6, 2000, January 10, 2000 and January 11, 2000,
                  incorporated   in  the  Final   Memorandum   agrees  with  the
                  accounting  records  of  the  Company  and  its  subsidiaries,
                  excluding any questions of legal interpretation.

                                       16

<PAGE>

                  References  to the  Final  Memorandum  in  this  Section  6(e)
         include  any  amendment  or  supplement  thereto  at  the  date  of the
         applicable  letter.  It is understood that the letter dated the Closing
         Date will include audited financial statements for the Company's fiscal
         year ending November 26, 2000.

                  (f) Subsequent to the Execution Time or, if earlier, the dates
         as of which information is given in the Final Memorandum  (exclusive of
         any amendment or supplement thereto), there shall not have been (i) any
         change or decrease  specified  in the letter or letters  referred to in
         paragraph (e) of this Section 6; or (ii) any change, or any development
         involving  a  prospective   change,   in  or  affecting  the  condition
         (financial or otherwise),  prospects,  earnings, business or properties
         of the Company and its subsidiaries,  taken as a whole,  whether or not
         arising from transactions in the ordinary course of business, except as
         set forth in or contemplated in the Final Memorandum  (exclusive of any
         amendment  or  supplement  thereto)  the  effect of which,  in any case
         referred  to in clause (i) or (ii) above,  is, in the sole  judgment of
         the Representatives,  so material and adverse as to make it impractical
         or inadvisable to market the  Securities as  contemplated  by the Final
         Memorandum (exclusive of any amendment or supplement thereto).

                  (g)   The   Securities   shall   have   been   designated   as
         Portal-eligible securities in accordance with the rules and regulations
         of the NASD, all filings necessary for the listing of the Securities on
         the  Luxembourg  Stock  Exchange shall have been made by the Company or
         its  counsel,  neither the  Company  nor its  listing  agent shall have
         received  notice that the  Securities  are not  eligible for listing or
         that  the  Securities  will  not  be  listed  on the  Luxembourg  Stock
         Exchange,  the  application  for the listing of the  Securities  on the
         Luxembourg  Stock  Exchange  shall  not  have  been  denied,   and  the
         Securities  shall be eligible for clearance and settlement  through The
         Depository  Trust  Company,  in the case of the Dollar  Notes,  and the
         Euroclear System and Clearstream,  Luxembourg,  in the case of the Euro
         Notes.

                  (h)  Subsequent  to the Execution  Time,  there shall not have
         been any decrease in the rating of any of the Company's debt securities
         by any "nationally  recognized  statistical  rating  organization"  (as
         defined for  purposes of Rule 436(g) under the Act) or any notice given
         of any  intended or  potential  decrease in any such rating  (including
         notice of an adverse  change in the  outlook  for such  rating) or of a
         possible change in any such rating that does not indicate the direction
         of the possible change.

                  (i) Prior to the Closing Date, the Company shall have
         furnished to the Representatives such further information, certificates
         and documents as the Representatives may reasonably request.

                  If any of the conditions specified in this Section 6 shall not
have been  fulfilled  in all  material  respects  when and as  provided  in this
Agreement,  or if  any of the  opinions  and  certificates  mentioned  above  or
elsewhere in this  Agreement  shall not be in all material  respects  reasonably
satisfactory  in form and substance to the  Representatives  and counsel for the
Initial Purchasers, this Agreement and all obligations of the Initial Purchasers
hereunder  may be canceled  at, or at any time prior to, the Closing Date by the
Representatives.  Notice of such  cancellation  shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.

                  The documents  required to be delivered by this Section 6 will
 be delivered at the office of counsel for the Initial  Purchasers,  at Cravath,
 Swaine & Moore, 825 Eighth Avenue, New York, NY 10019, on the Closing Date.

                                       17

<PAGE>


                  7.  Reimbursement  of Expenses.  If the sale of the Securities
                      --------------------------
provided for herein is not consummated  because any condition to the obligations
of the  Initial  Purchasers  set forth in  Section  6 hereof  is not  satisfied,
because  of any  termination  pursuant  to  Section  10 hereof or because of any
refusal,  inability  or  failure  on the  part of the  Company  to  perform  any
agreement  herein or comply with any provision  hereof other than by reason of a
default by any of the Initial Purchasers, the Company will reimburse the Initial
Purchasers  severally  through  Salomon  Smith  Barney  Inc.  on demand  for all
out-of-pocket  expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection  with the proposed  purchase
and sale of the Securities.

                  8.  Indemnification and Contribution. (a) The Company agrees
                      --------------------------------
to indemnify and hold harmless each Initial Purchaser, the directors, officers,
employees and agents of each Initial  Purchaser and each person who controls any
Initial  Purchaser  within the  meaning of either  the Act or the  Exchange  Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become  subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation,  at common law or otherwise,
insofar as such losses,  claims,  damages or liabilities  (or actions in respect
thereof)  arise out of or are based upon any untrue  statement or alleged untrue
statement of a material fact contained in the Preliminary Memorandum,  the Final
Memorandum  (or in any  supplement  or  amendment  thereto)  or any  information
provided by the Company to any holder or  prospective  purchaser  of  Securities
pursuant to Section 5(h), or in any amendment thereof or supplement  thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading,  and agrees to reimburse each such  indemnified  party, as
incurred,  for any  legal  or  other  expenses  reasonably  incurred  by them in
connection  with  investigating  or  defending  any such  loss,  claim,  damage,
liability or action;  provided,  however, that the Company will not be liable in
                      --------   -------
any such case to the  extent  that any such  loss,  claim,  damage or  liability
arises  out of or is based upon any such  untrue  statement  or  alleged  untrue
statement or omission or alleged omission made in the Preliminary  Memorandum or
the Final  Memorandum,  or in any amendment  thereof or supplement  thereto,  in
reliance  upon and in  conformity  with  written  information  furnished  to the
Company by or on behalf of any Initial  Purchasers  through the  Representatives
specifically for inclusion  therein;  and provided further,  however,  that with
                                          -------- -------   -------
respect to any  untrue  statement  or  omission  of a material  fact made in the
Preliminary  Memorandum,  the indemnity agreement contained in this Section 8(a)
shall not inure to the  benefit of any  Initial  Purchaser  from whom the person
asserting any such loss,  claim,  damage or liability  purchased the  Securities
concerned in any initial resale of the Securities by the Initial  Purchaser,  to
the extent  that any such  loss,  claim,  damage or  liability  of such  Initial
Purchaser occurs under the circumstance where it shall have been determined by a
court of competent jurisdiction by final and nonappealable judgment that (i) the
untrue  statement or omission of a material  fact  contained in the  Preliminary
Memorandum  was  corrected  in  the  Final  Memorandum,  (ii)  the  Company  had
previously  furnished copies of the Final  Memorandum to the Initial  Purchasers
and (iii) such loss, claim, damage or liability results from the fact that there
was not sent or given to such person at or prior to the written  confirmation of
the sale of such Securities to such person, a copy of the Final Memorandum. This
indemnity  agreement will be in addition to any liability  which the Company may
otherwise have.

                  (b) Each Initial Purchaser severally and not jointly agrees to
 indemnify and hold  harmless the Company,  each of its  directors,  each of its
 officers, and each person who controls the Company within the meaning of either
 the Act or the Exchange Act, to the same extent as the foregoing indemnity from
 the  Company to each  Initial  Purchaser,  but only with  reference  to written
 information  relating to such Initial Purchaser  furnished to the Company by or
 on behalf of such Initial  Purchaser through the  Representatives  specifically
 for inclusion in the Preliminary  Memorandum or the Final Memorandum (or in any
 amendment or supplement thereto).  This indemnity agreement will be in addition
 to any liability which any Initial Purchaser may otherwise

                                       18

<PAGE>


 have.  The  Company  acknowledges  that the  statements  set  forth in the last
 paragraph of the cover page regarding the delivery of the Securities and, under
 the heading  "Plan of  Distribution",  (i) the list of Initial  Purchasers  and
 their  respective  participation  in the  sale  of  the  Securities;  (ii)  the
 sentences  related to  concessions  and  reallowances;  and (iii) the paragraph
 related to stabilization,  syndicate covering  transactions and penalty bids in
 the  Preliminary  Memorandum  and the  Final  Memorandum,  constitute  the only
 information  furnished in writing by or on behalf of the Initial Purchasers for
 inclusion in the  Preliminary  Memorandum  or the Final  Memorandum  (or in any
 amendment or supplement thereto).

                  (c) Promptly after receipt by an indemnified  party under this
Section 8 of notice of the commencement of any action,  such  indemnified  party
will, if a claim in respect thereof is to be made against the indemnifying party
under  this  Section  8,  notify  the  indemnifying  party  in  writing  of  the
commencement  thereof;  but the failure so to notify the indemnifying  party (i)
will not relieve it from liability  under  paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying  party of substantial rights and defenses;
and (ii) will  not,  in any  event,  relieve  the  indemnifying  party  from any
obligations to any indemnified party other than the  indemnification  obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to  appoint  counsel  of the  indemnifying  party's  choice at the  indemnifying
party's  expense  to  represent  the  indemnified  party in any action for which
indemnification  is  sought  (in which  case the  indemnifying  party  shall not
thereafter  be  responsible  for the fees and expenses of any  separate  counsel
retained  by the  indemnified  party or  parties  except  as set  forth  below);
provided,  however,  that such counsel shall be reasonably  satisfactory  to the
- --------   -------
indemnified party.  Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified  party in an action,  the indemnified party
shall have the right to employ separate counsel  (including local counsel),  and
the  indemnifying  party shall bear the reasonable  fees,  costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest;  (ii) the actual or potential  defendants  in, or targets of, any such
action include both the  indemnified  party and the  indemnifying  party and the
indemnified  party  shall  have  reasonably  concluded  that  there may be legal
defenses  available to it and/or other  indemnified  parties which are different
from or  additional  to those  available to the  indemnifying  party;  (iii) the
indemnifying  party shall not have employed counsel  reasonably  satisfactory to
the  indemnified  party to represent the  indemnified  party within a reasonable
time after notice of the  institution of such action;  or (iv) the  indemnifying
party shall  authorize the indemnified  party to employ separate  counsel at the
expense of the indemnifying  party. An indemnifying  party will not, without the
prior  written  consent of the  indemnified  parties,  settle or  compromise  or
consent to the entry of any judgment  with respect to any pending or  threatened
claim,  action,  suit or  proceeding  in  respect  of which  indemnification  or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or  potential  parties to such claim or action)  unless such  settlement,
compromise  or consent  includes an  unconditional  release of each  indemnified
party from all liability arising out of such claim,  action, suit or proceeding.
The indemnifying  party shall not, in connection with any one action or separate
but substantially  similar or related actions in the same  jurisdiction  arising
out of the same general  allegations  or  circumstances,  be liable for fees and
expenses of more than one  separate  law firm of  attorneys  (in addition to any
local counsel) for all indemnified  parties and all such fees and expenses shall
be reimbursed as incurred. Such firm shall be designated by Salomon Smith Barney
Inc. in the case of the parties indemnified  pursuant to Section 8(a) and by the
Company in the case of  parties  indemnified  pursuant  to  Section  8(b).  Each
indemnified  party  shall  use all  reasonable  efforts  to  cooperate  with the
indemnifying party in the defense of any such action or claim.

                  (d) In the event that the indemnity  provided in paragraph (a)
 or (b) of this Section 8 is unavailable to or  insufficient to hold harmless an
 indemnified  party for any  reason,  the  Company  and the  Initial  Purchasers
 severally agree to contribute to the aggregate losses, claims, damages and

                                       19

<PAGE>


 liabilities   (including  legal  or  other  expenses   reasonably  incurred  in
connection  with  investigating  or defending same)  (collectively  "Losses") to
which the Company and one or more of the  Initial  Purchasers  may be subject in
such proportion as is appropriate to reflect the relative  benefits  received by
the Company on the one hand and by the Initial  Purchasers on the other from the
offering of the Securities; provided, however, that in no case shall any Initial
                            --------  -------
Purchaser  (except  as may  be  provided  in any  agreement  among  the  Initial
Purchasers  relating to the offering of the  Securities) be responsible  for any
amount  in excess of the  purchase  discount  or  commission  applicable  to the
Securities  purchased by such Initial  Purchaser  hereunder.  If the  allocation
provided by the  immediately  preceding  sentence is unavailable for any reason,
the  Company and the  Initial  Purchasers  severally  shall  contribute  in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and of the Initial  Purchasers
on the other in connection  with the  statements or omissions  which resulted in
such Losses, as well as any other relevant  equitable  considerations.  Benefits
received  by the Company  shall be deemed to be equal to the total net  proceeds
from the offering  (after  deducting  discounts and  commissions  to the Initial
Purchasers, but before deducting expenses) received by it, and benefits received
by the  Initial  Purchasers  shall be deemed  to be equal to the total  purchase
discounts  and  commissions  in each  case set  forth on the  cover of the Final
Memorandum.  Relative  fault shall be  determined  by reference  to, among other
things, whether any untrue or any alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information
provided by the Company on the one hand or the Initial  Purchasers on the other,
the intent of the parties and their  relative  knowledge,  access to information
and  opportunity  to correct or prevent such untrue  statement or omission.  The
Company and the Initial Purchasers agree that it would not be just and equitable
if  contribution  were  determined by pro rata allocation or any other method of
allocation which does not take account of the equitable  considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be  entitled  to  contribution  from any person who was not guilty of such
fraudulent  misrepresentation.  For  purposes of this Section 8, each person who
controls  an  Initial  Purchaser  within  the  meaning  of either the Act or the
Exchange  Act and each  director,  officer,  employee  and  agent of an  Initial
Purchaser shall have the same rights to contribution as such Initial  Purchaser,
and each person who controls the Company within the meaning of either the Act or
the Exchange  Act and each  officer and  director of the Company  shall have the
same  rights  to  contribution  as the  Company,  subject  in  each  case to the
applicable terms and conditions of this paragraph (d).

                  9.  Default by an Initial Purchaser. If any one or more
                      -------------------------------
 Initial Purchasers  shall fail to purchase and pay for any of the Securities
 agreed to be purchased by such Initial Purchaser hereunder and such failure to
 purchase shall constitute a default in the performance of its or their
 obligations under this Agreement, the remaining Initial Purchasers shall be
 obligated  severally to take up and pay for (in  the  respective  proportions
 which  the  principal amount of Securities  set forth opposite their names on
 Schedule I hereto bears to the aggregate principal amount of Securities set
 forth opposite the names of all the remaining  Initial  Purchasers)  the
 Securities  which the  defaulting Initial  Purchaser  or  Initial  Purchasers
 agreed  but  failed  to  purchase;  provided,  however,  that in the event
                                     ---------  -------
 that the aggregate  principal  amount of Securities which the defaulting
 Initial Purchaser or Initial Purchasers agreed but failed to purchase  shall
 exceed 10% of the aggregate  principal  amount of Securities  set forth on
 Schedule I hereto,  the remaining  Initial  Purchasers shall have the right to
 purchase all, but shall not be under any  obligation to purchase any, of the
 Securities,  and if such nondefaulting  Initial Purchasers do not purchase all
 the  Securities,  this  Agreement  will  terminate  without liability to any
 nondefaulting  Initial Purchaser or the Company.  In the event of a default by
 any  Initial  Purchaser  as set forth in this  Section  9, the Closing Date
 shall be postponed for such period,  not  exceeding  five Business Days, as the
 Representatives shall determine in order that the required changes in the Final
 Memorandum  or in any other  documents  or  arrangements  may be effected.
 Nothing  contained in this  Agreement  shall relieve any  defaulting Initial
 Purchaser of its

                                       20

<PAGE>


 liability,  if any, to the Company or any  nondefaulting  Initial Purchaser for
 damages occasioned by its default hereunder.

                  10. Termination.   This   Agreement   shall  be  subject  to
                      -----------
termination in the absolute discretion of the  Representatives,  by notice given
to the Company  prior to delivery of and payment for the  Securities,  if at any
time prior to such time (i)  trading  in  securities  generally  on the New York
Stock  Exchange  or the Nasdaq  National  Market  shall have been  suspended  or
limited or minimum  prices shall have been  established  on such Exchange or the
Nasdaq  National  Market;  (ii) a banking  moratorium  shall have been  declared
either by Federal  or New York  State  authorities;  or (iii)  there  shall have
occurred any outbreak or escalation of  hostilities,  declaration  by the United
States of a national  emergency or war or other calamity or crisis the effect of
which on  financial  markets is such as to make it, in the sole  judgment of the
Representatives,  impracticable  or  inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Final Memorandum (exclusive of
any amendment or supplement thereto).

                  11. Representations and Indemnities to Survive. The respective
                      ------------------------------------------
 agreements,  representations,  warranties,  indemnities and other statements of
 the Company or its officers and of the Initial  Purchasers set forth in or made
 pursuant to this Agreement will remain in full force and effect,  regardless of
 any investigation made by or on behalf of the Initial Purchasers or the Company
 or any of the officers,  directors,  employees,  agents or controlling  persons
 referred to in Section 8 hereof,  and will survive  delivery of and payment for
 the Securities;  provided,  however, that the representations and warranties of
                  --------   -------
 the Company  shall be deemed to be made at the  Execution  Time and the Closing
 Date  only.  The  provisions  of  Sections  7 and 8 hereof  shall  survive  the
 termination or cancellation of this Agreement.

                  12. Notices.  All communications  hereunder will be in writing
                      -------
 and effective  only on receipt,  and, if sent to the  Representatives,  will be
 mailed, delivered or telefaxed to the Salomon Smith Barney Inc. General Counsel
 (fax no.: (212) 816-7912) and confirmed to the General  Counsel,  Salomon Smith
 Barney Inc.  at 388  Greenwich  Street,  New York,  New York 10013,  Attention:
 General  Counsel;  or, if sent to the  Company,  will be mailed,  delivered  or
 telefaxed to (415)  501-7650 and confirmed to it at Levi's Plaza,  1155 Battery
 Street, San Francisco, CA 94111, attention of the Legal Department.

                  13. Successors.  This  Agreement will inure to the benefit of
                      ----------
 and be binding upon the parties hereto and their respective  successors and the
 officers,  directors,  employees, agents and controlling persons referred to in
 Section 8 hereof, and, except as expressly set forth in Section 5(h) hereof, no
 other person will have any right or obligation hereunder.

                  14. Applicable  Law. This  Agreement  will be governed by and
                      ---------------
construed in accordance  with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.

                  15. Counterparts.  This  Agreement  may be executed in one or
                      ------------
more  counterparts,  each of which shall constitute an original and all of which
together shall constitute one and the same instrument.

                  16. Headings.  The section headings used herein are for
                      --------
convenience only and shall not affect the construction hereof.

                  17. Definitions.  The terms which follow, when used in this
                      -----------
Agreement, shall have the meanings indicated.

                                       21

<PAGE>

                  "Act" shall mean the Securities  Act of 1933, as amended,  and
the rules and regulations of the Commission promulgated thereunder.

                  "Affiliate" shall have the meaning specified in Rule 501(b) of
Regulation D.

                  "Business  Day" shall mean any day other  than a  Saturday,  a
Sunday  or a legal  holiday  or a day on  which  banking  institutions  or trust
companies are authorized or obligated by law to close in the City of New York.

                  "Clearstream, Luxembourg" means Clearstream Banking, S.A.

                  "Commission"   shall   mean  the   Securities   and   Exchange
Commission.

                  "Euroclear  System" means Morgan Guaranty Trust Company of New
 York, Brussels Office, as operator of the Euroclear Clearance System.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
 as  amended,  and the  rules  and  regulations  of the  Commission  promulgated
 thereunder.

                  "Execution  Time"  shall  mean the date  and  time  that  this
 Agreement is executed and delivered by the parties hereto.

                  "Investment Company Act" shall mean the Investment Company Act
 of  1940,  as  amended,  and  the  rules  and  regulations  of  the  Commission
 promulgated thereunder.

                  "NASD"  shall  mean the  National  Association  of  Securities
Dealers, Inc.

                  "Regulation D" shall mean Regulation D under the Act.

                  "Regulation  S" shall mean  Regulation  S under the Act.

                  "Trust  Indenture  Act" shall mean the Trust  Indenture Act of
1939, as amended, and the rules and regulations of the Commission promulgated
thereunder.

                                       22

<PAGE>


                  If the foregoing is in accordance with your  understanding  of
our  agreement,  please  sign and return to us the  enclosed  duplicate  hereof,
whereupon this Agreement and your acceptance shall represent a binding agreement
between the Company and the several Initial Purchasers.


                                                 Very truly yours,

                                                 Levi Strauss & Co.



                                                 by
                                                    __________________________
                                                    Name: William B. Chiasson
                                                    Title: Senior Vice President
                                                           and Chief Financial
                                                           Officer







                                       23

<PAGE>


The  foregoing  Agreement is hereby
confirmed and accepted as of the
date first above written.

Salomon Smith Barney Inc.
Banc of America Securities LLC
Scotia Capital (USA) Inc.
Chase Securities Inc.
Banc One Capital Markets, Inc.

By:  Salomon Smith Barney Inc.


by
    ______________________
    Name:
    Title:


For themselves and the other several Initial
Purchasers named in Schedule I to
the foregoing Agreement.



<PAGE>



                                   SCHEDULE I

                                             Principal           Principal
                                             Amount of           Amount of Euro
                                             Dollar Notes         Dollar Notes
Initial Purchasers                           to be Purchased     to be Purchased
- ------------------                           ---------------     ---------------

Salomon Smith Barney Inc.                    $209,000,000          68,750,000

Banc of America Securities LLC                 64,600,000          21,250,000

Scotia Capital (USA) Inc.                      64,600,000          21,250,000

Chase Securities Inc.                          34,200,000          11,250,000

Banc One Capital Markets, Inc                   7,600,000           2,500,000
                                             ------------         -----------

Total                                        $380,000,000         125,000,000




<PAGE>


                                     Annex A
                            Significant Subsidiaries


Levi Strauss & Co. (Canada) Inc.

Levi Strauss & Co. Europe S.A.

Levi Strauss & Co. Financial Services

Levi Strauss Financial Center Corporation

Levi Strauss Funding Corp.

Levi's Only Stores, Inc.

Levi Strauss (U.K.) Limited



<PAGE>


                                                                       EXHIBIT A

                       Selling Restrictions for Offers and
                       -----------------------------------
                        Sales outside the United States
                        -------------------------------


                  (1)(a) The Securities have not been and will not be registered
under the Act and may not be offered or sold within the United  States or to, or
for the account or benefit of, U.S. persons except in accordance with Regulation
S under the Act or pursuant to an exemption from the  registration  requirements
of the Act.  Each  Initial  Purchaser  represents  and  agrees  that,  except as
otherwise  permitted  by Section  4(a)(i) of the  Agreement  to which this is an
exhibit,  it has  offered and sold the  Securities,  and will offer and sell the
Securities,  (i) as part of their  distribution  at any time; and (ii) otherwise
until 40 days  after  the  later of the  commencement  of the  offering  and the
Closing Date,  only in  accordance  with Rule 903 of Regulation S under the Act.
Accordingly,  each Initial Purchaser  represents and agrees that neither it, nor
any of its  Affiliates  nor any person acting on its or their behalf has engaged
or will engage in any directed  selling  efforts with respect to the Securities,
and  that  it  and  they  have  complied  and  will  comply  with  the  offering
restrictions requirement of Regulation S. Each Initial Purchaser agrees that, at
or  prior  to the  confirmation  of sale  of  Securities  (other  than a sale of
Securities  pursuant  to Section  4(a)(i) of the  Agreement  to which this is an
exhibit),  it shall have sent to each distributor,  dealer or person receiving a
selling concession,  fee or other remuneration that purchases Securities from it
during  the  distribution   compliance   period  a  confirmation  or  notice  to
substantially the following effect:

                  "The Securities  covered hereby have not been registered under
                  the U.S.  Securities  Act of 1933 (the  "Act")  and may not be
                  offered or sold  within  the  United  States or to, or for the
                  account  or  benefit  of,  U.S.  persons  (i) as part of their
                  distribution at any time or (ii) otherwise until 40 days after
                  the later of the  commencement of the offering and January 18,
                  2001, except in either case in accordance with Regulation S or
                  Rule 144A under the Act.  Terms  used above have the  meanings
                  given to them by Regulation S."

                  (b) Each Initial  Purchaser also represents and agrees that it
         has not  entered  and will not enter into any  contractual  arrangement
         with  any  distributor   with  respect  to  the   distribution  of  the
         Securities,  except  with  its  Affiliates  or with the  prior  written
         consent of the Company.

                  (c) Terms used in this section have the meanings given to them
         by Regulation S.

                  (2) Each Initial  Purchaser  represents and agrees that (i) it
 has not  offered  or sold,  and prior to the  expiration  of the  period of six
 months  from the  issue  date of the  Securities  will not  offer or sell,  any
 Securities in the United Kingdom, other than to persons whose ordinary business
 it is to buy, hold,  manage or dispose of investments,  whether as principal or
 as agent, for the purpose of their businesses or in circumstances  which do not
 constitute  an offer to the public  within the meaning of the Public  Offers of
 Securities  Regulations 1995 (the "POSR") or the Financial Services Act 1986 of
 the United  Kingdom (the "FSA");  (ii) it has complied and will comply with all
 applicable  provisions of the POSR and the FSA with respect to anything done by
 it in relation to the  Securities  in, from or otherwise  involving  the United
 Kingdom;  and (iii) it has only issued or passed on and will only issue or pass
 on in the United  Kingdom any document  received by it in  connection  with the
 issue of the Securities to a person who is of a kind described in Article 11(3)
 of the Financial  Services Act 1986  (Investment  Advertisements)  (Exemptions)
 Order  1996 (as  amended)  or is a person to whom the  document  may  otherwise
 lawfully be issued or passed on.


                                      A-1


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.6
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>REGISTRATION RIGHTS AGREEMENT
<TEXT>



                                LEVI STRAUSS & CO

                   $380,000,000 11 5/8% Senior Notes Due 2008

                         REGISTRATIONS RIGHTS AGREEMENT


                                                              New York, New York
                                                                January 18, 2001

Salomon Smith Barney Inc.
Banc of America Securities LLC
Scotia Capital (USA) Inc.
Chase Securities Inc.
Banc One Capital Markets, Inc.

As Representatives of the Initial Purchasers
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013

Ladies and Gentlemen:

                 Levi Strauss & Co., a corporation  organized under the laws of
Delaware (the "Company"), proposes to issue and sell to certain purchasers (the
"Initial Purchasers"), upon the terms set forth in a purchase agreement of even
date herewith (the "Purchase  Agreement"),  its  $380,000,000 of 11 5/8% Senior
Notes Due 2008 ( the  "Securities")  relating to the initial  placement  of the
Securities (the "Initial Placement"). To induce the Initial Purchasers to enter
into the  Purchase  Agreement  and to satisfy a condition  of your  obligations
thereunder, the Company agrees with you for your benefit and the benefit of the
holders from time to time of the Securities  (including the Initial Purchasers)
(each a "Holder" and, together, the "Holders"), as follows:

                  1.  Definitions. Capitalized terms used herein without
                      -----------
definition shall have the respective meanings set forth in the Purchase
Agreement.  As used in this Agreement, the following capitalized defined terms
shall have the following meanings:

                  "Act" shall mean the Securities  Act of 1933, as amended,  and
the rules and regulations of the Commission promulgated thereunder.



<PAGE>


                  "Affiliate"  of any  specified  person  shall  mean any  other
person that,  directly or indirectly,  is in control of, is controlled by, or is
under  common  control  with,  such  specified  person.  For  purposes  of  this
definition,  control of a person shall mean the power,  direct or  indirect,  to
direct or cause the  direction  of the  management  and  policies of such person
whether by contract or otherwise;  and the terms  "controlling" and "controlled"
shall have meanings correlative to the foregoing.

                  "Broker-Dealer"  shall mean any broker or dealer registered as
such under the Exchange Act.

                  "Business  Day" shall mean any day other  than a  Saturday,  a
Sunday  or a legal  holiday  or a day on  which  banking  institutions  or trust
companies are authorized or obligated by law to close in New York City.

                  "Commission"   shall   mean  the   Securities   and   Exchange
Commission.

                  "Euro Notes" shall mean the Company's euro denominated 11 5/8%
Senior Notes due 2008.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as  amended,  and  the  rules  and  regulations  of the  Commission  promulgated
thereunder.

                  "Exchange Offer Prospectus" shall mean the prospectus included
 in the Exchange Offer Registration Statement, as amended or supplemented by any
 prospectus supplement, with respect to the terms of the offering of any portion
 of the New  Securities  (and,  if the  Company  so  chooses  and to the  extent
 permitted by  applicable  law,  any portion of the  Company's  debt  securities
 offered  in  exchange  for the  Euro  Notes)  covered  by such  Exchange  Offer
 Registration  Statement,  and all  amendments and  supplements  thereto and all
 material incorporated by reference therein.

                                       2

<PAGE>

                  "Exchange  Offer  Registration  Period" shall mean the 180-day
 period following the consummation of the Registered  Exchange Offer,  exclusive
 of any period  during  which any stop order shall be in effect  suspending  the
 effectiveness of the Exchange Offer Registration Statement.

                  "Exchange   Offer   Registration   Statement"   shall  mean  a
 registration statement of the Company on an appropriate form under the Act with
 respect to the Registered Exchange Offer (and, if the Company so chooses and to
 the extent  permitted by applicable  law, with respect to an offer to issue and
 deliver to the holders of the Euro Notes,  in  exchange  for the Euro Notes,  a
 like aggregate principal amount of the Company's debt securities denominated in
 euros),  all  amendments  and  supplements  to  such  registration   statement,
 including  post-effective  amendments  thereto,  in  each  case  including  the
 Exchange  Offer  Prospectus  contained  therein,  all exhibits  thereto and all
 material incorporated by reference therein.

                  "Exchanging  Dealer"  shall mean any Holder (which may include
any Initial  Purchaser) that is a  Broker-Dealer  and elects to exchange for New
Securities  any  Securities  that it acquired for its own account as a result of
market-making  activities or other trading activities (but not directly from the
Company or any Affiliate of the Company).

                  "Holder"  shall  have the  meaning  set forth in the  preamble
hereto.

                  "Indenture"   shall  mean  the   indenture   relating  to  the
 Securities,  dated as of January 18,  2001,  between the Company and  Citibank,
 N.A.,  as trustee,  as the same may be amended from time to time in  accordance
 with the terms thereof.

                  "Initial  Placement"  shall have the  meaning set forth in the
preamble  hereto.  "Initial  Purchaser"  shall have the meaning set forth in the
preamble  hereto.  "Losses"  shall have the  meaning  set forth in Section  6(d)
hereof.

                  "Majority Holders" shall mean the Holders of a majority of the
 aggregate  principal  amount  of  Securities  registered  under a  Registration
 Statement.

                  "Managing  Underwriters"  shall mean the investment  banker or
 investment   bankers  and  manager  or  managers   that  shall   administer  an
 underwritten offering.

                  "New  Securities"  shall mean debt  securities  of the Company
 identical in all material respects to the Securities  (except that the interest
 rate  step-up  provisions  and the transfer  restrictions  shall be modified or
 eliminated,  as  appropriate)  and to be issued under the  Indenture or the New
 Securities Indenture.

                  "New Securities Indenture" shall mean an indenture between the
 Company and the New Securities  Trustee,  identical in all material respects to
 the  Indenture  (except  that the  interest  rate  step-up  provisions  will be
 modified or eliminated, as appropriate).

                  "New  Securities  Trustee" shall mean the Trustee or a bank or
 trust company  reasonably  satisfactory to the Initial  Purchasers,  as trustee
 with respect to the New Securities under the New Securities Indenture.

                  "Prospectus"  shall  mean  the  prospectus   included  in  any
 Registration  Statement  (including,  without  limitation,  a  prospectus  that
 discloses information  previously omitted from a prospectus filed as part of an
 effective  registration statement in reliance upon Rule 430A under the Act), as
 amended or supplemented by any prospectus supplement, with respect to the terms
 of the offering of any portion of the Securities or the New Securities  covered
 by such Registration Statement,  and all amendments and supplements thereto and
 all material incorporated by reference therein.

                                       3

<PAGE>


                  "Purchase  Agreement"  shall have the meaning set forth in the
preamble hereto.

                  "Registered  Exchange  Offer" shall mean the proposed offer of
the Company to issue and deliver to the Holders of the  Securities  that are not
prohibited by any law or policy of the  Commission  from  participating  in such
offer, in exchange for the Securities,  a like aggregate principal amount of the
New Securities.

                  "Registration   Statement"   shall  mean  any  Exchange  Offer
Registration  Statement or Shelf  Registration  Statement that covers any of the
Securities or the New Securities  pursuant to the provisions of this  Agreement,
any  amendments  and  supplements  to  such  registration  statement,  including
post-effective  amendments  (in each case  including  the  Prospectus  contained
therein),  all  exhibits  thereto and all  material  incorporated  by  reference
therein.

                  "Securities"  shall have the meaning set forth in the preamble
hereto.

                  "Shelf  Registration"  shall  mean  a  registration   effected
pursuant to Section 3 hereof.

                  "Shelf  Registration  Period"  has the  meaning  set  forth in
Section 3(b) hereof.

                  "Shelf   Registration   Statement"   shall   mean  a   "shelf"
 registration  statement of the Company  pursuant to the provisions of Section 3
 hereof  which  covers  some  or all of the  Securities  or New  Securities,  as
 applicable, on an appropriate form under Rule 415 under the Act, or any similar
 rule that may be adopted by the Commission,  amendments and supplements to such
 registration  statement,  including  post-effective  amendments,  in each  case
 including  the  Prospectus  contained  therein,  all  exhibits  thereto and all
 material incorporated by reference therein.

                  "Trustee"   shall  mean  the  trustee   with  respect  to  the
Securities under the Indenture.

                  "underwriter"  shall mean any  underwriter  of  Securities  in
 connection with an offering thereof under a Shelf Registration Statement.

                  2.  Registered Exchange  Offer.  (a) The Company shall prepare
                      --------------------------
and, not later than 60 days  following the date of the original  issuance of the
Securities,  shall file with the  Commission  the  Exchange  Offer  Registration
Statement with respect to the Registered  Exchange Offer.  The Company shall use
its best efforts to cause the Exchange  Offer  Registration  Statement to become
effective under the Act within 120 days of the date of the original  issuance of
the Securities.

                  (b) Upon the effectiveness of the Exchange Offer  Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the  objective  of such  Registered  Exchange  Offer to enable each Holder
electing to exchange Securities for New

                                       4

<PAGE>


Securities  (assuming  that such  Holder  is not an  Affiliate  of the  Company,
acquires the New  Securities in the ordinary  course of such Holder's  business,
has no  arrangements  with any person to participate in the  distribution of the
New Securities and is not prohibited by any law or policy of the Commission from
participating  in the  Registered  Exchange  Offer) to trade such New Securities
from and after their receipt without any  limitations or restrictions  under the
Act and without material restrictions under the securities laws of a substantial
proportion of the several states of the United States.

                  (c) In connection with the Registered Exchange Offer, the
Company shall:

                  (i) mail to each Holder a copy of the Prospectus  forming part
         of  the  Exchange  Offer  Registration  Statement,   together  with  an
         appropriate letter of transmittal and related documents;

                  (ii) keep the Registered Exchange Offer open for not less than
         30  Business  Days and not more than 45  Business  Days  after the date
         notice  thereof is mailed to the Holders  (or, in each case,  longer if
         required by applicable law);

                  (iii) use its  reasonable  best  efforts to keep the  Exchange
         Offer Registration Statement continuously  effective,  supplemented and
         amended as required,  under the Act to ensure that it is available  for
         sales of New Securities by Exchanging Dealers during the Exchange Offer
         Registration  Period;  provided  that if any  Initial  Purchaser  holds
                                --------
         Securities  that it  acquired  for  its  own  account  as a  result  of
         market-making  activities or other trading activities (but not directly
         from the Company or any Affiliate of the Company)  after the expiration
         of the Exchange Offer Registration Period, that Initial Purchaser shall
         have the right, for 90 days immediately following the expiration of the
         Exchange Offer Registration Period, to request the Company to prepare a
         prospectus  for  use  by  that  Initial  Purchaser  for  sales  of  New
         Securities,  and the Company shall use its  reasonable  best efforts to
         prepare that prospectus for such use;

                  (iv) utilize the services of a depositary  for the  Registered
         Exchange  Offer with an address in the Borough of Manhattan in New York
         City,  which  may be the  Trustee,  the New  Securities  Trustee  or an
         Affiliate of either of them;

                  (v) permit Holders to withdraw tendered Securities at any time
         prior to the close of business, New York time, on the last Business Day
         on which the Registered Exchange Offer is open;

                  (vi) prior to effectiveness of the Exchange Offer Registration
         Statement,  if  requested  or  required  by the  Commission,  provide a
         supplemental  letter to the  Commission (A) stating that the Company is
         conducting the Registered Exchange Offer in reliance on the position of
         the Commission in Exxon Capital Holdings  Corporation  (pub. avail. May
                           -----------------------------------
         13, 1988) and Morgan Stanley and Co., Inc. (pub.  avail. June 5, 1991);
                       ----------------------------
         and (B)  including  a  representation  that the Company has not entered
         into any

                                       5

<PAGE>


         arrangement  or  understanding  with any person to  distribute  the New
         Securities to be received in the Registered Exchange Offer and that, to
         the  best  of  the  Company's   information  and  belief,  each  Holder
         participating  in the  Registered  Exchange  Offer is acquiring the New
         Securities in the ordinary course of business and has no arrangement or
         understanding with any person to participate in the distribution of the
         New Securities; and

                  (vii)  comply in all respects with all applicable laws.

                  (d) As soon as  practicable  after the close of the Registered
Exchange Offer, the Company shall:

                  (i)  accept  for  exchange  all  Securities  tendered  and not
         validly withdrawn pursuant to the
         Registered Exchange Offer;

                  (ii) deliver to the Trustee for cancelation in accordance with
         Section 4(s) all Securities so accepted for exchange; and

                  (iii)   cause  the  New   Securities   Trustee   promptly   to
         authenticate  and  deliver to each  Holder of  Securities  a  principal
         amount  of  New  Securities  equal  to  the  principal  amount  of  the
         Securities of such Holder so accepted for exchange.

                  (e) Each Holder hereby  acknowledges  and agrees that any such
Holder using the Registered  Exchange Offer to participate in a distribution  of
the New  Securities  (x) could not under  Commission  policy as in effect on the
date of this  Agreement rely on the position of the Commission in Morgan Stanley
                                                                  --------------
and Co., Inc. (pub. avail. June 5, 1991) and Exxon Capital Holdings  Corporation
- ------------                                 -----------------------------------
(pub.  avail.  May 13,  1988),  as  interpreted  in the  Commission's  letter to
Shearman & Sterling dated July 2, 1993 and similar  no-action  letters;  and (y)
must comply with the  registration and prospectus  delivery  requirements of the
Act in connection with any secondary resale transaction which must be covered by
an effective  registration  statement  containing  the selling  security  holder
information required by Item 507 or 508, as applicable,  of Regulation S-K under
the Act if the resales are of New Securities obtained by such Holder in exchange
for Securities  acquired by such Holder  directly from the Company or one of its
Affiliates.  Accordingly,  each Holder  participating in the Registered Exchange
Offer shall be required to  represent  to the Company  that,  at the time of the
consummation of the Registered Exchange Offer:

                  (i)  any  New  Securities  received  by  such  Holder  will be
         acquired in the ordinary course of business;

                  (ii) such Holder  will have no  arrangement  or  understanding
         with any person to participate in the distribution of the Securities or
         the New Securities within the meaning of the Act; and

                                       6

<PAGE>


                  (iii)  such Holder is not an Affiliate of the Company.

                  (f)  If  any  Initial  Purchaser  determines  that  it is  not
 eligible to participate  in the  Registered  Exchange Offer with respect to the
 exchange of Securities  constituting any portion of an unsold allotment, at the
 request of such Initial Purchaser,  the Company shall issue and deliver to such
 Initial  Purchaser or the person  purchasing New Securities  registered under a
 Shelf  Registration  Statement  as  contemplated  by Section 3 hereof from such
 Initial Purchaser, in exchange for such Securities,  a like principal amount of
 New  Securities.  The  Company  shall use its best  efforts  to cause the CUSIP
 Service  Bureau to issue the same CUSIP numbers for such New  Securities as for
 New Securities issued pursuant to the Registered Exchange Offer.

                  3.  Shelf Registration. (a) If (i) due to any change in law or
                      ------------------
applicable  interpretations  thereof  by the  Commission's  staff,  the  Company
determines upon advice of its outside counsel that it is not permitted to effect
the Registered  Exchange Offer as contemplated by Section 2 hereof; (ii) for any
other reason the Exchange Offer Registration Statement is not declared effective
within  120 days of the  date of  original  issuance  of the  Securities  or the
Registered  Exchange  Offer is not  consummated  within  150 days of the date of
original  issuance of the  Securities;  (iii) any Initial  Purchaser so requests
within 45 days of consummation of the Registered  Exchange Offer with respect to
Securities  that are not  eligible to be  exchanged  for New  Securities  in the
Registered Exchange Offer and that are held by it following  consummation of the
Registered  Exchange Offer; (iv) any Holder (other than an Initial Purchaser) so
requests within 45 days of consummation of the Registered  Exchange Offer on the
basis  that such  Holder  was not  eligible  to  participate  in the  Registered
Exchange  Offer or does not  receive  freely  tradeable  New  Securities  in the
Registered Exchange Offer other than by reason of such Holder being an Affiliate
of the Company (it being  understood  that a requirement to deliver a Prospectus
in connection with market-making activities or other trading shall not result in
the applicable  securities not being "freely tradeable");  or (v) in the case of
any Initial  Purchaser that  participates  in the  Registered  Exchange Offer or
acquires New Securities  pursuant to Section 2(f) hereof, such Initial Purchaser
does not receive  freely  tradeable New  Securities  in exchange for  Securities
constituting  any portion of an unsold  allotment (it being  understood that (x)
the requirement that an Initial  Purchaser  deliver a Prospectus  containing the
information  required  by Item 507 or 508 of  Regulation  S-K  under  the Act in
connection with sales of New Securities acquired in exchange for such Securities
shall result in such New Securities  being not "freely  tradeable";  and (y) the
requirement  that an Exchanging  Dealer deliver an Exchange Offer  Prospectus in
connection  with sales of New  Securities  acquired in the  Registered  Exchange
Offer  in  exchange  for  Securities  acquired  as  a  result  of  market-making
activities or other trading  activities  shall not result in such New Securities
being not "freely  tradeable"),  the Company  shall effect a Shelf  Registration
Statement in accordance with subsection (b) below.

                  (b) (i) The Company shall as promptly as  practicable  (but in
 no event more than 60 days after so  required  or  requested  pursuant  to this
 Section 3), file with the Commission and thereafter  shall cause to be declared
 effective under the Act a Shelf  Registration  Statement  relating to the offer
 and sale of the Securities or the New Securities, as applicable, by the Holders
 thereof  from  time to time in  accordance  with the  methods  of  distribution
 elected by such

                                       7

<PAGE>


 Holders and set forth in such Shelf Registration Statement;  provided, however,
 that no Holder (other than an Initial  Purchaser) shall be entitled to have the
 Securities held by it covered by such Shelf Registration  Statement unless such
 Holder agrees in writing to be bound by all of the provisions of this Agreement
 applicable  to such  Holder;  and  provided  further,  that with respect to New
 Securities  received  by  an  Initial  Purchaser  in  exchange  for  Securities
 constituting any portion of an unsold allotment,  the Company may, if permitted
 by current  interpretations  by the Commission's  staff,  file a post-effective
 amendment  to  the  Exchange  Offer  Registration   Statement   containing  the
 information  required by Item 507 or 508 of Regulation  S-K, as applicable,  in
 satisfaction of its obligations under this subsection with respect thereto, and
 any  such  Exchange  Offer  Registration  Statement,  as so  amended,  shall be
 referred to herein as, and governed by the provisions  herein  applicable to, a
 Shelf Registration Statement.

                  (ii) The Company shall use its reasonable best efforts to keep
the  Shelf  Registration  Statement  continuously  effective,  supplemented  and
amended as required by the Act, in order to permit the  Prospectus  forming part
thereof to be usable by Holders for a period of two years from the Closing  Date
or such  shorter  period  that will  terminate  when all the  Securities  or New
Securities, as applicable, covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement (in any such case, such period
being called the "Shelf Registration  Period").  The Company shall be deemed not
to have  used  its  reasonable  best  efforts  to keep  the  Shelf  Registration
Statement  effective  during the requisite  period if it  voluntarily  takes any
action that would result in Holders of Securities covered thereby not being able
to offer and sell such Securities during that period,  unless (A) such action is
required by  applicable  law; or (B) such action is taken by the Company in good
faith and for valid business  reasons (not including  avoidance of the Company's
obligations  hereunder),  including the acquisition or divestiture of assets, so
long as the  Company  promptly  thereafter  complies  with the  requirements  of
Section  4(k)  hereof,  if  applicable.  The Company is  expressly  permitted to
suspend the effectiveness of the Shelf  Registration  Statement in good faith in
connection with the acquisition or divestiture of assets, so long as the Company
promptly  thereafter  complies with the requirements of Section 4(k) hereof,  if
applicable.

                  4.  Additional Registration Procedures. In connection with any
                      ----------------------------------
Shelf Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply.

                  (a) The Company shall:

                  (i) furnish to you, not less than five  Business Days prior to
         the filing  thereof with the  Commission,  a copy of any Exchange Offer
         Registration Statement and any Shelf Registration  Statement,  and each
         amendment  thereof and each  amendment  or  supplement,  if any, to the
         Prospectus  included therein  (including all documents  incorporated by
         reference   therein  after  the  initial  filing)  and  shall  use  its
         reasonable best efforts to reflect in each such document, when so filed
         with the Commission, such comments as you reasonably propose;

                                       8

<PAGE>


                  (ii)  include the  information  set forth in Annex A hereto on
         the facing page of the Exchange Offer Registration  Statement, in Annex
         B hereto in the forepart of the Exchange Offer  Registration  Statement
         in a section  setting forth details of the Exchange  Offer,  in Annex C
         hereto  in the  underwriting  or plan of  distribution  section  of the
         Prospectus contained in the Exchange Offer Registration Statement,  and
         in Annex D hereto in the letter of  transmittal  delivered  pursuant to
         the Registered Exchange Offer;

                  (iii)  if  requested  by an  Initial  Purchaser,  include  the
         information  required  by  Item  507  or  508  of  Regulation  S-K,  as
         applicable,   in  the  Prospectus   contained  in  the  Exchange  Offer
         Registration Statement; and

                  (iv) in the case of a Shelf  Registration  Statement,  include
         the names of the Holders  that propose to sell  Securities  pursuant to
         the Shelf Registration Statement as selling security holders.

                  (b)  The Company shall ensure that:

                  (i) any Registration  Statement and any amendment  thereto and
         any  Prospectus  forming part thereof and any  amendment or  supplement
         thereto  complies in all material  respects  with the Act and the rules
         and regulations thereunder;

                  (ii) any Registration Statement and any amendment thereto does
         not,  when it  becomes  effective,  contain  an untrue  statement  of a
         material  fact or omit to state a material  fact  required to be stated
         therein or necessary  to make the  statements  therein not  misleading;
         provided,   however,   that  the  Holders  shall  ensure  that  written
         --------    -------
         information  furnished  to the  Company  by or on behalf of any  Holder
         specifically  for  inclusion  in such  Registration  Statement  and any
         amendment thereto,  shall not contain an untrue statement of a material
         fact or omit to state a material fact required to be stated  therein or
         necessary to make the statements therein not misleading; and

                  (iii)  any  Prospectus   forming  part  of  any   Registration
         Statement, and any amendment or supplement to such Prospectus, does not
         include  an  untrue  statement  of a  material  fact or omit to state a
         material fact necessary in order to make the statements therein, in the
         light of the circumstances  under which they were made, not misleading;
         provided,   however,   that  the  Holders  shall  ensure  that  written
         --------    -------
         information  furnished  to the  Company  by or on behalf of any  Holder
         specifically  for  inclusion  in such  Registration  Statement  and any
         amendment thereto,  shall not contain an untrue statement of a material
         fact or omit to state a material fact required to be stated  therein or
         necessary to make the statements therein not misleading.

                  (c) The Company  shall advise you,  the Holders of  Securities
covered by any Shelf Registration  Statement and any Exchanging Dealer under any
Exchange  Offer  Registration  Statement  that has  provided  in  writing to the
Company a  telephone  or  facsimile  number and  address  for  notices,  and, if
requested by you or any such Holder or Exchanging Dealer, shall

                                       9

<PAGE>


confirm such advice in writing  (which  notice  pursuant to clauses (ii) through
(v) hereof  shall be  accompanied  by an  instruction  to suspend the use of the
Prospectus until the Company shall have remedied the basis for such suspension):

                  (i) when a  Registration  Statement and any amendment  thereto
         has been filed with the Commission and when the Registration  Statement
         or any post-effective amendment thereto has become effective;

                  (ii) of any request by the  Commission  for any  amendment  or
         supplement  to the  Registration  Statement  or the  Prospectus  or for
         additional information;

                  (iii) of the  issuance  by the  Commission  of any stop  order
         suspending  the  effectiveness  of the  Registration  Statement  or the
         initiation of any proceedings for that purpose;

                  (iv) of the  receipt by the Company of any  notification  with
         respect  to the  suspension  of  the  qualification  of the  securities
         included  therein for sale in any jurisdiction or the initiation of any
         proceeding for such purpose; and

                  (v) of the  happening of any event that requires any change in
         the Registration  Statement or the Prospectus so that, as of such date,
         the  statements  therein are not  misleading and do not omit to state a
         material  fact  required to be stated  therein or necessary to make the
         statements therein (in the case of the Prospectus,  in the light of the
         circumstances under which they were made) not misleading.

                  (d) The  Company  shall use its  reasonable  best  efforts  to
 obtain  the  withdrawal  of  any  order  suspending  the  effectiveness  of any
 Registration  Statement or the qualification of the securities therein for sale
 in any jurisdiction at the earliest possible time.

                  (e) The Company  shall  furnish to each  Holder of  Securities
 covered by any Shelf Registration Statement,  without charge, at least one copy
 of such Shelf Registration Statement and any post-effective  amendment thereto,
 including all material incorporated therein by reference, and, if the Holder so
 requests in writing,  all exhibits thereto (including exhibits  incorporated by
 reference therein).

                  (f) The Company shall,  during the Shelf Registration  Period,
 deliver  to  each  Holder  of  Securities  covered  by any  Shelf  Registration
 Statement,  without  charge,  as many copies of the Prospectus  (including each
 preliminary  Prospectus) included in such Shelf Registration  Statement and any
 amendment or  supplement  thereto as such Holder may  reasonably  request.  The
 Company  consents to the use of the  Prospectus  or any amendment or supplement
 thereto by each of the selling  Holders of Securities  in  connection  with the
 offering and sale of the Securities covered by the Prospectus, or any amendment
 or supplement thereto, included in the Shelf Registration Statement.

                                       10

<PAGE>


                  (g) The Company shall furnish to each Exchanging  Dealer which
so  requests,   without  charge,  at  least  one  copy  of  the  Exchange  Offer
Registration Statement and any post-effective  amendment thereto,  including all
material  incorporated by reference  therein,  and, if the Exchanging  Dealer so
requests in writing,  all exhibits thereto (including  exhibits  incorporated by
reference therein).

                  (h)  The Company shall promptly deliver to each Initial
Purchaser, each Exchanging Dealer and each other person  required  to deliver a
Prospectus  during the Exchange Offer  Registration  Period,  without charge, as
many copies of the  Prospectus  included  in such  Exchange  Offer  Registration
Statement  and any  amendment  or  supplement  thereto  as any such  person  may
reasonably  request.  The Company  consents to the use of the  Prospectus or any
amendment or supplement thereto by any Initial Purchaser,  any Exchanging Dealer
and any such other person that may be required to deliver a Prospectus following
the Registered  Exchange  Offer in connection  with the offering and sale of the
New  Securities  covered  by the  Prospectus,  or any  amendment  or  supplement
thereto, included in the Exchange Offer Registration Statement.

                  (i)  Prior  to the  Registered  Exchange  Offer  or any  other
offering of Securities pursuant to any Registration Statement, the Company shall
arrange,  if  necessary,  for the  qualification  of the  Securities  or the New
Securities  for sale under the laws of such  United  States and  European  Union
jurisdictions  as any Holder shall  reasonably  request and will  maintain  such
qualification in effect so long as required; provided that in no event shall the
                                             --------
Company be obligated to qualify to do business in any  jurisdiction  where it is
not then so qualified or to take any action that would  subject it to service of
process in suits in any such jurisdiction where it is not then so subject.

                  (j) The Company shall cooperate with the Holders of Securities
to facilitate the timely  preparation and delivery of certificates  representing
New  Securities or Securities to be issued or sold pursuant to any  Registration
Statement  free  of any  restrictive  legends  and  in  such  denominations  and
registered in such names as Holders may request.

                  (k)  Upon  the  occurrence  of  any  event   contemplated   by
subsections (c)ii) through (v) above,  the Company shall  promptly  prepare a
post-effective   amendment  to  the  applicable  Registration  Statement  or  an
amendment or  supplement to the related  Prospectus  or file any other  required
document  so  that,  as  thereafter  delivered  to  Initial  Purchasers  of  the
securities included therein, the Prospectus will not include an untrue statement
of a material  fact or omit to state any  material  fact  necessary  to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading. In such circumstances,  the period of effectiveness of the
Exchange Offer  Registration  Statement  provided for in Section 2 and the Shelf
Registration  Statement  provided  for in Section 3(b) shall each be extended by
the  number of days  from and  including  the date of the  giving of a notice of
suspension  pursuant to Section 4(c) to and  including the date when the Initial
Purchasers,  the Holders of the Securities and any known Exchanging Dealer shall
have received such amended or supplemented Prospectus pursuant to this Section.

                                       11

<PAGE>


                  (l) Not  later  than the  effective  date of any  Registration
Statement,  the Company shall  provide a CUSIP number for the  Securities or the
New Securities, as the case may be, registered under such Registration Statement
and provide the Trustee with printed  certificates  for such  Securities  or New
Securities, in a form eligible for deposit with The Depository Trust Company.

                  (m) The Company  shall  comply with all  applicable  rules and
 regulations  of the  Commission  and  shall  make  generally  available  to its
 security  holders  as soon  as  practicable  after  the  effective  date of the
 applicable   Registration   Statement  an  earnings  statement  satisfying  the
 provisions of Section 11(a) of the Act.

                  (n) The  Company   shall  cause  the  Indenture  or  the  New
 Securities  Indenture,  as the case may be,  to be  qualified  under  the Trust
 Indenture Act in a timely manner.

                  (o) The Company may require  each Holder of  Securities  to be
 sold pursuant to any Shelf Registration Statement to (i) furnish to the Company
 such  information  regarding the Holder and the distribution of such Securities
 as the Company may from time to time  reasonably  require for inclusion in such
 Registration  Statement and (ii) provide the indemnity  contemplated by Section
 6(b).  The Company  may  exclude  from such Shelf  Registration  Statement  the
 Securities  of any Holder that fails to furnish  such  information  or fails to
 provide the indemnity within a reasonable time after receiving such request.

                  (p) In the  case  of any  Shelf  Registration  Statement,  the
 Company   shall  enter  into  such   agreements   (including  if  requested  an
 underwriting  agreement  in  customary  form)  and take all  other  reasonable,
 appropriate  actions in order to expedite or facilitate the registration or the
 disposition of the Securities,  and in connection therewith, if an underwriting
 agreement is entered into, cause the same to contain indemnification provisions
 and  procedures  no less  favorable  than those set forth in Section 6 (or such
 other  provisions  and  procedures  acceptable to the Majority  Holders and the
 Managing  Underwriters,  if any) with respect to all parties to be  indemnified
 pursuant to Section 6.

                  (q)  In the case of any Shelf Registration Statement, the
Company shall:

                  (i) make reasonably available for inspection by the Holders of
         Securities to be registered thereunder,  any underwriter  participating
         in any disposition  pursuant to such  Registration  Statement,  and any
         attorney, accountant or other agent retained by the Holders or any such
         underwriter  all  relevant  financial  and  other  records,   pertinent
         corporate documents and properties of the Company and its subsidiaries;
         provided,  however,  that any information that is designated in writing
         --------   -------
         by the Company,  in good faith, as confidential at the time of delivery
         of such  information  shall be kept  confidential by the Holders or any
         such underwriter, attorney, accountant or agent, unless such disclosure
         is made in  connection  with a court  proceeding or required by law, or
         such information becomes available to the public generally or through a
         third party without an accompanying obligation of confidentiality;  and
         provided further that the Company shall
         -------- -------

                                       12

<PAGE>


be  entitled  to  coordinate  such access to its  financial  and other  records,
corporate  documents  and  properties  in a manner  that  does not  unreasonably
interfere with the business operations of the Company or its subsidiaries;

                  (ii) cause the Company's officers,  directors and employees to
         supply all relevant information  reasonably requested by the Holders or
         any such underwriter,  attorney, accountant or agent in connection with
         any  such  Registration  Statement  as is  customary  for  similar  due
         diligence examinations; provided, however, that any information that is
                                 --------  -------
         designated in writing by the Company, in good faith, as confidential at
         the time of delivery of such information  shall be kept confidential by
         the Holders or any such  underwriter,  attorney,  accountant  or agent,
         unless such disclosure is made in connection with a court proceeding or
         required by law, or such  information  becomes  available to the public
         generally or through a third party without an  accompanying  obligation
         of  confidentiality;  and provided  further  that the Company  shall be
         entitled  to  respond to such  information  requests  in a  coordinated
         fashion such that such requests do not unreasonably  interfere with the
         business operations of the Company or its subsidiaries;

                  (iii) make such  representations and warranties to the Holders
         of Securities  registered  thereunder and the underwriters,  if any, in
         form,  substance  and  scope  as are  customarily  made by  issuers  to
         underwriters  in primary  underwritten  offerings and covering  matters
         including,  but  not  limited  to,  those  set  forth  in the  Purchase
         Agreement;

                  (iv)  obtain  opinions  of counsel to the  Company and updates
         thereof  (which  counsel and  opinions (in form,  scope and  substance)
         shall be reasonably satisfactory to the Managing Underwriters,  if any)
         addressed to each selling Holder and the underwriters, if any, covering
         such  matters as are  customarily  covered  in  opinions  requested  in
         underwritten  offerings  and such other  matters  as may be  reasonably
         requested by such Holders and underwriters;

                  (v) obtain "cold comfort" letters and updates thereof from the
         independent  certified  public  accountants  of the  Company  (and,  if
         necessary,  any other independent  certified public  accountants of any
         subsidiary  of the Company or of any  business  acquired by the Company
         for which financial  statements and financial data are, or are required
         to be,  included  in the  Registration  Statement),  addressed  to each
         selling   Holder   of   Securities   registered   thereunder   and  the
         underwriters,  if any, in customary  form and  covering  matters of the
         type  customarily  covered in "cold comfort" letters in connection with
         primary underwritten offerings; and

                  (vi)  deliver  such  documents  and  certificates  as  may  be
         reasonably   requested  by  the  Majority   Holders  and  the  Managing
         Underwriters,  if any,  including  those to  evidence  compliance  with
         Section  4(k)  and  with  any  customary  conditions  contained  in the
         underwriting agreement or other agreement entered into by the Company.

                                       13

<PAGE>


The actions set forth in clauses (iii),  (iv),  (v) and (vi) of this  subsection
shall be performed at (A) the effectiveness of such  Registration  Statement and
each  post-effective   amendment  thereto;   and  (B)  each  closing  under  any
underwriting or similar agreement as and to the extent required thereunder.

                  (r) If a Registered Exchange Offer is to be consummated,  upon
delivery of the Securities by Holders to the Company (or to such other person as
directed by the Company) in exchange for the New  Securities,  the Company shall
mark, or cause to be marked, on the Securities so exchanged that such Securities
are being  canceled in exchange  for the New  Securities.  In no event shall the
Securities be marked as paid or otherwise satisfied.

                  (s) The Company  will use its  reasonable  best efforts (i) if
 the Securities have been rated prior to the initial sale of such Securities, to
 confirm such ratings will apply to the Securities or the New Securities, as the
 case may be,  covered by a  Registration  Statement;  or (ii) if the Securities
 were not previously  rated,  to cause the Securities  covered by a Registration
 Statement  to be rated  with at least  one  nationally  recognized  statistical
 rating agency,  if so requested by Majority Holders with respect to the related
 Registration Statement or by any Managing Underwriters.

                  (t) In the event that any  Broker-Dealer  shall underwrite any
 Securities or participate as a member of an  underwriting  syndicate or selling
 group or "assist in the distribution"  (within the meaning of the Rules of Fair
 Practice and the By-Laws of the National  Association  of  Securities  Dealers,
 Inc.) thereof,  whether as a Holder of such Securities or as an underwriter,  a
 placement  or  sales  agent  or a broker  or  dealer  in  respect  thereof,  or
 otherwise, assist such Broker-Dealer in complying with the requirements of such
 Rules and By-Laws, including, without limitation, by:

                  (i) if such  Rules or  By-Laws  shall so  require,  engaging a
         "qualified  independent  underwriter"  (as  defined  in such  Rules) to
         participate  in the  preparation  of  the  Registration  Statement,  to
         exercise usual  standards of due diligence with respect thereto and, if
         any portion of the offering contemplated by such Registration Statement
         is an  underwritten  offering or is made  through a placement  or sales
         agent, to recommend the yield of such Securities;

                  (ii) indemnifying any such qualified  independent  underwriter
         to the  extent  of the  indemnification  of  underwriters  provided  in
         Section 6 hereof; and

                  (iii) providing such information to such  Broker-Dealer as may
         be  required  in  order  for  such  Broker-Dealer  to  comply  with the
         requirements of such Rules.

                  (u) The Company shall use its reasonable  best efforts to take
 all other steps  necessary to effect the  registration of the Securities or the
 New Securities, as the case may be, covered by a Registration Statement.

                                       14

<PAGE>


                  5.  Registration Expenses. The Company shall bear all expenses
                      ---------------------
incurred in connection with the performance of its obligations under Sections 2,
3 and 4 hereof  and,  in the event of any  Shelf  Registration  Statement,  will
reimburse the Holders for the reasonable fees and  disbursements  of one firm or
counsel  designated by the Majority Holders to act as counsel for the Holders in
connection  therewith,  and,  in the  case of any  Exchange  Offer  Registration
Statement,  will reimburse the Initial  Purchasers  for the reasonable  fees and
disbursements of counsel acting in connection therewith.

                  6.  Indemnification and Contribution. (a) The Company agrees
                      --------------------------------
to indemnify and hold harmless each Holder of Securities or New Securities, as
the case may be, covered by any Registration Statement (including each Initial
Purchaser  and,  with  respect to any  Prospectus  delivery as  contemplated  in
Section 4(h) hereof, each Exchanging Dealer), the directors, officers, employees
and agents of each such  Holder and each  person who  controls  any such  Holder
within the  meaning of either the Act or the  Exchange  Act  against any and all
losses, claims,  damages or liabilities,  joint or several, to which they or any
of them may become  subject  under the Act, the Exchange Act or other Federal or
state statutory law or regulation,  at common law or otherwise,  insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based  upon any untrue  statement  or alleged  untrue  statement  of a
material fact contained in the Registration  Statement as originally filed or in
any amendment thereof, or in any preliminary Prospectus or the Prospectus, or in
any amendment thereof or supplement  thereto,  or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
agrees to reimburse each such indemnified  party, as incurred,  for any legal or
other expenses  reasonably  incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,  however,
that the  Company  will not be  liable in any case to the  extent  that any such
loss, claim,  damage or liability arises out of or is based upon any such untrue
statement  or alleged  untrue  statement  or omission or alleged  omission  made
therein in reliance upon and in conformity with written information furnished to
the  Company  by or on  behalf of any such  Holder  specifically  for  inclusion
therein;  and  provided  further,  however,  that  with  respect  to any  untrue
statement or omission of a material fact made in a preliminary  Prospectus,  the
indemnity  agreement  contained  in this  Section  6(a)  shall  not inure to the
benefit  of any  person  to the  extent  that any such  loss,  claim,  damage or
liability of such person occurs under the circumstance  where it shall have been
determined  by a court of  competent  jurisdiction  by final  and  nonappealable
judgment that (i) the untrue  statement or omission of a material fact contained
in the  preliminary  Prospectus  was corrected in the final  Prospectus or in an
amendment  or  supplement  thereto,  (ii) the Company had  previously  furnished
copies of the final Prospectus, amendment or supplement to such person and (iii)
such loss,  claim,  damage or liability results from the fact that there was not
sent or given by such person at or prior to the written confirmation of the sale
of such  Securities,  a copy of the final  Prospectus,  amendment or supplement.
This indemnity  agreement will be in addition to any liability which the Company
may otherwise have.

                  The Company also agrees to indemnify or contribute as provided
 in Section 6(d) to Losses of each  underwriter of Securities or New Securities,
 as the case may be, registered

                                       15

<PAGE>


 under a Shelf Registration Statement, their directors,  officers,  employees or
 agents and each person who controls such underwriter on substantially  the same
 basis as that of the  indemnification of the Initial Purchasers and the selling
 Holders  provided in this Section  6(a) and shall,  if requested by any Holder,
 enter into an underwriting agreement reflecting such agreement,  as provided in
 Section 4(p) hereof.

                  (b) Each  Holder  of  securities  covered  by a  Registration
 Statement (including each Initial Purchaser and, with respect to any Prospectus
 delivery as  contemplated  in Section  4(h)  hereof,  each  Exchanging  Dealer)
 severally  and not jointly  agrees to indemnify  and hold harmless the Company,
 each of its  directors,  each  of its  officers  who  signs  such  Registration
 Statement and each person who controls the Company within the meaning of either
 the Act or the Exchange Act, to the same extent as the foregoing indemnity from
 the Company to each such Holder, but only with reference to written information
 relating to such Holder furnished to the Company by or on behalf of such Holder
 specifically  for  inclusion  in the  documents  referred  to in the  foregoing
 indemnity.  This indemnity agreement will be in addition to any liability which
 any such Holder may otherwise have.

                  (c) Promptly after receipt by an indemnified  party under this
Section of notice of the  commencement  of any action,  such  indemnified  party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party in writing of the commencement
thereof;  but the  failure  so to  notify  the  indemnifying  party (i) will not
relieve it from  liability  under  paragraph  (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure results in the
forfeiture by the  indemnifying  party of substantial  rights and defenses;  and
(ii) will not, in any event, relieve the indemnifying party from any obligations
to any indemnified party other than the  indemnification  obligation provided in
paragraph (a) or (b) above. The indemnifying  party shall be entitled to appoint
counsel of the indemnifying  party's choice at the indemnifying  party's expense
to represent the indemnified  party in any action for which  indemnification  is
sought (in which case the indemnifying party shall not thereafter be responsible
for the fees and expenses of any separate  counsel  retained by the  indemnified
party or  parties  except  as set forth  below);  provided,  however,  that such
                                                  --------   -------
counsel   shall  be   reasonably   satisfactory   to  the   indemnified   party.
Notwithstanding  the  indemnifying   party's  election  to  appoint  counsel  to
represent the indemnified  party in an action,  the indemnified party shall have
the  right  to  employ  separate  counsel  (including  local  counsel),  and the
indemnifying  party shall bear the reasonable  fees,  costs and expenses of such
separate counsel if (i) the use of counsel chosen by the  indemnifying  party to
represent  the  indemnified  party would present such counsel with a conflict of
interest;  (ii) the actual or potential  defendants  in, or targets of, any such
action include both the  indemnified  party and the  indemnifying  party and the
indemnified  party  shall  have  reasonably  concluded  that  there may be legal
defenses  available to it and/or other  indemnified  parties which are different
from or  additional  to those  available to the  indemnifying  party;  (iii) the
indemnifying  party shall not have employed counsel  reasonably  satisfactory to
the  indemnified  party to represent the  indemnified  party within a reasonable
time after notice of the  institution of such action;  or (iv) the  indemnifying
party shall  authorize the indemnified  party to employ separate  counsel at the
expense of the indemnifying party. An indemnifying party will not,

                                       16

<PAGE>


 without  the  prior  written  consent  of the  indemnified  parties,  settle or
 compromise  or consent to the entry of any judgment with respect to any pending
 or  threatened  claim,   action,   suit  or  proceeding  in  respect  of  which
 indemnification  or contribution  may be sought  hereunder  (whether or not the
 indemnified  parties are actual or  potential  parties to such claim or action)
 unless such settlement, compromise or consent includes an unconditional release
 of each indemnified party from all liability arising out of such claim, action,
 suit or proceeding.  The  indemnifying  party shall not, in connection with any
 one action or separate but substantially similar or related actions in the same
 jurisdiction  arising out of the same general allegations or circumstances,  be
 liable for fees and  expenses of more than one  separate  law firm of attorneys
 (in  addition to any local  counsel) for all  indemnified  parties and all such
 fees  and  expenses  shall  be  reimbursed  as  incurred.  Such  firm  shall be
 designated by Salomon Smith Barney Inc. in the case of the parties  indemnified
 pursuant to Section 6(a) and by the Company in the case of parties  indemnified
 pursuant to Section  6(b).  Each  indemnified  party  shall use all  reasonable
 efforts to  cooperate  with the  indemnifying  party in the defense of any such
 action or claim.

                  (d) In the event that the indemnity  provided in paragraph (a)
or (b) of this Section is  unavailable  to or  insufficient  to hold harmless an
indemnified party for any reason, then each applicable  indemnifying party shall
have a joint and several  obligation  to  contribute  to the  aggregate  losses,
claims,  damages and liabilities  (including legal or other expenses  reasonably
incurred in  connection  with  investigating  or defending  same)  (collectively
"Losses") to which such  indemnified  party may be subject in such proportion as
is appropriate to reflect the relative  benefits  received by such  indemnifying
party, on the one hand, and such indemnified  party, on the other hand, from the
Initial Placement and the Registration  Statement which resulted in such Losses;
provided, however, that in no case shall any Initial Purchaser or any subsequent
- --------  -------
Holder of any Security or New Security be responsible, in the aggregate, for any
amount in excess of the  purchase  discount  or  commission  applicable  to such
Security, or in the case of a New Security,  applicable to the Security that was
exchangeable into such New Security, as set forth on the cover page of the Final
Memorandum, nor shall any underwriter be responsible for any amount in excess of
the underwriting  discount or commission  applicable to the securities purchased
by such  underwriter  under the  Registration  Statement  which resulted in such
Losses.  If the allocation  provided by the  immediately  preceding  sentence is
unavailable for any reason,  the  indemnifying  party and the indemnified  party
shall  contribute in such  proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of such indemnifying party, on the
one hand, and such indemnified  party, on the other hand, in connection with the
statements  or  omissions  which  resulted  in such  Losses as well as any other
relevant  equitable  considerations.  Benefits  received by the Company shall be
deemed to be equal to the total net proceeds from the Initial  Placement (before
deducting  expenses)  as set  forth on the cover  page of the Final  Memorandum.
Benefits  received by the Initial  Purchasers shall be deemed to be equal to the
total purchase  discounts and  commissions as set forth on the cover page of the
Final Memorandum,  and benefits received by any other Holders shall be deemed to
be equal to the value of receiving Securities or New Securities,  as applicable,
registered under the Act or selling Securities or New Securities, as applicable,
under a Shelf Registration Statement. Benefits received by any underwriter shall
be deemed to be equal to the total  underwriting  discounts and commissions,  as
set forth on the cover page of the Prospectus

                                       17

<PAGE>


forming a part of the  Registration  Statement  which  resulted in such Losses.
Relative fault shall be determined by reference to, among other things, whether
any alleged untrue statement or omission relates to information provided by the
indemnifying  party, on the one hand, or by the indemnified party, on the other
hand,  the  intent of the  parties  and  their  relative  knowledge,  access to
information  and  opportunity  to correct or prevent  such untrue  statement or
omission.  The  parties  agree  that it  would  not be just  and  equitable  if
contribution  were determined by pro rata allocation  (even if the Holders were
treated as one entity for such purpose) or any other method of allocation which
does not take  account  of the  equitable  considerations  referred  to  above.
Notwithstanding  the  provisions  of this  paragraph  (d), no person  guilty of
fraudulent  misrepresentation  (within the meaning of Section 11(f) of the Act)
shall be  entitled to  contribution  from any person who was not guilty of such
fraudulent  misrepresentation.  For purposes of this  Section,  each person who
controls a Holder  within the meaning of either the Act or the Exchange Act and
each director,  officer,  employee and agent of such Holder shall have the same
rights to contribution as such Holder, and each person who controls the Company
within the meaning of either the Act or the Exchange  Act,  each officer of the
Company who shall have signed the  Registration  Statement and each director of
the Company shall have the same rights to contribution as the Company,  subject
in each case to the applicable terms and conditions of this paragraph (d).

                  (e) The  provisions  of this Section will remain in full force
and effect,  regardless of any investigation made by or on behalf of any Holder
or the  Company  or  any  of the  directors,  officers,  employees,  agents  or
controlling  persons  referred to in this Section hereof,  and will survive the
sale by a Holder of securities covered by a Registration Statement.

                  7.  Underwritten Registrations.  (a)  If any of the Securities
                      --------------------------
or New  Securities,  as the  case  may be,  covered  by any  Shelf  Registration
Statement are to be sold in an underwritten  offering, the Managing Underwriters
shall be selected by the Majority Holders, provided, however, that such Managing
                                           --------  -------
Underwriters must be reasonably satisfactory to the Company.

                  (b) No person may  participate  in any  underwritten  offering
 pursuant to any Shelf Registration Statement,  unless such person (i) agrees to
 sell such  person's  Securities or New  Securities,  as the case may be, on the
 basis  reasonably  provided in any  underwriting  arrangements  approved by the
 persons  entitled  hereunder to approve such  arrangements;  (ii) completes and
 executes  all  questionnaires,  powers of attorney,  indemnities,  underwriting
 agreements  and other  documents  reasonably  required  under the terms of such
 underwriting arrangements; and (iii) agrees to be bound by Section 6(b) hereof.

                  8.  No Inconsistent Agreements. The Company has not, as of the
                      --------------------------
 date hereof,  entered  into,  nor shall it, on or after the date hereof,  enter
 into, any agreement with respect to its securities  that is  inconsistent  with
 the rights  granted  to the  Holders  herein or  otherwise  conflicts  with the
 provisions hereof.

                  9.  Amendments and Waivers.  The provisions of this Agreement,
                      ----------------------
including  the  provisions  of this  sentence,  may not be  amended,  qualified,
modified or supplemented, and

                                       18

<PAGE>


waivers or consents to departures from the provisions  hereof may not be given,
unless the Company has obtained the written consent of the Holders of at least a
majority of the then outstanding  aggregate  principal amount of Securities (or,
after the  consummation  of any  Registered  Exchange  Offer in accordance  with
Section 2 hereof, of New Securities);  provided that, with respect to any matter
                                       --------
that  directly  or  indirectly  affects  the  rights  of any  Initial  Purchaser
hereunder,  the Company  shall  obtain the written  consent of each such Initial
Purchaser  against which such amendment,  qualification,  supplement,  waiver or
consent is to be effective.  Notwithstanding the foregoing (except the foregoing
proviso),  a waiver or consent to  departure  from the  provisions  hereof  with
respect to a matter  that  relates  exclusively  to the rights of Holders  whose
Securities or New  Securities,  as the case may be, are being sold pursuant to a
Registration  Statement  and that does not  directly  or  indirectly  affect the
rights of other Holders may be given by the Majority Holders,  determined on the
basis of  Securities  or New  Securities,  as the case may be, being sold rather
than registered under such Registration Statement.

                  10. Notices. All notices and other communications provided for
                      -------
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier or air courier guaranteeing overnight delivery:

                  (a) if to a Holder,  at the most current address given by such
Holder to the Company in accordance  with the provisions of this Section,  which
address  initially  is, with respect to each Holder,  the address of such Holder
maintained by the Registrar  under the Indenture,  with a copy in like manner to
Salomon Smith Barney Inc.

                  (b) if to you, initially at the respective addresses set forth
in the Purchase Agreement; and

                  (c) if to the Company, initially at its address set forth in
the Purchase Agreement.

                  All such  notices and  communications  shall be deemed to have
been duly given when received.

                  The Initial  Purchasers  or the Company by notice to the other
 parties may designate  additional or different addresses for subsequent notices
 or communications.

                  11. Successors.  This Agreement shall inure to the benefit of
                      ----------
and be  binding  upon  the  successors  and  assigns  of  each  of the  parties,
including,  without  the need for an express  assignment  or any  consent by the
Company thereto,  subsequent  Holders of Securities and the New Securities.  The
Company  hereby agrees to extend the benefits of this Agreement to any Holder of
Securities and the New Securities,  and any such Holder who receives and accepts
any benefits of this Agreement and who is thereafter bound by the obligations of
this Agreement may  specifically  enforce the provisions of this Agreement as if
an original party hereto. Notwithstanding the foregoing, nothing herein shall be
deemed to permit any assignment,  transfer or other disposition of Securities or
New  Securities  in  violation  of the terms of the  Purchase  Agreement  or the
Indenture. Each Holder who receives and accepts any benefits of

                                       19

<PAGE>


 this Agreement will be deemed to agree to be bound by and comply with the terms
 and provisions of this Agreement.

                  12.  Counterparts.  This Agreement may be in signed
                       ------------
counterparts, each of which shall an original and all of which together shall
constitute one and the same agreement.

                  13. Headings.  The headings used herein are for convenience
                      --------
only and shall not affect the construction hereof.

                  14. Applicable Law.  This Agreement shall be governed by and
                      --------------
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York.

                  15. Severability.  In the  event  that any one of more of the
                      ------------
 provisions  contained herein, or the application  thereof in any circumstances,
 is held invalid,  illegal or unenforceable  in any respect for any reason,  the
 validity,  legality  and  enforceability  of any such  provision in every other
 respect and of the remaining provisions hereof shall not be in any way impaired
 or affected thereby, it being intended that all of the rights and privileges of
 the parties shall be enforceable to the fullest extent permitted by law.

                  16. Securities Held by the Company,  etc. Whenever the consent
                      ------------------------------------
or  approval  of  Holders  of a  specified  percentage  of  principal  amount of
Securities  or  New  Securities  is  required   hereunder,   Securities  or  New
Securities,  as  applicable,  held by the  Company  or its  Affiliates  shall be
disregarded and deemed not to be outstanding in determining whether such consent
or approval was given by the Holders of such required percentage.

                                       20

<PAGE>


                  If the foregoing is in accordance with your  understanding  of
our  agreement,  please  sign and return to us the  enclosed  duplicate  hereof,
whereupon this letter and your acceptance  shall  represent a binding  agreement
among the Company and the several Initial Purchasers.

                                                Very truly yours,
                                                Levi Strauss & Co.

                                                by
                                                     --------------------------
                                                     Name:
                                                     Title:









                                       21


<PAGE>


The  foregoing  Agreement is hereby
confirmed and accepted as of the
date first above written.

Salomon Smith Barney Inc.
Banc of America Securities LLC
Scotia Capital (USA) Inc.
Chase Securities Inc.
Banc One Capital Markets, Inc

By: Salomon Smith Barney Inc.



 by
       -----------------------
       Name:
       Title:

For themselves and the other several Initial
Purchasers named in Schedule I to
the Purchase Agreement.


                                       22

<PAGE>


ANNEX A

Each  Broker-Dealer that receives New Securities for its own account pursuant to
the  Exchange  Offer  must  acknowledge  that it will  deliver a  prospectus  in
connection  with any resale of such New  Securities.  The Letter of  Transmittal
states that by so acknowledging and by delivering a prospectus,  a Broker-Dealer
will not be deemed to admit that it is an  "underwriter"  within the  meaning of
the Securities Act. This Prospectus,  as it may be amended or supplemented  from
time to time, may be used by a  Broker-Dealer  in connection with resales of New
Securities  received in  exchange  for  Securities  where such  Securities  were
acquired by such Broker-Dealer as a result of market-making  activities or other
trading activities. The Company has agreed that, starting on the Expiration Date
(as  defined  herein)  and  ending on the close of  business  180 days after the
Expiration Date, it will make this Prospectus available to any Broker-Dealer for
use in connection with any such resale. See "Plan of Distribution".




                                       23

<PAGE>


ANNEX B

Each  Broker-Dealer that receives New Securities for its own account in exchange
for Securities,  where such Securities were acquired by such  Broker-Dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will  deliver a  prospectus  in  connection  with any resale of such New
Securities. See "Plan of Distribution".





                                       24

<PAGE>


ANNEX C



                              PLAN OF DISTRIBUTION

                  Each  Broker-Dealer  that receives New  Securities for its own
account  pursuant to the Exchange Offer must  acknowledge that it will deliver a
prospectus  in  connection  with  any  resale  of  such  New  Securities.   This
Prospectus,  as it may be amended or supplemented from time to time, may be used
by a  Broker-Dealer  in connection  with resales of New  Securities  received in
exchange  for  Securities  where such  Securities  were  acquired as a result of
market-making  activities  or other trading  activities.  The Company has agreed
that,  starting on the  Expiration  Date and ending on the close of business 180
days after the  Expiration  Date,  it will make this  Prospectus,  as amended or
supplemented, available to any Broker-Dealer for use in connection with any such
resale. In addition, until __________,  2001, all dealers effecting transactions
in the New Securities may be required to deliver a prospectus.

                  The Company will not receive any proceeds from any sale of New
 Securities by  brokers-dealers.  New Securities  received by Broker-Dealers for
 their own account  pursuant to the Exchange Offer may be sold from time to time
 in one or more  transactions  in the  over-the-counter  market,  in  negotiated
 transactions,  through  the  writing  of  options  on the New  Securities  or a
 combination of such methods of resale,  at market prices prevailing at the time
 of resale,  at prices  related to such  prevailing  market prices or negotiated
 prices.  Any such resale may be made  directly to  purchasers  or to or through
 brokers or dealers who may receive  compensation  in the form of commissions or
 concessions from any such  Broker-Dealer  and/or the purchasers of any such New
 Securities. Any Broker-Dealer that resells New Securities that were received by
 it for its own account  pursuant to the Exchange Offer and any broker or dealer
 that  participates in a distribution of such New Securities may be deemed to be
 an  "underwriter"  within  the  meaning  of the  Securities  Act and any profit
 resulting  from  any such  resale  of New  Securities  and any  commissions  or
 concessions  received  by any such  persons  may be deemed  to be  underwriting
 compensation under the Securities Act. The Letter of Transmittal states that by
 acknowledging  that  it  will  deliver  and  by  delivering  a  prospectus,   a
 Broker-Dealer  will not be deemed to admit that it is an  "underwriter"  within
 the meaning of the Securities Act.

                  For a period  of 180  days  after  the  Expiration  Date,  the
 Company  will  promptly  send  additional  copies  of this  Prospectus  and any
 amendment or supplement to this Prospectus to any  Broker-Dealer  that requests
 such documents in the Letter of Transmittal.  The Company has agreed to pay all
 expenses  incident to the Exchange Offer (including the expenses of one counsel
 for the Holders of the Securities) other than commissions or concessions of any
 brokers or dealers and will indemnify the holders of the Securities  (including
 any Broker-Dealers)  against certain liabilities,  including  liabilities under
 the Securities Act.

                                       25

<PAGE>


 ANNEX D

 Rider A
 -------

         [ ]      CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO
                  RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10
                  COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
                  THERETO.

                  Name:    _______________________________________
                  Address: _______________________________________
                           _______________________________________




Rider B
- -------

If the undersigned is not a  Broker-Dealer,  the undersigned  represents that it
acquired the New  Securities in the ordinary  course of its business,  it is not
engaged in, and does not intend to engage in, a  distribution  of New Securities
and it has no arrangements or understandings with any person to participate in a
distribution of the New Securities.  If the undersigned is a Broker-Dealer  that
will receive New Securities for its own account in exchange for  Securities,  it
represents  that the Securities to be exchanged for New Securities were acquired
by it as a result of  market-making  activities or other trading  activities and
acknowledges  that it will deliver a prospectus in connection with any resale of
such  New  Securities;   however,  by  so  acknowledging  and  by  delivering  a
prospectus,  the  undersigned  will  not  be  deemed  to  admit  that  it  is an
"underwriter" within the meaning of the Securities Act.





                                       26


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.7
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>REGISTRATION RIGHTS AGREEMENT
<TEXT>



                               LEVI STRAUSS & CO.

                 125,000,000 Euro Dollars 11 5/8% Senior Notes Due 2008

                         REGISTRATION RIGHTS AGREEMENT


                                                              New York, New York
                                                                January 18, 2001

 Salomon Smith Barney Inc. Banc of America
 Securities LLC Scotia Capital (USA) Inc.
 Chase Securities Inc.
 Banc One Capital Markets, Inc.

 As Representatives of the Initial Purchasers c/o Salomon
 Smith Barney Inc.
 388 Greenwich Street
 New York, New York 10013

 Ladies and Gentlemen:

                  Levi  Strauss & Co., a  corporation  organized  under the laws
of Delaware (the "Company"), proposes  to issue and sell to  certain  purchasers
(the  "Initial Purchasers"),  upon the  terms set forth in a  purchase agreement
of even date herewith (the "Purchase  Agreement"),  its 125,000,000 euro dollars
of  11 5/8%  Senior Notes Due 2008 ( the  "Securities")  relating to the initial
placement  of  the Securities (the "Initial  Placement").  To induce the Initial
Purchasers  to  enter  into the Purchase Agreement and to satisfy a condition of
your obligations thereunder,  the Company agrees with you for your  benefit  and
the  benefit  of the holders from time to time of the Securities  (including the
Initial  Purchasers) (each a "Holder" and, together, the "Holders"), as follows:

                  1.  Definitions. Capitalized terms used herein without
                      -----------
definition shall have the respective meanings set forth in the Purchase
Agreement.  As used in this Agreement, the following capitalized defined terms
shall have the following meanings:

                  "Act" shall mean the Securities  Act of 1933, as amended,  and
the rules and regulations of the Commission promulgated thereunder.

<PAGE>

                  "Affiliate"  of any  specified  person  shall  mean any  other
person that,  directly or indirectly,  is in control of, is controlled by, or is
under  common  control  with,  such  specified  person.  For  purposes  of  this
definition,  control of a person shall mean the power,  direct or  indirect,  to
direct or cause the  direction  of the  management  and  policies of such person
whether by contract or otherwise;  and the terms  "controlling" and "controlled"
shall have meanings correlative to the foregoing.

                  "Broker-Dealer"  shall mean any broker or dealer registered as
such under the Exchange Act.

                  "Business  Day" shall mean any day other  than a  Saturday,  a
Sunday  or a legal  holiday  or a day on  which  banking  institutions  or trust
companies are authorized or obligated by law to close in New York City.

                  "Commission"   shall   mean  the   Securities   and   Exchange
Commission.

                  "Dollar Notes" shall mean the Company's U.S. dollar
denominated 11 5/8% Senior Notes due 2008.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as  amended,  and  the  rules  and  regulations  of the  Commission  promulgated
thereunder.

                  "Exchange Offer Prospectus" shall mean the prospectus included
 in the Exchange Offer Registration Statement, as amended or supplemented by any
 prospectus supplement, with respect to the terms of the offering of any portion
 of the New  Securities  (and,  if the  Company  so  chooses  and to the  extent
 permitted by  applicable  law,  any portion of the  Company's  debt  securities
 offered in  exchange  for the Dollar  Notes)  covered  by such  Exchange  Offer
 Registration  Statement,  and all  amendments and  supplements  thereto and all
 material incorporated by reference therein.

                                       2

<PAGE>

                  "Exchange  Offer  Registration  Period" shall mean the 180-day
 period following the consummation of the Registered  Exchange Offer,  exclusive
 of any period  during  which any stop order shall be in effect  suspending  the
 effectiveness of the Exchange Offer Registration Statement.

                  "Exchange   Offer   Registration   Statement"   shall  mean  a
 registration statement of the Company on an appropriate form under the Act with
 respect to the Registered Exchange Offer (and, if the Company so chooses and to
 the extent  permitted by applicable  law, with respect to an offer to issue and
 deliver to the holders of the Dollar Notes, in exchange for the Dollar Notes, a
 like aggregate principal amount of the Company's debt securities denominated in
 U.S. dollars),  all amendments and supplements to such registration  statement,
 including  post-effective  amendments  thereto,  in  each  case  including  the
 Exchange  Offer  Prospectus  contained  therein,  all exhibits  thereto and all
 material incorporated by reference therein.

                  "Exchanging  Dealer"  shall mean any Holder (which may include
any Initial  Purchaser) that is a  Broker-Dealer  and elects to exchange for New
Securities  any  Securities  that it acquired for its own account as a result of
market-making  activities or other trading activities (but not directly from the
Company or any Affiliate of the Company).

                  "Holder"  shall  have the  meaning  set forth in the  preamble
hereto.

                  "Indenture"   shall  mean  the   indenture   relating  to  the
 Securities,  dated as of January 18,  2001,  between the Company and  Citibank,
 N.A.,  as trustee,  as the same may be amended from time to time in  accordance
 with the terms thereof.

                  "Initial  Placement"  shall have the  meaning set forth in the
preamble  hereto.  "Initial  Purchaser"  shall have the meaning set forth in the
preamble  hereto.  "Losses"  shall have the  meaning  set forth in Section  6(d)
hereof.

                  "Majority Holders" shall mean the Holders of a majority of the
 aggregate  principal  amount  of  Securities  registered  under a  Registration
 Statement.

                  "Managing  Underwriters"  shall mean the investment  banker or
 investment   bankers  and  manager  or  managers   that  shall   administer  an
 underwritten offering.

                  "New  Securities"  shall mean debt  securities  of the Company
 identical in all material respects to the Securities  (except that the interest
 rate  step-up  provisions  and the transfer  restrictions  shall be modified or
 eliminated,  as  appropriate)  and to be issued under the  Indenture or the New
 Securities Indenture.

                  "New Securities Indenture" shall mean an indenture between the
 Company and the New Securities  Trustee,  identical in all material respects to
 the  Indenture  (except  that the  interest  rate  step-up  provisions  will be
 modified or eliminated, as appropriate).

                  "New  Securities  Trustee" shall mean the Trustee or a bank or
 trust company  reasonably  satisfactory to the Initial  Purchasers,  as trustee
 with respect to the New Securities under the New Securities Indenture.

                  "Prospectus"  shall  mean  the  prospectus   included  in  any
 Registration  Statement  (including,  without  limitation,  a  prospectus  that
 discloses information  previously omitted from a prospectus filed as part of an
 effective  registration statement in reliance upon Rule 430A under the Act), as
 amended or supplemented by any prospectus supplement, with respect to the terms
 of the offering of any portion of the Securities or the New Securities  covered
 by such Registration Statement,  and all amendments and supplements thereto and
 all material incorporated by reference therein.

                                       3

<PAGE>


                  "Purchase  Agreement"  shall have the meaning set forth in the
preamble hereto.

                  "Registered  Exchange  Offer" shall mean the proposed offer of
the Company to issue and deliver to the Holders of the  Securities  that are not
prohibited by any law or policy of the  Commission  from  participating  in such
offer, in exchange for the Securities,  a like aggregate principal amount of the
New Securities.

                  "Registration   Statement"   shall  mean  any  Exchange  Offer
Registration  Statement or Shelf  Registration  Statement that covers any of the
Securities or the New Securities  pursuant to the provisions of this  Agreement,
any  amendments  and  supplements  to  such  registration  statement,  including
post-effective  amendments  (in each case  including  the  Prospectus  contained
therein),  all  exhibits  thereto and all  material  incorporated  by  reference
therein.

                  "Securities"  shall have the meaning set forth in the preamble
hereto.

                  "Shelf  Registration"  shall  mean  a  registration   effected
pursuant to Section 3 hereof.

                  "Shelf  Registration  Period"  has the  meaning  set  forth in
Section 3(b) hereof.

                  "Shelf   Registration   Statement"   shall   mean  a   "shelf"
 registration  statement of the Company  pursuant to the provisions of Section 3
 hereof  which  covers  some  or all of the  Securities  or New  Securities,  as
 applicable, on an appropriate form under Rule 415 under the Act, or any similar
 rule that may be adopted by the Commission,  amendments and supplements to such
 registration  statement,  including  post-effective  amendments,  in each  case
 including  the  Prospectus  contained  therein,  all  exhibits  thereto and all
 material incorporated by reference therein.

                  "Trustee"   shall  mean  the  trustee   with  respect  to  the
Securities under the Indenture.

                  "underwriter"  shall mean any  underwriter  of  Securities  in
 connection with an offering thereof under a Shelf Registration Statement.

                  2.  Registered Exchange  Offer.  (a) The Company shall prepare
                      ----------
and, not later than 60 days  following the date of the original  issuance of the
Securities,  shall file with the  Commission  the  Exchange  Offer  Registration
Statement with respect to the Registered  Exchange Offer.  The Company shall use
its best efforts to cause the Exchange  Offer  Registration  Statement to become
effective under the Act within 120 days of the date of the original  issuance of
the Securities.

                  (b) Upon the effectiveness of the Exchange Offer  Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the  objective  of such  Registered  Exchange  Offer to enable each Holder
electing to exchange Securities for New

                                       4

<PAGE>


Securities  (assuming  that such  Holder  is not an  Affiliate  of the  Company,
acquires the New  Securities in the ordinary  course of such Holder's  business,
has no  arrangements  with any person to participate in the  distribution of the
New Securities and is not prohibited by any law or policy of the Commission from
participating  in the  Registered  Exchange  Offer) to trade such New Securities
from and after their receipt without any  limitations or restrictions  under the
Act and without material restrictions under the securities laws of a substantial
proportion of the several states of the United States.

                  (c)  In connection with the Registered Exchange Offer, the
Company shall:

                  (i) mail to each Holder a copy of the Prospectus  forming part
         of  the  Exchange  Offer  Registration  Statement,   together  with  an
         appropriate letter of transmittal and related documents;

                  (ii) keep the Registered Exchange Offer open for not less than
         30  Business  Days and not more than 45  Business  Days  after the date
         notice  thereof is mailed to the Holders  (or, in each case,  longer if
         required by applicable law);

                  (iii) use its  reasonable  best  efforts to keep the  Exchange
         Offer Registration Statement continuously  effective,  supplemented and
         amended as required,  under the Act to ensure that it is available  for
         sales of New Securities by Exchanging Dealers during the Exchange Offer
         Registration  Period;  provided  that if any  Initial  Purchaser  holds
                                --------
         Securities  that it  acquired  for  its  own  account  as a  result  of
         market-making  activities or other trading activities (but not directly
         from the Company or any Affiliate of the Company)  after the expiration
         of the Exchange Offer Registration Period, that Initial Purchaser shall
         have the right, for 90 days immediately following the expiration of the
         Exchange Offer Registration Period, to request the Company to prepare a
         prospectus  for  use  by  that  Initial  Purchaser  for  sales  of  New
         Securities,  and the Company shall use its  reasonable  best efforts to
         prepare that prospectus for such use;

                  (iv) utilize the services of a depositary  for the  Registered
         Exchange  Offer with an address in the Borough of Manhattan in New York
         City,  which  may be the  Trustee,  the New  Securities  Trustee  or an
         Affiliate of either of them;

                  (v) permit Holders to withdraw tendered Securities at any time
         prior to the close of business, New York time, on the last Business Day
         on which the Registered Exchange Offer is open;

                  (vi) prior to effectiveness of the Exchange Offer Registration
         Statement,  if  requested  or  required  by the  Commission,  provide a
         supplemental  letter to the  Commission (A) stating that the Company is
         conducting the Registered Exchange Offer in reliance on the position of
         the Commission in Exxon Capital Holdings  Corporation  (pub. avail. May
                           -----------------------------------
         13, 1988) and Morgan Stanley and Co., Inc. (pub.  avail. June 5, 1991);
                       ----------------------------
         and (B)  including  a  representation  that the Company has not entered
         into any

                                       5

<PAGE>


         arrangement  or  understanding  with any person to  distribute  the New
         Securities to be received in the Registered Exchange Offer and that, to
         the  best  of  the  Company's   information  and  belief,  each  Holder
         participating  in the  Registered  Exchange  Offer is acquiring the New
         Securities in the ordinary course of business and has no arrangement or
         understanding with any person to participate in the distribution of the
         New Securities; and

                  (vii)  comply in all respects with all applicable laws.

                  (d) As soon as  practicable  after the close of the Registered
Exchange Offer, the Company shall:

                  (i)  accept  for  exchange  all  Securities  tendered  and not
         validly withdrawn pursuant to the Registered Exchange Offer;

                  (ii) deliver to the Trustee for cancelation in accordance with
         Section 4(s) all Securities so accepted for exchange; and

                  (iii)   cause  the  New   Securities   Trustee   promptly   to
         authenticate  and  deliver to each  Holder of  Securities  a  principal
         amount  of  New  Securities  equal  to  the  principal  amount  of  the
         Securities of such Holder so accepted for exchange.

                  (e) Each Holder hereby  acknowledges  and agrees that any such
Holder using the Registered  Exchange Offer to participate in a distribution  of
the New  Securities  (x) could not under  Commission  policy as in effect on the
date of this  Agreement rely on the position of the Commission in Morgan Stanley
                                                                  --------------
and Co., Inc. (pub. avail. June 5, 1991) and Exxon Capital Holdings  Corporation
- -------------                                -----------------------------------
(pub.  avail.  May 13,  1988),  as  interpreted  in the  Commission's  letter to
Shearman & Sterling dated July 2, 1993 and similar  no-action  letters;  and (y)
must comply with the  registration and prospectus  delivery  requirements of the
Act in connection with any secondary resale transaction which must be covered by
an effective  registration  statement  containing  the selling  security  holder
information required by Item 507 or 508, as applicable,  of Regulation S-K under
the Act if the resales are of New Securities obtained by such Holder in exchange
for Securities  acquired by such Holder  directly from the Company or one of its
Affiliates.  Accordingly,  each Holder  participating in the Registered Exchange
Offer shall be required to  represent  to the Company  that,  at the time of the
consummation of the Registered Exchange Offer:

                  (i)  any  New  Securities  received  by  such  Holder  will be
         acquired in the ordinary course of business;

                  (ii) such Holder  will have no  arrangement  or  understanding
         with any person to participate in the distribution of the Securities or
         the New Securities within the meaning of the Act; and

                                       6

<PAGE>


                  (iii)  such Holder is not an Affiliate of the Company.

                  (f)  If  any  Initial  Purchaser  determines  that  it is  not
 eligible to participate  in the  Registered  Exchange Offer with respect to the
 exchange of Securities  constituting any portion of an unsold allotment, at the
 request of such Initial Purchaser,  the Company shall issue and deliver to such
 Initial  Purchaser or the person  purchasing New Securities  registered under a
 Shelf  Registration  Statement  as  contemplated  by Section 3 hereof from such
 Initial Purchaser, in exchange for such Securities,  a like principal amount of
 New  Securities.  The  Company  shall use its best  efforts  to cause the CUSIP
 Service  Bureau to issue the same CUSIP numbers for such New  Securities as for
 New Securities issued pursuant to the Registered Exchange Offer.

                  3.  Shelf Registration. (a) If (i) due to any change in law or
                      ------------------
applicable  interpretations  thereof  by the  Commission's  staff,  the  Company
determines upon advice of its outside counsel that it is not permitted to effect
the Registered  Exchange Offer as contemplated by Section 2 hereof; (ii) for any
other reason the Exchange Offer Registration Statement is not declared effective
within  120 days of the  date of  original  issuance  of the  Securities  or the
Registered  Exchange  Offer is not  consummated  within  150 days of the date of
original  issuance of the  Securities;  (iii) any Initial  Purchaser so requests
within 45 days of consummation of the Registered  Exchange Offer with respect to
Securities  that are not  eligible to be  exchanged  for New  Securities  in the
Registered Exchange Offer and that are held by it following  consummation of the
Registered  Exchange Offer; (iv) any Holder (other than an Initial Purchaser) so
requests within 45 days of consummation of the Registered  Exchange Offer on the
basis  that such  Holder  was not  eligible  to  participate  in the  Registered
Exchange  Offer or does not  receive  freely  tradeable  New  Securities  in the
Registered Exchange Offer other than by reason of such Holder being an Affiliate
of the Company (it being  understood  that a requirement to deliver a Prospectus
in connection with market-making activities or other trading shall not result in
the applicable  securities not being "freely tradeable");  or (v) in the case of
any Initial  Purchaser that  participates  in the  Registered  Exchange Offer or
acquires New Securities  pursuant to Section 2(f) hereof, such Initial Purchaser
does not receive  freely  tradeable New  Securities  in exchange for  Securities
constituting  any portion of an unsold  allotment (it being  understood that (x)
the requirement that an Initial  Purchaser  deliver a Prospectus  containing the
information  required  by Item 507 or 508 of  Regulation  S-K  under  the Act in
connection with sales of New Securities acquired in exchange for such Securities
shall result in such New Securities  being not "freely  tradeable";  and (y) the
requirement  that an Exchanging  Dealer deliver an Exchange Offer  Prospectus in
connection  with sales of New  Securities  acquired in the  Registered  Exchange
Offer  in  exchange  for  Securities  acquired  as  a  result  of  market-making
activities or other trading  activities  shall not result in such New Securities
being not "freely  tradeable"),  the Company  shall effect a Shelf  Registration
Statement in accordance with subsection (b) below.

                  (b) (i) The Company shall as promptly as  practicable  (but in
 no event more than 60 days after so  required  or  requested  pursuant  to this
 Section 3), file with the Commission and thereafter  shall cause to be declared
 effective under the Act a Shelf  Registration  Statement  relating to the offer
 and sale of the Securities or the New Securities, as applicable, by the Holders
 thereof  from  time to time in  accordance  with the  methods  of  distribution
 elected by such

                                       7

<PAGE>


 Holders and set forth in such Shelf Registration Statement;  provided, however,
                                                              --------  -------
 that no Holder (other than an Initial  Purchaser) shall be entitled to have the
 Securities held by it covered by such Shelf Registration  Statement unless such
 Holder agrees in writing to be bound by all of the provisions of this Agreement
 applicable  to such  Holder;  and  provided  further,  that with respect to New
                                    --------  -------
 Securities  received  by  an  Initial  Purchaser  in  exchange  for  Securities
 constituting any portion of an unsold allotment,  the Company may, if permitted
 by current  interpretations  by the Commission's  staff,  file a post-effective
 amendment  to  the  Exchange  Offer  Registration   Statement   containing  the
 information  required by Item 507 or 508 of Regulation  S-K, as applicable,  in
 satisfaction of its obligations under this subsection with respect thereto, and
 any  such  Exchange  Offer  Registration  Statement,  as so  amended,  shall be
 referred to herein as, and governed by the provisions  herein  applicable to, a
 Shelf Registration Statement.

                  (ii) The Company shall use its reasonable best efforts to keep
the  Shelf  Registration  Statement  continuously  effective,  supplemented  and
amended as required by the Act, in order to permit the  Prospectus  forming part
thereof to be usable by Holders for a period of two years from the Closing  Date
or such  shorter  period  that will  terminate  when all the  Securities  or New
Securities, as applicable, covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement (in any such case, such period
being called the "Shelf Registration  Period").  The Company shall be deemed not
to have  used  its  reasonable  best  efforts  to keep  the  Shelf  Registration
Statement  effective  during the requisite  period if it  voluntarily  takes any
action that would result in Holders of Securities covered thereby not being able
to offer and sell such Securities during that period,  unless (A) such action is
required by  applicable  law; or (B) such action is taken by the Company in good
faith and for valid business  reasons (not including  avoidance of the Company's
obligations  hereunder),  including the acquisition or divestiture of assets, so
long as the  Company  promptly  thereafter  complies  with the  requirements  of
Section  4(k)  hereof,  if  applicable.  The Company is  expressly  permitted to
suspend the effectiveness of the Shelf  Registration  Statement in good faith in
connection with the acquisition or divestiture of assets, so long as the Company
promptly  thereafter  complies with the requirements of Section 4(k) hereof,  if
applicable.

                  4.  Additional Registration Procedures. In connection with any
                      ----------------------------------
Shelf Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply.

                  (a)  The Company shall:

                  (i) furnish to you, not less than five  Business Days prior to
         the filing  thereof with the  Commission,  a copy of any Exchange Offer
         Registration Statement and any Shelf Registration  Statement,  and each
         amendment  thereof and each  amendment  or  supplement,  if any, to the
         Prospectus  included therein  (including all documents  incorporated by
         reference   therein  after  the  initial  filing)  and  shall  use  its
         reasonable best efforts to reflect in each such document, when so filed
         with the Commission, such comments as you reasonably propose;

                                       8

<PAGE>


                  (ii)  include the  information  set forth in Annex A hereto on
         the facing page of the Exchange Offer Registration  Statement, in Annex
         B hereto in the forepart of the Exchange Offer  Registration  Statement
         in a section  setting forth details of the Exchange  Offer,  in Annex C
         hereto  in the  underwriting  or plan of  distribution  section  of the
         Prospectus contained in the Exchange Offer Registration Statement,  and
         in Annex D hereto in the letter of  transmittal  delivered  pursuant to
         the Registered Exchange Offer;

                  (iii)  if  requested  by an  Initial  Purchaser,  include  the
         information  required  by  Item  507  or  508  of  Regulation  S-K,  as
         applicable,   in  the  Prospectus   contained  in  the  Exchange  Offer
         Registration Statement; and

                  (iv) in the case of a Shelf  Registration  Statement,  include
         the names of the Holders  that propose to sell  Securities  pursuant to
         the Shelf Registration Statement as selling security holders.

                  (b)  The Company shall ensure that:

                  (i) any Registration  Statement and any amendment  thereto and
         any  Prospectus  forming part thereof and any  amendment or  supplement
         thereto  complies in all material  respects  with the Act and the rules
         and regulations thereunder;

                  (ii) any Registration Statement and any amendment thereto does
         not,  when it  becomes  effective,  contain  an untrue  statement  of a
         material  fact or omit to state a material  fact  required to be stated
         therein or necessary  to make the  statements  therein not  misleading;
         provided,   however,   that  the  Holders  shall  ensure  that  written
         --------    -------
         information  furnished  to the  Company  by or on behalf of any  Holder
         specifically  for  inclusion  in such  Registration  Statement  and any
         amendment thereto,  shall not contain an untrue statement of a material
         fact or omit to state a material fact required to be stated  therein or
         necessary to make the statements therein not misleading; and

                  (iii)  any  Prospectus   forming  part  of  any   Registration
         Statement, and any amendment or supplement to such Prospectus, does not
         include  an  untrue  statement  of a  material  fact or omit to state a
         material fact necessary in order to make the statements therein, in the
         light of the circumstances  under which they were made, not misleading;
         provided,   however,   that  the  Holders  shall  ensure  that  written
         --------    -------
         information  furnished  to the  Company  by or on behalf of any  Holder
         specifically  for  inclusion  in such  Registration  Statement  and any
         amendment thereto,  shall not contain an untrue statement of a material
         fact or omit to state a material fact required to be stated  therein or
         necessary to make the statements therein not misleading.

                  (c) The Company  shall advise you,  the Holders of  Securities
covered by any Shelf Registration  Statement and any Exchanging Dealer under any
Exchange  Offer  Registration  Statement  that has  provided  in  writing to the
Company a  telephone  or  facsimile  number and  address  for  notices,  and, if
requested by you or any such Holder or Exchanging Dealer, shall

                                       9

<PAGE>


confirm such advice in writing  (which  notice  pursuant to clauses (ii) through
(v) hereof  shall be  accompanied  by an  instruction  to suspend the use of the
Prospectus until the Company shall have remedied the basis for such suspension):

                  (i) when a  Registration  Statement and any amendment  thereto
         has been filed with the Commission and when the Registration  Statement
         or any post-effective amendment thereto has become effective;

                  (ii) of any request by the  Commission  for any  amendment  or
         supplement  to the  Registration  Statement  or the  Prospectus  or for
         additional information;

                  (iii) of the  issuance  by the  Commission  of any stop  order
         suspending  the  effectiveness  of the  Registration  Statement  or the
         initiation of any proceedings for that purpose;

                  (iv) of the  receipt by the Company of any  notification  with
         respect  to the  suspension  of  the  qualification  of the  securities
         included  therein for sale in any jurisdiction or the initiation of any
         proceeding for such purpose; and

                  (v) of the  happening of any event that requires any change in
         the Registration  Statement or the Prospectus so that, as of such date,
         the  statements  therein are not  misleading and do not omit to state a
         material  fact  required to be stated  therein or necessary to make the
         statements therein (in the case of the Prospectus,  in the light of the
         circumstances under which they were made) not misleading.

                  (d) The  Company  shall use its  reasonable  best  efforts  to
 obtain  the  withdrawal  of  any  order  suspending  the  effectiveness  of any
 Registration  Statement or the qualification of the securities therein for sale
 in any jurisdiction at the earliest possible time.

                  (e) The Company  shall  furnish to each  Holder of  Securities
 covered by any Shelf Registration Statement,  without charge, at least one copy
 of such Shelf Registration Statement and any post-effective  amendment thereto,
 including all material incorporated therein by reference, and, if the Holder so
 requests in writing,  all exhibits thereto (including exhibits  incorporated by
 reference therein).

                  (f) The Company shall,  during the Shelf Registration  Period,
 deliver  to  each  Holder  of  Securities  covered  by any  Shelf  Registration
 Statement,  without  charge,  as many copies of the Prospectus  (including each
 preliminary  Prospectus) included in such Shelf Registration  Statement and any
 amendment or  supplement  thereto as such Holder may  reasonably  request.  The
 Company  consents to the use of the  Prospectus  or any amendment or supplement
 thereto by each of the selling  Holders of Securities  in  connection  with the
 offering and sale of the Securities covered by the Prospectus, or any amendment
 or supplement thereto, included in the Shelf Registration Statement.

                                       10

<PAGE>


                  (g) The Company shall furnish to each Exchanging  Dealer which
so  requests,   without  charge,  at  least  one  copy  of  the  Exchange  Offer
Registration Statement and any post-effective  amendment thereto,  including all
material  incorporated by reference  therein,  and, if the Exchanging  Dealer so
requests in writing,  all exhibits thereto (including  exhibits  incorporated by
reference therein).

                  (h) The Company shall promptly deliver to each Initial
Purchaser, each Exchanging Dealer and each other person  required  to deliver a
Prospectus  during the Exchange Offer  Registration  Period,  without charge, as
many copies of the  Prospectus  included  in such  Exchange  Offer  Registration
Statement  and any  amendment  or  supplement  thereto  as any such  person  may
reasonably  request.  The Company  consents to the use of the  Prospectus or any
amendment or supplement thereto by any Initial Purchaser,  any Exchanging Dealer
and any such other person that may be required to deliver a Prospectus following
the Registered  Exchange  Offer in connection  with the offering and sale of the
New  Securities  covered  by the  Prospectus,  or any  amendment  or  supplement
thereto, included in the Exchange Offer Registration Statement.

                  (i)  Prior  to the  Registered  Exchange  Offer  or any  other
offering of Securities pursuant to any Registration Statement, the Company shall
arrange,  if  necessary,  for the  qualification  of the  Securities  or the New
Securities  for sale under the laws of such  United  States and  European  Union
jurisdictions  as any Holder shall  reasonably  request and will  maintain  such
qualification in effect so long as required; provided that in no event shall the
                                             --------
Company be obligated to qualify to do business in any  jurisdiction  where it is
not then so qualified or to take any action that would  subject it to service of
process in suits in any such jurisdiction where it is not then so subject.

                  (j) The Company shall cooperate with the Holders of Securities
to facilitate the timely  preparation and delivery of certificates  representing
New  Securities or Securities to be issued or sold pursuant to any  Registration
Statement  free  of any  restrictive  legends  and  in  such  denominations  and
registered in such names as Holders may request.

                  (k)  Upon  the  occurrence  of  any  event   contemplated   by
subsections  (c)(ii)  through (v) above,  the Company shall  promptly  prepare a
post-effective   amendment  to  the  applicable  Registration  Statement  or  an
amendment or  supplement to the related  Prospectus  or file any other  required
document  so  that,  as  thereafter  delivered  to  Initial  Purchasers  of  the
securities included therein, the Prospectus will not include an untrue statement
of a material  fact or omit to state any  material  fact  necessary  to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading. In such circumstances,  the period of effectiveness of the
Exchange Offer  Registration  Statement  provided for in Section 2 and the Shelf
Registration  Statement  provided  for in Section 3(b) shall each be extended by
the  number of days  from and  including  the date of the  giving of a notice of
suspension  pursuant to Section 4(c) to and  including the date when the Initial
Purchasers,  the Holders of the Securities and any known Exchanging Dealer shall
have received such amended or supplemented Prospectus pursuant to this Section.

                                       11

<PAGE>


                  (l) Not  later  than the  effective  date of any  Registration
Statement,  the Company shall  provide a CUSIP number for the  Securities or the
New Securities, as the case may be, registered under such Registration Statement
and provide the Trustee with printed  certificates  for such  Securities  or New
Securities, in a form eligible for deposit with The Depository Trust Company.

                  (m) The Company  shall  comply with all  applicable  rules and
 regulations  of the  Commission  and  shall  make  generally  available  to its
 security  holders  as soon  as  practicable  after  the  effective  date of the
 applicable   Registration   Statement  an  earnings  statement  satisfying  the
 provisions of Section 11(a) of the Act.

                  (n)  The  Company   shall  cause  the  Indenture  or  the  New
 Securities  Indenture,  as the case may be,  to be  qualified  under  the Trust
 Indenture Act in a timely manner.

                  (o) The Company may require  each Holder of  Securities  to be
 sold pursuant to any Shelf Registration Statement to (i) furnish to the Company
 such  information  regarding the Holder and the distribution of such Securities
 as the Company may from time to time  reasonably  require for inclusion in such
 Registration  Statement and (ii) provide the indemnity  contemplated by Section
 6(b).  The Company  may  exclude  from such Shelf  Registration  Statement  the
 Securities  of any Holder that fails to furnish  such  information  or fails to
 provide the indemnity within a reasonable time after receiving such request.

                  (p) In the  case  of any  Shelf  Registration  Statement,  the
 Company   shall  enter  into  such   agreements   (including  if  requested  an
 underwriting  agreement  in  customary  form)  and take all  other  reasonable,
 appropriate  actions in order to expedite or facilitate the registration or the
 disposition of the Securities,  and in connection therewith, if an underwriting
 agreement is entered into, cause the same to contain indemnification provisions
 and  procedures  no less  favorable  than those set forth in Section 6 (or such
 other  provisions  and  procedures  acceptable to the Majority  Holders and the
 Managing  Underwriters,  if any) with respect to all parties to be  indemnified
 pursuant to Section 6.

                  (q)  In the case of any Shelf Registration Statement, the
Company shall:

                  (i) make reasonably available for inspection by the Holders of
         Securities to be registered thereunder,  any underwriter  participating
         in any disposition  pursuant to such  Registration  Statement,  and any
         attorney, accountant or other agent retained by the Holders or any such
         underwriter  all  relevant  financial  and  other  records,   pertinent
         corporate documents and properties of the Company and its subsidiaries;
         provided,  however,  that any information that is designated in writing
         --------   -------
         by the Company,  in good faith, as confidential at the time of delivery
         of such  information  shall be kept  confidential by the Holders or any
         such underwriter, attorney, accountant or agent, unless such disclosure
         is made in  connection  with a court  proceeding or required by law, or
         such information becomes available to the public generally or through a
         third party without an accompanying obligation of confidentiality;  and
         provided further that the Company shall
         -------- -------

                                       12

<PAGE>


         be  entitled  to  coordinate  such access to its  financial  and other
         records, corporate  documents  and  properties  in a manner  that  does
         not unreasonably interfere with the business operations of the Company
         or its subsidiaries;

                  (ii) cause the Company's officers,  directors and employees to
         supply all relevant information  reasonably requested by the Holders or
         any such underwriter,  attorney, accountant or agent in connection with
         any  such  Registration  Statement  as is  customary  for  similar  due
         diligence examinations; provided, however, that any information that is
                                 --------  -------
         designated in writing by the Company, in good faith, as confidential at
         the time of delivery of such information  shall be kept confidential by
         the Holders or any such  underwriter,  attorney,  accountant  or agent,
         unless such disclosure is made in connection with a court proceeding or
         required by law, or such  information  becomes  available to the public
         generally or through a third party without an  accompanying  obligation
         of  confidentiality;  and provided  further  that the Company  shall be
         entitled  to  respond to such  information  requests  in a  coordinated
         fashion such that such requests do not unreasonably  interfere with the
         business operations of the Company or its subsidiaries;

                  (iii) make such  representations and warranties to the Holders
         of Securities  registered  thereunder and the underwriters,  if any, in
         form,  substance  and  scope  as are  customarily  made by  issuers  to
         underwriters  in primary  underwritten  offerings and covering  matters
         including,  but  not  limited  to,  those  set  forth  in the  Purchase
         Agreement;

                  (iv)  obtain  opinions  of counsel to the  Company and updates
         thereof  (which  counsel and  opinions (in form,  scope and  substance)
         shall be reasonably satisfactory to the Managing Underwriters,  if any)
         addressed to each selling Holder and the underwriters, if any, covering
         such  matters as are  customarily  covered  in  opinions  requested  in
         underwritten  offerings  and such other  matters  as may be  reasonably
         requested by such Holders and underwriters;

                  (v) obtain "cold comfort" letters and updates thereof from the
         independent  certified  public  accountants  of the  Company  (and,  if
         necessary,  any other independent  certified public  accountants of any
         subsidiary  of the Company or of any  business  acquired by the Company
         for which financial  statements and financial data are, or are required
         to be,  included  in the  Registration  Statement),  addressed  to each
         selling   Holder   of   Securities   registered   thereunder   and  the
         underwriters,  if any, in customary  form and  covering  matters of the
         type  customarily  covered in "cold comfort" letters in connection with
         primary underwritten offerings; and

                  (vi)  deliver  such  documents  and  certificates  as  may  be
         reasonably   requested  by  the  Majority   Holders  and  the  Managing
         Underwriters,  if any,  including  those to  evidence  compliance  with
         Section  4(k)  and  with  any  customary  conditions  contained  in the
         underwriting agreement or other agreement entered into by the Company.

                                       13

<PAGE>


The actions set forth in clauses (iii),  (iv),  (v) and (vi) of this  subsection
shall be performed at (A) the effectiveness of such  Registration  Statement and
each  post-effective   amendment  thereto;   and  (B)  each  closing  under  any
underwriting or similar agreement as and to the extent required thereunder.

                  (r) If a Registered Exchange Offer is to be consummated,  upon
delivery of the Securities by Holders to the Company (or to such other person as
directed by the Company) in exchange for the New  Securities,  the Company shall
mark, or cause to be marked, on the Securities so exchanged that such Securities
are being  canceled in exchange  for the New  Securities.  In no event shall the
Securities be marked as paid or otherwise satisfied.

                  (s) The Company  will use its  reasonable  best efforts (i) if
 the Securities have been rated prior to the initial sale of such Securities, to
 confirm such ratings will apply to the Securities or the New Securities, as the
 case may be,  covered by a  Registration  Statement;  or (ii) if the Securities
 were not previously  rated,  to cause the Securities  covered by a Registration
 Statement  to be rated  with at least  one  nationally  recognized  statistical
 rating agency,  if so requested by Majority Holders with respect to the related
 Registration Statement or by any Managing Underwriters.

                  (t) In the event that any  Broker-Dealer  shall underwrite any
 Securities or participate as a member of an  underwriting  syndicate or selling
 group or "assist in the distribution"  (within the meaning of the Rules of Fair
 Practice and the By-Laws of the National  Association  of  Securities  Dealers,
 Inc.) thereof,  whether as a Holder of such Securities or as an underwriter,  a
 placement  or  sales  agent  or a broker  or  dealer  in  respect  thereof,  or
 otherwise, assist such Broker-Dealer in complying with the requirements of such
 Rules and By-Laws, including, without limitation, by:

                  (i) if such  Rules or  By-Laws  shall so  require,  engaging a
         "qualified  independent  underwriter"  (as  defined  in such  Rules) to
         participate  in the  preparation  of  the  Registration  Statement,  to
         exercise usual  standards of due diligence with respect thereto and, if
         any portion of the offering contemplated by such Registration Statement
         is an  underwritten  offering or is made  through a placement  or sales
         agent, to recommend the yield of such Securities;

                  (ii) indemnifying any such qualified  independent  underwriter
         to the  extent  of the  indemnification  of  underwriters  provided  in
         Section 6 hereof; and

                  (iii) providing such information to such  Broker-Dealer as may
         be  required  in  order  for  such  Broker-Dealer  to  comply  with the
         requirements of such Rules.

                  (u) The Company shall use its reasonable  best efforts to take
 all other steps  necessary to effect the  registration of the Securities or the
 New Securities, as the case may be, covered by a Registration Statement.

                                       14

<PAGE>


                  5.  Registration Expenses. The Company shall bear all expenses
                      ---------------------
incurred in connection with the performance of its obligations under Sections 2,
3 and 4 hereof  and,  in the event of any  Shelf  Registration  Statement,  will
reimburse the Holders for the reasonable fees and  disbursements  of one firm or
counsel  designated by the Majority Holders to act as counsel for the Holders in
connection  therewith,  and,  in the  case of any  Exchange  Offer  Registration
Statement,  will reimburse the Initial  Purchasers  for the reasonable  fees and
disbursements of counsel acting in connection therewith.

                  6.  Indemnification and Contribution. (a) The Company agrees
                      --------------------------------
to indemnify and hold harmless each Holder of Securities or New Securities, as
the case may be, covered by any Registration Statement (including each Initial
Purchaser  and,  with  respect to any  Prospectus  delivery as  contemplated  in
Section 4(h) hereof, each Exchanging Dealer), the directors, officers, employees
and agents of each such  Holder and each  person who  controls  any such  Holder
within the  meaning of either the Act or the  Exchange  Act  against any and all
losses, claims,  damages or liabilities,  joint or several, to which they or any
of them may become  subject  under the Act, the Exchange Act or other Federal or
state statutory law or regulation,  at common law or otherwise,  insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based  upon any untrue  statement  or alleged  untrue  statement  of a
material fact contained in the Registration  Statement as originally filed or in
any amendment thereof, or in any preliminary Prospectus or the Prospectus, or in
any amendment thereof or supplement  thereto,  or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
agrees to reimburse each such indemnified  party, as incurred,  for any legal or
other expenses  reasonably  incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,  however,
                                                             --------   -------
that the  Company  will not be  liable in any case to the  extent  that any such
loss, claim,  damage or liability arises out of or is based upon any such untrue
statement  or alleged  untrue  statement  or omission or alleged  omission  made
therein in reliance upon and in conformity with written information furnished to
the  Company  by or on  behalf of any such  Holder  specifically  for  inclusion
therein;  and  provided  further,  however,  that  with  respect  to any  untrue
               --------  -------   -------
statement or omission of a material fact made in a preliminary  Prospectus,  the
indemnity  agreement  contained  in this  Section  6(a)  shall  not inure to the
benefit  of any  person  to the  extent  that any such  loss,  claim,  damage or
liability of such person occurs under the circumstance  where it shall have been
determined  by a court of  competent  jurisdiction  by final  and  nonappealable
judgment that (i) the untrue  statement or omission of a material fact contained
in the  preliminary  Prospectus  was corrected in the final  Prospectus or in an
amendment  or  supplement  thereto,  (ii) the Company had  previously  furnished
copies of the final Prospectus, amendment or supplement to such person and (iii)
such loss,  claim,  damage or liability results from the fact that there was not
sent or given by such person at or prior to the written confirmation of the sale
of such  Securities,  a copy of the final  Prospectus,  amendment or supplement.
This indemnity  agreement will be in addition to any liability which the Company
may otherwise have.

                  The Company also agrees to indemnify or contribute as provided
 in Section 6(d) to Losses of each  underwriter of Securities or New Securities,
 as the case may be, registered

                                       15

<PAGE>


 under a Shelf Registration Statement, their directors,  officers,  employees or
 agents and each person who controls such underwriter on substantially  the same
 basis as that of the  indemnification of the Initial Purchasers and the selling
 Holders  provided in this Section  6(a) and shall,  if requested by any Holder,
 enter into an underwriting agreement reflecting such agreement,  as provided in
 Section 4(p) hereof.

                  (b)  Each  Holder  of  securities  covered  by a  Registration
 Statement (including each Initial Purchaser and, with respect to any Prospectus
 delivery as  contemplated  in Section  4(h)  hereof,  each  Exchanging  Dealer)
 severally  and not jointly  agrees to indemnify  and hold harmless the Company,
 each of its  directors,  each  of its  officers  who  signs  such  Registration
 Statement and each person who controls the Company within the meaning of either
 the Act or the Exchange Act, to the same extent as the foregoing indemnity from
 the Company to each such Holder, but only with reference to written information
 relating to such Holder furnished to the Company by or on behalf of such Holder
 specifically  for  inclusion  in the  documents  referred  to in the  foregoing
 indemnity.  This indemnity agreement will be in addition to any liability which
 any such Holder may otherwise have.

                  (c) Promptly after receipt by an indemnified  party under this
Section of notice of the  commencement  of any action,  such  indemnified  party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party in writing of the commencement
thereof;  but the  failure  so to  notify  the  indemnifying  party (i) will not
relieve it from  liability  under  paragraph  (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure results in the
forfeiture by the  indemnifying  party of substantial  rights and defenses;  and
(ii) will not, in any event, relieve the indemnifying party from any obligations
to any indemnified party other than the  indemnification  obligation provided in
paragraph (a) or (b) above. The indemnifying  party shall be entitled to appoint
counsel of the indemnifying  party's choice at the indemnifying  party's expense
to represent the indemnified  party in any action for which  indemnification  is
sought (in which case the indemnifying party shall not thereafter be responsible
for the fees and expenses of any separate  counsel  retained by the  indemnified
party or  parties  except  as set forth  below);  provided,  however,  that such
                                                  --------   -------
counsel   shall  be   reasonably   satisfactory   to  the   indemnified   party.
Notwithstanding  the  indemnifying   party's  election  to  appoint  counsel  to
represent the indemnified  party in an action,  the indemnified party shall have
the  right  to  employ  separate  counsel  (including  local  counsel),  and the
indemnifying  party shall bear the reasonable  fees,  costs and expenses of such
separate counsel if (i) the use of counsel chosen by the  indemnifying  party to
represent  the  indemnified  party would present such counsel with a conflict of
interest;  (ii) the actual or potential  defendants  in, or targets of, any such
action include both the  indemnified  party and the  indemnifying  party and the
indemnified  party  shall  have  reasonably  concluded  that  there may be legal
defenses  available to it and/or other  indemnified  parties which are different
from or  additional  to those  available to the  indemnifying  party;  (iii) the
indemnifying  party shall not have employed counsel  reasonably  satisfactory to
the  indemnified  party to represent the  indemnified  party within a reasonable
time after notice of the  institution of such action;  or (iv) the  indemnifying
party shall  authorize the indemnified  party to employ separate  counsel at the
expense of the indemnifying party. An indemnifying party will not,

                                       16

<PAGE>


 without  the  prior  written  consent  of the  indemnified  parties,  settle or
 compromise  or consent to the entry of any judgment with respect to any pending
 or  threatened  claim,   action,   suit  or  proceeding  in  respect  of  which
 indemnification  or contribution  may be sought  hereunder  (whether or not the
 indemnified  parties are actual or  potential  parties to such claim or action)
 unless such settlement, compromise or consent includes an unconditional release
 of each indemnified party from all liability arising out of such claim, action,
 suit or proceeding.  The  indemnifying  party shall not, in connection with any
 one action or separate but substantially similar or related actions in the same
 jurisdiction  arising out of the same general allegations or circumstances,  be
 liable for fees and  expenses of more than one  separate  law firm of attorneys
 (in  addition to any local  counsel) for all  indemnified  parties and all such
 fees  and  expenses  shall  be  reimbursed  as  incurred.  Such  firm  shall be
 designated by Salomon Smith Barney Inc. in the case of the parties  indemnified
 pursuant to Section 6(a) and by the Company in the case of parties  indemnified
 pursuant to Section  6(b).  Each  indemnified  party  shall use all  reasonable
 efforts to  cooperate  with the  indemnifying  party in the defense of any such
 action or claim.

                  (d) In the event that the indemnity  provided in paragraph (a)
or (b) of this Section is  unavailable  to or  insufficient  to hold harmless an
indemnified party for any reason, then each applicable  indemnifying party shall
have a joint and several  obligation  to  contribute  to the  aggregate  losses,
claims,  damages and liabilities  (including legal or other expenses  reasonably
incurred in  connection  with  investigating  or defending  same)  (collectively
"Losses") to which such  indemnified  party may be subject in such proportion as
is appropriate to reflect the relative  benefits  received by such  indemnifying
party, on the one hand, and such indemnified  party, on the other hand, from the
Initial Placement and the Registration  Statement which resulted in such Losses;
provided, however, that in no case shall any Initial Purchaser or any subsequent
- --------  -------
Holder of any Security or New Security be responsible, in the aggregate, for any
amount in excess of the  purchase  discount  or  commission  applicable  to such
Security, or in the case of a New Security,  applicable to the Security that was
exchangeable into such New Security, as set forth on the cover page of the Final
Memorandum, nor shall any underwriter be responsible for any amount in excess of
the underwriting  discount or commission  applicable to the securities purchased
by such  underwriter  under the  Registration  Statement  which resulted in such
Losses.  If the allocation  provided by the  immediately  preceding  sentence is
unavailable for any reason,  the  indemnifying  party and the indemnified  party
shall  contribute in such  proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of such indemnifying party, on the
one hand, and such indemnified  party, on the other hand, in connection with the
statements  or  omissions  which  resulted  in such  Losses as well as any other
relevant  equitable  considerations.  Benefits  received by the Company shall be
deemed to be equal to the total net proceeds from the Initial  Placement (before
deducting  expenses)  as set  forth on the cover  page of the Final  Memorandum.
Benefits  received by the Initial  Purchasers shall be deemed to be equal to the
total purchase  discounts and  commissions as set forth on the cover page of the
Final Memorandum,  and benefits received by any other Holders shall be deemed to
be equal to the value of receiving Securities or New Securities,  as applicable,
registered under the Act or selling Securities or New Securities, as applicable,
under a Shelf Registration Statement. Benefits received by any underwriter shall
be deemed to be equal to the total  underwriting  discounts and commissions,  as
set forth on the cover page of the Prospectus

                                       17

<PAGE>


 forming a part of the  Registration  Statement  which  resulted in such Losses.
 Relative fault shall be determined by reference to, among other things, whether
 any alleged untrue statement or omission relates to information provided by the
 indemnifying  party, on the one hand, or by the indemnified party, on the other
 hand,  the  intent of the  parties  and  their  relative  knowledge,  access to
 information  and  opportunity  to correct or prevent  such untrue  statement or
 omission.  The  parties  agree  that it  would  not be just  and  equitable  if
 contribution  were determined by pro rata allocation  (even if the Holders were
 treated as one entity for such purpose) or any other method of allocation which
 does not take  account  of the  equitable  considerations  referred  to  above.
 Notwithstanding  the  provisions  of this  paragraph  (d), no person  guilty of
 fraudulent  misrepresentation  (within the meaning of Section 11(f) of the Act)
 shall be  entitled to  contribution  from any person who was not guilty of such
 fraudulent  misrepresentation.  For purposes of this  Section,  each person who
 controls a Holder  within the meaning of either the Act or the Exchange Act and
 each director,  officer,  employee and agent of such Holder shall have the same
 rights to contribution as such Holder, and each person who controls the Company
 within the meaning of either the Act or the Exchange  Act,  each officer of the
 Company who shall have signed the  Registration  Statement and each director of
 the Company shall have the same rights to contribution as the Company,  subject
 in each case to the applicable terms and conditions of this paragraph (d).

                  (e) The  provisions  of this Section will remain in full force
 and effect,  regardless of any investigation made by or on behalf of any Holder
 or the  Company  or  any  of the  directors,  officers,  employees,  agents  or
 controlling  persons  referred to in this Section hereof,  and will survive the
 sale by a Holder of securities covered by a Registration Statement.

                  7.  Underwritten Registrations.  (a)  If any of the Securities
                      --------------------------
or New  Securities,  as the  case  may be,  covered  by any  Shelf  Registration
Statement are to be sold in an underwritten  offering, the Managing Underwriters
shall be selected by the Majority Holders, provided, however, that such Managing
                                           --------  -------
Underwriters must be reasonably satisfactory to the Company.

                  (b) No person may  participate  in any  underwritten  offering
 pursuant to any Shelf Registration Statement,  unless such person (i) agrees to
 sell such  person's  Securities or New  Securities,  as the case may be, on the
 basis  reasonably  provided in any  underwriting  arrangements  approved by the
 persons  entitled  hereunder to approve such  arrangements;  (ii) completes and
 executes  all  questionnaires,  powers of attorney,  indemnities,  underwriting
 agreements  and other  documents  reasonably  required  under the terms of such
 underwriting arrangements; and (iii) agrees to be bound by Section 6(b) hereof.

                  8.  No Inconsistent Agreements. The Company has not, as of the
                      --------------------------
 date hereof,  entered  into,  nor shall it, on or after the date hereof,  enter
 into, any agreement with respect to its securities  that is  inconsistent  with
 the rights  granted  to the  Holders  herein or  otherwise  conflicts  with the
 provisions hereof.

                  9.  Amendments and Waivers.  The provisions of this Agreement,
                      ----------------------
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and

                                       18

<PAGE>


waivers or consents to departures from the provisions  hereof may not be given,
unless the Company has obtained the written consent of the Holders of at least a
majority of the then outstanding  aggregate  principal amount of Securities (or,
after the  consummation  of any  Registered  Exchange  Offer in accordance  with
Section 2 hereof, of New Securities);  provided that, with respect to any matter
                                       --------
that  directly  or  indirectly  affects  the  rights  of any  Initial  Purchaser
hereunder,  the Company  shall  obtain the written  consent of each such Initial
Purchaser  against which such amendment,  qualification,  supplement,  waiver or
consent is to be effective.  Notwithstanding the foregoing (except the foregoing
proviso),  a waiver or consent to  departure  from the  provisions  hereof  with
respect to a matter  that  relates  exclusively  to the rights of Holders  whose
Securities or New  Securities,  as the case may be, are being sold pursuant to a
Registration  Statement  and that does not  directly  or  indirectly  affect the
rights of other Holders may be given by the Majority Holders,  determined on the
basis of  Securities  or New  Securities,  as the case may be, being sold rather
than registered under such Registration Statement.

                  10. Notices. All notices and other communications provided for
                      -------
or permitted  hereunder shall be made in writing by  hand-delivery,  first-class
mail, telex, telecopier or air courier guaranteeing overnight delivery:

                  (a) if to a Holder,  at the most current address given by such
Holder to the Company in accordance  with the provisions of this Section,  which
address  initially  is, with respect to each Holder,  the address of such Holder
maintained by the Registrar  under the Indenture,  with a copy in like manner to
Salomon Smith Barney Inc.

                  (b) if to you, initially at the respective addresses set forth
in the Purchase Agreement; and

                  (c) if to the Company, initially at its address set forth in
the Purchase Agreement

                  All such  notices and  communications  shall be deemed to have
been duly given when received.

                  The Initial  Purchasers  or the Company by notice to the other
 parties may designate  additional or different addresses for subsequent notices
 or communications.

                  11. Successors.  This Agreement shall inure to the benefit of
                      ----------
and be  binding  upon  the  successors  and  assigns  of  each  of the  parties,
including,  without  the need for an express  assignment  or any  consent by the
Company thereto,  subsequent  Holders of Securities and the New Securities.  The
Company  hereby agrees to extend the benefits of this Agreement to any Holder of
Securities and the New Securities,  and any such Holder who receives and accepts
any benefits of this Agreement and who is thereafter bound by the obligations of
this Agreement may  specifically  enforce the provisions of this Agreement as if
an original party hereto. Notwithstanding the foregoing, nothing herein shall be
deemed to permit any assignment,  transfer or other disposition of Securities or
New  Securities  in  violation  of the terms of the  Purchase  Agreement  or the
Indenture. Each Holder who receives and accepts any benefits of

                                       19

<PAGE>


 this Agreement will be deemed to agree to be bound by and comply with the terms
 and provisions of this Agreement.

                  12. Counterparts.  This Agreement may be in signed counter-
                      ------------
parts,  each of  which  shall  an  original  and  all of  which  together  shall
constitute one and the same agreement.

                  13. Headings.  The headings used herein are for convenience
                      --------
only and shall not affect the construction hereof.

                  14. Applicable Law.  This Agreement shall be governed by and
                      --------------
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York.

                  15. Severability.  In the  event  that any one of more of the
                      ------------
 provisions  contained herein, or the application  thereof in any circumstances,
 is held invalid,  illegal or unenforceable  in any respect for any reason,  the
 validity,  legality  and  enforceability  of any such  provision in every other
 respect and of the remaining provisions hereof shall not be in any way impaired
 or affected thereby, it being intended that all of the rights and privileges of
 the parties shall be enforceable to the fullest extent permitted by law.

                  16. Securities Held by the Company,  etc. Whenever the consent
                      ------------------------------------
or  approval  of  Holders  of a  specified  percentage  of  principal  amount of
Securities  or  New  Securities  is  required   hereunder,   Securities  or  New
Securities,  as  applicable,  held by the  Company  or its  Affiliates  shall be
disregarded and deemed not to be outstanding in determining whether such consent
or approval was given by the Holders of such required percentage.


                                       20

<PAGE>


                  If the foregoing is in accordance with your  understanding  of
our  agreement,  please  sign and return to us the  enclosed  duplicate  hereof,
whereupon this letter and your acceptance  shall  represent a binding  agreement
among the Company and the several Initial Purchasers.

                                      Very truly yours,
                                      Levi Strauss & Co.

                                      by
                                         --------------------------
                                         Name:
                                         Title:






                                       21

<PAGE>


The  foregoing  Agreement is hereby
confirmed and accepted as of the
date first above written.

Salomon Smith Barney Inc.
Banc of America Securities LLC
Scotia Capital (USA) Inc.
Chase Securities Inc.
Banc One Capital Markets, Inc

By: Salomon Smith Barney Inc.



by
      -----------------------
      Name:
      Title:

For themselves and the other several Initial
Purchasers named in Schedule I to
the Purchase Agreement.






                                       22

<PAGE>


ANNEX A

Each  Broker-Dealer that receives New Securities for its own account pursuant to
the  Exchange  Offer  must  acknowledge  that it will  deliver a  prospectus  in
connection  with any resale of such New  Securities.  The Letter of  Transmittal
states that by so acknowledging and by delivering a prospectus,  a Broker-Dealer
will not be deemed to admit that it is an  "underwriter"  within the  meaning of
the Securities Act. This Prospectus,  as it may be amended or supplemented  from
time to time, may be used by a  Broker-Dealer  in connection with resales of New
Securities  received in  exchange  for  Securities  where such  Securities  were
acquired by such Broker-Dealer as a result of market-making  activities or other
trading activities. The Company has agreed that, starting on the Expiration Date
(as  defined  herein)  and  ending on the close of  business  180 days after the
Expiration Date, it will make this Prospectus available to any Broker-Dealer for
use in connection with any such resale. See "Plan of Distribution".









                                       23

<PAGE>


ANNEX B

Each  Broker-Dealer that receives New Securities for its own account in exchange
for Securities,  where such Securities were acquired by such  Broker-Dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will  deliver a  prospectus  in  connection  with any resale of such New
Securities. See "Plan of Distribution".









                                       24

<PAGE>


ANNEX C



                              PLAN OF DISTRIBUTION

                  Each  Broker-Dealer  that receives New  Securities for its own
account  pursuant to the Exchange Offer must  acknowledge that it will deliver a
prospectus  in  connection  with  any  resale  of  such  New  Securities.   This
Prospectus,  as it may be amended or supplemented from time to time, may be used
by a  Broker-Dealer  in connection  with resales of New  Securities  received in
exchange  for  Securities  where such  Securities  were  acquired as a result of
market-making  activities  or other trading  activities.  The Company has agreed
that,  starting on the  Expiration  Date and ending on the close of business 180
days after the  Expiration  Date,  it will make this  Prospectus,  as amended or
supplemented, available to any Broker-Dealer for use in connection with any such
resale. In addition, until __________,  2001, all dealers effecting transactions
in the New Securities may be required to deliver a prospectus.

                  The Company will not receive any proceeds from any sale of New
 Securities by  brokers-dealers.  New Securities  received by Broker-Dealers for
 their own account  pursuant to the Exchange Offer may be sold from time to time
 in one or more  transactions  in the  over-the-counter  market,  in  negotiated
 transactions,  through  the  writing  of  options  on the New  Securities  or a
 combination of such methods of resale,  at market prices prevailing at the time
 of resale,  at prices  related to such  prevailing  market prices or negotiated
 prices.  Any such resale may be made  directly to  purchasers  or to or through
 brokers or dealers who may receive  compensation  in the form of commissions or
 concessions from any such  Broker-Dealer  and/or the purchasers of any such New
 Securities. Any Broker-Dealer that resells New Securities that were received by
 it for its own account  pursuant to the Exchange Offer and any broker or dealer
 that  participates in a distribution of such New Securities may be deemed to be
 an  "underwriter"  within  the  meaning  of the  Securities  Act and any profit
 resulting  from  any such  resale  of New  Securities  and any  commissions  or
 concessions  received  by any such  persons  may be deemed  to be  underwriting
 compensation under the Securities Act. The Letter of Transmittal states that by
 acknowledging  that  it  will  deliver  and  by  delivering  a  prospectus,   a
 Broker-Dealer  will not be deemed to admit that it is an  "underwriter"  within
 the meaning of the Securities Act.

                  For a period  of 180  days  after  the  Expiration  Date,  the
 Company  will  promptly  send  additional  copies  of this  Prospectus  and any
 amendment or supplement to this Prospectus to any  Broker-Dealer  that requests
 such documents in the Letter of Transmittal.  The Company has agreed to pay all
 expenses  incident to the Exchange Offer (including the expenses of one counsel
 for the Holders of the Securities) other than commissions or concessions of any
 brokers or dealers and will indemnify the holders of the Securities  (including
 any Broker-Dealers)  against certain liabilities,  including  liabilities under
 the Securities Act.

                                       25

<PAGE>


ANNEX D

Rider A
- -------

         [ ]      CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO
                  RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10
                  COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

                  Name:    ___________________________________________
                  Address: ___________________________________________
                           ___________________________________________



Rider B
- -------

If the undersigned is not a  Broker-Dealer,  the undersigned  represents that it
acquired the New  Securities in the ordinary  course of its business,  it is not
engaged in, and does not intend to engage in, a  distribution  of New Securities
and it has no arrangements or understandings with any person to participate in a
distribution of the New Securities.  If the undersigned is a Broker-Dealer  that
will receive New Securities for its own account in exchange for  Securities,  it
represents  that the Securities to be exchanged for New Securities were acquired
by it as a result of  market-making  activities or other trading  activities and
acknowledges  that it will deliver a prospectus in connection with any resale of
such  New  Securities;   however,  by  so  acknowledging  and  by  delivering  a
prospectus,  the  undersigned  will  not  be  deemed  to  admit  that  it  is an
"underwriter" within the meaning of the Securities Act.









                                       26


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.8
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>U.S. DOLLAR INDENTURE
<TEXT>



                                                                  EXECUTION COPY









                               LEVI STRAUSS & CO.

                         11 5/8% Senior Notes due 2008



                         _____________________________



                              U.S. DOLLAR INDENTURE



                          Dated as of January 18, 2001



                         _____________________________





                                 CITIBANK, N.A.,

                                     Trustee





================================================================================



<PAGE>

                                                                               2


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                    ARTICLE I

                   Definitions and Incorporation by Reference
                   ------------------------------------------


SECTION 1.01.           Definitions                                          1
SECTION 1.02.           Other Definitions                                    40
SECTION 1.03.           Incorporation by Reference of Trust
                        Indenture Act                                        41
SECTION 1.04.           Rules of Construction                                41


                                   ARTICLE II

                                 The Securities
                                 --------------

SECTION 2.01.           Amount of Securities; Issuable in Series             42
SECTION 2.02.           Form and Dating                                      44
SECTION 2.03.           Execution and Authentication                         44
SECTION 2.04.           Registrar and Paying Agent                           45
SECTION 2.05.           Paying Agent to Hold Money in Trust                  45
SECTION 2.06.           Securityholder Lists                                 46
SECTION 2.07.           Replacement Securities                               46
SECTION 2.08.           Outstanding Securities                               46
SECTION 2.09.           Temporary Securities                                 47
SECTION 2.10.           Cancellation                                         47
SECTION 2.11.           Defaulted Interest                                   47
SECTION 2.12.           CUSIP Numbers                                        48


                                   ARTICLE III

                                   Redemption
                                   ----------

SECTION 3.01.           Notices to Trustee                                   48
SECTION 3.02.           Selection of Securities To Be Redeemed               48
SECTION 3.03.           Notice of Redemption                                 49
SECTION 3.04.           Effect of Notice of Redemption                       49
SECTION 3.05.           Deposit of Redemption Price                          50
SECTION 3.06.           Securities Redeemed in Part                          50


<PAGE>

                                                                               3


                                   ARTICLE IV

                                    Covenants
                                    ---------

SECTION 4.01            Covenant Suspension                                  50
SECTION 4.02.           Payment of Securities                                51
SECTION 4.03.           SEC Reports                                          51
SECTION 4.04.           Limitation on Debt                                   52
SECTION 4.05.           Limitation on Restricted Payments                    55
SECTION 4.06.           Limitation on Liens                                  58
SECTION 4.07.           Limitation on Asset Sales                            58
SECTION 4.08.           Limitation on Restrictions on
                        Distributions from Restricted
                        Subsidiaries                                         62
SECTION 4.09.           Limitation on Transactions with
                        Affiliates                                           64
SECTION 4.10.           Designation of Restricted and
                        Unrestricted Subsidiaries                            65
SECTION 4.11.           Limitation on Sale and Leaseback
                        Transactions                                         67
SECTION 4.12.           Change of Control                                    67
SECTION 4.13.           Further Instruments and Acts                         69



                                    ARTICLE V

                                Successor Company
                                -----------------

SECTION 5.01.           When Company May Merge or Transfer
                        Assets                                               69




                                   ARTICLE VI

                              Defaults and Remedies
                              ---------------------

SECTION 6.01.           Events of Default                                    71
SECTION 6.02.           Acceleration                                         73
SECTION 6.03.           Other Remedies                                       74
SECTION 6.04.           Waiver of Past Defaults                              74
SECTION 6.05.           Control by Majority                                  74
SECTION 6.06.           Limitation on Suits                                  75
SECTION 6.07.           Rights of Holders to Receive Payment                 75
SECTION 6.08.           Collection Suit by Trustee                           75
SECTION 6.09.           Trustee May File Proofs of Claim                     76
SECTION 6.10.           Priorities                                           76

<PAGE>

                                                                               4


SECTION 6.11.           Undertaking for Costs                                76
SECTION 6.12.           Waiver of Stay or Extension Laws                     77


                                   ARTICLE VII

                                     Trustee
                                     -------

SECTION 7.01.           Duties of Trustee                                    77
SECTION 7.02.           Rights of Trustee                                    79
SECTION 7.03.           Individual Rights of Trustee                         80
SECTION 7.04.           Trustee's Disclaimer                                 80
SECTION 7.05.           Notice of Defaults                                   80
SECTION 7.06.           Reports by Trustee to Holders                        80
SECTION 7.07.           Compensation and Indemnity                           81
SECTION 7.08.           Replacement of Trustee                               81
SECTION 7.09.           Successor Trustee by Merger                          83
SECTION 7.10.           Eligibility; Disqualification                        83
SECTION 7.11.           Preferential Collection of Claims
                        Against Company                                      83


                                  ARTICLE VIII

                       Discharge of Indenture; Defeasance
                       ----------------------------------

SECTION 8.01.           Discharge of Liability on Securities;
                        Defeasance                                           84
SECTION 8.02.           Conditions to Defeasance                             85
SECTION 8.03.           Application of Trust Money                           86
SECTION 8.04.           Repayment to Company                                 86
SECTION 8.05.           Indemnity for Government Obligations                 87
SECTION 8.06.           Reinstatement                                        87


                           ARTICLE IX

                           Amendments
                           ----------

SECTION 9.01.           Without Consent of Holders                           87
SECTION 9.02.           With Consent of Holders                              88
SECTION 9.03.           Compliance with Trust Indenture Act                  89
SECTION 9.04.           Revocation and Effect of Consents and
                        Waivers                                              89
SECTION 9.05.           Notation on or Exchange of Securities                90
SECTION 9.06.           Trustee to Sign Amendments                           90
SECTION 9.07.           Payment for Consent                                  90

<PAGE>

                                                                               5


                                    ARTICLE X

                                  Miscellaneous
                                  -------------

SECTION 10.01.          Trust Indenture Act Controls                         91
SECTION 10.02.          Notices                                              91
SECTION 10.03.          Communication by Holders with Other Holders          92
SECTION 10.04.          Certificate and Opinion as to Conditions Precedent   92
SECTION 10.05.          Statements Required in Certificate or Opinion        92
SECTION 10.06.          When Securities Disregarded                          93
SECTION 10.07.          Rules by Trustee, Paying Agent and Registrar         93
SECTION 10.08.          Legal Holidays                                       93
SECTION 10.09.          Governing Law                                        93
SECTION 10.10.          No Recourse Against Others                           93
SECTION 10.11.          Successors                                           94
SECTION 10.12.          Multiple Originals                                   94
SECTION 10.13.          Table of Contents; Headings                          94


Appendix A - Provisions Relating to Initial Securities
             and Exchange Securities
Exhibit 1 to Appendix A
           -  Form of Initial Security
Exhibit A -  Form of Exchange Security
Exhibit B -  Form of Transferee Letter of Representation


<PAGE>


                              CROSS-REFERENCE TABLE


  TIA                                                                  Indenture
Section                                                                 Section
- -------                                                                ---------

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.
311 (a)                                                                   7.11
    (b)                                                                   7.11
    (c)                                                                   N.A.
312 (a)                                                                   2.06
    (b)                                                                   N.A.
    (c)                                                                   N.A.
313 (a)                                                                   7.06
    (b)(1)                                                                N.A.
    (b)(2)                                                                7.06
    (c)                                                                   N.A.
    (d)                                                                   7.06
314 (a)                                                                   4.02;
                                                                          4.10;
                                                                          N.A.
    (b)                                                                   N.A.
    (c)(1)                                                                N.A.
    (c)(2)                                                                N.A.
    (c)(3)                                                                N.A.
    (d)                                                                   N.A.
    (e)                                                                   N.A.
    (f)                                                                   4.10
315 (a)                                                                   7.01
    (b)                                                                   7.05;
                                                                          N.A.
    (c)                                                                   7.01
    (d)                                                                   7.01
    (e)                                                                   6.11
316 (a)
    (last
sentence)                                                                 N.A.
    (a)(1)(A)                                                             6.05
    (a)(1)(B)                                                             6.04
    (a)(2)                                                                N.A.
    (b)                                                                   6.07
317 (a)(1)                                                                6.08
    (a)(2)                                                                6.09
    (b)                                                                   2.05
318 (a)                                                                   N.A.

                           N.A. Means Not Applicable.

__________________

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

<PAGE>


                     INDENTURE dated as of January 18, 2001,






                           between LEVI STRAUSS & CO., a Delaware
                           corporation (the "Company") and CITIBANK,
                           N.A., a national banking association duly
                           organized and existing under the laws of the
                           U.S.A., as Trustee (the "Trustee").


                  Each  party  agrees as  follows  for the  benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's U.S.
dollar  denominated  11 5/8% Senior Notes due 2008,  to be issued,  from time to
time,  in one or  more  series  as in  this  Indenture  provided  (the  "Initial
Securities")  and,  if and when  issued  pursuant  to a  registered  or  private
exchange for the Initial Securities, the Company's 11 5/8% Senior Notes due 2008
(the  "Exchange  Securities"  and,  together  with the Initial  Securities,  the
"Securities"):


                                    ARTICLE I

                   Definitions and Incorporation by Reference
                   ------------------------------------------


                  SECTION 1.01.  Definitions.
                                 -----------


                  "Additional Assets" means:

                  (a)  any  Property   (other  than  cash,   cash   equivalents,
         securities  and inventory) to be owned by the Company or any Restricted
         Subsidiary and used in a Related Business; or

                  (b)  Capital  Stock  of a Person  that  becomes  a  Restricted
         Subsidiary as a result of the  acquisition of that Capital Stock by the
         Company or another Restricted Subsidiary from any Person other than the
         Company or an Affiliate of the Company; provided, however, that, in the
                                                 --------  -------
         case of this clause (b), the Restricted Subsidiary is primarily engaged
         in a Related Business.

                  "Affiliate" of any specified Person means:

                  (a)  any other Person  directly or indirectly  controlling  or
         controlled  by or under  direct or indirect  common  control  with that
         specified Person, or

<PAGE>

                                                                               2


                  (b) any other Person who is a director or officer of that
         specified Person.

                  For the purposes of this definition,  "control" when used with
respect to any Person means the power to direct the  management  and policies of
that Person,  directly or  indirectly,  whether  through the ownership of voting
securities,   by  contract  or  otherwise;   and  the  terms  "controlling"  and
"controlled" have meanings correlative to the foregoing. For purposes of Section
4.09  and  Section  4.07  and  the  definition  of  "Additional   Assets"  only,
"Affiliate"  shall also mean any Beneficial Owner of shares  representing 10% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of
the Company or of rights or warrants to purchase  that Voting Stock  (whether or
not  currently  exercisable)  and any  Person who would be an  Affiliate  of any
Beneficial Owner pursuant to the first sentence hereof.

                  "Asset  Sale"  means any sale,  lease,  transfer,  issuance or
other disposition (or series of related sales, leases,  transfers,  issuances or
dispositions)  by  the  Company  or any  Restricted  Subsidiary,  including  any
disposition by means of a merger,  consolidation  or similar  transaction  (each
referred to for the purposes of this definition as a "disposition"), of

                  (a) any shares of  Capital  Stock of a  Restricted  Subsidiary
         (other than directors' qualifying shares),

                  (b) all or  substantially  all the assets of any  division  or
         line of business of the Company or any Restricted Subsidiary,

                  (c) in  the  case  of any  disposition  by  the  Company  or a
         Restricted Subsidiary to any Person, any other assets of the Company or
         any Restricted Subsidiary outside of the ordinary course of business of
         the Company or such Restricted Subsidiary, or

                  (d) in  the  case  of any  disposition  by  the  Company  to a
         Restricted  Subsidiary of the Company, any other assets of the Company,
         other than  dispositions  in the  ordinary  course of  business  of raw
         materials to a Restricted  Subsidiary to be used in the  manufacture of
         finished goods, of finished goods to a Restricted Subsidiary for resale
         by the Restricted Subsidiary or its designee or of work in process to a
         Restricted Subsidiary,

<PAGE>

                                                                               3


         other than, in the case of clause (a), (b), (c) or (d) above,

                  (1) any disposition by a Restricted  Subsidiary to the Company
         or  by  the  Company  or  a  Restricted   Subsidiary  to  a  Restricted
         Subsidiary,

                  (2) any disposition that constitutes a Permitted Investment or
         Restricted Payment permitted by Section 4.05,

                  (3) any  disposition  effected  in  compliance  with the first
         paragraph in Section 5.01,

                  (4) a sale of accounts  receivables  and related assets of the
         type specified in the definition of "Qualified Receivables Transaction"
         to a Receivables Entity,

                  (5) a transfer of accounts  receivables  and related assets of
         the  type  specified  in  the  definition  of  "Qualified   Receivables
         Transaction"  (or  a  fractional   undivided  interest  therein)  by  a
         Receivables   Entity  in  connection   with  a  Qualified   Receivables
         Transaction, and

                  (6) a transfer of accounts receivable of the type specified in
         the definition of "Credit  Facility" that is permitted under clause (b)
         of the second paragraph of Section 4.04.

         Notwithstanding  the  foregoing,  if at any time,  the  aggregate  Fair
Market Value of assets disposed of by the Company to its Subsidiaries  since the
Issue  Date,  other than (a)  Permitted  Investments  comprised  of cash or cash
equivalents,  (b) dispositions pursuant to paragraphs (4), (5) and (6) above and
(c)  dispositions by the Company to a Restricted  Subsidiary of raw materials to
be used in the  manufacture of finished  goods, of finished goods and of work in
process,  exceeds 10% of Consolidated Tangible Assets, all asset dispositions in
excess thereof shall be treated as Asset Sales subject to the  restrictions  set
forth in Section 4.07. For purposes of this paragraph, the aggregate Fair Market
Value of assets so  transferred at any time shall be calculated by using the sum
of the  Fair  Market  Value  of each  asset  disposition  as of the  date of its
disposition.

<PAGE>

                                                                               4


                  "Attributable Debt" in respect of a Sale and Leaseback Trans-
action means, at any date of determination,

                  (a) if the Sale and Leaseback  Transaction  is a Capital Lease
         Obligation,  the amount of Debt  represented  thereby  according to the
         definition of "Capital Lease Obligation", and

                  (b) in all other instances, the greater of:

                           (1) the Fair Market Value of the Property subject to
                  the Sale and Leaseback Transaction, and

                           (2) the present  value  (discounted  at the  interest
                  rate  borne by the  Securities,  compounded  annually)  of the
                  total obligations of the lessee for rental payments during the
                  remaining term of the lease included in the Sale and Leaseback
                  Transaction (including any period for which the lease has been
                  extended).

                  "Average Life" means,  as of any date of  determination,  with
respect to any Debt or Preferred Stock, the quotient obtained by dividing:

                  (a) the sum of the product of the numbers of years (rounded to
         the nearest  one-twelfth of one year) from the date of determination to
         the dates of each successive  scheduled  principal payment of that Debt
         or redemption or similar  payment with respect to that Preferred  Stock
         multiplied by the amount of the payment by

                  (b) the sum of all payments of this kind.

                  "Beneficial Owner" means a beneficial owner as defined in Rule
13d-3 under the Exchange Act, except that:

                  (a) a Person will be deemed to be the Beneficial  Owner of all
         shares that the Person has the right to acquire,  whether that right is
         exercisable immediately or only after the passage of time,

                  (b) for purposes of clause (a) of the definition of "Change of
         Control",  Permitted Holders will be deemed to be the Beneficial Owners
         of any Voting Stock of a corporation  or other legal entity held by any
         other  corporation  or  other  legal  entity  so long as the  Permitted
         Holders  Beneficially Own,  directly or indirectly,  in the aggregate a
         majority of the total

<PAGE>

                                                                               5


         voting power of the Voting Stock of that corporation or other legal
         entity, and

                  (c) for purposes of clause (b) of the definition of "Change of
         Control",  any  "person"  or  "group"  (as those  terms are  defined in
         Sections  13(d)  and  14(d)  of  the  Exchange  Act  or  any  successor
         provisions to either of the foregoing),  including any group acting for
         the purpose of  acquiring,  holding,  voting or disposing of securities
         within the meaning of Rule  13d-5(b)(1)  under the Exchange Act,  other
         than any one or more of the  Permitted  Holders,  shall be deemed to be
         the  Beneficial  Owners of any Voting Stock of a  corporation  or other
         legal entity held by any other corporation or legal entity ("the parent
         corporation"),  so long as that  person  or  group  Beneficially  Owns,
         directly or indirectly, in the aggregate a majority of the total voting
         power of the Voting Stock of that parent corporation.

The term "Beneficially Own" shall have a corresponding meaning.

                  "Board  of  Directors"  means the  Board of  Directors  of the
Company  (or,  in  the  case  of  Section  4.09(2),  the  applicable  Restricted
Subsidiary)  or any committee  thereof duly  authorized to act on behalf of such
Board.

                  "Board  Resolution" means a copy of a resolution  certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification.

                  "Business Day" means each day that is not a Legal Holiday.

                  "Capital Lease Obligations" means any obligation under a lease
that  is  required  to  be  capitalized  for  financial  reporting  purposes  in
accordance  with GAAP;  and the amount of Debt  represented  by that  obligation
shall be the capitalized amount of the obligations determined in accordance with
GAAP; and the Stated  Maturity  thereof shall be the date of the last payment of
rent or any other amount due under that lease prior to the first date upon which
that lease may be terminated  by the lessee  without  payment of a penalty.  For
purposes of Section 4.06, a Capital Lease  Obligation shall be deemed secured by
a Lien on the Property being leased.

<PAGE>

                                                                               6


                  "Capital Stock" means, with respect to any Person,  any shares
or other  equivalents  (however  designated) of any class of corporate  stock or
partnership interests or any other participations,  rights, warrants, options or
other  interests in the nature of an equity  interest in that Person,  including
Preferred  Stock,  but excluding any debt security  convertible or  exchangeable
into that equity interest.

                  "Capital  Stock  Sale  Proceeds"   means  the  aggregate  cash
proceeds  received  by the  Company  from the  issuance or sale (other than to a
Subsidiary  of  the  Company  or an  employee  stock  ownership  plan  or  trust
established by the Company or the Subsidiary for the benefit of their employees)
by the Company of its Capital  Stock (other than  Disqualified  Stock) after the
Issue Date, net of attorneys' fees,  accountants' fees,  initial  purchasers' or
placement agents' fees,  discounts or commissions and brokerage,  consultant and
other fees actually  incurred in connection with the issuance or sale and net of
taxes paid or payable as a result thereof.

                  "Change  of  Control"  means  the  occurrence  of  any  of the
following events:

                  (a) prior to the first Public Equity  Offering that results in
         a Public  Market,  the  Permitted  Holders  cease to be the  Beneficial
         Owners, directly or indirectly, of a majority of the total voting power
         of the Voting Stock of the Company, whether as a result of the issuance
         of securities of the Company, any merger, consolidation, liquidation or
         dissolution  of  the  Company,  any  direct  or  indirect  transfer  of
         securities by the Permitted Holders or otherwise; or

                  (b) on or after the first Public Equity  Offering that results
         in a Public Market,  if any "person" or "group" (as such terms are used
         in  Sections  13(d)  and  14(d) of the  Exchange  Act or any  successor
         provisions to either of the foregoing),  including any group acting for
         the purpose of  acquiring,  holding,  voting or disposing of securities
         within the meaning of Rule  13d-5(b)(1)  under the Exchange Act,  other
         than any one or more of the Permitted  Holders,  becomes the Beneficial
         Owner, directly or indirectly, of 35% or more of the total voting power
         of the  Voting  Stock  of the  Company;  provided,  however,  that  the
                                                  --------   -------
         Permitted Holders are the Beneficial Owners, directly or indirectly, in
         the  aggregate of a lesser  percentage of the total voting power of the
         Voting  Stock of the  Company  than that  other  person  or group;  and
         provided further, that the
         ----------------

<PAGE>

                                                                               7


         provisions of this clause (b) will not apply to Voting Trustees serving
         in that capacity under the Voting Trust Arrangement; or

                  (c) the sale, transfer, assignment, lease, conveyance or other
         disposition,  directly or indirectly,  of all or substantially  all the
         assets of the Company and the Restricted Subsidiaries,  considered as a
         whole (other than a  disposition  of assets as an entirety or virtually
         as an entirety to a Wholly Owned  Restricted  Subsidiary or one or more
         Permitted  Holders)  shall  have  occurred,   or  the  Company  merges,
         consolidates  or amalgamates  with or into any other Person (other than
         one or more  Permitted  Holders) or any other Person (other than one or
         more Permitted  Holders)  merges,  consolidates or amalgamates  with or
         into the Company,  in any event  pursuant to a transaction in which the
         outstanding  Voting  Stock  of the  Company  is  reclassified  into  or
         exchanged  for  cash,   securities  or  other   Property,   other  than
         transaction where:

                       (1) the outstanding Voting Stock  of  the   Company  is
                  reclassified into or exchanged for other Voting Stock of the
                  Company or for Voting Stock of the surviving corporation or
                  transferee, and

                       (2) the Holders of the Voting Stock of the Company
                  immediately prior to the transaction own, directly or
                  indirectly, not less than a majority of the Voting Stock of
                  the Company  or  the   surviving corporation  or transferee
                  immediately  after the  transaction  and in substantially the
                  same proportion as before the transaction; or

                  (d) during any period of two  consecutive  years,  individuals
         who at the beginning of that period  constituted the Board of Directors
         (together with any new directors  whose election or appointment by such
         Board or whose  nomination  for  election  by the  shareholders  of the
         Company was  approved by a vote of not less than  three-fourths  of the
         directors  then  still in  office  who  were  either  directors  at the
         beginning of that period or whose  election or nomination  for election
         was previously so approved or by a vote of the Voting Trustees pursuant
         to the terms of the Voting Trust  Arrangement)  cease for any reason to
         constitute a majority of the Board of Directors then in office; or

<PAGE>

                                                                               8


                  (e) the  shareholders  of the Company  shall have approved any
         plan of liquidation or dissolution of the Company.

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


                  "Commodity Price Protection  Agreement" means, in respect of a
Person,  any  forward  contract,  commodity  swap  agreement,  commodity  option
agreement or other  similar  agreement or  arrangement  designed to protect that
Person against fluctuations in commodity prices.

                  "Company"  means  the  party  named as such in this  Indenture
until a successor replaces it pursuant to the applicable  provisions hereof 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.

                  "Consolidated  Current  Liabilities"  means, as of any date of
determination,  the  aggregate  amount of  liabilities  of the  Company  and its
consolidated Restricted Subsidiaries which may properly be classified as current
liabilities (including taxes accrued as estimated), after eliminating:

                  (a)  all  intercompany  items  between  the  Company  and  any
         Restricted Subsidiary or between Restricted Subsidiaries, and

                  (b) all current maturities of long-term Debt.

                  "Consolidated  Fixed Charges" means, for any period, the total
interest  expense (net of interest  income) of the Company and its  consolidated
Restricted Subsidiaries, plus, to the extent not included in such total interest
expense,   and  to  the  extent  Incurred  by  the  Company  or  its  Restricted
Subsidiaries,

                  (a) interest expense  attributable to leases constituting part
         of a Sale and Leaseback Transaction and to Capital Lease Obligations,

                  (b)  amortization  of debt  discount and debt  issuance  cost,
         including commitment fees,

                  (c) capitalized interest,

                  (d) non-cash interest expense,

<PAGE>

                                                                               9


                  (e)  commissions,  discounts  and other fees and charges  owed
         with respect to letters of credit and bankers' acceptance financing,

                  (f)  net  costs   associated  with  Interest  Rate  Agreements
         (including amortization of fees),

                  (g) Disqualified Stock Dividends,

                  (h) Preferred Stock Dividends,

                  (i)  interest  Incurred  in  connection  with  Investments  in
         discontinued operations,

                  (j)  interest  accruing on any Debt of any other Person to the
         extent  that  Debt  is  Guaranteed  by the  Company  or any  Restricted
         Subsidiary, and

                  (k) the cash  contributions  to any employee  stock  ownership
         plan or similar trust to the extent those contributions are used by the
         plan or trust to pay  interest  or fees to any Person  (other  than the
         Company) in connection with Debt Incurred by the plan or trust.

         Notwithstanding anything to the contrary contained herein, commissions,
discounts,  yield and other fees and  charges  Incurred in  connection  with any
transaction   (including,   without   limitation,   any  Qualified   Receivables
Transaction)  pursuant to which the Company or any Subsidiary of the Company may
sell, convey or otherwise  transfer or grant a security interest in any accounts
receivable  or  related  assets  of the  type  specified  in the  definition  of
"Qualified  Receivables  Transaction"  shall be included in  Consolidated  Fixed
Charges.

         "Consolidated  Fixed Charges  Coverage  Ratio" means, as of any date of
determination, the ratio of:

                  (a) the  aggregate  amount of EBITDA for the most  recent four
         consecutive  fiscal  quarters  ending  at least  45 days  prior to such
         determination date to

                  (b) Consolidated Fixed Charges for those four fiscal quarters;

<PAGE>

                                                                              10


         provided, however, that:
         --------  -------

                      (1) if

                          (A) since the  beginning  of that period the Company
                              or any Restricted Subsidiary has Incurred any Debt
                              that remains outstanding or Repaid any Debt, or

                          (B) the transaction  giving rise to the need to
                              calculate the Consolidated  Fixed Charges Coverage
                              Ratio involves an Incurrence or Repayment of Debt,

         Consolidated  Fixed Charges for that period shall be  calculated  after
         giving  effect on a pro forma basis to that  Incurrence or Repayment as
         if the Debt was  Incurred  or Repaid  on the first day of that  period,
         provided  that, in the event of any Repayment of Debt,  EBITDA for that
         period  shall  be  calculated  as if the  Company  or  such  Restricted
         Subsidiary had not earned any interest  income  actually  earned during
         such period in respect of the funds used to Repay such Debt, and

                      (2) if

                          (A) since the  beginning  of that period the Company
                              or any Restricted  Subsidiary shall have made any
                              Asset  Sale  or  an  Investment  (by  merger  or
                              otherwise) in any Restricted  Subsidiary  (or  any
                              Person which becomes a Restricted Subsidiary) or
                              an acquisition of Property which constitutes all
                              or substantially all of an operating unit of a
                              business,

                          (B) the transaction  giving rise to the need to
                              calculate the Consolidated  Fixed Charges Coverage
                              Ratio involves  an  Asset  Sale,   Investment   or
                              acquisition, or

                          (C) since the  beginning  of that period any Person
                              (that subsequently became a Restricted Subsidiary
                              or was merged with or into the Company or any
                              Restricted Subsidiary since the beginning of that
                              period) shall  have  made  such  an  Asset   Sale,
                              Investment or acquisition,

<PAGE>

                                                                              11


EBITDA for that period shall be calculated  after giving pro forma effect to the
Asset  Sale,  Investment  or  acquisition  as if the Asset Sale,  Investment  or
acquisition occurred on the first day of that period.

         If any Debt bears a floating  rate of  interest  and is being given pro
forma  effect,  the interest  expense on that Debt shall be calculated as if the
base  interest  rate in effect for the floating  rate of interest on the date of
determination  had been the applicable  base interest rate for the entire period
(taking into account any Interest Rate Agreement  applicable to that Debt if the
applicable Interest Rate Agreement has a remaining term in excess of 12 months).
In the event the Capital Stock of any  Restricted  Subsidiary is sold during the
period,  the Company shall be deemed,  for purposes of clause (1) above, to have
Repaid during that period the Debt of that  Restricted  Subsidiary to the extent
the Company and its continuing Restricted  Subsidiaries are no longer liable for
that Debt after the sale.

                  "Consolidated  Net  Income"  means,  for any  period,  the net
income  (loss)  of the  Company  and its  consolidated  Subsidiaries;  provided,
                                                                       --------
however, that there shall not be included in such Consolidated Net Income:
- -------

                  (a) any net  income  (loss)  of any  Person  (other  than  the
         Company) if that Person is not a Restricted Subsidiary, except that:

                           (1) subject to the exclusion  contained in clause (d)
                  below,  the  Company's  equity  in the net  income of any such
                  Person for that period shall be included in such  Consolidated
                  Net Income up to the aggregate  amount of cash  distributed by
                  that Person  during that period to the Company or a Restricted
                  Subsidiary as a dividend or other  distribution  (subject,  in
                  the case of a dividend or other  distribution  to a Restricted
                  Subsidiary, to the limitations contained in clause (c) below),
                  and

                           (2) the Company's equity in a net loss of that Person
                  other than an Unrestricted Subsidiary for the specified period
                  shall be included in determining such Consolidated Net Income,

                  (b) for purposes of Section 4.05 only,  any net income  (loss)
         of any  Person  acquired  by  the  Company  or any of its  consolidated
         Subsidiaries in a pooling of interests transaction for any period prior
         to the date of the acquisition,

<PAGE>

                                                                              12


                  (c) any net income (loss) of any Restricted  Subsidiary if the
         Restricted   Subsidiary  is  subject  to   restrictions,   directly  or
         indirectly, on the payment of dividends or the making of distributions,
         directly or indirectly, to the Company, except that:

                       (1) subject to the  exclusion  contained  in clause (d)
                  below, the Company's equity in the net income of the
                  Restricted Subsidiary for the  period shall be  included in
                  Consolidated Net Income up to the aggregate  amount  that
                  would  have  been permitted  at the  date  of determination
                  to be  dividended to the Company or another Restricted
                  Subsidiary by that Restricted Subsidiary  without prior
                  approval by a third party (that has not been obtained),
                  pursuant to the terms of its charter and all agreements,
                  instruments, judgments, decrees, orders, statutes, rules  and
                  government regulations applicable to that Restricted
                  Subsidiary or its  shareholders, during  that period as a
                  dividend or other distribution (subject, in the case of a
                  dividend or other distribution to another Restricted
                  Subsidiary,  to the limitation contained in this clause), and

                       (2) the  Company's  equity  in a net  loss  of the
                  Restricted Subsidiary  for such  period  shall be  included in
                  determining  such Consolidated Net Income,

                  (d) any gain  (but not loss)  realized  upon the sale or other
         disposition  of any Property of the Company or any of its  consolidated
         Subsidiaries (including pursuant to any Sale and Leaseback Transaction)
         that is not sold or  otherwise  disposed of in the  ordinary  course of
         business,

                  (e) any extraordinary gain or loss,

                  (f)  the   cumulative   effect  of  a  change  in   accounting
         principles,

                  (g) any  unrealized  gains or  losses  of the  Company  or its
         consolidated Subsidiaries on any Hedging Obligations, and

                  (h) any non-cash  compensation  expense realized for grants of
         performance  shares,   stock  options  or  other  rights  to  officers,
         directors  and employees of the Company or any  Restricted  Subsidiary,
         provided that those shares, options or other rights can be redeemed

<PAGE>

                                                                              13


         at the  option of the  holder  only for  Capital  Stock of the  Company
         (other than Disqualified Stock).

Notwithstanding the foregoing, for purposes of Section 4.05 only, there shall be
excluded  from  Consolidated  Net Income any  dividends,  repayments of loans or
advances or other  transfers  of assets from  Unrestricted  Subsidiaries  to the
Company or a Restricted  Subsidiary to the extent the  dividends,  repayments or
transfers  increase  the  amount of  Restricted  Payments  permitted  under that
covenant pursuant to clause (c)(4) thereof.

         "Consolidated   Net  Tangible   Assets"  means,   as  of  any  date  of
determination,  the sum of the  amounts  that  would  appear  on a  consolidated
balance sheet of the Company and its consolidated Restricted Subsidiaries as the
total  assets  (less  accumulated  depreciation,  amortization,  allowances  for
doubtful  receivables,  other applicable  reserves and other properly deductible
items) of the Company and its  Restricted  Subsidiaries,  after giving effect to
purchase   accounting  and  after  deducting  therefrom   Consolidated   Current
Liabilities  and,  to the extent  otherwise  included,  the  amounts of (without
duplication):

                  (a) the  excess of cost over  fair  market  value of assets or
         businesses acquired;

                  (b) any  revaluation or other write-up in book value of assets
         subsequent  to the  last  day  of the  fiscal  quarter  of the  Company
         immediately  preceding  the  Issue  Date as a result of a change in the
         method of valuation in accordance with GAAP;

                  (c)   unamortized   debt   discount  and  expenses  and  other
         unamortized deferred charges, goodwill,  patents,  trademarks,  service
         marks, trade names, copyrights, licenses, organization or developmental
         expenses and other intangible items;

                  (d) minority  interests in consolidated  Subsidiaries  held by
         Persons other than the Company or any Restricted Subsidiary;

                  (e) treasury stock;

                  (f) cash or  securities  set aside  and held in a  sinking  or
         other analogous fund established for the purpose of redemption or other
         retirement  of  Capital  Stock to the  extent  such  obligation  is not
         reflected in Consolidated Current Liabilities; and

<PAGE>

                                                                              14


                  (g) Investments in and assets of Unrestricted Subsidiaries.

         "Consolidated  Tangible Assets" means, as of any date of determination,
the sum of the amounts of  Consolidated  Net  Tangible  Assets and  Consolidated
Current Liabilities as of such date.

         "Credit   Facilities"  means,  with  respect  to  the  Company  or  any
Restricted  Subsidiary,   one  or  more  debt  or  commercial  paper  facilities
(including  related   Guarantees)  with  banks,   investment  banks,   insurance
companies,  mutual funds or other institutional  lenders (including our Existing
Bank Credit  Facilities),  providing  for revolving  credit  loans,  term loans,
receivables or inventory financing (including through the sale of receivables or
inventory to  institutional  lenders or to special  purpose,  bankruptcy  remote
entities formed to borrow from  institutional  lenders against those receivables
or inventory) or trade or standby letters of credit,  in each case together with
any Refinancings thereof by a lender or syndicate of lenders;  provided that, in
the case of a transaction in which any accounts receivable are sold, conveyed or
otherwise  transferred  by the  Company  or any of its  subsidiaries  to another
Person other than a Receivables  Entity,  then that transaction must satisfy the
following three conditions:

                  (a)  if  the  transaction  involves  a  transfer  of  accounts
         receivable  with Fair  Market  Value  equal to or  greater  than  $25.0
         million,  the Board of Directors  shall have  determined  in good faith
         that the transaction is economically fair and reasonable to the Company
         or the  Subsidiary  that sold,  conveyed or  transferred  the  accounts
         receivable,

                  (b) the sale, conveyance or transfer of accounts receivable by
         the Company or the Subsidiary is made at Fair Market Value and

                  (c) the financing  terms,  covenants,  termination  events and
         other  provisions  of  the  transaction   shall  be  market  terms  (as
         determined in good faith by the Board of Directors if Board approval is
         required under clause (a)).

                  "Currency Exchange Protection  Agreement" means, in respect of
a Person,  any foreign  exchange  contract,  currency swap  agreement,  currency
option or other similar agreement or arrangement designed to protect that Person
against fluctuations in currency exchange rates.

<PAGE>

                                                                              15


                  "Debt"  means,  with  respect  to any  Person  on any  date of
determination (without duplication):

                  (a) the principal of and premium (if any) in respect of:

                           (1) debt of the Person for money borrowed, and

                           (2) debt  evidenced  by notes,  debentures,  bonds or
                  other similar  instruments for the payment of which the Person
                  is responsible or liable;

                  (b)  all  Capital  Lease  Obligations  of the  Person  and all
         Attributable Debt in respect of Sale and Leaseback Transactions entered
         into by the Person;

                  (c) all  obligations  of the  Person  issued or assumed as the
         deferred  purchase price of Property,  all conditional sale obligations
         of the  Person  and all  obligations  of the  Person  under  any  title
         retention  agreement (but excluding  trade accounts  payable arising in
         the ordinary course of business);

                  (d) all obligations of the Person for the reimbursement of any
         obligor on any letter of credit,  banker's acceptance or similar credit
         transaction  (other than  obligations with respect to letters of credit
         securing  obligations (other than obligations  described in (a) through
         (c) above)  entered  into in the  ordinary  course of  business  of the
         Person to the extent those  letters of credit are not drawn upon or, if
         and to the extent drawn upon,  the drawing is  reimbursed no later than
         the third Business Day following  receipt by the Person of a demand for
         reimbursement following payment on the letter of credit);

                  (e) the amount of all  obligations  of the Person with respect
         to the  Repayment  of any  Disqualified  Stock or, with  respect to any
         Subsidiary of the Person,  any Preferred Stock (but excluding,  in each
         case, any accrued dividends);

                  (f) all  obligations  of the type  referred  to in clauses (a)
         through (e) of other Persons and all dividends of other Persons for the
         payment of which,  in either case, the Person is responsible or liable,
         directly or indirectly, as obligor,  guarantor or otherwise,  including
         by means of any Guarantee;

<PAGE>

                                                                              16


                  (g) all  obligations  of the type  referred  to in clauses (a)
         through (f) of other Persons secured by any Lien on any Property of the
         Person (whether or not such  obligation is assumed by the Person),  the
         amount of such obligation being deemed to be the lesser of the value of
         that Property or the amount of the obligation so secured; and

                  (h) to the extent not otherwise  included in this  definition,
         Hedging Obligations of such Person.

The amount of Debt of any Person at any date shall be the outstanding balance at
that date of all  unconditional  obligations as described  above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent  obligations at that date. The amount of Debt represented by a
Hedging Obligation shall be equal to:

                       (1) zero if the Hedging Obligation has been Incurred
                  pursuant to clause (e), (f) or (g) of the second paragraph of
                  Section 4.04, or

                       (2) if the Hedging Obligation is not Incurred pursuant to
                  clauses  (e),  (f) or (g) of the second  paragraph  of Section
                  4.04,  then 105% of the  aggregate  net amount,  if any,  that
                  would  then be  payable  by the  Company  and  any  Restricted
                  Subsidiary on a per  counter-party  basis  pursuant to Section
                  6(e) of the ISDA Master Agreement (Multicurrency-Cross Border)
                  in  the  form  published  by  the   International   Swaps  and
                  Derivatives  Association in 1992 (the "ISDA Form"),  as if the
                  date  of  determination  were a date  that  constitutes  or is
                  substantially  equivalent  to an Early  Termination  Date,  as
                  defined in the ISDA  Form,  with  respect to all  transactions
                  governed by the ISDA Form,  plus the  equivalent  amount under
                  the  terms  of any  other  Hedging  Obligations  that  are not
                  Incurred  pursuant  to clauses  (e),  (f) or (g) of the second
                  paragraph of Section 4.04, each such amount to be estimated in
                  good faith by the Company.

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

                  "Disqualified  Stock" means,  with respect to any Person,  any
Capital  Stock that by its terms (or by the terms of any security  into which it
is convertible or for which it is exchangeable,  in either case at the option of
the holder thereof) or otherwise:

<PAGE>

                                                                              17


                  (a) matures or is mandatorily redeemable pursuant to a sinking
         fund obligation or otherwise,

                  (b) is or may become redeemable or repurchaseable at the
         option of the holder thereof, in whole or in part, or

                  (c) is convertible or exchangeable at the option of the holder
         thereof for Debt or Disqualified  Stock, on or prior to, in the case of
         clause (a), (b) or (c), the first anniversary of the Stated Maturity of
         the Securities.

                  "Disqualified   Stock  Dividends"  means  all  dividends  with
respect to Disqualified Stock of the Company held by Persons other than a Wholly
Owned  Restricted  Subsidiary.  The amount of any dividend of this kind shall be
equal to the quotient of the dividend divided by the difference  between one and
the maximum  statutory  federal  income tax rate  (expressed as a decimal number
between 1 and 0) then applicable to the Company.

                  "EBITDA"  means,  for any period,  an amount equal to, for the
Company and its consolidated Restricted Subsidiaries:

                  (a) the sum of Consolidated  Net Income for that period,  plus
         the following to the extent reducing  Consolidated  Net Income for that
         period:

                       (1) the provision for taxes based on income or profits or
                  utilized in computing net loss,

                       (2) Consolidated Fixed Charges,

                       (3) depreciation,

                       (4) amortization of intangibles,


                       (5) any other  non-cash  items  (other than any  non-cash
                  item to the extent that it represents an accrual of or reserve
                  for cash expenditures in any future period), and

                       (6) any one-time,  non-recurring expenses relating to, or
                  arising from, any closures of  manufacturing  facilities on or
                  after the Issue Date, in each case  incurred  within 12 months
                  after such closure, minus

<PAGE>

                                                                              18


                  (b) all non-cash items increasing  Consolidated Net Income for
         that period  (other than any such  non-cash  item to the extent that it
         will result in the receipt of cash payments in any future period).

Notwithstanding  the  foregoing  clause  (a),  the  provision  for taxes and the
depreciation,  amortization and non-cash items of a Restricted  Subsidiary shall
be added to Consolidated Net Income to compute EBITDA only to the extent (and in
the same  proportion)  that the net  income of that  Restricted  Subsidiary  was
included  in  calculating  Consolidated  Net Income and only if a  corresponding
amount would be permitted at the date of  determination  to be dividended to the
Company by that Restricted  Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments,   decrees,  orders,  statutes,  rules  and  governmental  regulations
applicable to that Restricted Subsidiary or its shareholders.

                  "Equipment   Financing   Transaction"  means  any  arrangement
 (together with any Refinancings  thereof) with any Person pursuant to which the
 Company or any Restricted Subsidiary Incurs Debt secured by a Lien on equipment
 or equipment related property of the Company or any Restricted Subsidiary.

                  "Euro Notes" means the Company's 11 5/8% Senior Notes due 2008
 denominated in euros and issued  pursuant to an indenture dated the date hereof
 between the Company and Citibank, N.A. as trustee.

                  "Event of Default" has the meaning set forth in Section 6.01

                  "Exchange Act" means the Securities Exchange Act of 1934.

                  "Existing Bank Credit Facilities" means:

                  (a) the Bridge Credit Agreement, dated as of January 31, 2000,
         among the  Company,  Bank of  America,  N.A. as  administrative  agent,
         collateral agent and lender,  The Bank of Nova Scotia,  Citicorp U.S.A.
         Incorporated,  Morgan  Guaranty Trust Company of New York and Bank One,
         N.A., as amended as of July 31, 2000 and September 29, 2000,

                  (b) the Amended and  Restated  1999 180 Day Credit  Agreement,
         dated as of January 31, 2000, among the Company,  Bank of America, N.A.
         as administrative agent,  collateral agent and lender, The Bank of Nova
         Scotia,

<PAGE>

                                                                              19


         Citicorp U.S.A.  Incorporated  and Morgan Guaranty Trust Company of New
         York,  as amended as of July 31, 2000,  September  29, 2000 and October
         13, 2000,

                  (c) the Amended and  Restated  1997 364 Day Credit  Agreement,
         dated as of January 31, 2000, among the Company,  Bank of America, N.A.
         as administrative agent,  collateral agent and lender, The Bank of Nova
         Scotia, Citicorp U.S.A. Incorporated,  Morgan Guaranty Trust Company of
         New York, Commerzbank AG, Credit Lyonnais, Bank One, N.A., The Sumitomo
         Bank,  Ltd., ABN AMRO Bank N.V.,  Banca  Commerciale  Italiana,  Banque
         Nationale de Paris,  Criplo-Cassa di Risparmio delle Provincie Lombarde
         S.p.A.,  Societe Generale,  Mellon Bank National Association,  KBC Bank
         N.V.,  UniCredito  Italiano S.p.A.,  Deutsche Bank  Aktiengesellschaft,
         Wachovia Bank N.A.,  Bankers Trust Company and First  Hawaiian Bank, as
         amended as of July 31, 2000,  September  29, 2000 and October 13, 2000,
         and

                  (d) the 1997 Second  Amended and  Restated  Credit  Agreement,
         dated as of January 31, 2000, among the Company,  Bank of America, N.A.
         as administrative agent,  collateral agent and lender, The Bank of Nova
         Scotia, Citicorp U.S.A. Incorporated,  Morgan Guaranty Trust Company of
         New York,  Commerzbank AG, Credit  Lyonnais,  The Chase Manhattan Bank,
         Bank One,  N.A., The Sumitomo  Bank,  Ltd.,  ABN AMRO Bank N.V.,  Banca
         Commerciale  Italiana,  Banque  Nationale  de Paris,  Cariplo-Cassa  di
         Risparmio delle Provincie Lombarde S.p.A., CIBC Inc., The Royal Bank of
         Canada, The Sanwa Bank, Limited,  The  Toronto-Dominion  Bank, KBC Bank
         N.V., PNC Bank N.A., Societe Generale,  BankBoston N.A., The Industrial
         Bank of Japan,  Limited,  Mellon Bank National  Association,  The Tokai
         Bank  Limited,  The Bank of  Tokyo-Mitsubishi  Limited,  Union  Bank of
         California,  N.A.  Banca Monte dei Paschi di Siena  S.p.A.,  UniCredito
         Italiano  S.p.A.,  Deutsche  Bank  Aktiengesellschaft,  San  Paolo  IMI
         S.p.A., Cooperative Centrale  Raiffeisent--Boerenleenbank B.A., UBS AG,
         Wachovia Bank N.A.,  Bankers Trust Company and First  Hawaiian Bank, as
         amended as of July 31, 2000, September 29, 2000 and October 13, 2000.

                  "Existing   Policies"  means  (1)  the  Company's  estate  tax
repurchase  policy under which the Company  repurchases  a portion of a deceased
stockholder's  shares to generate  funds for payment of estate taxes and (2) the
Company's  valuation  policy under which the Company obtains an annual valuation
of the Company's Voting Trust Certificates,  as both policies exist at the Issue
Date or as they may exist  from time to time,  provided  that if either of these
policies is

<PAGE>

                                                                              20


materially  amended  after  the Issue  Date in a manner  less  favorable  to the
Company than the policy as existing on the Issue Date,  then that amended policy
shall be deemed not to be an Existing Policy.

                  "Fair Market Value" means,  with respect to any Property,  the
price that could be negotiated in an arm's length  free market transaction, for
cash,  between a willing  seller and a willing  buyer,  neither of whom is under
undue  pressure or  compulsion  to complete  the  transaction.  For  purposes of
Section  4.05 and Section 4.07 and the  definitions  of  "Qualified  Receivables
Transaction"  and "Credit  Facilities",  Fair Market Value shall be  determined,
except as otherwise provided,

                  (a) if the  Property  has a Fair Market Value equal to or less
         than $25.0 million, by any Officer of the Company, or

                  (b) if the Property has a Fair Market Value in excess of $25.0
         million,  by a majority of the Board of  Directors  and  evidenced by a
         Board Resolution,  dated within 12 months of the relevant  transaction,
         delivered to the Trustee.

                  "Foreign Restricted Subsidiary" means any Restricted
Subsidiary which is not organized under the laws of the United States of America
or any State thereof or the District of Columbia.

                  "GAAP"  means  United  States  generally  accepted  accounting
 principles as in effect from time to time, including those set forth:

                  (a) in  the  opinions  and  pronouncements  of the  Accounting
         Principles  Board  of  the  American   Institute  of  Certified  Public
         Accountants,

                  (b) in the  statements  and  pronouncements  of the  Financial
         Accounting Standards Board,

                  (c) in other  statements  by another  entity as  approved by a
         significant segment of the accounting profession, and

                  (d) the 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

<PAGE>

                                                                              21


         in staff accounting  bulletins and similar written  statements from the
         accounting staff of the Commission.

                  "Guarantee" means any obligation,  contingent or otherwise, of
any Person directly or indirectly  guaranteeing any Debt of any other Person and
any obligation, direct or indirect, contingent or otherwise, of that Person:

                  (a) to  purchase  or pay (or  advance or supply  funds for the
         purchase or payment of) the Debt of such other 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

                  (b)  entered  into for the  purpose of  assuring  in any other
         manner the  obligee  against  loss in respect  thereof  (in whole or in
         part);

provided, however, that the term "Guarantee" shall not include:
- --------  -------

                  (1)  endorsements  for  collection  or deposit in the ordinary
         course of business, or

                  (2) a  contractual  commitment  by one  Person  to  invest  in
         another Person for so long as the Investment is reasonably  expected to
         constitute a Permitted  Investment  under clause (a), (b) or (i) of the
         definition of "Permitted Investment".

The  term  "Guarantee"  used as a verb  has a  corresponding  meaning.  The term
"Guarantor" shall mean any Person Guaranteeing any obligation.

                  "Hedging  Obligation"  of any Person means any  obligation  of
that  Person  pursuant  to  any  Interest  Rate  Agreement,   Currency  Exchange
Protection Agreement,  Commodity Price Protection Agreement or any other similar
agreement or arrangement.

                  "Holder"  or  "Securityholder"  means the Person in whose name
the Security is registered on the Security register described in Section 2.04.

                  "Incur" means, with respect to any Debt or other obligation of
any  Person,  to  create,  issue,  incur (by  merger,  conversion,  exchange  or
otherwise),  extend, assume,  Guarantee or become liable in respect of that Debt
or other obligation or the recording, as required pursuant to GAAP or

<PAGE>

                                                                              22


otherwise,  of any Debt or  obligation  on the balance sheet of that Person (and
"Incurrence" and "Incurred"  shall have meanings  correlative to the foregoing);
provided,  however,  that a change in GAAP that results in an obligation of that
- --------   -------
Person  that exists at such time,  and is not  theretofore  classified  as Debt,
becoming Debt shall not be deemed an Incurrence of that Debt;  provided further,
                                                               ----------------
however, that any Debt or other obligations of a Person existing at the time the
- -------
Person becomes a Subsidiary  (whether by merger,  consolidation,  acquisition or
otherwise)  shall be deemed to be  Incurred  by that  Subsidiary  at the time it
becomes a Subsidiary; and provided further, however, that solely for purposes of
                          ----------------  -------
determining  compliance  with Section  4.04,  amortization  of debt  discount or
premium shall not be deemed to be the  Incurrence of Debt,  provided that in the
case of Debt sold at a discount or at a premium, the amount of the Debt Incurred
shall at all times be the aggregate principal amount at Stated Maturity.

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

                  "Independent  Financial  Advisor" means an investment  banking
firm of national  standing or any third party  appraiser  of national  standing,
provided that the firm or appraiser is not an Affiliate of the Company.

                  "Interest Rate Agreement" means, for any Person,  any interest
rate swap agreement,  interest rate option agreement or other similar  agreement
or arrangement designed to protect against fluctuations in interest rates.

                  "Investment"  by any Person means any direct or indirect  loan
(other than  advances to  customers  and  suppliers  in the  ordinary  course of
business  that are recorded as accounts  receivable on the balance sheet of that
Person),  advance or other extension of credit or capital contribution (by means
of  transfers  of cash or other  Property to others or payments  for Property or
services for the account or use of others,  or otherwise) to, or Incurrence of a
Guarantee of any  obligation  of, or purchase or  acquisition  of Capital Stock,
bonds, notes,  debentures or other securities or evidence of Debt issued by, any
other Person.  For purposes of Section 4.05,  Section 4.10 and the definition of
"Restricted Payment", Investment shall include the portion (proportionate to the
Company's equity interest in the Subsidiary) of the Fair Market Value of the net
assets of any  Subsidiary  of the  Company  at the time that the  Subsidiary  is
designated  an  Unrestricted   Subsidiary;   provided,   however,  that  upon  a
                                             --------    -------
redesignation of that Subsidiary as a Restricted  Subsidiary,  the Company shall
be

<PAGE>

                                                                              23


deemed to continue to have a permanent Investment in an Unrestricted  Subsidiary
of an amount (if positive) equal to:

                  (a) the Company's Investment in that Subsidiary at the time of
         such redesignation, less

                  (b)  the  portion   (proportionate  to  the  Company's  equity
         interest in such Subsidiary) of the Fair Market Value of the net assets
         of that  Subsidiary at the time of such  redesignation.  In determining
         the amount of any  Investment  made by transfer of any  Property  other
         than cash, the Property shall be valued at its Fair Market Value at the
         time of the Investment.

                  "Investment  Grade  Rating"  means a rating equal to or higher
than Baa3 (or the equivalent) by Moody's and BBB- (or the equivalent) by S&P.

                  "Issue Date" means the first date on which the  Securities are
initially issued.

                  "Issue Date Euro Notes"  means Euro Notes  issued on the first
date on which the Euro Notes are initially issued.

                  "Lien" means, with respect to any Property of any Person,  any
mortgage  or  deed  of  trust,  pledge,   hypothecation,   assignment,   deposit
arrangement,  security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability),  encumbrance, preference,
priority or other security agreement or preferential  arrangement of any kind or
nature  whatsoever  on or with respect to that Property  (including  any Capital
Lease  Obligation,  conditional  sale or other title retention  agreement having
substantially  the same economic  effect as any of the foregoing or any Sale and
Leaseback Transaction).

                  "Moody's" means Moody's Investors Service, Inc. or any
successor to the rating agency business thereof.

                  "Net  Available  Cash" from any Asset Sale means cash payments
received  therefrom  (including  any cash  payments  received by way of deferred
payment of principal pursuant to a note or installment  receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of  assumption  by the  acquiring  Person of Debt or other  obligations
relating to the  Property  that is the subject of that Asset Sale or received in
any other non-cash form), in each case net of:

<PAGE>

                                                                              24


                  (a) all legal,  title and recording tax expenses,  commissions
         and other fees (including,  without limitation,  brokers' or investment
         bankers'  commissions or fees) and expenses incurred,  and all Federal,
         state, provincial,  foreign and local taxes required to be accrued as a
         liability under GAAP, as a consequence of the Asset Sale,

                  (b) all  payments  made on any  Debt  that is  secured  by any
         Property subject to the Asset Sale, in accordance with the terms of any
         Lien upon or other security  agreement of any kind with respect to that
         Property, or which must by its terms, or in order to obtain a necessary
         consent to the Asset Sale, or by  applicable  law, be repaid out of the
         proceeds from the Asset Sale,

                  (c) all  distributions  and other payments required to be made
         to minority  interest  holders in  Subsidiaries  or joint ventures as a
         result of the Asset Sale, and

                  (d) the  deduction  of  appropriate  amounts  provided  by the
         seller as a reserve,  in accordance with GAAP,  against any liabilities
         associated with the Property disposed in the Asset Sale and retained by
         the Company or any Restricted Subsidiary after the Asset Sale.

                  "Officer"  means the Chief Executive  Officer,  the President,
the Chief  Financial  Officer,  the Treasurer or the Assistant  Treasurer of the
Company.

                  "Officers'  Certificate"  means a  certificate  signed  by two
Officers of the Company,  at least one of whom shall be the principal  executive
officer or  principal  financial  officer of the Company,  and  delivered to the
Trustee.

                  "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 or the Trustee.

                  "Permitted  Holders"  means the holders of Voting  Stock as of
the Issue  Date,  together  with any  Voting  Trustee  and any  Person  who is a
"Permitted  Transferee"  of  the  holders,  as  that  term  is  defined  in  the
Stockholders  Agreement  dated as of April 15, 1996  between the Company and the
stockholders of the Company party thereto as that Stockholders  Agreement was in
effect on the Issue Date, except that transferees  pursuant to Section 2.2(a)(x)
of that Stockholders  Agreement shall not be deemed to be Permitted  Transferees
for purposes of the Indenture.

<PAGE>

                                                                              25


                  "Permitted  Investment" means any Investment by the Company or
a Restricted Subsidiary in:

                  (a) any  Restricted  Subsidiary or any Person that will,  upon
         the making of such Investment, become a Restricted Subsidiary, provided
         that the primary  business of the  Restricted  Subsidiary  is a Related
         Business;

                  (b) any Person if as a result of the Investment that Person is
         merged or  consolidated  with or into,  or  transfers or conveys all or
         substantially  all  its  Property  to,  the  Company  or  a  Restricted
         Subsidiary,  provided that the Person's  primary  business is a Related
         Business;

                  (c) Temporary Cash Investments;

                  (d)   receivables   owing  to  the  Company  or  a  Restricted
         Subsidiary,  if created or acquired in the ordinary  course of business
         and payable or  dischargeable in accordance with customary trade terms;
         provided,   however,   that  those  trade   terms  may   include   such
         --------    -------
         concessionary  trade terms as the Company or the Restricted  Subsidiary
         deems reasonable under the circumstances;

                  (e) payroll, travel and similar advances to cover matters that
         are expected at the time of those advances  ultimately to be treated as
         expenses  for  accounting  purposes  and that are made in the  ordinary
         course of business;

                  (f) loans  and  advances  to  employees  made in the  ordinary
         course of business consistent with past practices of the Company or the
         applicable  Restricted  Subsidiary,  as the case may be,  provided that
         those loans and  advances  do not exceed  $5.0  million at any one time
         outstanding;

                  (g)  stock,   obligations  or  other  securities  received  in
         settlement  of debts  created in the  ordinary  course of business  and
         owing to the Company or a Restricted  Subsidiary or in  satisfaction of
         judgments;

                  (h) any  Person to the extent the  Investment  represents  the
         non-cash  portion of the  consideration  received in connection with an
         Asset Sale consummated in compliance with Section 4.07;

<PAGE>

                                                                              26


                  (i) a  Receivables  Entity or any  Investment by a Receivables
         Entity in any other Person in connection  with a Qualified  Receivables
         Transaction,  including Investments of funds held in accounts permitted
         or required by the  arrangements  governing that Qualified  Receivables
         Transaction or any related  Indebtedness;  provided that any Investment
         in a  Receivables  Entity  is in the  form of a  Purchase  Money  Note,
         contribution of additional receivables or an equity interest;

                  (j)  customers  or  suppliers  of  the  Company  or any of its
         subsidiaries  in the form of  extensions  of  credit  or  transfers  of
         property,  to the extent otherwise  constituting an Investment,  and in
         the  ordinary  course of business and any  Investments  received in the
         ordinary  course of business in  satisfaction  or partial  satisfaction
         thereof;

                  (k) any Person if the Investments are outstanding on the Issue
         Date and not otherwise described in clauses (a) through (j) above; and

                  (l) any Person made for Fair  Market  Value that do not exceed
         $100.0 million outstanding at any one time in the aggregate.

                  "Permitted Liens" means:

                  (a) Liens  (including,  without  limitation  and to the extent
         constituting a Lien,  negative  pledges) to secure Debt permitted to be
         Incurred  under  clause (b) of the second  paragraph  of Section  4.04,
         regardless of whether the Company and the Restricted  Subsidiaries  are
         actually subject to the covenant  contained in Section 4.04 at the time
         the Lien is Incurred;

                  (b) Liens  (including,  without  limitation  and to the extent
         constituting a Lien,  negative  pledges) to secure Debt permitted to be
         Incurred  under  clause (h) of the second  paragraph  of Section  4.04,
         regardless of whether the Company and the Restricted  Subsidiaries  are
         actually subject to the covenant  contained in Section 4.04 at the time
         the Lien is  Incurred,  provided  that  any  Lien of this  kind may not
         extend to any  Property  of the Company or any  Restricted  Subsidiary,
         other  than the  Property  acquired,  constructed  or  leased  with the
         proceeds  of that  Debt  and any  improvements  or  accessions  to that
         Property;

<PAGE>

                                                                              27


                  (c) Liens for taxes,  assessments or  governmental  charges or
         levies on the Property of the Company or any  Restricted  Subsidiary if
         the same shall not at the time be delinquent or thereafter  can be paid
         without  penalty,   or  are  being  contested  in  good  faith  and  by
         appropriate  proceedings promptly instituted and diligently  concluded,
         provided that any reserve or other appropriate  provision that shall be
         required in conformity with GAAP shall have been made therefor;

                  (d) Liens imposed by law,  such as  carriers',  warehousemen's
         and mechanics'  Liens and other similar  Liens,  on the Property of the
         Company or any Restricted  Subsidiary arising in the ordinary course of
         business and securing  payment of obligations that are not more than 60
         days past due or are being  contested in good faith and by  appropriate
         proceedings;

                  (e) Liens on the  Property  of the  Company or any  Restricted
         Subsidiary  Incurred  in the  ordinary  course  of  business  to secure
         performance  of  obligations  with respect to  statutory or  regulatory
         requirements,  performance or  return-of-money  bonds,  surety bonds or
         other  obligations of a like nature and Incurred in a manner consistent
         with industry practice, including banker's liens and rights of set-off,
         in each case which are not Incurred in connection with the borrowing of
         money,  the  obtaining  of  advances  or credit or the  payment  of the
         deferred  purchase  price of Property and which do not in the aggregate
         impair in any material  respect the use of Property in the operation of
         the business of the Company and the Restricted  Subsidiaries taken as a
         whole;

                  (f)  Liens  on  Property  at  the  time  the  Company  or  any
         Restricted Subsidiary acquired the Property,  including any acquisition
         by means of a merger or  consolidation  with or into the Company or any
         Restricted  Subsidiary;  provided,  however, that any Lien of this kind
                                  --------   -------
         may not extend to any other  Property of the Company or any  Restricted
         Subsidiary;  provided further,  however,  that the Liens shall not have
                      ----------------   -------
         been Incurred in  anticipation of or in connection with the transaction
         or series of  transactions  pursuant to which the Property was acquired
         by the Company or any Restricted Subsidiary;

<PAGE>

                                                                              28


                  (g) Liens on the  Property of a Person at the time that Person
         becomes a Restricted  Subsidiary;  provided,  however, that any Lien of
                                            --------   -------
         this kind may not extend to any other  Property  of the  Company or any
         other  Restricted  Subsidiary  that is not a direct  Subsidiary of that
         Person;  provided further,  however,  that the Lien was not Incurred in
                  ----------------   -------
         anticipation  of or in  connection  with the  transaction  or series of
         transactions   pursuant  to  which  the  Person   became  a  Restricted
         Subsidiary;

                  (h)  pledges or  deposits  by the  Company  or any  Restricted
         Subsidiary under worker's  compensation  laws,  unemployment  insurance
         laws or similar legislation,  or good faith deposits in connection with
         bids, tenders, contracts (other than for the payment of Debt) or leases
         to which the Company or any  Restricted  Subsidiary  or any  Restricted
         Subsidiary  is  party,  or  deposits  to  secure  public  or  statutory
         obligations  of the Company or any Restricted  Subsidiary,  or deposits
         for the payment of rent, in each case  Incurred in the ordinary  course
         of business;

                  (i) Liens  (including,  without  limitation  and to the extent
         constituting  Liens,  negative  pledges),  assignments  and  pledges of
         rights to receive  premiums,  interest or loss  payments  or  otherwise
         arising  in  connection  with  worker's   compensation  loss  portfolio
         transfer  insurance   transactions  or  any  insurance  or  reinsurance
         agreements  pertaining  to  losses  covered  by  insurance,  and  Liens
         (including,  without limitation and to the extent  constituting  Liens,
         negative  pledges)  in favor of insurers  or  reinsurers  on pledges or
         deposits by the Company or any Restricted  Subsidiary  under  workmen's
         compensation laws, unemployment insurance laws or similar legislation;

                  (j) utility  easements,  building  restrictions and such other
         encumbrances  or  charges  against  real  Property  as are of a  nature
         generally existing with respect to properties of a similar character;

                  (k) Liens  arising  out of  judgments  or awards  against  the
         Company or a Restricted Subsidiary with respect to which the Company or
         the Restricted  Subsidiary  shall then be proceeding  with an appeal or
         other proceeding for review;

<PAGE>

                                                                              29


                  (l) Liens in favor of surety bonds or letters of credit issued
         pursuant  to the  request of and for the  account  of the  Company or a
         Restricted Subsidiary in the ordinary course of its business,  provided
         that these letters of credit do not constitute Debt;

                  (m)  leases  or  subleases  of real  property  granted  by the
         Company or a Restricted  Subsidiary to any other Person in the ordinary
         course of business  and not  materially  impairing  the use of the real
         property  in the  operation  of the  business  of  the  Company  or the
         Restricted Subsidiary;

                  (n) Liens  (including,  without  limitation  and to the extent
         constituting Liens,  negative pledges) on intellectual property arising
         from intellectual property licenses entered into in the ordinary course
         of business;

                  (o) Liens or negative pledges attaching to or related to joint
         ventures engaged in a Related Business,  restricting Liens on interests
         in those joint ventures;

                  (p) Liens  existing on the Issue Date not otherwise  described
         in clauses (a) through (o) above;

                  (q) Liens not  otherwise  described in clauses (a) through (p)
         above on the Property of any  Restricted  Subsidiary to secure any Debt
         permitted  to be  Incurred  by the  Restricted  Subsidiary  pursuant to
         Section 4.04;

                  (r) Liens on the  Property  of the  Company or any  Restricted
         Subsidiary to secure any Refinancing,  in whole or in part, of any Debt
         secured by Liens  referred to in clause (b),  (e), (f), (g), (k) or (l)
         above;  provided,  however, that any Lien of this kind shall be limited
                 --------   -------
         to all or part of the same  Property  that  secured the  original  Lien
         (together  with  improvements  and accessions to such Property) and the
         aggregate  principal  amount of Debt that is  secured by the Lien shall
         not be increased to an amount greater than the sum of:

                       (1) the outstanding principal amount, or, if greater, the
                  committed  amount, of the Debt ecured by Liens described under
                  clause (b), (e),  (f), (g), (k) or (l) above,  as the case may
                  be, at the time the original Lien became a Permitted Lien
                  under the indenture, and

<PAGE>

                                                                              30


                           (2) an amount necessary to pay any fees and expenses,
                  including  premiums  and  defeasance  costs,  incurred  by the
                  Company or the  Restricted  Subsidiary in connection  with the
                  Refinancing;

                  (s) Liens not  otherwise  permitted by clauses (a) through (r)
         above that are Liens  permitted by the Existing Bank Credit  Facilities
         as they exist on the Issue Date; and

                  (t) Liens not  otherwise  permitted by clauses (a) through (s)
         above  encumbering  assets having an aggregate Fair Market Value not in
         excess of 5.0% of Consolidated Net Tangible Assets, as determined based
         on the  consolidated  balance sheet of the Company as of the end of the
         most recent  fiscal  quarter  ending at least 45 days prior to the date
         the Lien shall be Incurred.

                  "Permitted  Refinancing  Debt" means any Debt that  Refinances
any other Debt, including any successive Refinancings, so long as:

                  (a) the new Debt is in an  aggregate  principal  amount (or if
         Incurred with original issue discount, an aggregate issue price) not in
         excess of the sum of:

                           (1) the  aggregate  principal  amount (or if Incurred
                  with original issue  discount,  the aggregate  accreted value)
                  then outstanding of the Debt being Refinanced, and

                           (2) an amount necessary to pay any fees and expenses,
                  including premiums and defeasance costs, related to the
                  Refinancing,

                  (b) the  Average  Life of the new Debt is equal to or  greater
         than the Average Life of the Debt being Refinanced,

                  (c) the Stated Maturity of the new Debt is no earlier than the
         Stated Maturity of the Debt being Refinanced, and

                  (d) the new Debt  shall not be senior in right of  payment  to
         the Debt that is being Refinanced;

<PAGE>

                                                                              31


provided, however, that Permitted Refinancing Debt shall not include:
- --------  -------

                  (x) Debt of a Subsidiary  that  Refinances Debt of the Company
         or

                  (y)  Debt  of the  Company  or a  Restricted  Subsidiary  that
         Refinances Debt of an Unrestricted Subsidiary.

                  "Person" means any individual, corporation, company (including
 any limited liability company), association, partnership, joint venture, trust,
 unincorporated organization,  government or any agency or political subdivision
 thereof or any other entity.

                  "Preferred Stock" means any Capital Stock of a Person, however
 designated,  which entitles the holder thereof to a preference  with respect to
 the  payment  of  dividends,  or as to the  distribution  of  assets  upon  any
 voluntary or involuntary liquidation or dissolution of that Person, over shares
 of any other class of Capital Stock issued by that Person.

                  "Preferred  Stock  Dividends" means all dividends with respect
 to Preferred  Stock of Restricted  Subsidiaries  held by Persons other than the
 Company or a Wholly Owned Restricted Subsidiary.  The amount of any dividend of
 this  kind  shall be equal  to the  quotient  of the  dividend  divided  by the
 difference between one and the maximum statutory federal income rate (expressed
 as a decimal  number  between  1 and 0) then  applicable  to the  issuer of the
 Preferred Stock.

                  "pro forma"  means,  with respect to any  calculation  made or
 required to be made  pursuant to the terms hereof,  a calculation  performed in
 accordance with Article 11 of Regulation S-X  promulgated  under the Securities
 Act, as interpreted in good faith by the Board of Directors after  consultation
 with the independent  certified public accountants of the Company, or otherwise
 a calculation  made in good faith by the Board of Directors after  consultation
 with the independent  certified public accountants of the Company,  as the case
 may be.

                  "Property" means, with respect to any Person,  any interest of
 that Person in any kind of property or asset,  whether real, personal or mixed,
 or tangible or intangible, including Capital Stock in, and other securities of,
 any other  Person.  For purposes of any  calculation  required  pursuant to the
 indenture, the value of any Property shall be its Fair Market Value.

<PAGE>

                                                                              32


                  "principal" of any Debt (including the  Securities)  means the
principal amount of such Debt plus the premium, if any, on such Debt.

                  "Public Equity Offering" means an underwritten public offering
of common stock of the Company pursuant to an effective  registration  statement
under the Securities Act.

                  "Public Market" means any time after:

                  (a) a Public Equity Offering has been consummated, and

                  (b) at least 15% 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.

                  "Purchase Money Debt" means Debt:

                  (a)  consisting  of the deferred  purchase  price of property,
         conditional  sale  obligations,  obligations  under any title retention
         agreement,  other purchase money obligations and obligations in respect
         of  industrial  revenue  bonds,  in each case where the maturity of the
         Debt does not exceed the anticipated  useful life of the Property being
         financed, and

                  (b) Incurred to finance the acquisition, construction or lease
         by the Company or a Restricted  Subsidiary of the  Property,  including
         additions and improvements thereto;

provided,  however,  that  the  Debt is  Incurred  within  180  days  after  the
- --------   -------
acquisition,  construction or lease of the Property by the Company or Restricted
Subsidiary.

                  "Qualified  Receivables  Transaction" means any transaction or
 series of  transactions  that may be entered  into by the Company or any of its
 Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell,
 convey or otherwise transfer to:

                  (a) a  Receivables  Entity (in the case of a  transfer  by the
         Company or any of its Subsidiaries) and

<PAGE>

                                                                              33


                  (b)  any  other  Person  (in  the  case  of  a  transfer  by a
         Receivables Entity),

or may grant a  security  interest  in, any  accounts  receivable  (whether  now
existing or arising in the  future) of the  Company or any of its  Subsidiaries,
and any assets related thereto  including,  without  limitation,  all collateral
securing  those accounts  receivable,  all contracts and all Guarantees or other
obligations in respect of those accounts receivable,  proceeds of those accounts
receivable and other assets which are  customarily  transferred or in respect of
which  security  interests  are  customarily  granted in  connection  with asset
securitization transactions involving accounts receivable; provided that:

                       (1) if the  transaction  involves a transfer  of accounts
                  receivable  with Fair Market  Value  equal to or greater  than
                  $25.0 million, the Board of Directors shall have determined in
                  good  faith  that the  Qualified  Receivables  Transaction  is
                  economically  fair  and  reasonable  to the  Company  and  the
                  Receivables Entity,

                       (2) all sales of accounts  receivable  and related assets
                  to or by the Receivables  Entity are made at Fair Market Value
                  and

                       (3) the financing terms,  covenants,  termination  events
                  and  other  provisions  thereof  shall  be  market  terms  (as
                  determined in good faith by the Board of Directors).

         The grant of a security  interest  in any  accounts  receivable  of the
Company or any of its Restricted  Subsidiaries  to secure the Credit  Facilities
shall not be deemed a Qualified Receivables Transaction.

                  "Rating Agencies" mean Moody's and S&P.

                  "Real Estate Financing Transaction" means any arrangement with
any Person  pursuant to which the Company or any  Restricted  Subsidiary  Incurs
Debt  secured  by a Lien on  real  property  of the  Company  or any  Restricted
Subsidiary and related personal property together with any Refinancings thereof.

                  "Receivables Entity" means a Wholly Owned Subsidiary of the
Company (or another  Person  formed for the  purposes of engaging in a Qualified
Receivables  Transaction with the Company in which the Company or any Subsidiary
of the Company makes an Investment and to which the Company or any Subsidiary of
the Company transfers accounts receivable

<PAGE>

                                                                              34


and related assets) which engages in no activities other than in connection with
the financing of accounts  receivable of the Company and its  Subsidiaries,  all
proceeds  thereof and all rights  (contractual  or other),  collateral and other
assets relating thereto, and any business or activities incidental or related to
that  business,  and (with  respect to any  Receivables  Entity formed after the
Issue Date) which is designated by the Board of Directors (as provided below) as
a Receivables Entity and

                  (a) no portion of the  Indebtedness  or any other  obligations
         (contingent or otherwise) of which

                       (1) is Guaranteed by the Company or any Subsidiary of the
                  Company  (excluding  Guarantees of obligations (other than the
                  principal  of, and  interest  on,  Indebtedness)  pursuant  to
                  Standard Securitization Undertakings),

                       (2)  is  recourse  to or  obligates  the  Company  or any
                  Subsidiary  of the  Company in any way other than  pursuant to
                  Standard Securitization Undertakings or

                       (3)  subjects any property or asset of the Company or any
                  Subsidiary   of   the   Company,   directly   or   indirectly,
                  contingently or otherwise,  to the satisfaction thereof, other
                  than pursuant to Standard Securitization Undertakings;

                  (b) with which  neither the Company nor any  Subsidiary of the
         Company  has  any  material   contract,   agreement,   arrangement   or
         understanding other than on terms which the Company reasonably believes
         to be no less  favorable  to the Company or the  Subsidiary  than those
         that might be obtained at the time from Persons that are not Affiliates
         of the Company and

                  (c) to which  neither the Company  nor any  Subsidiary  of the
         Company  has any  obligation  to  maintain  or  preserve  the  entity's
         financial  condition or cause the entity to achieve  certain  levels of
         operating  results  other  than  pursuant  to  Standard  Securitization
         Undertakings.

         Any  designation  of this  kind by the  Board  of  Directors  shall  be
evidenced  to the Trustee by filing  with the  Trustee a  certified  copy of the
resolution  of the Board of Directors  giving effect to the  designation  and an
Officers'  Certificate   certifying  that  the  designation  complied  with  the
foregoing conditions.

<PAGE>

                                                                              35


                  "Refinance"  means,  in  respect  of any Debt,  to  refinance,
extend, renew, refund, repay, prepay, repurchase,  redeem, defease or retire, or
to issue other Debt, in exchange or replacement for, that Debt.

                  "Refinanced"   and   "Refinancing"   shall  have   correlative
meanings.

                  "Related   Business"  means  any  business  that  is  related,
ancillary or  complementary  to the businesses of the Company and the Restricted
Subsidiaries on the Issue Date.

                  "Repay"  means,  in  respect  of any Debt,  to repay,  prepay,
repurchase,  redeem,  legally defease or otherwise retire that Debt. "Repayment"
and "Repaid" shall have correlative  meanings.  For purposes of Section 4.07 and
Section 4.04 and the definition of "Consolidated  Fixed Charges Coverage Ratio",
Debt shall be considered to have been Repaid only to the extent the related loan
commitment, if any, shall have been permanently reduced in connection therewith.

                  "Restricted Payment" means:

                  (a) any  dividend  or  distribution  (whether  made  in  cash,
         securities  or other  Property)  declared or paid on or with respect to
         any shares of Capital Stock of the Company or any Restricted Subsidiary
         (including any payment in connection  with any merger or  consolidation
         with or into the Company or any Restricted Subsidiary),  except for any
         dividend or  distribution  that is made to the Company or the parent of
         the  Restricted  Subsidiary  or any  dividend or  distribution  payable
         solely in shares of Capital  Stock (other than  Disqualified  Stock) of
         the Company;

                  (b)  the  purchase,  repurchase,  redemption,  acquisition  or
         retirement  for  value  of any  Capital  Stock  of the  Company  or any
         Restricted  Subsidiary  (other  than from the  Company or a  Restricted
         Subsidiary) or any  securities  exchangeable  for or  convertible  into
         Capital Stock of the Company or any  Restricted  Subsidiary,  including
         the  exercise of any option to exchange  any Capital  Stock (other than
         for or into  Capital  Stock  of the  Company  that is not  Disqualified
         Stock);

                  (c)  the  purchase,  repurchase,  redemption,  acquisition  or
         retirement  for value,  prior to the date for any  scheduled  maturity,
         sinking fund or amortization or other installment payment, of any

<PAGE>

                                                                              36


         Subordinated  Obligation (other than the purchase,  repurchase or other
         acquisition of any Subordinated Obligation purchased in anticipation of
         satisfying a scheduled maturity,  sinking fund or amortization or other
         installment obligation, in each case due within one year of the date of
         acquisition);

                  (d) any Investment  (other than Permitted  Investments) in any
         Person; or

                  (e) the issuance,  sale or other  disposition of Capital Stock
         of any  Restricted  Subsidiary  to a Person  other than the  Company or
         another  Restricted  Subsidiary  if the  result  thereof  is  that  the
         Restricted  Subsidiary  shall cease to be a Restricted  Subsidiary,  in
         which event the amount of the  "Restricted  Payment"  shall be the Fair
         Market  Value  of  the  remaining  interest,  if  any,  in  the  former
         Restricted  Subsidiary  held by the  Company  and the other  Restricted
         Subsidiaries.

                  "Restricted  Subsidiary"  means any  Subsidiary of the Company
other than an Unrestricted Subsidiary.

                  "S&P" means Standard & Poor's Ratings Service or any successor
to the rating agency business thereof.

                  "Sale and Leaseback  Transaction" means any direct or indirect
arrangement  relating to Property  now owned or hereafter  acquired  whereby the
Company or a Restricted Subsidiary transfers that Property to another Person and
the Company or a Restricted Subsidiary leases it from that other Person together
with any Refinancings thereof.

                  "SEC" means the Securities and Exchange Commission.

                  "Securities Act" means the Securities Act of 1933.

                  "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 Commission.

                  "Standard Securitization  Undertakings" means representations,
warranties,  covenants  and  indemnities  entered  into  by the  Company  or any
Subsidiary  of  the  Company  which  are  customary  in an  accounts  receivable
securitization transaction involving a comparable company.

<PAGE>

                                                                              37


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

                  "Subordinated  Obligation"  means  any  Debt  of  the  Company
(whether  outstanding  on  the  Issue  Date  or  thereafter  Incurred)  that  is
subordinate  or junior  in right of  payment  to the  Securities  pursuant  to a
written agreement to that effect.

                  "Subsidiary" means, in respect of any Person, any corporation,
company  (including any limited liability  company),  association,  partnership,
joint venture or other  business  entity of which a majority of the total voting
power of the  Voting  Stock is at the time  owned  or  controlled,  directly  or
indirectly, by:

                  (a) that Person,

                  (b) that Person and one or more Subsidiaries of that Person,
                      or

                  (c) one or more Subsidiaries of that Person.

                  "Temporary Cash Investments" means any of the following:

                  (a) Investments in U.S. Government Obligations maturing within
         365 days of the date of acquisition thereof;

                  (b)   Investments   in   time   deposit   accounts,   banker's
         acceptances, certificates of deposit and money market deposits maturing
         within 180 days of the date of acquisition  thereof issued by a bank or
         trust company  organized under the laws of the United States of America
         or any state thereof  having  capital,  surplus and  undivided  profits
         aggregating  in excess of $500 million or issued by a  commercial  bank
         organized  under the laws of any other  country that is a member of the
         Organization  for Economic  Cooperation  and  Development  having total
         assets in excess of $500 million (or its foreign currency equivalent at
         the time),  and in any case whose long-term debt is rated "A-3" or "A-"
         or higher according to Moody's or S&P (or a similar

<PAGE>

                                                                              38


         equivalent  rating by at least one "nationally  recognized  statistical
         rating  organization"  (as  defined  in Rule 436 under  the  Securities
         Act));

                  (c)  repurchase  obligations  with a term of not more  than 30
         days for  underlying  securities  of the types  described in clause (a)
         entered into with:

                       (1) a bank meeting the qualifications described in clause
                  (b) above, or

                       (2) any primary government securities dealer reporting to
                  the Market Reports Division of the Federal Reserve Bank of New
                  York;

                  (d)  Investments in commercial  paper,  maturing not more than
         270 days after the date of acquisition,  issued by a corporation (other
         than an Affiliate of the Company)  organized and in existence under the
         laws of the United  States of America  or any other  country  that is a
         member of the  Organization  for Economic  Cooperation and Development,
         and in any case with a rating  at the time as of which  any  Investment
         therein is made of "P-1" (or higher)  according to Moody's  or"A-1" (or
         higher)  according to S&P (or a similar  equivalent  rating by at least
         one "nationally recognized statistical rating organization" (as defined
         in Rule 436 under the Securities Act); and

                  (e)  direct  obligations  (or  certificates   representing  an
         ownership  interest  in such  obligations)  of any state of the  United
         States of America (including any agency or instrumentality thereof) for
         the payment of which the full faith and credit of such state is pledged
         and  which are not  callable  or  redeemable  at the  issuer's  option,
         provided that:

                       (1) the  long-term  debt of the  state is rated  "A-3" or
                  "A-" or  higher  according  to  Moody's  or S&P (or a  similar
                  equivalent  rating  by at  least  one  "nationally  recognized
                  statistical rating organization" (as defined in Rule 436 under
                  the Securities Act)), and

                       (2) the obligations mature within 180 days of the date of
                  acquisition thereof.

                  "TIA" means the Trust Indenture Act of 1939 (15 U.S.C.  ss.ss.
77aaa-77bbbb)  as in effect on the date of this  Indenture;  provided,  however,
that, in the event the TIA is amended  after such date,  "Trust  Indenture  Act"
means, to the

<PAGE>

                                                                              39


extent required by any such amendments, the Trust Indenture Act of 1939 as so
amended.

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

                  "Trust  Officer" means any officer within the Corporate  Trust
Administration department of the Trustee (or any successor group of the trustee)
with direct  responsibility  for the  administration  of this Indenture and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred  because of his knowledge of and  familiarity  with
the particular subject.

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

                  "Unrestricted Subsidiary" means:

                  (a) any Subsidiary of the Company that is designated after the
         Issue Date as an  Unrestricted  Subsidiary  as  permitted  or  required
         pursuant  to  Section  4.10  and is not  thereafter  redesignated  as a
         Restricted Subsidiary as permitted pursuant thereto; and

                  (b) any Subsidiary of an Unrestricted Subsidiary.

                  "U.S.  Dollar  Equivalent"  means with respect to any monetary
amount in a currency  other  than U.S.  dollars,  at any time for  determination
thereof, the amount of U.S. dollars obtained by converting such foreign currency
involved in such computation into U.S. dollars at the spot rate for the purchase
of U.S.  dollars with the applicable  foreign  currency as published in THE WALL
STREET  JOURNAL in the  "Exchange  Rates"  column  under the  heading  "Currency
Trading"  on the  date  two  Business  Days  prior  to  such  determination.  In
determining  the  aggregate  principal  amount of Euro Notes  outstanding,  such
amount will be treated as the U.S. Dollar  Equivalent  determined as of the date
of issuance of such Euro Notes.

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

<PAGE>

                                                                              40


                  "Voting  Stock" of any  Person  means all  classes  of Capital
Stock or other interests (including  partnership  interests,  and in the case of
the Company,  Voting Trust  Certificates)  of that 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.

                  "Voting Trust Arrangement" means the Voting Trust Arrangement
entered  into as of April 15, 1996 by and among  Robert D. Haas;  Peter E. Haas,
Sr.; Peter E. Haas,  Jr.; and F. Warren  Hellman as the Voting  Trustees and the
stockholders of the Company who are parties thereto.

                  "Voting Trust  Certificates"  means those certificates  issued
pursuant to the Voting Trust Arrangement.

                  "Voting  Trustees" means the persons entitled to act as voting
trustees under the Voting Trust Arrangement.

                  "Wholly Owned  Restricted  Subsidiary"  means,  at any time, a
Restricted   Subsidiary  all  the  Voting  Stock  of  which  (except  directors'
qualifying shares) is at that time owned, directly or indirectly, by the Company
and its other Wholly Owned Subsidiaries.

                  SECTION 1.02.  Other Definitions.
                                 -----------------

                                                                 Defined in
                                Term                              Section
                                ----                             ----------

"Affiliate Transaction"                                             4.09
"Bankruptcy Law"                                                    6.01
"Change of Control Offer"                                           4.12
"Change of Control Payment Date"                                    4.12
"Change of Control Purchase Price"                                  4.12
"covenant defeasance option"                                        8.01
"Custodian"                                                         6.01
"Event of Default"                                                  6.01
"Exchange Security"                                              Appendix A
"Global Security"                                                Appendix A
"legal defeasance option"                                           8.01
"Legal Holiday"                                                    10.08
"Offer Amount"                                                      4.07
"Offer Period"                                                      4.07

<PAGE>

                                                                              41


"Original Securities"                                               2.01
"Paying Agent"                                                      2.04
"Prepayment Offer"                                                  4.07
"Registered Exchange Offer"                                      Appendix A
"Registrar"                                                         2.04
"Shelf Registration statement"                                   Appendix A
"Surviving Person"                                                  5.01


                  SECTION 1.03.  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 Securities.

                  "indenture security holder" means a Securityholder.

                  "indenture to be qualified" means this Indenture.

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

                  "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 1.04.  Rules of Construction.  Unless the context
                                 ---------------------
otherwise requires:

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

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

                  (3) "or" is not exclusive;

                  (4) "including" means including without limitation;

<PAGE>

                                                                              42


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

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

                  (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


                  (8) the principal  amount of any Preferred  Stock shall be the
         greater of (i) the maximum liquidation value of such Preferred Stock or
         (ii) the maximum  mandatory  redemption or mandatory  repurchase  price
         with respect to such Preferred Stock.


                                   ARTICLE II

                                 The Securities
                                 --------------

                  SECTION 2.01.  Amount of Securities;  Issuable in Series.  The
                                 -----------------------------------------
aggregate  principal  amount  of  Securities  which  may  be  authenticated  and
delivered  under this  Indenture is (x) $850.0  million  less (y) the  aggregate
principal amount (on a U.S. Dollar Equivalent basis) of any Euro Notes issued by
the Company.  All Securities shall be identical in all respects other than issue
prices and issuance  dates.  The Securities may be issued in one or more series;
provided,  however,  that any  Securities  issued with original  issue  discount
- --------   -------
("OID") for Federal  income tax purposes shall not be issued as part of the same
series as any Securities  that are issued with a different  amount of OID or are
not issued with OID. All  Securities  of any one series  shall be  substantially
identical except as to denomination.

                  Subject  to  Section  2.03,  the  Trustee  shall  authenticate
Securities  for  original  issue on the Issue  Date in the  aggregate  principal
amount of $380.0  million  (the  "Original  Securities").  With  respect  to any
Securities issued after the Issue Date (except for Securities  authenticated and
delivered upon  registration  of transfer of, or in exchange for, or in lieu of,
Original Securities pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix A),
there  shall be  established  in or  pursuant  to a  resolution  of the Board of
Directors,  and subject to Section 2.03, set forth,  or determined in the manner
provided in an Officers'

<PAGE>

                                                                              43


Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of such Securities:

                  (1) whether such  Securities  shall be issued as part of a new
         or  existing  series of  Securities  and the  title of such  Securities
         (which shall  distinguish  the Securities of the series from Securities
         of any other series);

                  (2) the aggregate principal amount of such Securities that may
         be authenticated and delivered under this Indenture,  which shall be in
         an aggregate principal amount not to exceed (x) $350.0 million less (y)
         the aggregate  principal amount (on a U.S. Dollar  Equivalent basis) of
         any Euro Notes issued by the Company that are not Issue Date Euro Notes
         (except for Securities authenticated and delivered upon registration of
         transfer of, or in exchange for, or in lieu of, other Securities of the
         same series pursuant to Section 2.07,  2.08, 2.09 or 3.06 or Appendix A
         and except for Securities  which,  pursuant to Section 2.03, are deemed
         never to have been authenticated and delivered hereunder);

                  (3) the issue  price  and  issuance  date of such  Securities,
         including the date from which interest on such Securities shall accrue;

                  (4) if applicable,  that such Securities  shall be issuable in
         whole or in part in the form of one or more Global  Securities  and, in
         such case, the respective depositories for such Global Securities,  the
         form of any  legend or legends  that shall be borne by any such  Global
         Security  in  addition  to or in lieu of that set forth in Exhibit 1 to
         Appendix A and any circumstances in addition to or in lieu of those set
         forth in Section 2.3 of  Appendix A in which any such  Global  Security
         may be exchanged in whole or in part for Securities registered, and any
         transfer of such Global Security in whole or in part may be registered,
         in the name or names of  Persons  other  than the  depository  for such
         Global Security or a nominee thereof; and

                  (5) if applicable, that such Securities shall not be issued in
         the form of  Initial  Securities  subject to  Appendix  A, but shall be
         issued in the form of Exchange Securities as set forth in Exhibit A.

<PAGE>

                                                                              44


                  If any of the terms of any  series are  established  by action
taken  pursuant  to a  resolution  of the  Board  of  Directors,  a  copy  of an
appropriate  record of such action shall be  certified  by the  Secretary or any
Assistant  Secretary of the Company and  delivered to the Trustee at or prior to
the delivery of the Officers'  Certificate or the trust  indenture  supplemental
hereto setting forth the terms of the series.

                  SECTION  2.02.  Form and  Dating.  Provisions  relating to the
                                  ----------------
Initial  Securities of each series and the Exchange  Securities are set forth in
Appendix  A, which is hereby  incorporated  in and  expressly  made part of this
Indenture.  The Initial Securities of each series and the Trustee's  certificate
of authentication  shall be substantially in the form of Exhibit 1 to Appendix A
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange  Securities and the Trustee's  certificate of  authentication  shall be
substantially  in the form of  Exhibit A,  which is hereby  incorporated  in and
expressly made a part of this Indenture.  The Securities of each series may have
notations,  legends  or  endorsements  required  by law,  stock  exchange  rule,
agreements to which the Company is subject, if any, or usage,  provided that any
such notation,  legend or endorsement is in a form reasonably  acceptable to the
Company. Each Security shall be dated the date of its authentication.  The terms
of the  Securities  of each  series  set forth in  Exhibit 1 to  Appendix  A and
Exhibit A are part of the terms of this Indenture.

                  SECTION 2.03. Execution and Authentication. Two Officers shall
                                ----------------------------
sign the  Securities  for the  Company  by manual or  facsimile  signature.  The
Company's  seal shall be  impressed,  affixed,  imprinted or  reproduced  on the
Securities and may be in facsimile form.

                  If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee  authenticates  the  Security,  the Security
shall be valid nevertheless.

                  At any time and from  time to time  after  the  execution  and
delivery of this  Indenture,  the Company may deliver  Securities  of any series
executed  by the  Company to the Trustee  for  authentication,  together  with a
written  order of the Company in the form of an  Officers'  Certificate  for the
authentication  and delivery of such  Securities,  and the Trustee in accordance
with such  written  order of the Company  shall  authenticate  and deliver  such
Securities.

<PAGE>

                                                                              45


                  A Security shall not be valid until an authorized signatory of
the Trustee  manually signs the certificate of  authentication  on the Security.
The  signature  shall  be  conclusive   evidence  that  the  Security  has  been
authenticated under this Indenture.

                  The  Trustee may appoint an  authenticating  agent  reasonably
acceptable to the Company to authenticate the Securities.  Unless limited by the
terms of such appointment,  an authenticating agent may authenticate  Securities
whenever  the  Trustee  may  do  so.  Each   reference  in  this   Indenture  to
authentication  by  the  Trustee  includes  authentication  by  such  agent.  An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.

                  SECTION 2.04.  Registrar  and Paying Agent.  The Company shall
                                 ---------------------------
 maintain an office or agency where Securities may be presented for registration
 of transfer or for  exchange  (the  "Registrar")  and an office or agency where
 Securities  may be presented  for payment (the "Paying  Agent").  The Registrar
 shall keep a register of the Securities and of their transfer and exchange. The
 Company may have one or more  co-registrars  and one or more additional  paying
 agents. The term "Paying Agent" includes any additional paying agent.

                  The Company shall enter into an appropriate  agency  agreement
 with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
 which shall incorporate the terms of the TIA. The agreement shall implement the
 provisions  of this  Indenture  that  relate to such agent.  The Company  shall
 notify the Trustee of the name and  address of any such  agent.  If the Company
 fails to maintain a Registrar or Paying  Agent,  the Trustee  shall act as such
 and shall be entitled to appropriate  compensation therefor pursuant to Section
 7.07.  The  Company  or any  of  its  domestically  incorporated  Wholly  Owned
 Subsidiaries  may act as Paying  Agent,  Registrar,  co-registrar  or  transfer
 agent.

                  The Company  initially  appoints the Trustee as Registrar  and
 Paying Agent in connection with the Securities.

                  SECTION  2.05.  Paying Agent To Hold Money in Trust.  Prior to
                                  -----------------------------------
each due date of the principal  and interest on any Security,  the Company shall
deposit  with  the  Paying  Agent a sum  sufficient  to pay such  principal  and
interest  when so becoming  due.  The Company  shall  require  each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of

<PAGE>

                                                                              46


Securityholders  or the  Trustee  all  money  held by the  Paying  Agent for the
payment of  principal  of or interest  on the  Securities  and shall  notify the
Trustee of any default by the Company in making any such payment. If the Company
or a Wholly Owned  Subsidiary acts as Paying Agent, it shall segregate the money
held by it as Paying Agent and hold it as a separate  trust fund. The Company at
any time may  require a Paying  Agent to pay all money held by it to the Trustee
and to account for any funds disbursed by the Paying Agent.  Upon complying with
this  Section,  the Paying Agent shall have no further  liability  for the money
delivered to the Trustee.

                  SECTION 2.06. Securityholder Lists. The Trustee shall preserve
                                --------------------
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of  Securityholders.  If the Trustee is not the
Registrar,  the Company shall  furnish to the Trustee,  in writing at least five
Business Days before each  interest  payment date and at such other times as the
Trustee may  request in writing,  a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.

                  SECTION 2.07. Replacement Securities.  If a mutilated Security
                                ----------------------
is surrendered to the Registrar or if the Holder of a Security  claims that such
Security has been lost,  destroyed or wrongfully  taken, the Company shall issue
and the Trustee shall authenticate a replacement Security 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 Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.

                  Every replacement Security is an additional  obligation of the
Company.

                  SECTION 2.08. Outstanding  Securities.  Securities outstanding
                                -----------------------
at any time are all  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 Security  does not cease to be  outstanding
because the Company or an Affiliate of the Company holds the Security.

<PAGE>

                                                                              47


                  If a Security 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 Security 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 and interest  payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing,  as the case
may be, then on and after that date such Securities (or portions  thereof) cease
to be outstanding and interest on them ceases to accrue.


                  SECTION   2.09.   Temporary   Securities.   Until   definitive
                                    ----------------------
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate  temporary Securities.  Temporary Securities shall be substantially
in the form of definitive  Securities but may have  variations  that the Company
considers appropriate for temporary Securities.  Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate  definitive  Securities
and deliver them in exchange for temporary Securities.

                  SECTION  2.10.  Cancellation.  The  Company  at any  time  may
                                  ------------
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent  shall  forward to the  Trustee  any  Securities  surrendered  to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and dispose of all Securities  surrendered for  registration of transfer,
exchange,  payment or cancellation in its customary manner.  The Company may not
issue new Securities to replace Securities it has redeemed, paid or delivered to
the Trustee for cancellation.

                  SECTION 2.11. Defaulted Interest. If the Company defaults in a
                                ------------------
 payment of interest on the  Securities,  the  Company  shall pay the  defaulted
 interest (plus interest on such defaulted interest to the extent lawful) in any
 lawful  manner.  The Company may pay the defaulted  interest to the persons who
 are  Securityholders on a subsequent special record date. The Company shall fix
 or cause to be fixed  any such  special  record  date and  payment  date to the
 reasonable  satisfaction  of the  Trustee  and  shall  promptly  mail  to  each
 Securityholder  a notice that states the special  record date, the payment date
 and the amount of defaulted interest to be paid.

<PAGE>

                                                                              48


                  SECTION  2.12.  CUSIP  Numbers.  The  Company in  issuing  the
                                  --------------
 Securities may use "CUSIP",  "ISIN" or "Common Code" numbers (if then generally
 in use) and,  if so, the Trustee  shall use  "CUSIP",  "ISIN" or "Common  Code"
 numbers  in  notices of  redemption  as a  convenience  to  Holders;  provided,
                                                                       --------
 however, that neither the Company nor the Trustee shall have any responsibility
 --------
 for any defect in the "CUSIP",  "ISIN" or "Common  Code" number that appears on
 any  Security,  check,  advice of payment or  redemption  notice,  and any such
 notice may state that no  representation  is made as to the correctness of such
 numbers  either as printed on the Securities or as contained in any notice of a
 redemption  and that  reliance  may be placed only on the other  identification
 numbers  printed  on the  Securities,  and any  such  redemption  shall  not be
 affected  by any defect in or  omission  of such  numbers.  The  Company  shall
 promptly notify the Trustee of any change in such numbers.


                                   ARTICLE III

                                   Redemption
                                   ----------

                  SECTION  3.01.  Notices to Trustee.  If the Company  elects to
                                  ------------------
 redeem  Securities  pursuant to paragraph 5 of the Securities,  it shall notify
 the  Trustee  in  writing  of the  redemption  date,  the  principal  amount of
 Securities  to be redeemed and that such  redemption  is being made pursuant to
 paragraph 5 of the Securities.

                  The Company shall give each notice to the Trustee provided for
 in this Section at least 45 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 Securities To Be Redeemed. If fewer
                                --------------------------------------
than all the  Securities  are to be  redeemed,  the  Trustee  shall  select  the
Securities  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  Securities  not  previously
called for  redemption.  The Trustee may select for  redemption  portions of the
principal of Securities that have denominations  larger than $1,000.  Securities
and portions of them the Trustee selects shall be

<PAGE>

                                                                              49


in amounts of $1,000 or a whole multiple of $1,000. Provisions of this Indenture
that  apply to  Securities  called for  redemption  also  apply to  portions  of
Securities called for redemption.  The Trustee shall notify the Company promptly
of the Securities or portions of Securities to be redeemed.

                  SECTION 3.03.  Notice of Redemption.  At least 30 days but not
                                 --------------------
more than 60 days before a date for redemption of Securities,  the Company shall
mail a notice of redemption by first-class  mail to each Holder of Securities to
be redeemed.

                  The notice shall  identify the  Securities  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 Securities  called for redemption must be surrendered
         to the Paying Agent to collect the redemption price;

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

                  (6)  that,   unless  the  Company   defaults  in  making  such
         redemption payment,  interest on Securities (or portion thereof) called
         for redemption ceases to accrue on and after the redemption date; and

                  (7) that no  representation  is made as to the  correctness or
         accuracy of the CUSIP,  ISIN or Common Code number,  if any,  listed in
         such notice or printed on the Securities.

                  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 at least 45 days before the redemption date.

                  SECTION 3.04.  Effect of Notice of Redemption. Once notice of
                                 ------------------------------
redemption is mailed, Securities 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 Securities shall be paid

<PAGE>

                                                                              50


at the  redemption  price  stated in the notice,  plus  accrued  interest to the
redemption  date  (subject  to the right of  Holders  of record on the  relevant
record date to receive interest due on the related interest payment date that is
on or prior to the date of redemption).  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.  Prior  to the
                                  ------------------------------
redemption  date,  the Company  shall  deposit with the Paying Agent (or, if the
Company or a Wholly Owned  Subsidiary is the Paying Agent,  shall  segregate and
hold in trust)  money  sufficient  to pay the  redemption  price of and  accrued
interest  (subject to the right of Holders of record on the relevant record date
to receive interest due on the related interest payment date that is on or prior
to the date of  redemption)  on all Securities to be redeemed on that date other
than  Securities or portions of Securities  called for redemption that have been
delivered by the Company to the Trustee for cancellation.

                  SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
                                ---------------------------
Security  that is redeemed in part,  the Company  shall  execute and the Trustee
shall  authenticate  for the Holder (at the  Company's  expense) a new  Security
equal in principal amount to the unredeemed portion of the Security surrendered.


                                   ARTICLE IV

                                    Covenants
                                    ---------

                  SECTION 4.01.  Covenant Suspension.  During any period of time
                                 -------------------
that:

                  (a) the  Securities  have  Investment  Grade Ratings from both
         Rating Agencies and

                  (b) no  Default  or  Event  of  Default  has  occurred  and is
         continuing  under  the  Indenture,   the  Company  and  the  Restricted
         Subsidiaries  will not be  subject  to the  following  Sections  of the
         Indenture:  Section  4.04,  Section 4.05,  Section 4.07,  Section 4.08,
         clause  (x) of the third  paragraph  (and as  referred  to in the first
         paragraph)  of Section 4.10,  and clause (e) of the first  paragraph of
         Article 5.

<PAGE>

                                                                              51


(collectively, the "Suspended Covenants"). In the event that the Company and the
Restricted  Subsidiaries  are not  subject to the  Suspended  Covenants  for any
period of time as a result of the preceding sentence and,  subsequently,  one or
both of the  Rating  Agencies  withdraws  its  rating or  downgrades  the rating
assigned to the  Securities  below the  required  Investment  Grade  Rating or a
Default or Event of Default occurs and is  continuing,  then the Company and the
Restricted  Subsidiaries  will  thereafter  again be  subject  to the  Suspended
Covenants for all periods after that withdrawal,  downgrade, Default or Event of
Default and,  furthermore,  compliance  with the provisions of Section 4.05 with
respect to Restricted Payments made after the time of the withdrawal, downgrade,
Default or Event of Default will be calculated  in accordance  with the terms of
that  covenant  as though  that  covenant  had been in effect  during the entire
period of time from the Issue  Date,  provided  that there will not be deemed to
have occurred a Default or Event of Default with respect to that covenant during
the time that the Company and the  Restricted  Subsidiaries  were not subject to
the Suspended Covenants (or after that time based solely on events that occurred
during that time).

                  SECTION  4.02.  Payment  of  Securities.   The  Company  shall
                                  -----------------------
 promptly pay the  principal of and interest on the  Securities on the dates and
 in the manner provided in the Securities and in this  Indenture.  Principal 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 sufficient to
 pay all principal and interest then due.

                  The Company  shall pay  interest on overdue  principal  at the
 rate specified therefor in the Securities, and it shall pay interest on overdue
 installments  of  interest  at the rate borne by the  Securities  to the extent
 lawful.

                  SECTION 4.03.  SEC Reports.  Notwithstanding  that the Company
                                 -----------
may not be subject to the reporting  requirements  of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the Commission and provide the Trustee
and Holders of Securities  with annual  reports and  information,  documents and
other  reports as are specified in Sections 13 and 15(d) of the Exchange Act and
applicable to a U.S. corporation subject to those Sections, and the information,
documents and reports to be so filed and provided at the times specified for the
filing of the information, documents and reports under those Sections; provided,
                                                                       --------
however,  that the Company  shall not be so obligated  to file the  information,
- -------
documents and reports with the Commission if

<PAGE>

                                                                              52


the Commission does not permit those filings. The Company shall also comply with
the other  provisions of TIA ss. 314(a).  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  or  determinable  from  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  Officer's
Certificates).

                  SECTION 4.04.  Limitation on Debt.  The Company shall not, and
                                 ------------------
 shall not permit any Restricted  Subsidiary to, Incur,  directly or indirectly,
 any Debt  unless,  after  giving  effect  to the  application  of the  proceeds
 thereof,  no Default or Event of Default  would occur as a  consequence  of the
 Incurrence or be continuing following the Incurrence and either:

                  (1) the Debt is Debt of the Company and after giving effect to
         the Incurrence of the Debt and the application of the proceeds thereof,
         the  Consolidated  Fixed Charges  Coverage  Ratio would be greater than
         2.00 to 1.00 if the  Debt is  Incurred  from  the  Issue  Date  through
         January 15, 2004, and 2.50 to 1.00 if the Debt is Incurred  thereafter,
         or

                  (2) the Debt is Permitted Debt.

         The term "Permitted Debt" is defined to include the following:

                  (a) Debt of the Company evidenced by the Original Securities;

                  (b) Debt of the Company or a Restricted  Subsidiary  under any
         Credit Facilities,  Incurred by the Company or a Restricted  Subsidiary
         pursuant to a Real Estate Financing  Transaction,  a Sale and Leaseback
         Transaction  or an Equipment  Financing  Transaction,  or Incurred by a
         Receivables Entity in a Qualified  Receivables  Transaction that is not
         recourse  to the  Company  or any other  Restricted  Subsidiary  of the
         Company  (except for Standard  Securitization  Undertakings),  provided
         that the aggregate principal amount of all Debt of this kind at any one
         time outstanding shall not exceed the greater of:

<PAGE>

                                                                              53


                  (1) $1.6 billion, which amount shall be permanently reduced by
         the  amount of Net  Available  Cash used to Repay Debt under the Credit
         Facilities pursuant to Section 4.07 and

                  (2) the sum of the amounts equal to:

                           (A) 50% of the book value of the inventory of the
                  Company and the Restricted Subsidiaries and

                           (B) 85% of the book value of the accounts  receivable
                  of the Company and the Restricted Subsidiaries, in the case of
                  each of  clauses  (A) and (B) as of the  most  recently  ended
                  quarter of the Company for which  financial  statements of the
                  Company have been provided to the Holders of Securities;


                  (c) Debt of the  Company  owing to and held by any  Restricted
         Subsidiary and Debt of a Restricted Subsidiary owing to and held by the
         Company or any Restricted Subsidiary;  provided,  however, that (1) any
                                                --------   -------
         subsequent  issue or  transfer  of  Capital  Stock or other  event that
         results  in  any  Restricted  Subsidiary  ceasing  to  be a  Restricted
         Subsidiary  or any  subsequent  transfer  of that Debt  (except  to the
         Company or a Restricted  Subsidiary)  shall be deemed, in each case, to
         constitute the Incurrence of that Debt by the issuer  thereof,  and (2)
         if the Company is the obligor on that Indebtedness, the Indebtedness is
         expressly  subordinated  to the  prior  payment  in full in cash of all
         obligations with respect to the Securities;

                  (d) Debt of a Restricted Subsidiary outstanding on the date on
         which  that  Restricted  Subsidiary  was  acquired  by the  Company  or
         otherwise became a Restricted  Subsidiary  (other than Debt Incurred as
         consideration  in, or to  provide  all or any  portion  of the funds or
         credit  support  utilized to consummate,  the  transaction or series of
         transactions  pursuant  to which that  Restricted  Subsidiary  became a
         Subsidiary  of the Company or was  otherwise  acquired by the Company),
         provided that at the time that  Restricted  Subsidiary  was acquired by
         the  Company or  otherwise  became a  Restricted  Subsidiary  and after
         giving effect to the  Incurrence  of that Debt,  the Company would have
         been able to Incur $1.00 of  additional  Debt pursuant to clause (1) of
         the first paragraph of this covenant;

<PAGE>

                                                                              54


                  (e) Debt under  Interest Rate  Agreements  entered into by the
         Company or a Restricted Subsidiary for the purpose of limiting interest
         rate risk in the ordinary  course of the  financial  management  of the
         Company or that Restricted Subsidiary and not for speculative purposes,
         provided that the  obligations  under those  agreements  are related to
         payment  obligations on Debt  otherwise  permitted by the terms of this
         covenant;

                  (f) Debt under Currency Exchange Protection Agreements entered
         into by the  Company  or a  Restricted  Subsidiary  for the  purpose of
         limiting  currency exchange rate risks directly related to transactions
         entered  into by the  Company  or  that  Restricted  Subsidiary  in the
         ordinary course of business and not for speculative purposes;



                  (g) Debt under Commodity Price Protection  Agreements  entered
         into by the Company or a Restricted  Subsidiary in the ordinary  course
         of  the  financial   management  of  the  Company  or  that  Restricted
         Subsidiary and not for speculative purposes;

                  (h) Debt Incurred in respect of Capital Lease  Obligations and
         Purchase Money Debt,  provided that the aggregate  principal  amount of
         all Debt of this kind does not exceed  the Fair  Market  Value,  on the
         date of Incurrence  thereof,  of the Property acquired,  constructed or
         leased,  and provided  further,  that the  aggregate  principal  amount
         outstanding of all Debt of this kind at any one time, together with all
         Permitted Refinancing Debt Incurred and outstanding in respect of these
         Capital  Lease  Obligations  and Purchase  Money Debt,  does not exceed
         $50.0 million;

                  (i) Debt outstanding on the Issue Date not otherwise described
         in clauses (a) through (h) above;

                  (j)  Debt of the  Company  or a  Restricted  Subsidiary  in an
         aggregate  principal  amount  outstanding at any one time not to exceed
         $100.0 million; and

                  (k)  Permitted  Refinancing  Debt  Incurred in respect of Debt
         Incurred pursuant to clause (1) of the first paragraph of this covenant
         and clauses (a), (d), (h) and (i) above.

<PAGE>

                                                                              55


                  SECTION 4.05.  Limitation on Restricted Payments.  The Company
                                 ---------------------------------
shall not make, and shall not permit any Restricted Subsidiary to make, directly
or indirectly, any Restricted Payment if at the time of, and after giving effect
to, the proposed Restricted Payment,

                  (a) a Default or Event of Default  shall have  occurred and be
         continuing,

                  (b) the Company  could not Incur at least $1.00 of  additional
         Debt pursuant to clause (1) of the first paragraph of Section 4.04 or

                  (c) the aggregate  amount of that  Restricted  Payment and all
         other  Restricted  Payments  declared or made since the Issue Date (the
         amount of any  Restricted  Payment,  if made other than in cash,  to be
         based upon Fair Market  Value)  would exceed an amount equal to the sum
         of:

                       (1)  50% of the  aggregate  amount  of  Consolidated  Net
                  Income  accrued  during the period  (treated as one accounting
                  period) from the beginning of the fiscal  quarter during which
                  the Issue  Date  occurs to the end of the most  recent  fiscal
                  quarter  ending  at  least  45 days  prior  to the date of the
                  Restricted Payment (or if the aggregate amount of Consolidated
                  Net Income for such period  shall be a deficit,  minus 100% of
                  such deficit), plus

                       (2) Capital Stock Sale Proceeds, plus

                       (3) the sum of:

                                    (A) the aggregate net cash proceeds received
                           by the Company or any Restricted  Subsidiary from the
                           issuance or sale after the Issue Date of  convertible
                           or exchangeable  Debt that has been converted into or
                           exchanged for Capital Stock (other than  Disqualified
                           Stock) of the Company, and

                                    (B) the  aggregate  amount by which  Debt of
                           the Company or any  Restricted  Subsidiary is reduced
                           on the  Company's  consolidated  balance  sheet on or
                           after the Issue Date upon the  conversion or exchange
                           of any Debt  issued  or sold on or prior to the Issue
                           Date that is convertible or exchangeable  for Capital
                           Stock (other than Disqualified Stock) of the

<PAGE>

                                                                              56


                           Company, excluding, in the case of clause (A) or (B):

                  (x) any Debt issued or sold to the Company or a Subsidiary  of
         the Company or an employee stock ownership plan or trust established by
         the Company or any Subsidiary for the benefit of their employees, and

                  (y)  the  aggregate  amount  of any  cash  or  other  Property
         distributed by the Company or any Restricted  Subsidiary  upon any such
         conversion or exchange, plus

                       (4) an amount equal to the sum of:

                                    (A) the net reduction in  Investments in any
                           Person   other  than  the  Company  or  a  Restricted
                           Subsidiary  resulting from  dividends,  repayments of
                           loans or advances or other transfers of Property,  in
                           each case to the Company or any Restricted Subsidiary
                           from that Person, less the cost of the disposition of
                           those Investments, and

                                    (B) the  lesser of the net book value or the
                           Fair Market Value of the Company's equity interest in
                           an   Unrestricted   Subsidiary   at  the   time   the
                           Unrestricted  Subsidiary  is  designated a Restricted
                           Subsidiary; provided, however, that the foregoing sum
                           shall  not  exceed,  in the case of any  Person,  the
                           amount of Investments previously made (and treated as
                           a   Restricted   Payment)   by  the  Company  or  any
                           Restricted Subsidiary in that Person.

         Notwithstanding the foregoing limitation, the Company may:

                  (a) pay  dividends on its Capital  Stock within 60 days of the
         declaration  thereof if, on said declaration  date, the dividends could
         have been paid in compliance  with the  Indenture;  provided,  however,
         that at the time of the payment of the  dividend,  no other  Default or
         Event of  Default  shall have  occurred  and be  continuing  (or result
         therefrom);  provided  further,  however,  that the  dividend  shall be
         included in the calculation of the amount of Restricted Payments;

                  (b) purchase,  repurchase, redeem, legally defease, acquire or
         retire  for  value  Capital  Stock  of  the  Company  or   Subordinated
         Obligations in exchange for, or

<PAGE>

                                                                              57


out of the proceeds of the  substantially  concurrent  sale of, Capital Stock of
the Company (other than  Disqualified  Stock and other than Capital Stock issued
or sold to a Subsidiary of the Company or an employee  stock  ownership  plan or
trust  established  by the  Company or any  Subsidiary  for the benefit of their
employees); provided, however, that
            --------  -------

                       (1)   the   purchase,   repurchase,   redemption,   legal
                  defeasance, acquisition or retirement shall be excluded in the
                  calculation of the amount of Restricted Payments and

                       (2) the Capital  Stock Sale Proceeds from the exchange or
                  sale shall be excluded from the calculation pursuant to clause
                  (c)(2) above;

                  (c) purchase,  repurchase, redeem, legally defease, acquire or
         retire for value any  Subordinated  Obligations in exchange for, or out
         of the  proceeds of the  substantially  concurrent  sale of,  Permitted
         Refinancing Debt;  provided,  however,  that the purchase,  repurchase,
                            --------   -------
         redemption,  legal  defeasance,  acquisition  or  retirement  shall  be
         excluded in the calculation of the amount of Restricted Payments;

                  (d) pay  scheduled  dividends  (not  constituting  a return on
         capital) on Disqualified Stock of the Company issued pursuant to and in
         compliance with Section 4.04;

                  (e) permit a Restricted  Subsidiary that is not a Wholly Owned
         Subsidiary  to  pay  dividends  to   shareholders  of  that  Restricted
         Subsidiary  that are not the parent of that Restricted  Subsidiary,  so
         long as the Company or a  Restricted  Subsidiary  that is the parent of
         that Restricted Subsidiary receives dividends on a pro rata basis or on
         a basis that  results in the  receipt  by the  Company or a  Restricted
         Subsidiary  that  is  the  parent  of  that  Restricted  Subsidiary  of
         dividends or  distributions of greater value than it would receive on a
         pro rata basis; and

                  (f) until January 31, 2002 or the earlier  termination  of all
         of  the  Existing  Bank  Credit  Facilities,  permit  the  making  of a
         Restricted  Payment (as defined in the Existing Bank Credit Facilities,
         without  giving  effect to any waiver or  amendment  thereto  after the
         Issue Date) or the transfer of assets from any Subsidiary to its parent
         (in each case, to the

<PAGE>

                                                                              58


         extent such a payment or transfer is not  permitted to be restricted or
         limited  under  Section  7.18  of  each  of the  Existing  Bank  Credit
         Facilities,  without  giving effect to any waiver or amendment  thereto
         after the Issue Date).

                  SECTION 4.06.  Limitation on Liens. The Company shall not, and
                                 -------------------
shall not permit any Restricted Subsidiary to, directly or indirectly,  Incur or
suffer to exist,  any Lien (other than Permitted Liens) upon any of its Property
(including Capital Stock of a Restricted Subsidiary), whether owned at the Issue
Date or thereafter  acquired,  or any interest  therein or any income or profits
therefrom,  unless  it has made or will make  effective  provision  whereby  the
Securities  will be secured by that Lien  equally and ratably with (or prior to)
all other Debt of the Company or any Restricted Subsidiary secured by that Lien.


                  SECTION 4.07. Limitation on Asset Sales. (a) The Company shall
                                -------------------------
not, and shall not permit any Restricted Subsidiary to, directly or indirectly,
consummate any Asset Sale unless:

                  (i)  the  Company  or  the  Restricted   Subsidiary   receives
         consideration  at the time of the Asset Sale at least equal to the Fair
         Market Value of the Property subject to such Asset Sale;

                  (ii) at least 75% of the consideration  paid to the Company or
         the Restricted  Subsidiary in connection with such Asset Sale is in the
         form of cash or cash  equivalents or the assumption by the purchaser of
         liabilities  of the Company or any  Restricted  Subsidiary  (other than
         liabilities that are by their terms  subordinated to the Securities) as
         a result of which the Company and the  Restricted  Subsidiaries  are no
         longer obligated with respect to such liabilities,  provided,  however,
                                                             --------   -------
         that in the case of a transaction  involving a sale of any distribution
         center by the Company or a Restricted  Subsidiary and the establishment
         of  an  outsourcing   arrangement   in  which  the  purchaser   assumes
         distribution   responsibilities   on  behalf  of  the  Company  or  the
         Restricted Subsidiary, any credits or other consideration the purchaser
         grants  to the  Company  or the  Restricted  Subsidiary  as part of the
         purchase  price of the  distribution  center,  which  credits  or other
         consideration  effectively  offset future payments due from the Company
         or  the  Restricted   Subsidiary  to  the  purchaser  as  part  of  the
         outsourcing

<PAGE>

                                                                              59


         arrangement, will be considered to be cash equivalents for purposes of
         this clause (ii); and

                  (iii) the Company delivers an Officers' Certificate  to the
         Trustee  certifying  that such Asset Sale  complies with the foregoing
         clauses (i) and (ii).

                  (b) The Net Available Cash (or any portion thereof) from Asset
Sales may be applied by the Company or a  Restricted  Subsidiary,  to the extent
the Company or such Restricted Subsidiary elects (or is required by the terms of
any Debt):

                  (i) to Repay  Debt under the  Credit  Facilities,  or to Repay
         Debt of the  Company  or any  Restricted  Subsidiary  secured by a Lien
         pursuant  to  Section  4.06 on the  assets  subject  to that Asset Sale
         (excluding,  in any such  case,  any  Debt  owed to the  Company  or an
         Affiliate of the Company); or

                  (ii) to reinvest in Additional  Assets  (including by means of
         an Investment in Additional Assets by a Restricted  Subsidiary with Net
         Available   Cash   received  by  the  Company  or  another   Restricted
         Subsidiary),  provided,  however,  that the Net Available  Cash (or any
                       --------   -------
         portion  thereof)  from Asset Sales from the Company to any  Subsidiary
         must be reinvested in Additional Assets of the Company.

                  (c) Any Net  Available  Cash from an Asset Sale not applied in
 accordance  with the preceding  paragraph  within 360 days from the date of the
 receipt of such Net Available Cash shall constitute "Excess Proceeds".

                  When the aggregate  amount of Excess  Proceeds not  previously
 subject to a Prepayment  Offer (as defined below) exceeds $10.0 million (taking
 into account income earned on those Excess Proceeds,  if any), the Company will
 be  required  to make an offer to  purchase  the  Securities  (the  "Prepayment
 Offer") which offer shall be in the amount of the Allocable Excess Proceeds, on
 a pro rata basis  according to principal  amount,  at a purchase price equal to
 100% of the principal amount thereof, plus accrued and unpaid interest, if any,
 to the purchase date (subject to the right of Holders of record on the relevant
 record date to receive interest due on the relevant  interest payment date), in
 accordance   with  the  procedures   (including   prorating  in  the  event  of
 oversubscription)  set forth in this Indenture.  To the extent that any portion
 of the amount of Net Available Cash remains after compliance with the preceding
 sentence and provided that all Holders of Securities have been given the

<PAGE>

                                                                              60


opportunity  to tender their  Securities  for purchase in  accordance  with this
Indenture,  the  Company or such  Restricted  Subsidiary  may use the  remaining
amount for any  purpose  permitted  by this  Indenture  and the amount of Excess
Proceeds will be reset to zero.

                  The term "Allocable Excess Proceeds" will mean the product of:

                  (a) the Excess Proceeds and

                  (b) a fraction,

                       (1) the numerator of which is the  aggregate  principal
                  amount  of  the  Securities  outstanding  on the  date  of the
                  Prepayment Offer, and

                       (2) the  denominator of which is the sum of the aggregate
                  principal amount of the Securities  outstanding on the date of
                  the  Prepayment  Offer and the aggregate  principal  amount of
                  other  Debt  of the  Company  outstanding  on the  date of the
                  Prepayment  Offer that is pari passu in right of payment  with
                  the  Securities and subject to terms and conditions in respect
                  of  Asset  Sales  similar  in  all  material  respects  to the
                  covenant described hereunder and requiring the Company to make
                  an offer to purchase such Debt at substantially  the same time
                  as the Prepayment Offer.

                       (d)(1)  Within  five  Business  Days after the Company is
                  obligated  to make a  Prepayment  Offer  as  described  in the
                  preceding paragraph,  the Company shall send a written notice,
                  by first-class mail, to the Holders of Securities, accompanied
                  by information  regarding the Company and its  Subsidiaries as
                  the Company in good faith  believes will enable the Holders to
                  make an  informed  decision  with  respect to that  Prepayment
                  Offer.  The  notice  shall  state,  among  other  things,  the
                  purchase price and the purchase date,  which shall be, subject
                  to any contrary requirements of applicable law, a Business Day
                  no  earlier  than 30 days nor later than 60 days from the date
                  the notice is mailed.

                       (2) Not later than the date upon which written  notice of
                  a  Prepayment  Offer is  delivered  to the Trustee as provided
                  above,  the Company  shall deliver to the Trustee an Officers'
                  Certificate as to (i) the amount of the Prepayment  Offer (the
                  "Offer Amount"), (ii) the allocation of the Net Available Cash
                  from the Asset Sales pursuant to which such  Prepayment  Offer
                  is

<PAGE>

                                                                              61


                  being made and (iii) the  compliance of such  allocation  with
                  the provisions of Section  4.07(b).  On or before the Purchase
                  Date,  the Company  shall also  irrevocably  deposit  with the
                  Trustee or with the  Paying  Agent  (or,  if the  Company or a
                  Wholly Owned  Subsidiary is the Paying Agent,  shall segregate
                  and hold in trust) in Temporary Cash  Investments  (other than
                  in  those  enumerated  in  clause  (b)  of the  definition  of
                  Temporary Cash Investments), maturing on the last day prior to
                  the  Purchase  Date  or on the  Purchase  Date  if  funds  are
                  immediately  available by open of business, an amount equal to
                  the Offer Amount to be held for payment in accordance with the
                  provisions of this Section.  Upon the expiration of the period
                  for which  the  Prepayment  Offer  remains  open  (the  "Offer
                  Period"),  the  Company  shall  deliver  to  the  Trustee  for
                  cancellation the Securities or portions thereof that have been
                  properly  tendered to and are to be  accepted by the  Company.
                  The Trustee or the Paying Agent shall,  on the Purchase  Date,
                  mail or deliver payment to each tendering Holder in the amount
                  of  the  purchase  price.  In the  event  that  the  aggregate
                  purchase price of the  Securities  delivered by the Company to
                  the Trustee is less than the Offer Amount,  the Trustee or the
                  Paying   Agent  shall   deliver  the  excess  to  the  Company
                  immediately  after  the  expiration  of the Offer  Period  for
                  application in accordance with this Section.

                       (3) Holders  electing to have a Security  purchased shall
                  be required to surrender  the  Security,  with an  appropriate
                  form  duly  completed,  to the  Company  or its  agent  at the
                  address  specified in the notice at least three  Business Days
                  prior to the  Purchase  Date.  Holders  shall be  entitled  to
                  withdraw their election if the Trustee or the Company receives
                  not later than one Business Day prior to the Purchase  Date, a
                  telegram,  telex,  facsimile  transmission  or letter  setting
                  forth  the name of the  Holder,  the  principal  amount of the
                  Security  that was  delivered for purchase by the Holder and a
                  statement that such Holder is withdrawing its election to have
                  such  Security  purchased.  If at the  expiration of the Offer
                  Period   the   aggregate   principal   amount  of   Securities
                  surrendered by Holders  exceeds the Offer Amount,  the Company
                  shall select the  Securities to be purchased on pro rata basis
                  for all  Securities,  (with such  adjustments as may be deemed
                  appropriate  by  the  Company  so  that  only   Securities  in
                  denominations of $1,000, or integral multiples thereof,  shall
                  be purchased).  Holders whose Securities are purchased only in
                  part shall be issued new Securities equal in

<PAGE>

                                                                              62


                  principal amount to the unpurchased portion of the Securities
                  surrendered.

                       (4) At the time the Company  delivers  Securities  to the
                  Trustee  that are to be  accepted  for  purchase,  the Company
                  shall also deliver an Officers'  Certificate stating that such
                  Securities  are to be accepted by the Company  pursuant to and
                  in accordance with the terms of this Section. A Security shall
                  be deemed to have been  accepted  for purchase at the time the
                  Trustee or the Paying Agent mails or delivers payment therefor
                  to the surrendering Holder.

                  (e) The Company will 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
         Securities pursuant to the covenant described hereunder.  To the extent
         that the provisions of any securities laws or regulations conflict with
         provisions of the covenant described hereunder, the Company will comply
         with the applicable  securities  laws and  regulations  and will not be
         deemed to have breached its  obligations  under the covenant  described
         hereunder by virtue thereof.

                  SECTION 4.08. Limitation on Restrictions on Distributions from
                                ------------------------------------------------
Restricted  Subsidiaries.  The  Company  shall  not,  and shall not  permit  any
- ------------------------
Restricted  Subsidiary to, directly or indirectly,  create or otherwise cause or
suffer  to exist  any  consensual  restriction  on the  right of any  Restricted
Subsidiary to:

                  (a) pay  dividends,  in cash or  otherwise,  or make any other
         distributions on or in respect of its Capital Stock, or pay any Debt or
         other   obligation  owed,  to  the  Company  or  any  other  Restricted
         Subsidiary,

                  (b) make any loans or  advances  to the  Company  or any other
         Restricted Subsidiary or

                  (c)  transfer  any of its Property to the Company or any other
         Restricted Subsidiary. The foregoing limitations will not apply:

                       (1)  with  respect  to  clauses  (a),  (b)  and  (c),  to
                  restrictions:

                                    (A) in effect on the Issue Date,

                                    (B)   relating  to  Debt  of  a   Restricted
                           Subsidiary and existing at the time it became

<PAGE>

                                                                              63


                           a Restricted  Subsidiary if such  restriction was not
                           created in connection  with or in anticipation of the
                           transaction  or series of  transactions  pursuant  to
                           which that Restricted  Subsidiary became a Restricted
                           Subsidiary or was acquired by the Company,

                                    (C) that result from the Refinancing of Debt
                           Incurred  pursuant  to an  agreement  referred  to in
                           clause (1)(A) or (B) above or in clause (2)(A) or (B)
                           below, provided that restriction is no less favorable
                           to the  Holders of  Securities  than those  under the
                           agreement evidencing the Debt so Refinanced, or

                                    (D)  resulting  from the  Incurrence  of any
                           Permitted  Debt described in clause (b) of the second
                           paragraph  of  Section   4.04,   provided   that  the
                           restriction  is no less  favorable  to the Holders of
                           Securities  than the  restrictions  of the same  type
                           contained in the Indenture, and

                       (2) with respect to clause (c) only, to restrictions:

                                    (A) relating to Debt that is permitted to be
                           Incurred and secured  without also securing the notes
                           pursuant to Section  4.04 and Section 4.06 that limit
                           the right of the debtor to  dispose  of the  Property
                           securing that Debt,

                                    (B)  encumbering  Property  at the  time the
                           Property   was   acquired   by  the  Company  or  any
                           Restricted  Subsidiary,  so long  as the  restriction
                           relates  solely to the  Property so acquired  and was
                           not created in connection  with or in anticipation of
                           the acquisition,

                                    (C)  resulting  from  customary   provisions
                           restricting  subletting  or  assignment  of leases or
                           customary provisions in other agreements  (including,
                           without  limitation,  intellectual  property licenses
                           entered into in the ordinary course of business) that
                           restrict  assignment  of  the  agreements  or  rights
                           thereunder, or

<PAGE>

                                                                              64


                                    (D)   which   are   customary   restrictions
                           contained  in  asset  sale  agreements  limiting  the
                           transfer of Property pending the closing of the sale.

                  SECTION 4.09. Limitation on Transactions with Affiliates.  The
                                ------------------------------------------
Company shall not, and shall not permit any Restricted  Subsidiary to,  directly
or  indirectly,  conduct  any  business  or enter  into or  suffer  to exist any
transaction or series of transactions  (including the purchase,  sale, transfer,
assignment,  lease,  conveyance  or exchange of any Property or the rendering of
any  service)  with,  or for the  benefit of, any  Affiliate  of the Company (an
"Affiliate Transaction"), unless:

                  (a) the terms of such Affiliate Transaction are:

                       (1) set forth in writing, and

                       (2) no less  favorable to the Company or that  Restricted
                  Subsidiary,  as the  case may be,  than  those  that  could be
                  obtained  in a  comparable  arm's-length  transaction  with  a
                  Person that is not an Affiliate of the Company, and

                  (b) if the Affiliate  Transaction  involves aggregate payments
         or value in excess of $10.0 million,  the Board of Directors (including
         a majority  of the  disinterested  members  of the Board of  Directors)
         approves the  Affiliate  Transaction  and, in its good faith  judgment,
         believes that the Affiliate  Transaction  complies with clauses  (a)(1)
         and (2) of this paragraph as evidenced by a Board  Resolution  promptly
         delivered to the trustee.

         Notwithstanding the foregoing limitation, the Company or any Restricted
 Subsidiary may enter into or suffer to exist the following:

                  (a) any  transaction  or series of  transactions  between  the
         Company and one or more Restricted  Subsidiaries or between two or more
         Restricted  Subsidiaries in the ordinary  course of business,  provided
         that no more than 5% of the total  voting power of the Voting Stock (on
         a fully diluted basis) of any such Restricted Subsidiary is owned by an
         Affiliate of the Company (other than a Restricted Subsidiary);

                  (b) any  Restricted  Payment  permitted to be made pursuant to
         Section 4.05 or any Permitted Investment;

<PAGE>

                                                                              65


                  (c)  the  payment  of  compensation  (including  amounts  paid
         pursuant  to  employee  benefit  plans) for the  personal  services  of
         officers,  directors  and  employees  of  the  Company  or  any  of the
         Restricted  Subsidiaries,  so long  as,  in the  case of  officers  and
         directors, the Board of Directors in good faith shall have approved the
         terms thereof and deemed the services  theretofore  or thereafter to be
         performed for the compensation to be fair consideration therefor;

                  (d) loans  and  advances  to  employees  made in the  ordinary
         course  of  business  and  consistent  with the past  practices  of the
         Company or that  Restricted  Subsidiary,  as the case may be,  provided
         that  those  loans and  advances  do not  exceed  $5.0  million  in the
         aggregate at any one time outstanding;

                  (e)  any   transaction   effected   as  part  of  a  Qualified
         Receivables  Transaction or any  transaction  involving the transfer of
         accounts  receivable of the type specified in the definition of "Credit
         Facility"  and  permitted  under clause (b) of the second  paragraph of
         Section 4.04; and

                  (f) the  Existing  Policies  or any  transaction  contemplated
         thereby.

                  SECTION 4.10.  Designation of Restricted and Unrestricted
                                 ------------------------------------------
Subsidiaries. The Board of Directors may designate any Subsidiary of the Company
- ------------
to be an Unrestricted Subsidiary if:

                  (a)  the  Subsidiary  to be so  designated  does  not  own any
         Capital  Stock or Debt of, or own or hold any Lien on any  Property of,
         the Company or any other Restricted Subsidiary, and

                  (b) any of the following:

                       (1) the  Subsidiary to be so designated  has total assets
                  of $1,000 or less,

                       (2) if the  Subsidiary  has  consolidated  assets greater
                  than $1,000,  then the  designation  would be permitted  under
                  Section 4.05, or

                       (3) the  designation  is effective  immediately  upon the
                  entity becoming a Subsidiary of the Company.

<PAGE>

                                                                              66


Unless so designated as an  Unrestricted  Subsidiary,  any Person that becomes a
Subsidiary  of the  Company  will  be  classified  as a  Restricted  Subsidiary;
provided,  however,  that the  Subsidiary  shall not be  designated a Restricted
- --------   -------
Subsidiary and shall be automatically  classified as an Unrestricted  Subsidiary
if either of the  requirements  set forth in  clauses  (x) and (y) of the second
immediately  following  paragraph  will not be satisfied  after giving pro forma
effect to the classification or if the Person is a Subsidiary of an Unrestricted
Subsidiary.

                  Except as  provided  in the first  sentence  of the  preceding
paragraph,  no Restricted  Subsidiary  may be  redesignated  as an  Unrestricted
Subsidiary. In addition, neither the Company nor any Restricted Subsidiary shall
at any time be directly or indirectly liable for any Debt that provides that the
holder  thereof  may (with  the  passage  of time or  notice or both)  declare a
default  thereon or cause the payment thereof to be accelerated or payable prior
to its Stated  Maturity  upon the  occurrence  of a default  with respect to any
Debt, Lien or other obligation of any  Unrestricted  Subsidiary in existence and
classified  as an  Unrestricted  Subsidiary  at  the  time  the  Company  or the
Restricted  Subsidiary  is  liable  for that Debt  (including  any right to take
enforcement action against that Unrestricted Subsidiary).

                  The  Board  of  Directors  may   designate  any   Unrestricted
Subsidiary to be a Restricted  Subsidiary if, immediately after giving pro forma
effect to the designation,

                  (x) the Company could Incur at least $1.00 of additional  Debt
         pursuant to clause (1) of the first paragraph of Section 4.04, and

                  (y) no Default or Event of Default  shall have occurred and be
         continuing or would result therefrom.

                  Any designation or  redesignation of this kind by the Board of
Directors  will be  evidenced  to the Trustee by filing with the Trustee a Board
Resolution  giving effect to the designation or  redesignation  and an Officers'
Certificate that:

                  (a) certifies that the designation or  redesignation  complies
         with the foregoing provisions, and

                  (b)  gives  the   effective   date  of  the   designation   or
         redesignation, and the filing with the Trustee to occur

<PAGE>

                                                                              67


         within 45 days  after the end of the fiscal  quarter of the  Company in
         which the  designation or  redesignation  is made (or, in the case of a
         designation or redesignation made during the last fiscal quarter of the
         Company's  fiscal  year,  within 90 days  after the end of that  fiscal
         year).

                  SECTION 4.11.  Limitation on Sale and Leaseback  Transactions.
                                 ----------------------------------------------
The Company shall not, and shall not permit any Restricted  Subsidiary to, enter
into any Sale and Leaseback Transaction with respect to any Property unless:

                  (a)  the  Company  or  that  Restricted  Subsidiary  would  be
         entitled to:

                       (1)  Incur  Debt in an amount  equal to the  Attributable
                  Debt  with  respect  to that  Sale and  Leaseback  Transaction
                  pursuant to Section 4.04, and

                       (2)  create  a  Lien  on  the  Property   securing   that
                  Attributable   Debt  without  also  securing  the   Securities
                  pursuant to Section 4.06, and

                  (b)  the  Sale  and  Leaseback   Transaction  is  effected  in
         compliance with Section 4.07.

                  SECTION 4.12. Change of Control.
                                -----------------

                  (a) Upon the occurrence of a Change of Control, each Holder of
         Securities  shall have the right to require the  Company to  repurchase
         all or any  part of such  Holder's  Securities  pursuant  to the  offer
         described  below (the  "Change of Control  Offer") at a purchase  price
         (the  "Change  of  Control  Purchase  Price")  equal to  101.0%  of the
         principal amount thereof,  plus accrued and unpaid interest, if any, to
         the  purchase  date  (subject  to the right of Holders of record on the
         relevant record date to receive  interest due on the relevant  interest
         payment date).

                  (b)  Within  30 days  following  any  Change of  Control,  the
         Company  shall (i) cause a notice of the Change of Control  Offer to be
         sent at least  once to the Dow Jones News  Service or similar  business
         news service in the United States and (ii) send, by  first-class  mail,
         with a copy to the  Trustee,  to each  Holder  of  Securities,  at such
         Holder's address appearing in the Security Register,  a notice stating:
         (A) that a Change  of  Control  Offer is being  made  pursuant  to this
         Section 4.12 and that all Securities  timely  tendered will be accepted
         for payment;  (B) the Change of Control Purchase Price and the purchase
         date,  which  shall  be,  subject  to  any  contrary   requirements  of
         applicable law,

<PAGE>

                                                                              68


         a Business  Day no earlier than 30 days nor later than 60 days from the
         date such notice is mailed (the "Change of Control Payment Date");  (C)
         the  circumstances  and relevant facts  regarding the Change of Control
         (including  information  with respect to pro forma  historical  income,
         cash flow and  capitalization  after  giving  effect  to the  Change of
         Control); and (D) the procedures that Holders of Securities must follow
         in order to tender their  Securities (or portions  thereof) for payment
         and the procedures  that Holders of Securities  must follow in order to
         withdraw an election to tender  Securities  (or  portions  thereof) for
         payment.

                  (c)  Holders  electing to have a Security  purchased  shall be
         required to  surrender  the  Security,  with an  appropriate  form duly
         completed,  to the Company or its agent at the address specified in the
         notice at least  three  Business  Days  prior to the  Change of Control
         Payment Date.  Holders shall be entitled to withdraw  their election if
         the Trustee or the Company  receives  not later than one  Business  Day
         prior to the  Change  of  Control  Payment  Date,  a  telegram,  telex,
         facsimile  transmission or letter setting forth the name of the Holder,
         the principal amount of the Security that was delivered for purchase by
         the Holder and a statement that such Holder is withdrawing its election
         to have such Security purchased.

                  (d) On or prior to the Change of  Control  Payment  Date,  the
         Company shall  irrevocably  deposit with the Trustee or with the Paying
         Agent (or, if the Company or any of its Wholly  Owned  Subsidiaries  is
         acting as the  Paying  Agent,  segregate  and hold in trust) in cash an
         amount  equal to the Change of Control  Purchase  Price  payable to the
         Holders entitled thereto, to be held for payment in accordance with the
         provisions of this Section.  On the Change of Control Payment Date, the
         Company shall deliver to the Trustee the Securities or portions thereof
         that have  been  properly  tendered  to and are to be  accepted  by the
         Company for  payment.  The Trustee or the Paying  Agent  shall,  on the
         Change  of  Control  Payment  Date,  mail or  deliver  payment  to each
         tendering  Holder of the Change of Control Purchase Price. In the event
         that the aggregate  Change of Control  Purchase  Price is less than the
         amount delivered by the Company to the Trustee or the Paying Agent, the
         Trustee or the Paying  Agent,  as the case may be,  shall  deliver  the
         excess to the Company  immediately  after the Change of Control Payment
         Date.

                  (e) The Company will 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  purchase of
         Securities pursuant to this

<PAGE>

                                                                              69


         Section.  To the extent that the provisions of any  securities  laws or
         regulations  conflict with the provisions of this Section,  the Company
         will comply with the applicable  securities  laws and  regulations  and
         will not be deemed to have breached its obligations  under this Section
         by virtue thereof.

                  SECTION 4.13.  Further  Instruments  and Acts. Upon request of
                                 ------------------------------
the Trustee,  the Company shall 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.



                                    ARTICLE V

                                Successor Company
                                -----------------


                  SECTION 5.01.  (a) When Company May Merge or Transfer  Assets.
                                     ------------------------------------------
The Company shall not merge,  consolidate  or amalgamate  with or into any other
Person  (other than a merger of a Wholly Owned  Restricted  Subsidiary  into the
Company) or sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially  all its Property in any one transaction or series of transactions
unless:

                  (a) the Company shall be the surviving  Person (the "Surviving
         Person") or the Surviving  Person (if other than the Company) formed by
         that  merger,  consolidation  or  amalgamation  or to which  that sale,
         transfer, assignment, lease, conveyance or disposition is made shall be
         a  corporation  organized  and  existing  under the laws of the  United
         States of America, any State thereof or the District of Columbia;

                  (b) the Surviving Person (if other than the Company) expressly
         assumes, by supplemental indenture in form satisfactory to the Trustee,
         executed and delivered to the Trustee by that Surviving Person, the due
         and punctual  payment of the  principal  of, and  premium,  if any, and
         interest on, all the Securities,  according to their tenor, and the due
         and  punctual  performance  and  observance  of all the  covenants  and
         conditions of the Indenture to be performed by the Company;

<PAGE>

                                                                              70


                  (c)  in the  case  of a  sale,  transfer,  assignment,  lease,
         conveyance  or  other  disposition  of all  or  substantially  all  the
         Property of the Company,  that Property shall have been  transferred as
         an entirety or virtually as an entirety to one Person;

                  (d)  immediately  before  and  after  giving  effect  to  that
         transaction  or  series  of  transactions  on a pro  forma  basis  (and
         treating,  for  purposes of this  clause (d) and clause (e) below,  any
         Debt that becomes,  or is anticipated  to become,  an obligation of the
         Surviving  Person  or any  Restricted  Subsidiary  as a result  of that
         transaction  or series of  transactions  as having been Incurred by the
         Surviving  Person  or the  Restricted  Subsidiary  at the  time of that
         transaction or series of transactions),  no Default or Event of Default
         shall have occurred and be continuing;

                  (e)  immediately  after giving effect to that  transaction  or
         series  of  transactions  on a pro  forma  basis,  the  Company  or the
         Surviving  Person,  as the case may be, would be able to Incur at least
         $1.00 of  additional  Debt under  clause (1) of the first  paragraph of
         Section  4.04,  provided,  however,  that this  clause (e) shall not be
                         --------   -------
         applicable to the Company merging,  consolidating or amalgamating  with
         or  into  an   Affiliate   incorporated   solely  for  the  purpose  of
         reincorporating  the Company in another  State of the United  States so
         long  as  the  amount  of  Debt  of  the  Company  and  the  Restricted
         Subsidiaries is not increased thereby;

                  (f) the Company shall  deliver,  or cause to be delivered,  to
         the  Trustee,  in form and  substance  reasonably  satisfactory  to the
         Trustee,  an  Officers'  Certificate  and an Opinion of  Counsel,  each
         stating that the transaction and the supplemental indenture, if any, in
         respect  thereto  comply  with this  covenant  and that all  conditions
         precedent  herein  provided for relating to the  transaction  have been
         satisfied; and

                  (g) the Company shall have delivered to the Trustee an Opinion
         of Counsel to the effect that the Holders  will not  recognize  income,
         gain or loss  for  Federal  income  tax  purposes  as a  result  of the
         transaction  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 that transaction had not occurred.

<PAGE>

                                                                              71


                  The Surviving Person shall succeed to, and be substituted for,
and may exercise every right and power of the Company under the  Indenture,  but
the predecessor Company in the case of:

                  (a)  a  sale,  transfer,   assignment,   conveyance  or  other
         disposition  (unless that sale,  transfer,  assignment,  conveyance  or
         other disposition is of all the assets of the Company as an entirety or
         virtually as an entirety), or

                  (b) a lease,  shall not be released from any obligation to pay
         the principal of, premium, if any, and interest on, the Securities.



                                   ARTICLE VI

                              Defaults and Remedies
                              ---------------------


                  SECTION 6.01.  Events of Default.  The following events shall
                                 -----------------
be "Events of Default":

                       (1) the  Company  defaults  in any payment of interest on
                  any Security  when the same becomes due and payable,  and such
                  default continues for a period of 30 days;

                       (2) the Company  defaults in the payment of the principal
                  of any  Security  when the same becomes due and payable at its
                  Stated  Maturity,  upon  acceleration,   redemption,  optional
                  redemption, required repurchase or otherwise;

                       (3) the Company fails to comply with Article 5;

                       (4) the  Company  fails to comply  with any  covenant  or
                  agreement in the Securities or in this Indenture (other than a
                  failure that is the subject of the  foregoing  clause (1), (2)
                  or (3)) and such failure  continues  for 30 days after written
                  notice is given to the Company as specified below;

                       (5) a  default  under  any  Debt  by the  Company  or any
                  Restricted  Subsidiary  that  results in  acceleration  of the
                  maturity  of that  Debt,  or  failure  to pay any such Debt at
                  maturity, in an aggregate amount greater than $25.0 million or
                  its foreign currency equivalent at the time;

<PAGE>

                                                                              72


                       (6) the Company or any Significant Subsidiary pursuant to
                  or within the meaning of any Bankruptcy Law:

                                    (A) commences a voluntary case;

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

                                    (C)  consents  to  the   appointment   of  a
                           Custodian  of it or for any  substantial  part of its
                           property; or




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

                  or takes any comparable action under any foreign laws relating
                  to insolvency;

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

                                    (A) is for relief against the Company or any
                           Significant Subsidiary in an involuntary case;

                                    (B)  appoints a Custodian  of the Company or
                           any  Significant  Subsidiary  or for any  substantial
                           part of its property; or

                                    (C) orders the winding up or  liquidation of
                           the Company or any Significant Subsidiary; or

                                    (D)  grants  any  similar  relief  under any
                           foreign laws;

                  and in each such case the order or decree remains unstayed and
                  in effect for 30 days; or

                       (8) any judgment or judgments for the payment of money in
                  an aggregate amount in excess of $25.0 million, or its foreign
                  currency  equivalent  at the  time,  that  shall  be  rendered
                  against the Company or any Restricted Subsidiary and shall not
                  be  waived,  satisfied  or  discharged  for any  period  of 30
                  consecutive days during which a stay of enforcement  shall not
                  be in effect.

<PAGE>

                                                                              73


                  The foregoing will constitute  Events of Default  whatever the
reason for any such Event of Default and whether it is voluntary or  involuntary
or is effected by operation of law or pursuant to any judgment,  decree or order
of any  court  or any  order,  rule  or  regulation  of  any  administrative  or
governmental body.

                  The term  "Bankruptcy Law" means Title 11, United States Code,
                                                             ------------------
or any  similar  Federal  or  state  law for the  relief  of  debtors.  The term
"Custodian"  means any receiver,  trustee,  assignee,  liquidator,  custodian or
similar official under any Bankruptcy Law.

                  A Default  under  clause (4) is not an Event of Default  until
 the Trustee or the Holders of at least 25% in aggregate principal amount of the
 Securities then outstanding  notify the Company (and in the case of such notice
 by Holders,  the  Trustee)  of the  Default and the Company  does not cure that
 Default within the time specified after receipt of such notice. The 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  and any event  that with the  giving of notice or the
 lapse of time would become an Event of Default,  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  with
                                  ------------
respect to any of the  Securities  (other than an Event of Default  specified in
Section  6.01(6) or (7) with respect to the Company)  shall have occurred and be
continuing,  the  Trustee  or the  registered  Holders  of not less  than 25% in
aggregate  principal amount of the Securities then outstanding may, by notice to
the  Company  and the  Trustee,  declare to be  immediately  due and payable the
principal amount of all the applicable Securities then outstanding, plus accrued
but unpaid interest to the date of acceleration.  Upon such a declaration,  such
principal  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 and accrued and unpaid interest on all the Securities  shall be
due and payable  immediately without any declaration or other act by the Trustee
or the  Holder of the  Securities.  After  any such  acceleration  but  before a
judgment or decree based on acceleration is obtained by the Trustee, the Holders
of a majority in aggregate principal amount of the outstanding

<PAGE>

                                                                              74


Securities by notice to the Trustee and the Company may rescind any  declaration
of acceleration 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 or interest  that has become due solely  because of the
acceleration.  No such rescission shall affect any subsequent  Default or impair
any right consequent thereto.

                  SECTION 6.03.  Other  Remedies.  If an Event of Default occurs
                                 ---------------
and is  continuing,  the Trustee may pursue any available  remedy to collect the
payment  of  principal  of or  interest  on the  Securities  or to  enforce  the
performance of any provision of the Securities or this Indenture.


                  The  Trustee  may  maintain a  proceeding  even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder 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 a
                                  -------------------------
 majority in aggregate  principal  amount of the Securities then  outstanding by
 notice to the Trustee may waive an existing Default and its consequences except
 (i) a Default in the payment of the  principal  of or interest on a Security or
 (ii) a Default in respect of a  provision  that under  Section  9.02  cannot be
 amended without the consent of each Securityholder  affected. When a Default is
 waived,  it is deemed cured,  but no such waiver shall extend to any subsequent
 or other Default or impair any consequent right.

                  SECTION 6.05.  Control by Majority.  The Holders of a majority
                                 -------------------
in aggregate  principal amount of the Securities then outstanding 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 with
respect  to the  Securities.  However,  the  Trustee  may  refuse to follow  any
direction that conflicts with law or this Indenture or, subject to Section 7.01,
that the  Trustee  determines  is  unduly  prejudicial  to the  rights  of other
Securityholders  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

<PAGE>

                                                                              75


reasonable  indemnification  against all losses and expenses caused by taking or
not taking such action.

                  SECTION 6.06.  Limitation on Suits.  A Securityholder  may not
pursue any remedy with respect to this  Indenture or the Securities unless:

                       (1)  such  Holder  shall  have  previously  given  to the
                  Trustee written notice of a continuing Event of Default;

                       (2) the  Holders of at least 25% in  aggregate  principal
                  amount of the Securities  then  outstanding  shall have made a
                  written request, and such Holder or Holders shall have offered
                  reasonable indemnity, to the Trustee to pursue such proceeding
                  as trustee; and

                       (3) the Trustee has failed to institute  such  proceeding
                  and has not  received  from the Holders of at least a majority
                  in aggregate principal amount of the Securities  outstanding a
                  direction inconsistent with such request, within 60 days after
                  such notice, request and offer.

                  The  foregoing  limitations  on the  pursuit of  remedies by a
Securityholder  shall not apply to a suit  instituted  by a Holder of Securities
for the  enforcement  of payment of the  principal  of, and premium,  if any, or
interest on such Security on or after the  applicable due date specified in such
Security. A Securityholder may not use this Indenture to prejudice the rights of
another  Securityholder  or to obtain a  preference  or  priority  over  another
Securityholder.

                  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 and interest on the Securities  held by such
Holder, on or after the respective due dates expressed in the Securities,  or to
bring suit for the  enforcement of any such payment on or after such  respective
dates, shall not be impaired or affected without the consent of such Holder.

                  SECTION  6.08.  Collection  Suit by  Trustee.  If an  Event of
                                  ----------------------------
 Default  specified  in Section  6.01(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  (together  with
 interest on any unpaid interest to the extent lawful) and the amounts  provided
 for in Section 7.07.

<PAGE>

                                                                              76


                  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  Securityholders
allowed in any judicial  proceedings  relative to the Company,  its creditors or
its 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
and, in the event that the Trustee  shall consent to the making of such payments
directly  to the  Holders,  to pay to the  Trustee  any  amount  due 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.  If the Trustee collects any money
                                 ----------
or property  pursuant to this  Article 6, it shall pay out the money or property
in the following order:

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

                  SECOND:  to Securityholders for amounts due and unpaid on the
         Securities for principal and interest, ratably, without preference or
         priority of any kind, according to the amounts due and payable on the
         Securities for principal and interest, respectively; and

                  THIRD:  to the Company.

                  The Trustee  may fix a record  date and  payment  date for any
payment to  Securityholders  pursuant to this  Section.  At least 15 days before
such record date, the Company shall mail to each  Securityholder 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 and expenses,
 against any party litigant in the suit, having due regard to the merits and

<PAGE>

                                                                              77


good faith of the claims or defenses  made by the party  litigant.  This Section
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 aggregate  principal amount of the
Securities.

                  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,  that 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 its 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:

                       (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

<PAGE>

                                                                              78


                  investigate the accuracy of any  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;

                       (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) Every  provision of this Indenture that in any way relates
         to the  Trustee  is  subject  to  paragraphs  (a),  (b) and (c) of this
         Section.

                  (e) 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.

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

                  (g) 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.

                  (h) 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  and  to the
         provisions  of the TIA and the  provisions  of this  Article  VII shall
         apply  to the  Trustee  in its  role as  Registrar,  Paying  Agent  and
         Security Custodian.

                  (i) The  Trustee  shall  not be  deemed  to have  notice  of a
         Default or an Event of  Default  unless (a) the  Trustee  has  received
         written notice thereof from the Company

<PAGE>

                                                                              79


         or any Holder or (b) a Trust Officer shall have actual knowledge
         thereof.

                  SECTION  7.02.   Rights  of  Trustee.
                                   -------------------

                  (a) The Trustee may conclusively rely on any document (whether
         in its original or facsimile  form) 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.  The Trustee
         may,   however,   in  its  discretion  make  such  further  inquiry  or
         investigation  into such facts or matters as it may see fit and, if the
         Trustee shall determine to make such further inquiry or  investigation,
         it shall be entitled to examine the books,  records and premises of the
         Company,  personally  or by agent or  attorney  at the  expense  of the
         Company and shall incur no  liability  or  additional  liability of any
         kind by reason of such inquiry or investigation.

                  (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 the 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 that 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  Securities  shall  be  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)  The  permissive  rights  of  the  Trustee  to  do  things
         enumerated in this Indenture shall not be construed as a duty unless so
         specified herein.

                  (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  security or indemnity
         satisfactory to

<PAGE>

                                                                              80


         the Trustee 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 Securities
and may otherwise deal with the Company or its  Affiliates  with the same rights
it  would  have  if  it  were  not  Trustee.  Any  Paying  Agent,  Registrar  or
co-registrar may do the same with like rights.  However, the Trustee must comply
with Sections 7.10 and 7.11.

                  SECTION 7.04. Trustee's  Disclaimer.  The Trustee shall not be
                                ---------------------
responsible  for and makes no  representation  as to the  validity,  priority or
adequacy of this Indenture or the  Securities,  it shall not be accountable  for
the  Company's  use of the  proceeds  from the  Securities,  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  Securities  or in the
Securities other than the Trustee's certificate of authentication.

                  SECTION  7.05.  Notice of  Defaults.  If a Default or Event of
                                  -------------------
 Default occurs and is continuing and if it is known to the Trustee, the Trustee
 shall  mail to each  Securityholder  notice of the  Default or Event of Default
 within 90 days after it is known to a Trust Officer or written  notice of it is
 received by the Trustee. Except in the case of a Default or Event of Default in
 payment of principal of or interest on any  Security,  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 Securityholders.

                  SECTION  7.06.  Reports by Trustee to Holders.  As promptly as
                                  -----------------------------
practicable  after each December 31 beginning with December 31, 2000, and in any
event  prior  to  March  31 in  each  year,  the  Trustee  shall  mail  to  each
Securityholder  a brief report  dated as of December 31 each year that  complies
with TIA ss.  313(a),  if and to the extent  required  by such  subsection.  The
Trustee shall also comply with TIA ss. 313(b).

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

<PAGE>

                                                                              81


                  SECTION 7.07.  Compensation  and Indemnity.  The Company shall
                                 ---------------------------
 pay to the Trustee from time to time reasonable  compensation for its services.
 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,  counsel,  accountants and
 experts.  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  acceptance  and  administration  of this  trust  and the
 performance of its duties hereunder except to the extent that the Company shall
 have been actually  prejudiced  as a result of such failure.  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  may have  separate  counsel  and the  Company  shall  pay the fees and
 expenses  of such  counsel.  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.  The
 Company  need  not pay for any  settlement  made  by the  Trustee  without  the
 Company's  consent,  such  consent  not  to  be  unreasonably   withheld.   All
 indemnifications  and releases from liability  granted hereunder to the Trustee
 shall extend to its officers,  directors,  employees,  agents,  successors  and
 assigns.

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

                  The  Company's  payment  obligations  pursuant to this Section
 shall  survive the  resignation  or removal of the Trustee and 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 a majority in aggregate
principal amount of the Securities then outstanding may remove the Trustee by so

<PAGE>

                                                                              82


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  aggregate  principal  amount of the  Securities  then
outstanding  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 Securityholders.  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.

                  If a successor  Trustee  does not take  office  within 60 days
after the retiring  Trustee resigns or is removed,  the retiring  Trustee or the
Holders of 10% in aggregate  principal amount of the Securities then outstanding
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
Securityholder  who has been a bona fide  Holder of a Security  for at least six
months 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,  the Company's  obligations  under Section 7.07 shall continue for
the benefit of the retiring Trustee.

<PAGE>

                                                                              83


                  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  or banking
association 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 Securities  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  Securities  so
authenticated;  and in case at that  time any of the  Securities  shall not have
been  authenticated,  any such  successor to the Trustee may  authenticate  such
Securities 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 Securities or in this Indenture  provided
that the certificate of the Trustee shall have.

                  SECTION 7.10. Eligibility; Disqualification. The Trustee shall
                                -----------------------------
at all times satisfy the requirements of TIA ss. 310(a).  The Trustee shall have
(or, in the case of a corporation included in a bank holding company system, the
related bank holding  company  shall have) a combined  capital and surplus of at
least  $50,000,000  as set forth in its (or its related bank holding  company's)
most recent published annual report of condition.  The Trustee shall comply with
TIA ss. 310(b), subject to the penultimate paragraph thereof; provided, however,
                                                              --------  -------
that  there  shall be  excluded  from the  operation  of TIA ss.  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 ss. 310(b)(1) are met.

                  SECTION  7.11.   Preferential  Collection  of  Claims  Against
                                   ---------------------------------------------
Company.  The Trustee shall comply with TIA ss.  311(a),  excluding any creditor
- -------
relationship  listed in TIA ss.  311(b).  A  Trustee  who has  resigned  or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.



                                  ARTICLE VIII

                       Discharge of Indenture; Defeasance
                       ----------------------------------

<PAGE>

                                                                              84


SECTION 8.01.  Discharge of Liability on Securities;  Defeasance.
               -------------------------------------------------

                  (a)  When  (i)  the  Company   delivers  to  the  Trustee  all
         outstanding  Securities  (other than  Securities  replaced  pursuant to
         Section 2.07) for cancellation or (ii) all outstanding  Securities have
         become  due and  payable,  whether  at  maturity  or as a result of the
         mailing  of a notice of  redemption  pursuant  to  Article  III and the
         Company  irrevocably  deposits with the Trustee funds sufficient to pay
         at maturity or upon  redemption all outstanding  Securities,  including
         interest  thereon to  maturity  or such  redemption  date  (other  than
         Securities  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 Sections  8.01(c) and 8.02,  the Company at any
         time may terminate (i) all of its obligations  under the Securities and
         this  Indenture  ("legal  defeasance  option") or (ii) its  obligations
         under Sections 4.03,  4.04,  4.05,  4.06, 4.07, 4.08, 4.09, 4.10, 4.11,
         and 4.12 and the operation of Sections  6.01(5),  6.01(6),  6.01(7) and
         6.01(8)  (but,  in the case of Sections  6.01(6) and (7),  with respect
         only to  Significant  Subsidiaries)  and the  limitations  contained in
         clause (e) of Article 5 ("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  Securities  may  not be  accelerated  because  of an  Event  of
         Default.  If the Company  exercises  its  covenant  defeasance  option,
         payment of the Securities may not be accelerated because of an Event of
         Default specified in Sections 6.01(4) (with respect to the covenants of
         Article IV identified in the immediately preceding paragraph), 6.01(5),
         6.01(6),   6.01(7)  or  6.01(8)  (with  respect  only  to   Significant
         Subsidiaries in the case of Sections 6.01(6) and 6.01(7)) or because of
         the failure of the Company to comply with the limitations  contained in
         clause (e) of Article 5.

                  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.

<PAGE>

                                                                              85


                  (c)  Notwithstanding  clauses (a) and (b) above, the Company's
         obligations in Sections 2.04,  2.05,  2.06,  2.07, 7.07, 7.08, 8.05 and
         8.06  shall  survive  until  the  Securities  have  been  paid in full.
         Thereafter,  the Company's  obligations in Sections 7.07 and 8.05 shall
         survive such satisfaction or discharge.

                  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 U.S.  Government  Obligations for the payment
                  of principal of and interest on the  Securities 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  their  opinion that the payments of principal  and
                  interest  when due and without  reinvestment  on the deposited
                  U.S.  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 and interest when due
                  on all the Securities to maturity or  redemption,  as the case
                  may be;

                       (3) 123 days pass  after the  deposit  is made and during
                  the 123-day period no Default  specified in Section 6.01(6) or
                  (7) occurs  with  respect to the  Company or any other  Person
                  making  the  deposit  that  is  continuing  at the  end of the
                  period;

                       (4) the deposit does not  constitute a default  under any
                  other agreement or instrument binding on the Company;

                       (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

<PAGE>

                                                                              86


                  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  Securityholders  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;

                       (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  Security-holders  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; and

                       (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
                  Securities  as  contemplated  by this  Article  VIII have been
                  complied with.

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

                  SECTION 8.03.  Application  of Trust Money.  The Trustee shall
                                 ---------------------------
 hold in trust money or U.S. Government  Obligations  deposited with it pursuant
 to this Article  VIII.  It shall apply the  deposited  money and the money from
 U.S.  Government  Obligations  through the Paying Agent and in accordance  with
 this Indenture to the payment of principal of and interest on the Securities.

                  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 or interest  that  remains  unclaimed  for two
years, and, thereafter,  Securityholders  entitled to the money must look to the
Company for payment as general creditors.

<PAGE>

                                                                              87


                  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 U.S.  Government  Obligations or
the principal and interest received on such U.S. Government Obligations.

                  SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
                                -------------
 unable to apply any money or U.S.  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  Securities  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 U.S. 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  Securities
 because  of  the  reinstatement  of  its  obligations,  the  Company  shall  be
 subrogated  to the rights of the  Holders of such  Securities  to receive  such
 payment from the money or U.S.  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  Securities  without  notice to or
consent of any Securityholder:

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

                       (2) to comply with Article V;

                       (3) to provide for uncertificated  Securities in addition
                  to or in place of certificated Securities;  provided, however,
                                                              --------  -------
                  that the  uncertificated  Securities  are issued in registered
                  form for purposes of Section 163(f) of the Code or in a manner
                  such  that the  uncertificated  Securities  are  described  in
                  Section 163(f)(2)(B) of the Code;

                       (4) to add Guarantees with respect to the Securities;

<PAGE>

                                                                              88


                       (5) to secure the Securities,  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;

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

                       (7) to make any change that does not adversely affect the
                  rights of any Securityholder; or

                       (8) to provide for the issuance of additional  Securities
                  in accordance with the Indenture.

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

                  SECTION  9.02.  With  Consent of Holders.  The Company and the
                                  ------------------------
 Trustee  may amend  this  Indenture  or the  Securities  without  notice to any
 Securityholder  but with  the  written  consent  of the  Holders  of at least a
 majority in  aggregate  principal  amount of the  Securities  then  outstanding
 (including  consents  obtained in  connection  with a tender  offer or exchange
 offer for the Securities).  However, without the consent of each Securityholder
 affected thereby, an amendment may not:

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

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

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

                       (4) impair the right of any Holder to receive  payment of
                  principal of and interest on such  Holder's  Securities  on or
                  after  the due dates  therefor  or to  institute  suit for the
                  enforcement of any payment on or with respect to such Holder's
                  Securities;

                       (5) reduce  the amount  payable  upon the  redemption  or
                  repurchase of any Security under Article III or

<PAGE>

                                                                              89


                  Section  4.07 or 4.12,  change the time at which any  Security
                  may be redeemed in  accordance  with  Article  III, or, at any
                  time after a Change of  Control  or Asset  Sale has  occurred,
                  change  the time at  which  any  Change  of  Control  Offer or
                  Prepayment  Offer must be made or at which the Securities must
                  be  repurchased  pursuant to such  Change of Control  Offer or
                  Prepayment Offer;

                       (6) make any  Security  payable in money  other than that
                  stated in the Security;

                       (7)  release  any  security  interest  that may have been
                  granted in favor of the  Holders  other than  pursuant  to the
                  terms of the agreement granting that security interest;

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

                       (9) subordinate the Securities to any other obligation of
                  the Company

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

                  After an amendment under this Section becomes  effective,  the
                  Company  shall  mail  to   Securityholders  a  notice  briefly
                  describing such amendment.  The failure to give such notice to
                  all Securityholders,  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 Securities  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  Security  shall bind the
Holder and every  subsequent  Holder of that Security or portion of the Security
that  evidences  the same  debt as the  consenting  Holder's  Security,  even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security  or portion  of the  Security  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  Securityholder.  An
amendment or waiver becomes effective

<PAGE>

                                                                              90


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  Securityholders  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
Securityholders 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
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 Securities.  If an
                                 -------------------------------------
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver such  Security to the Trustee.  The Trustee may place an
appropriate notation on the Security regarding the changed terms and return such
Security  to the  Holder.  Alternatively,  if the  Company  or  the  Trustee  so
determines, the Company in exchange for the Security shall issue and the Trustee
shall  authenticate a new Security that reflects the changed  terms.  Failure to
make the  appropriate  notation or to issue a new Security  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.

                  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 Securities  unless such  consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in

<PAGE>

                                                                              91


the time frame set forth in  solicitation  documents  relating to such  consent,
waiver or agreement.



                                    ARTICLE X

                                  Miscellaneous
                                  -------------


                  SECTION 10.01. Trust Indenture Act Controls.  If any provision
                                 ----------------------------
of this Indenture limits,  qualifies or conflicts with another provision that is
required to be included in this  Indenture by the TIA,  the  required  provision
shall control.

                  SECTION 10.02.  Notices.  Any notice or communication shall be
                                  -------
 in writing and  delivered  in person or mailed by  first-class  mail or sent by
 facsimile (with a hard copy delivered in person or by mail promptly thereafter)
 and addressed as follows:

                 if to the Company:

                 Levi Strauss & Co. Levi's Plaza 1155 Battery Street
                 San Francisco, CA 94111 Facsimile: (415) 501-7650

                 Attention of:  Legal Department

                 if to the Trustee:

                 Citibank, N.A.,
                 111 Wall Street, 14th Floor New York, NY 10005

                 Attention of: Citibank Agency and 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 Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration

<PAGE>

                                                                              92


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 Securityholder
or any  defect in it shall not  affect  its  sufficiency  with  respect to other
Securityholders.  If a notice or  communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.

                  SECTION  10.03.  Communication  by Holders with Other Holders.
                                   --------------------------------------------
Securityholders   may  communicate   pursuant  to  TIA  ss.  312(b)  with  other
Securityholders  with  respect  to their  rights  under  this  Indenture  or the
Securities.  The Company,  the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).

                  SECTION  10.04.  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.

                  SECTION 10.05.  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 or opinion are based;

<PAGE>

                                                                              93


                       (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

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

                  SECTION 10.06.  When  Securities  Disregarded.  In determining
                                  -----------------------------
whether  the  Holders  of the  required  principal  amount  of  Securities  have
concurred in any direction,  waiver or consent,  Securities owned by the Company
or by any Person  directly or indirectly  controlling  or controlled by or under
direct or indirect  common  control with the Company  shall be  disregarded  and
deemed not to be  outstanding,  except  that,  for the  purpose  of  determining
whether the Trustee shall be protected in relying on any such direction,  waiver
or consent,  only  Securities  that the  Trustee  knows are so owned shall be so
disregarded.  Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.

                  SECTION 10.07.  Rules by Trustee,  Paying Agent and Registrar.
                                  ---------------------------------------------
The  Trustee  may  make  reasonable   rules  for  action  by  or  a  meeting  of
Securityholders.  The  Registrar and the Paying Agent or  co-registrar  may make
reasonable rules for their functions.

                  SECTION  10.08.  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.  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.

                  SECTION   10.09.   Governing   Law.  THIS  INDENTURE  AND  THE
                                     ---------------
SECURITIES  SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT  GIVING  EFFECT TO  APPLICABLE  PRINCIPLES  OF
CONFLICTS  OF LAW TO THE  EXTENT  THAT THE  APPLICATION  OF THE LAWS OF  ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.

                  SECTION 10.10.  No Recourse Against Others.  A director,
                                  --------------------------
officer,  employee or  stockholder,  as such,  of the Company shall not have any
liability  for any  obligations  of the  Company  under the  Securities  or this
Indenture or for any claim based on, in respect of or by reason of such

<PAGE>

                                                                              94


obligations  or their  creation.  By accepting a Security,  each  Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.

                  SECTION  10.11.  Successors.  All  agreements of the Company
                                   ----------
in this Indenture and the Securities  shall bind its successors.  All agreements
of the Trustee in this Indenture shall bind its successors.

                  SECTION 10.12.  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.

                  SECTION  10.13.  Table of  Contents;  Headings.  The  table of
                                   -----------------------------
contents,  cross-reference  sheet 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.

<PAGE>

                                                                              95


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


                                      LEVI STRAUSS & CO.,


                                      by
                                        ----------------------------------------
                                        Name:
                                        Title:




                                      CITIBANK, N.A.,


                                      by
                                        ----------------------------------------
                                        Name:
                                        Title:



<PAGE>


                                                                      APPENDIX A


                    PROVISIONS RELATING TO INITIAL SECURITIES
                    -----------------------------------------
                             AND EXCHANGE SECURITIES
                             -----------------------


         1.    Definitions
               -----------

         1.1   Definitions

         For the purposes of this Appendix A the following  terms shall have the
meanings indicated below:

               "Clearstream" means Clearstream Banking,  S.A., formerly known as
Cedel Bank, S.A., or any successor securities clearing agency.

               "Definitive  Security" means a certificated  Initial  Security or
Exchange  Security  or Private  Exchange  Security  bearing,  if  required,  the
restricted securities legend set forth in Section 2.3(d).

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

               "Distributed  Compliance Period", with respect to any Securities,
means the period of 40 consecutive  days beginning on and including the later of
(i) the day on which such  Securities  are first  offered to persons  other than
distributors  (as defined in Regulation S under the Securities  Act) in reliance
on Regulation S and (ii) the Issue Date with respect to such Securities.

               "Exchange  Securities" means the 11 5/8% Senior Notes due 2008 to
be issued  pursuant to the  Indenture in connection  with a Registered  Exchange
Offer pursuant to the Registration Agreement.

               "Euroclear"  means  Morgan  Guaranty  Trust  Company  of New York
(Brussels office) as operator of the Euroclear Clearance System or any successor
securities clearing agency.

               "Euro  Notes"  means the  Company's 11 5/8% Senior Notes due 2008
denominated in euros and issued  pursuant to an indenture  dated the date hereof
between the Company and Citibank, N.A. as trustee.

               "IAI" means an institutional  "accredited  investor" as described
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

<PAGE>

                                                                               2


               "Initial  Purchasers"  means Salomon  Smith Barney Inc.,  Banc of
America  Securities  LLC, Scotia Capital (USA) Inc.,  Chase  Securities Inc. and
Banc One Capital Markets, Inc.

               "Initial  Securities" means the 11 5/8% Senior Notes due 2008, to
be issued  from time to time,  in one or more  series  as  provided  for in this
Indenture.

               "Issue Date Euro Notes" means Euro Notes issued on the first date
on which the Euro Notes are initially issued.

               "Original  Securities" means Initial  Securities in the aggregate
principal amount of $380.0 million issued on January 18, 2001.

               "Private  Exchange"  means the offer by the Company,  pursuant to
Section 2 of the  Registration  Agreement dated January 18, 2001, or pursuant to
any similar provision of any other Registration  Agreement, to issue and deliver
to certain  purchasers,  in  exchange  for the Initial  Securities  held by such
purchasers as part of their initial  distribution,  a like  aggregate  principal
amount of Private Exchange Securities.

               "Private Exchange  Securities" means the 11 5/8% Senior Notes due
2008 to be  issued  pursuant  to this  Indenture  in  connection  with a Private
Exchange pursuant to a Registration Agreement.

               "Purchase  Agreement" means the Purchase  Agreement dated January
12, 2001, among the Company and the Initial Purchasers  relating to the Original
Securities,  or any  similar  agreement  relating  to any future sale of Initial
Securities by the Company.

               "QIB" means a "qualified  institutional buyer" as defined in Rule
144A.

               "Registered  Exchange  Offer"  means  the  offer by the  Company,
pursuant to a Registration  Agreement, to certain Holders of Initial Securities,
to issue and deliver to such Holders, in exchange for the Initial Securities,  a
like aggregate  principal  amount of Exchange  Securities  registered  under the
Securities Act.

               "Registration  Agreement" means the Registration Rights Agreement
dated January 18, 2001, among the Company and the Initial Purchasers relating to
the Original  Securities,  or any similar  agreement  relating to any additional
Initial Securities.

<PAGE>

                                                                               3


               "Rule 144A Securities" means all Initial  Securities  offered and
sold to QIBs in reliance on Rule 144A.

               "Securities"  means  the  Initial  Securities  and  the  Exchange
Securities, treated as a single class.

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

               "Securities  Custodian"  means the  custodian  with  respect to a
Global  Security  (as  appointed  by the  Depository)  or any  successor  person
thereto, who shall initially be the Trustee.

               "Shelf  Registration  Statement"  means a registration  statement
issued  by the  Company  in  connection  with  the  offer  and  sale of  Initial
Securities  or  Private  Exchange   Securities   pursuant  to  the  Registration
Agreement.

               "Transfer Restricted  Securities" means Definitive Securities and
any other  Securities  that bear or are required to bear the legend set forth in
Section 2.3(d) hereto.

               "U.S.  Dollar  Equivalent"  means with  respect  to any  monetary
amount in a currency  other  than U.S.  dollars,  at any time for  determination
thereof, the amount of U.S. dollars obtained by converting such foreign currency
involved in such computation into U.S. dollars at the spot rate for the purchase
of U.S.  dollars with the applicable  foreign  currency as published in THE WALL
STREET  JOURNAL in the  "Exchange  Rates"  column  under the  heading  "Currency
Trading"  on the  date  two  Business  Days  prior  to  such  determination.  In
determining  the  aggregate  principal  amount of Euro Notes  outstanding,  such
amount will be treated as the U.S. Dollar  Equivalent  determined as of the date
of issuance of such Euro Notes.

         1.2   Other Definitions
               -----------------

                                                                Defined in
         Term                                                    Section:
         ----                                                   ----------

"Agent Members"                                                   2.1(b)
"Global  Security"                                                2.1(a)
"IAI Global Security"                                             2.1(a)
"Regulation S"                                                    2.1
"Rule 144A"                                                       2.1
"Rule 144A Global Security"                                       2.1(a)
"Regulation S Global Security"                                    2.1(a)

<PAGE>

                                                                               4


         2.    The Securities
               --------------

         2.1   Form and Dating
               ---------------

                  The  Initial  Securities  will  be  offered  and  sold  by the
Company,  from time to time,  pursuant to one or more Purchase  Agreements.  The
Initial  Securities  will be resold  initially  only to QIBs in reliance on Rule
144A under the  Securities  Act ("Rule  144A") and in reliance on  Regulation  S
under the Securities Act ("Regulation S"). Initial  Securities may thereafter be
transferred to, among others,  QIBs,  purchasers in reliance on Regulation S and
IAIs under Rule 501(a)(1),  (2), (3) or (7) under the Securities Act, subject to
the restrictions on transfer set forth herein.

                  (a) Global  Securities.  Initial  Securities  initially resold
                      ------------------
pursuant  to Rule  144A  shall be  issued  initially  in the form of one or more
permanent global Securities in definitive,  fully registered form (collectively,
the "Rule 144A Global Security"),  Initial Securities  initially resold pursuant
to  Regulation  S shall be issued  initially  in the form of one or more  global
securities  (collectively,  the "Regulation S Global  Security") and, subject to
Section 2.4 hereof,  Initial  Securities  transferred  subsequent to the initial
resale  thereof  to IAIs  shall be issued  initially  in the form of one or more
permanent global securities in definitive,  fully registered form (collectively,
the "IAI Global  Security"),  in each case without interest coupons and with the
global securities legend and restricted securities legend set forth in Exhibit 1
hereto,  which shall be  deposited  on behalf of the  purchasers  of the Initial
Securities represented thereby with the Securities Custodian,  and registered in
the name of the Depository or a nominee of the Depository,  duly executed by the
Company and authenticated by the Trustee as provided in this Indenture. The Rule
144A Global  Security,  IAI Global Security and Regulation S Global Security are
collectively  referred to herein as "Global Securities." The aggregate principal
amount of the Global  Securities may from time to time be increased or decreased
by  adjustments  made on the records of the Trustee  and the  Depository  or its
nominee as hereinafter provided.

                  (b) Book-Entry  Provisions.  This Section  2.1(b) shall apply
                      ----------------------
 only to a Global Security deposited with or on behalf of the Depository.

                  The Company shall execute and the Trustee shall, in accordance
 with this Section 2.1(b) and pursuant to an order of the Company,  authenticate
 and  deliver  initially  one or  more  Global  Securities  that  (a)  shall  be
 registered in the name of

<PAGE>

                                                                               5


 the Depository for such Global Security or Global  Securities or the nominee of
 such Depository and (b) shall be delivered by the Trustee to such Depository or
 pursuant to such Depository's instructions or held by the Trustee as Securities
 Custodian.

                  Members  of,  or  participants  in,  the  Depository   ("Agent
 Members")  shall have no rights under this Indenture with respect to any Global
 Security held on their behalf by the Depository or by the Trustee as Securities
 Custodian or under such Global  Security,  and the Depository may be treated by
 the  Company,  the  Trustee  and any agent of the Company or the Trustee as the
 absolute   owner  of  such  Global   Security  for  all  purposes   whatsoever.
 Notwithstanding  the foregoing,  nothing herein shall prevent the Company,  the
 Trustee or any agent of the  Company or the Trustee  from giving  effect to any
 written certification, proxy or other authorization furnished by the Depository
 or impair,  as between the Depository  and its Agent Members,  the operation of
 customary practices of such Depository  governing the exercise of the rights of
 a holder of a beneficial interest in any Global Security.

                  (c) Definitive  Securities.  Except as  provided  in Section
                      ----------------------
2.3 or 2.4,  owners of  beneficial  interests in Global  Securities  will not be
entitled to receive physical delivery of Definitive Securities.

         2.2   Authentication. The Trustee shall  authenticate and deliver:  (1)
               --------------
Original  Securities  for  original  issue in an aggregate  principal  amount of
$380.0 million,  (2) additional  Initial  Securities,  if and when issued, in an
aggregate  principal  amount of up to (x) $350.0  million less (y) the aggregate
principal amount (on a U.S. Dollar Equivalent basis) of any Euro Notes issued by
the Company that are not Issue Date Euro Notes, and (3) the Exchange  Securities
or Private Exchange  Securities for issue only in a Registered Exchange Offer or
a Private Exchange, respectively,  pursuant to the Registration Agreement, for a
like principal amount of Initial Securities or Private Exchange  Securities,  as
applicable,  upon a written order of the Company signed by two Officers or by an
Officer and either an  Assistant  Treasurer  or an  Assistant  Secretary  of the
Company.   Such  order  shall  specify  the  amount  of  the  Securities  to  be
authenticated  and the date on which the original  issue of  Securities is to be
authenticated  and  whether  the  Securities  are to be  Initial  Securities  or
Exchange Securities. The aggregate principal amount of Securities outstanding at
any time may not exceed  (x) $850.0  million  less (y) the  aggregate  principal
amount  (on a U.S.  Dollar  Equivalent  basis) of any Euro  Notes  issued by the
Company, except as provided in Section 2.08 of this Indenture.

<PAGE>

                                                                               6


         2.3   Transfer and Exchange.
               ---------------------

                  (a)  Transfer and Exchange of Definitive Securities.  When
         Definitive Securities are presented to the Registrar or a co-registrar
         with a request:

                  (x) to register the transfer of such Definitive Securities; or

                  (y) to  exchange  such  Definitive  Securities  for  an  equal
         principal  amount of  Definitive Securities of other authorized
denominations,

the Registrar or  co-registrar  shall register the transfer or make the exchange
as  requested  if its  reasonable  requirements  for such  transaction  are met;
provided,  however, that the Definitive  Securities  surrendered for transfer or
exchange:

                  (i)  shall  be  duly  endorsed  or  accompanied  by a  written
         instrument of transfer in form  reasonably  satisfactory to the Company
         and the Registrar or co-registrar,  duly executed by the Holder thereof
         or his attorney duly authorized in writing; and

                  (ii) if such Definitive Securities bear a restricted
         securities legend, they are being transferred or exchanged pursuant to
         an effective registration statement under the Securities Act or
         pursuant to clause (A), (B) or (C) below, and are accompanied by the
         following additional information and documents, as applicable:

                           (A) if such Definitive Securities are being delivered
                  to the Registrar by a Holder for  registration  in the name of
                  such  Holder,  without  transfer,  a  certification  from such
                  Holder to that effect; or

                           (B)  if such Definitive Securities are being
                      transferred to the Company, a certification to that
                      effect; or

                           (C)  if  such   Definitive   Securities   are   being
                  transferred  pursuant to an  exemption  from  registration  in
                  accordance  with  Rule 144  under the  Securities  Act,  (i) a
                  certification  to  that  effect  and  (ii) if the  Company  so
                  requests,  an opinion of counsel or other evidence  reasonably
                  satisfactory to it as to the compliance with the  restrictions
                  set forth in the legend set forth in Section 2.3(d)(i).

<PAGE>

                                                                               7


                  (b) Transfer and Exchange of Global Securities.
                      ------------------------------------------

                  (i) The  transfer  and  exchange  of Global  Securities  or
beneficial  interests  therein  shall be  effected  through the  Depository,  in
accordance with this Indenture  (including  applicable  restrictions on transfer
set forth herein,  if any) and the  procedures  of the  Depository  therefor.  A
transferor of a beneficial interest in a Global Security shall deliver a written
order  given  in  accordance  with  the   Depository's   procedures   containing
information  regarding the participant  account of the Depository to be credited
with a beneficial  interest in the Global  Security  and such  account  shall be
credited in accordance with such instructions with a beneficial  interest in the
Global  Security  and the  account of the Person  making the  transfer  shall be
debited by an amount  equal to the  beneficial  interest in the Global  Security
being  transferred.  In the case of a transfer  of a  beneficial  interest  in a
Global  Security to an IAI, the  transferee  must furnish a signed letter to the
Trustee containing certain representations and agreements in the form of Exhibit
C hereto.

                  (ii) If the proposed transfer is a transfer of a beneficial
interest in one Global  Security  to a  beneficial  interest  in another  Global
Security,  the Registrar  shall reflect on its books and records the date and an
increase in the principal  amount of the Global  Security to which such interest
is being  transferred in an amount equal to the principal amount of the interest
to be so  transferred,  and the Registrar shall reflect on its books and records
the date and a  corresponding  decrease  in the  principal  amount of the Global
Security from which such interest is being transferred.

                  (iii)  Notwithstanding  any other  provisions  of this
Appendix A (other than the  provisions  set forth in Section 2.4), a Global
Security may not be transferred as a whole except by the Depository to a
nominee of the Depository or by a nominee  of the  Depository to the
Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository.

                  (iv) In the event that a Global  Security is exchanged  for
Definitive  Securities  pursuant to Section 2.4 prior to the  consummation  of a
Registered Exchange Offer or the effectiveness of a Shelf Registration Statement
with  respect to such  Securities,  such  Securities  may be  exchanged  only in
accordance with such procedures as are substantially consistent with the

<PAGE>

                                                                               8


 provisions of this Section 2.3 (including the  certification  requirements  set
 forth on the  reverse of the  Initial  Securities  intended to ensure that such
 transfers  comply  with  Rule  144A,  Regulation  S or  such  other  applicable
 exemption from  registration  under the Securities Act, as the case may be) and
 such other procedures as may from time to time be adopted by the Company.

                  (c) Legend.

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

"THIS NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES  ACT"). THE HOLDER HEREOF,  BY PURCHASING THIS NOTE, AGREES FOR
THE  BENEFIT  OF THE  COMPANY  THAT  THIS  NOTE MAY NOT BE  RESOLD,  PLEDGED  OR
OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF
(OR ANY PREDECESSOR  SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE
OF THE COMPANY AT ANY TIME DURING THE THREE  MONTHS  PRECEDING  THE DATE OF SUCH
TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS NOTE
IS ELIGIBLE  FOR RESALE  PURSUANT TO RULE 144A UNDER THE  SECURITIES  ACT ("RULE
144A"),  TO A  PERSON  WHOM  THE  SELLER  REASONABLY  BELIEVES  IS  A  QUALIFIED
INSTITUTIONAL  BUYER  WITHIN  THE  MEANING OF RULE 144A  PURCHASING  FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED  INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE  RESALE,  PLEDGE OR OTHER  TRANSFER  IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE  CERTIFICATE
OF  TRANSFER ON THE REVERSE OF THIS  NOTE),  (3) IN AN OFFSHORE  TRANSACTION  IN
ACCORDANCE  WITH  REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE  CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
NOTE), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1),  (2), (3) OR (7) UNDER THE  SECURITIES  ACT (AS  INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE  CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
NOTE)  THAT  IS  ACQUIRING  THIS  NOTE  FOR  INVESTMENT  PURPOSES  AND  NOT  FOR
DISTRIBUTION,  AND A  CERTIFICATE  WHICH MAY BE OBTAINED FROM THE COMPANY OR THE
TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND TRUSTEE,  (5) PURSUANT
TO AN EXEMPTION FROM REGISTRATION  UNDER THE SECURITIES ACT PROVIDED BY RULE 144
(IF APPLICABLE) UNDER

<PAGE>

                                                                               9


THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES  ACT, IN EACH CASE IN ACCORDANCE  WITH ANY APPLICABLE  SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES.  AN  INSTITUTIONAL  ACCREDITED  INVESTOR
HOLDING  THIS NOTE  AGREES  THAT IT WILL  FURNISH TO THE COMPANY AND THE TRUSTEE
SUCH  CERTIFICATES  AND OTHER  INFORMATION  AS THEY MAY  REASONABLY  REQUIRE  TO
CONFIRM  THAT ANY  TRANSFER  BY IT OF THIS  NOTE  COMPLIES  WITH  THE  FOREGOING
RESTRICTIONS.  THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES
FOR THE BENEFIT OF THE COMPANY  THAT IT IS (1) A QUALIFIED  INSTITUTIONAL  BUYER
WITHIN  THE  MEANING  OF  RULE  144A  OR  (2)  PURCHASING   FROM  A  PERSON  NOT
PARTICIPATING  IN THE INITIAL  DISTRIBUTION OF THIS SECURITY (OR ANY PREDECESSOR
SECURITY), THAT IT IS AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED
IN RULE  501(a)(1),  (2),  (3) OR (7)  UNDER THE  SECURITIES  ACT AND THAT IT IS
HOLDING  THIS NOTE FOR  INVESTMENT  PURPOSES AND NOT FOR  DISTRIBUTION  OR (3) A
NON-U.S.  PERSON  OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT
SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2)(i) OF RULE 902 UNDER) REGULATION
S UNDER THE SECURITIES ACT."

Each Definitive Security will also bear the following additional legend:

"IN CONNECTION  WITH ANY TRANSFER,  THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH  CERTIFICATES  AND OTHER  INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY  REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."

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

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

                           (B) in the case of any Transfer  Restricted  Security
                  that is represented by a Global Security,  the Registrar shall
                  permit the Holder thereof to exchange such Transfer Restricted
                  Security  for a Security  that does not bear the  legends  set
                  forth

<PAGE>

                                                                              10


                  above and rescind any restriction on the transfer of such
                  Transfer Restricted Security,

in either case,  if the Holder  certifies in writing to the  Registrar  that its
request for such  exchange was made in reliance on Rule 144 (such  certification
to be in the form set forth on the reverse of the Initial Security).

                  (iii)  After a  transfer  of any  Initial  Securities  or
Private  Exchange  Securities,  as the case may be,  during  the  period  of the
effectiveness  of a Shelf  Registration  Statement  with respect to such Initial
Securities  or Private  Exchange  Securities,  all  requirements  pertaining  to
restricted  legends on such Initial Security or such Private  Exchange  Security
will cease to apply and an Initial Security or Private Exchange Security, as the
case may be, in global form without  restricted legends will be available to the
transferee  of the  beneficial  interests of such Initial  Securities or Private
Exchange Securities.  Upon the occurrence of any of the circumstances  described
in this  paragraph,  the Company will deliver an  Officers'  Certificate  to the
Trustee instructing the Trustee to issue Securities without restricted legends.

                  (iv) Upon the  consummation of a Registered  Exchange Offer
with respect to the Initial Securities pursuant to which certain Holders of such
Initial Securities are offered Exchange Securities in exchange for their Initial
Securities,  Exchange  Securities in global form without the restricted  legends
will be available to Holders or  beneficial  owners that  exchange  such Initial
Securities (or beneficial  interests therein) in such Registered Exchange Offer.
Upon the occurrence of any of the circumstances described in this paragraph, the
Company will deliver an Officers'  Certificate  to the Trustee  instructing  the
Trustee to issue Securities without restricted legends.

                  (d) Cancelation or Adjustment of Global Security. At such time
                      --------------------------------------------
as all beneficial  interests in a Global Security have either been exchanged for
Definitive Securities,  redeemed,  repurchased or canceled, such Global Security
shall be returned by the  Depository to the Trustee for  cancelation or retained
and  canceled  by the  Trustee.  At any time prior to such  cancelation,  if any
beneficial interest in a Global Security is exchanged for Definitive Securities,
redeemed,   repurchased  or  canceled,   the  principal   amount  of  Securities
represented by such Global Security shall be reduced and an adjustment  shall be
made on the books  and  records  of the  Trustee  (if it is then the  Securities
Custodian for such

<PAGE>

                                                                              11


Global  Security)  with respect to such Global  Security,  by the Trustee or the
Securities Custodian, to reflect such reduction.

                  (e) Obligations with Respect to Transfers and Exchanges of
                      ------------------------------------------------------
Securities.
- ----------

                  (i) To permit  registrations  of transfers and exchanges,  the
Company shall execute and the Trustee shall authenticate  Definitive  Securities
and Global Securities at the Registrar's or co-registrar's request.

                 (ii) No service  charge  shall be made for any  registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax,  assessments,  or similar governmental charge payable in
connection therewith (other than any such transfer taxes, assessments or similar
governmental charge payable upon exchange or transfer pursuant to Sections 3.06,
4.08 and 9.05 of this Indenture).

                  (iii) The  Registrar  or  co-registrar  shall not be  required
to register the  transfer of or exchange of any Security for a period  beginning
15 days before the mailing of a notice of  redemption  or an offer to repurchase
Securities or 15 days before an interest payment date.

                  (iv) Prior to the due  presentation for registration of
transfer of any Security,  the Company,  the Trustee, the Paying Agent, the
Registraror any  co-registrar  may deem and treat the person in whose name a
Security is registered  as the absolute  owner of such Security for the purpose
of receiving payment of principal of and interest on such Security and for all
other purposes whatsoever,  whether or not such  Security is overdue,  and none
of the Company, the  Trustee,  the Paying  Agent,  the  Registrar or any
co-registrar  shall be affected by notice to the contrary.

                  (v) All  Securities  issued  upon  any  transfer  or  exchange
pursuant to the terms of this  Indenture  shall evidence the same debt and shall
be  entitled  to the  same  benefits  under  this  Indenture  as the  Securities
surrendered upon such transfer or exchange.

                  (f) No Obligation of the Trustee.

                  (i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security,  a member of, or a participant in the
Depository or any

<PAGE>

                                                                              12


other Person with respect to the  accuracy of the records of the  Depository  or
its  nominee  or of any  participant  or member  thereof,  with  respect  to any
ownership  interest in the  Securities  or with  respect to the  delivery to any
participant,   member,   beneficial  owner  or  other  Person  (other  than  the
Depository) of any notice  (including any notice of redemption or repurchase) or
the payment of any amount, under or with respect to such Securities. All notices
and  communications  to be given to the Holders  and all  payments to be made to
Holders  under  the  Securities  shall be given or made  only to the  registered
Holders  (which shall be the  Depository  or its nominee in the case of a Global
Security).  The  rights of  beneficial  owners in any Global  Security  shall be
exercised  only  through  the  Depository  subject to the  applicable  rules and
procedures of the Depository.  The Trustee may rely and shall be fully protected
in relying  upon  information  furnished by the  Depository  with respect to its
members, participants and any beneficial owners.

                  (ii) The Trustee shall have no obligation  or duty to monitor,
determine or inquire as to compliance with any  restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security  (including any transfers  between or among  Depository
participants, members or beneficial owners in any Global Security) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture,  and to examine the same to determine substantial  compliance
as to form with the express requirements hereof.

         2.4   Definitive Securities
               ---------------------

                  (a) A Global  Security  deposited  with the Depository or with
the Trustee as Securities Custodian pursuant to Section 2.1 shall be transferred
to the  beneficial  owners  thereof in the form of  Definitive  Securities in an
aggregate  principal  amount  equal  to the  principal  amount  of  such  Global
Security,  in exchange for such Global Security,  only if such transfer complies
with  Section  2.3  and (i)  the  Depository  notifies  the  Company  that it is
unwilling or unable to continue as a Depository  for such Global  Security or if
at any time the Depository ceases to be a "clearing agency" registered under the
Exchange Act, and a successor  Depository is not appointed by the Company within
90 days of such  notice,  or (ii) a Default or an Event of Default has  occurred
and is continuing or (iii) the Company, in its sole discretion,

<PAGE>

13


notifies  the  Trustee  in  writing  that it  elects to cause  the  issuance  of
Definitive Securities under this Indenture.

                  (b) Any Global Security that is transferable to the beneficial
owners  thereof  pursuant  to this  Section  2.4  shall  be  surrendered  by the
Depository to the Trustee,  to be so transferred,  in whole or from time to time
in part, without charge,  and the Trustee shall  authenticate and deliver,  upon
such  transfer  of each  portion of such  Global  Security,  an equal  aggregate
principal   amount  of  Definitive   Securities  of  authorized   denominations.
Definitive  Securities  issued in exchange for any portion of a Global  Security
transferred  pursuant  to this  Section  shall be  executed,  authenticated  and
delivered only in denominations of $1,000 and any integral  multiple thereof and
registered in such names as the Depository shall direct. Any Definitive Security
delivered in exchange for an interest in the Global  Security  shall,  except as
otherwise provided by Section 2.3(d), bear the restricted  securities legend set
forth in Exhibit 1 hereto.

                  (c) The  registered  Holder  of a Global  Security  may  grant
proxies and otherwise authorize any Person,  including Agent Members and Persons
that may hold interests through Agent Members,  to take any action that a Holder
is entitled to take under this Indenture or the Securities.

                  (d)  In  the  event  of the  occurrence  of any of the  events
specified in Section  2.4(a)(i),  (ii) or (iii),  the Company will promptly make
available  to the  Trustee a  reasonable  supply  of  Definitive  Securities  in
definitive, fully registered form without interest coupons.



<PAGE>


                                                                       EXHIBIT 1
                                                                   to APPENDIX A


                       [FORM OF FACE OF INITIAL SECURITY]

                           [Global Securities Legend]


                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK,  NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT,  AND ANY  CERTIFICATE  ISSUED IS  REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC  (AND ANY  PAYMENT  IS MADE TO CEDE & CO.,  OR TO SUCH  OTHER  ENTITY  AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR  OTHERWISE  BY OR TO ANY PERSON IS WRONGFUL  INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                  TRANSFERS  OF  THIS  GLOBAL   SECURITY  SHALL  BE  LIMITED  TO
TRANSFERS  IN  WHOLE,  BUT NOT IN PART,  TO  NOMINEES  OF DTC OR TO A  SUCCESSOR
THEREOF OR SUCH  SUCCESSOR'S  NOMINEE AND  TRANSFERS  OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE  RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.


                         [Restricted Securities Legend]

                  THIS NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES  ACT"). THE HOLDER HEREOF,  BY PURCHASING THIS
NOTE,  AGREES FOR THE BENEFIT OF THE  COMPANY  THAT THIS NOTE MAY NOT BE RESOLD,
PLEDGED OR  OTHERWISE  TRANSFERRED  (X) PRIOR TO THE SECOND  ANNIVERSARY  OF THE
ISSUANCE HEREOF (OR ANY PREDECESSOR  SECURITY  HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN AFFILIATE  OF THE COMPANY AT ANY TIME DURING THE THREE  MONTHS  PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO
LONG AS THIS  NOTE IS  ELIGIBLE  FOR  RESALE  PURSUANT  TO RULE  144A  UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY  BELIEVES IS
A QUALIFIED  INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A  QUALIFIED  INSTITUTIONAL  BUYER TO WHOM
NOTICE IS GIVEN  THAT THE  RESALE,  PLEDGE OR OTHER  TRANSFER  IS BEING  MADE IN
RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE  TRANSFEROR ON THE
CERTIFICATE  OF  TRANSFER  ON THE  REVERSE  OF THIS  NOTE),  (3) IN AN  OFFSHORE
TRANSACTION  IN  ACCORDANCE  WITH  REGULATION  S UNDER  THE  SECURITIES  ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE  REVERSE  OF  THIS  NOTE),  (4) TO AN  INSTITUTION  THAT  IS AN  "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
(AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE

<PAGE>

                                                                               2


CERTIFICATE  OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS
SECURITY FOR  INVESTMENT  PURPOSES AND NOT FOR  DISTRIBUTION,  AND A CERTIFICATE
WHICH MAY BE  OBTAINED  FROM THE  COMPANY  OR THE  TRUSTEE IS  DELIVERED  BY THE
TRANSFEREE  TO  THE  COMPANY  AND  TRUSTEE,(5)  PURSUANT  TO AN  EXEMPTION  FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES  ACT, IN EACH CASE IN ACCORDANCE  WITH ANY APPLICABLE  SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES.  AN  INSTITUTIONAL  ACCREDITED  INVESTOR
HOLDING  THIS NOTE  AGREES  THAT IT WILL  FURNISH TO THE COMPANY AND THE TRUSTEE
SUCH  CERTIFICATES  AND OTHER  INFORMATION  AS THEY MAY  REASONABLY  REQUIRE  TO
CONFIRM  THAT ANY  TRANSFER  BY IT OF THIS  NOTE  COMPLIES  WITH  THE  FOREGOING
RESTRICTIONS.  THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES
FOR THE BENEFIT OF THE COMPANY  THAT IT IS (1) A QUALIFIED  INSTITUTIONAL  BUYER
WITHIN  THE  MEANING  OF  RULE  144A  OR  (2)  PURCHASING   FROM  A  PERSON  NOT
PARTICIPATING  IN THE INITIAL  DISTRIBUTION OF THIS SECURITY (OR ANY PREDECESSOR
SECURITY), THAT IT IS AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED
IN RULE  501(a)(1),  (2),  (3) OR (7)  UNDER THE  SECURITIES  ACT AND THAT IT IS
HOLDING  THIS NOTE FOR  INVESTMENT  PURPOSES AND NOT FOR  DISTRIBUTION  OR (3) A
NON-U.S.  PERSON  OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT
SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2)(i) OF RULE 902 UNDER) REGULATION
S UNDER THE SECURITIES ACT.


                         [Definitive Securities Legend]

 IN CONNECTION  WITH ANY TRANSFER,  THE HOLDER WILL DELIVER TO THE REGISTRAR AND
 TRANSFER AGENT SUCH  CERTIFICATES AND OTHER  INFORMATION AS SUCH TRANSFER AGENT
 MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
 RESTRICTIONS.



<PAGE>


                       [FORM OF FACE OF INITIAL SECURITY]



 No.                                                         [up to]3$__________

                          11 5/8% Senior Note due 2008

                                                       CUSIP No.[52736R AJ 1](1)
                                                                [U52799 AE 0](2)
                                                      ISIN No. [US52736RAJ14](1)
                                                               [USU52799AE03](2)
                                                  Common Code No. [012338678](1)
                                                                  [012338732](2)


                  LEVI STRAUSS & CO., a Delaware corporation, promises to pay to
[Cede   &   Co.]3,    or   registered    assigns,    the   principal   sum   [of
_____________________Dollars]4  [as set forth on the  Schedule of  Increases  or
Decreases annexed hereto](3)on January 15, 2008.

                  Interest Payment Dates:  January 15 and July 15.

                  Record Dates: January 1 and July 1.


















__________________

 1       Insert for Rule 144A Global Note.

 2       Insert for Reg. S Global Note.

 3       Insert for Global Securities.

 4       Insert for Definitive Securities.



<PAGE>

                                                                               2


                  Additional  provisions  of this  Security are set forth on the
other side of this Security.


                  IN WITNESS WHEREOF, the parties have caused this instrument to
be duly executed.


                                         LEVI STRAUSS & CO.,


                                         by
                                            ------------------------------------
                                            Name:
                                            Title:

                                         by
                                            ------------------------------------
                                            Name:
                                            Title:




TRUSTEE'S CERTIFICATE OF
         AUTHENTICATION

Dated:  January 18, 2001

CITIBANK, N.A.,

         as Trustee, certifies
         that this is one of
         the Securities referred
         to in the Indenture.



by:
   ------------------------------
   Authorized Signatory



<PAGE>

                                                                               3


                   [FORM OF REVERSE SIDE OF INITIAL SECURITY]

                          11 5/8% Senior Note due 2008


 1.  Interest
     --------

                  (a) LEVI  STRAUSS  &  CO.,  a  Delaware   corporation   (such
corporation,  and its  successors  and assigns under the  Indenture  hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will  pay  interest  semiannually  on  January  15 and  July  15 of  each  year,
commencing  July 15, 2001.  Interest on the Securities will accrue from the most
recent date to which  interest  has been paid or, if no interest  has been paid,
from January 18, 2001. Interest shall be computed on the basis of a 360-day year
of twelve 30-day months.  The Company shall pay interest on overdue principal at
the rate borne by the Securities plus 1% per annum, and it shall pay interest on
overdue  installments  of  interest at the rate borne by the  Securities  to the
extent lawful.

                  (b) Special Interest.  The holder of this Security is entitled
                      ----------------
to the  benefits of a  Registration  Rights  Agreement,  dated as of January 18,
2001,  among the Company and the  Purchasers  named  therein (the  "Registration
Agreement"). Capitalized terms used in this paragraph (b) but not defined herein
have the meanings assigned to them in the Registration  Agreement.  In the event
that (i)  neither  the  Exchange  Offer  Registration  Statement  nor the  Shelf
Registration  Statement  has been filed with the  Commission  on or prior to the
60th day following the date of the original issuance of the Securities, (ii) the
Exchange  Offer  Registration  Statement has not been  declared  effective on or
prior to the  120th  day  following  the date of the  original  issuance  of the
Securities, (iii) neither the Registered Exchange Offer has been consummated nor
the Shelf Registration  Statement has been declared effective on or prior to the
150th day following the date of the original issuance of the Securities, or (iv)
after  the  Shelf  Registration  Statement  has been  declared  effective,  such
Registration Statement thereafter ceases to be effective or usable in connection
with  resales of the  Securities  at any time that the Company is  obligated  to
maintain the effectiveness thereof pursuant to the Registration  Agreement (each
such event  referred  to in clauses (i)  through  (iv) above  being  referred to
herein as a "Registration  Default"),  interest (the "Special  Interest")  shall
accrue (in addition to stated interest on the Securities) from and including the
date on which the first such  Registration  Default shall occur to but excluding
the date on which all Registration Defaults have

<PAGE>

                                                                               4


been cured,  at a rate per annum equal to 0.25% of the principal  amount of the
Securities;  provided, however, that such rate per annum shall increase by 0.25%
             --------  -------
per annum  from and  including  the 91st day after the first  such  Registration
Default  (and  each  successive  91st  day  thereafter)  unless  and  until  all
Registration  Defaults have been cured;  provided further,  however,  that in no
                                         -------- -------   -------
event shall the Special  Interest accrue at a rate in excess of 1.00% per annum.
The  Special  Interest  will be payable  in cash  semiannually  in arrears  each
January 15 and July 15.

 2.  Method of Payment
     -----------------

                  The  Company  will  pay  interest  on the  Securities  (except
defaulted  interest) to the Persons who are registered  Holders of Securities at
the close of  business on the January 1 or July 1 next  preceding  the  interest
payment date even if  Securities  are  canceled  after the record date and on or
before the interest payment date. Holders must surrender  Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United  States of  America  that at the time of payment is legal
tender for  payment  of public and  private  debts.  Payments  in respect of the
Securities  represented by a Global Security (including  principal,  premium and
interest)  will be made by wire transfer of immediately  available  funds to the
accounts  specified by The Depository  Trust Company.  The Company will make all
payments in respect of a Definitive Security (including  principal,  premium and
interest),  by mailing a check to the registered address of each Holder thereof;
provided, however, that payments on the Securities may also be made, in the case
- --------  -------
of a Holder of at least $1,000,000 aggregate principal amount of Securities,  by
wire transfer to a U.S.  dollar  account  maintained by the payee with a bank in
the United  States if such  Holder  elects  payment by wire  transfer  by giving
written  notice to the Trustee or the Paying  Agent to such  effect  designating
such account no later than 30 days  immediately  preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).

 3.  Paying Agent and Registrar
     --------------------------

                  Initially,   CITIBANK,   N.A.,  a  banking   association  (the
"Trustee"),  will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent,  Registrar or co-registrar  without notice. The Company
or any of its  domestically  incorporated  Wholly Owned  Subsidiaries may act as
Paying Agent, Registrar or co-registrar.

<PAGE>

                                                                               5


 4.  Indenture
     ---------

                  The Company issued the Securities  under an Indenture dated as
of January 18, 2001 (the "Indenture"),  between the Company and the Trustee. The
terms of the  Securities  include  those stated in the  Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
                                                                          ------
ss.ss.  77aaa-77bbbb)  as in effect on the date of the  Indenture  (the  "TIA").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the  Indenture.  The  Securities  are subject to all such terms,  and
Securityholders  are  referred to the  Indenture  and the TIA for a statement of
those terms.

                  The Securities are senior unsecured obligations of the Company
 limited to an aggregate  principal  amount at any one time  outstanding  of (x)
 $850.0  million  less (y) the  aggregate  principal  amount  (on a U.S.  Dollar
 Equivalent  basis) of any Euro Notes issued by the Company (subject to Sections
 2.01  and  2.08  of the  Indenture).  [This  Security  is  one of the  Original
 Securities referred to in the Indenture issued in an aggregate principal amount
 of $380.0 million. The Securities include the Original  Securities,  additional
 Initial  Securities  that may be issued under the  Indenture up to an aggregate
 principal amount of (x) $350.0 million less (y) the aggregate  principal amount
 (on a U.S.  Dollar  Equivalent  basis) of any Euro Notes  issued by the Company
 that are not Issue  Date Euro  Notes,  and any  Exchange  Securities  issued in
 exchange  for Initial  Securities].  [This  Security  is one of the  additional
 Initial Securities issued in an aggregate  principal amount of up to (x) $350.0
 million less (y) the aggregate  principal  amount (on a U.S. Dollar  Equivalent
 basis) of any Euro  Notes  issued by the  Company  that are not Issue Date Euro
 Notes.  The  Securities  include  such  additional  Securities,   the  Original
 Securities in an aggregate principal amount of $380.0 million previously issued
 under the Indenture and any Exchange  Securities issued in exchange for Initial
 Securities.  The additional Initial Securities, the Original Securities and the
 Exchange  Securities  are  treated as a single  class of  securities  under the
 Indenture.] The Original Securities, such additional Initial Securities and the
 Exchange  Securities  are  treated as a single  class of  securities  under the
 Indenture.  The Indenture  imposes  certain  limitations  on the ability of the
 Company and its Restricted  Subsidiaries  to, among other things,  make certain
 Investments   and  other   Restricted   Payments,   pay   dividends  and  other
 distributions,  incur Debt, enter into consensual restrictions upon the payment
 of certain dividends and distributions by such Restricted  Subsidiaries,  issue
 or sell shares of capital stock of such Restricted Subsidiaries,  enter into or
 permit certain transactions with Affiliates, create or incur Liens

<PAGE>

                                                                               6


 and make Asset Sales. The Indenture also imposes  limitations on the ability of
 the  Company to  consolidate  or merge  with or into any other  Person or sell,
 transfer,  assign,  lease,  convey or otherwise dispose of all or substantially
 all of the Property of the Company.

 5.  Optional Redemption
     -------------------

                  Except  as  set  forth  below,   the  Securities  may  not  be
redeemable  prior to 2005.  On and after that date,  the  Company may redeem the
Securities  in whole at any time or in part from  time to time at the  following
redemption prices (expressed in percentages of principal  amount),  plus accrued
and unpaid  interest,  if any, 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 that is on or prior to the date of redemption),
if redeemed during the 12-month  period  beginning on or after January 15 of the
years set forth below:

                                                              Redemption
Period                                                          Price
- ------                                                        ----------

2005                                                            105.813%
2006                                                            102.906%
2007 and thereafter                                             100.000%

                  Notwithstanding  the  foregoing,  on or prior to  January  15,
2004, the Company may redeem up to 33 1/3% of the original  aggregate  principal
amount of the Securities issued with the proceeds from one or more Public Equity
Offerings  by the  Company,  at a  redemption  price  equal  to 111  5/8% of the
principal amount thereof,  plus accrued and unpaid interest thereon,  if any, 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 that
it on or prior to the date of redemption);  provided, however, that after giving
effect  to any  such  redemption,  at least  66 2/3% of the  original  aggregate
principal  amount of the Securities  remains  outstanding.  Any such  redemption
shall be made within 75 days of such Public Equity Offering.

6.  Sinking Fund
    ------------

                  The Securities are not subject to any sinking fund.

7.  Notice of Redemption
    --------------------

                  Notice of  redemption  will be mailed by  first-class  mail at
least 30 days but not  more  than 60 days  before  the  redemption  date to each
Holder of Securities to be redeemed at

<PAGE>

                                                                               7


 his or her registered address.  Securities in denominations  larger than $1,000
 may be  redeemed  in part but  only in  whole  multiples  of  $1,000.  If money
 sufficient  to  pay  the  redemption  price  of  and  accrued  interest  on all
 Securities  (or  portions  thereof) to be redeemed  on the  redemption  date is
 deposited  with the Paying Agent on or before the  redemption  date and certain
 other  conditions  are  satisfied,  on and after such date  interest  ceases to
 accrue on such Securities (or such portions thereof) called for redemption.


 8.    Repurchase of Securities at the Option of Holders upon Change of Control
       ------------------------------------------------------------------------

                  Upon a Change of Control,  any Holder of Securities  will have
the right,  subject to certain conditions  specified in the Indenture,  to cause
the Company to repurchase  all or any part of the Securities of such Holder at a
purchase  price equal to 101% of the  principal  amount of the  Securities to be
repurchased  plus accrued and unpaid  interest,  if any, to the date of purchase
(subject  to the  right of  Holders  of record on the  relevant  record  date to
receive  interest due on the relevant  interest payment date that is on or prior
to the date of  purchase)  as  provided  in,  and  subject  to the terms of, the
Indenture.

9.  Denominations; Transfer; Exchange
    ---------------------------------

                  The  Securities  are in  registered  form  without  coupons in
denominations  of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange  Securities  in  accordance  with the  Indenture.  Upon any transfer or
exchange,  the  Registrar  and the  Trustee  may  require a Holder,  among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes  required by law or permitted by the  Indenture.  The  Registrar  need not
register  the  transfer of or exchange any  Securities  selected for  redemption
(except,  in the case of a Security to be  redeemed in part,  the portion of the
Security not to be redeemed)  or to transfer or exchange  any  Securities  for a
period of 15 days prior to a selection of  Securities  to be redeemed or 15 days
before an interest payment date.

10.  Persons Deemed Owners
     ---------------------

                  The  registered  Holder of this Security may be treated as the
owner of it for all purposes.

<PAGE>

                                                                               8


 11.  Unclaimed Money
      ---------------

                  If money for the  payment of  principal  or  interest  remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written  request unless an abandoned  property law designates
another Person. After any such payment,  Holders entitled to the money must look
only to the Company and not to the Trustee for payment.

12.  Discharge and Defeasance
     ------------------------

                  Subject to  certain  conditions,  the  Company at any time may
terminate some of or all its obligations  under the Securities and the Indenture
if the Company  deposits with the Trustee money or U.S.  Government  Obligations
for the payment of principal  and interest on the  Securities  to  redemption or
maturity, as the case may be.

13.  Amendment, Waiver
     -----------------

                  Subject to certain exceptions set forth in the Indenture,  (i)
the  Indenture  or the  Securities  may be amended  without  prior notice to any
Securityholder  but  with  the  written  consent  of the  Holders  of at least a
majority in aggregate  principal  amount of the outstanding  Securities and (ii)
any default or  noncompliance  with any provision may be waived with the written
consent  of the  Holders  of at least a  majority  in  principal  amount  of the
outstanding  Securities.   Subject  to  certain  exceptions  set  forth  in  the
Indenture,  without the consent of any Holder of Securities, the Company and the
Trustee may amend the  Indenture or the  Securities  (i) to cure any  ambiguity,
omission,  defect  or  inconsistency;  (ii)  to  comply  with  Article  V of the
Indenture;  (iii) to provide for uncertificated  Securities in addition to or in
place  of  certificated  Securities;   (iv)  to  make  certain  changes  in  the
subordination provisions;  (v) to add Guarantees with respect to the Securities;
(vi) to secure the Securities; (vii) to add additional covenants or to surrender
rights  and  powers  conferred  on  the  Company;  (viii)  to  comply  with  the
requirements of the SEC in order to effect or maintain the  qualification of the
Indenture  under the TIA;  or (ix) to make any  change  that does not  adversely
affect the rights of any Securityholder.

14.  Defaults and Remedies
     ---------------------

                  If an Event of Default occurs and is  continuing,  the Trustee
or the Holders of at least 25% in aggregate  principal  amount of the Securities
then outstanding, subject to certain limitations, may declare all the Securities
to be immediately due and payable. Certain events of bankruptcy or insolvency

<PAGE>

                                                                               9


 are Events of Default and shall result in the Securities 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  Securities  may not enforce the  Indenture  or the
 Securities  except as  provided  in the  Indenture.  The  Trustee may refuse to
 enforce the Indenture or the Securities unless it receives reasonable indemnity
 or security. Subject to certain limitations, Holders of a majority in aggregate
 principal  amount of the Securities then  outstanding may direct the Trustee in
 its  exercise  of any trust or power  under the  Indenture.  The  Holders  of a
 majority in aggregate  principal amount of the Securities then outstanding,  by
 written notice to the Company and the Trustee,  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 or interest that has become due solely
 because of the acceleration.

 15.  Trustee Dealings with the Company
      ---------------------------------

                  Subject to certain limitations imposed by the TIA, the Trustee
under the  Indenture,  in its individual or any other  capacity,  may become the
owner  or  pledgee  of  Securities  and may  otherwise  deal  with  and  collect
obligations  owed to it by the Company or its  Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

16.  No Recourse Against Others
     --------------------------

                  A director,  officer, employee or stockholder, as such, of the
Company shall not have any liability  for any  obligations  of the Company under
the  Securities  or the Indenture or for any claim based on, in respect of or by
reason of such  obligations  or their  creation.  By accepting a Security,  each
Securityholder  waives and releases all such  liability.  The waiver and release
are part of the consideration for the issue of the Securities.

17.  Authentication
     --------------

                  This Security shall not be valid until an authorized signatory
of the Trustee (or an  authenticating  agent)  manually signs the certificate of
authentication on the other side of this Security.

<PAGE>

                                                                              10


18.  Abbreviations
     -------------

                  Customary   abbreviations  may  be  used  in  the  name  of  a
Securityholder  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).

19.  Governing Law
     -------------

                  THIS   SECURITY   SHALL  BE  GOVERNED  BY,  AND  CONSTRUED  IN
ACCORDANCE  WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE  PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

20.  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  Securities  and has  directed  the  Trustee to use CUSIP
numbers in notices of  redemption as a convenience  to  Securityholders.  To the
extent such  numbers  have been  issued,  the Company has caused ISIN and Common
Code  numbers  to be  similarly  printed  on the  Securities  and has  similarly
instructed  the Trustee.  No  representation  is made as to the accuracy of such
numbers  either as printed on the  Securities  or as  contained in any notice of
redemption and reliance may be placed only on the other  identification  numbers
placed thereon.

                  THE  COMPANY  WILL  FURNISH TO ANY HOLDER OF  SECURITIES  UPON
WRITTEN  REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE  WHICH
HAS IN IT THE TEXT OF THIS SECURITY.

<PAGE>

                                                                              11


                                 ASSIGNMENT FORM



To assign this Security, fill in the form below:

I or we assign and transfer this Security to


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

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


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


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

Date: _______________________        Your Signature: ___________________________


________________________________________________________________________________
Sign  exactly  as your name appears on the other side of this Security.

In  connection  with any  transfer of any of the  Securities  evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k)  under  the  Securities  Act  after  the  later of the date of  original
issuance of such Securities and the last date, if any, on which such Securities
were owned by the Company or any  Affiliate  of the  Company,  the  undersigned
confirms that such  Securities  are being  transferred  in accordance  with its
terms:

CHECK ONE BOX BELOW

       (1)        [ ]      to the Company; or

       (2)        [ ]      pursuant to an effective registration statement under
                           the Securities Act of 1933; or

       (3)        [ ]      inside the United States to a "qualified
                           institutional  buyer" (as defined in Rule 144A under
                           the Securities Act of 1933) that purchases for its
                           own account or for the account of a qualified
                           institutional buyer to whom notice is given that
                           such transfer is being made in reliance on Rule 144A,
                           in each

<PAGE>

                                                                              12


                           case pursuant to and in compliance with Rule 144A
                           under the Securities Act of 1933; or

       (4)        [ ]      outside  the United  States in an offshore  trans-
                           action  within the meaning of Regulation S under the
                           Securities Act in compliance  with Rule 904 under the
                           Securities Act of 1933; or

       (5)        [ ]      to an  institutional  "accredited  investor"  (as
                           defined  in Rule 501(a)(1),  (2),  (3) or (7) under
                           the  Securities  Act of 1933) that has furnished   to
                           the   Trustee   a  signed   letter   containing
                           certain representations  and agreements (the form of
                           which letter can be obtained from the Trustee or the
                           Company); or

       (6)        [ ]       pursuant to another available  exemption from
                            registration  provided by Rule 144 under the
                            Securities Act of 1933.

       Unless one of the boxes is checked,  the Trustee  will refuse to register
       any of the  Securities  evidenced by this  certificate in the name of any
       person other than the registered holder thereof; provided,  however, that
       if box (4),  (5) or (6) is checked,  the Trustee  may  require,  prior to
       registering  any such transfer of the  Securities,  such legal  opinions,
       certifications  and  other  information  as the  Company  has  reasonably
       requested  to confirm  that such  transfer  is being made  pursuant to an
       exemption  from,  or in a  transaction  not subject to, the  registration
       requirements of the Securities Act of 1933.


                                                --------------------------------
                                                         Your Signature

Signature Guarantee:

Date:
      ------------------------------            --------------------------------
Signature must be guaranteed                    Signature of Signature
by a participant in a                           Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee

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

<PAGE>

                                                                              13


              TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

                  The undersigned  represents and warrants that it is purchasing
this  Security  for its own  account  or an  account  with  respect  to which it
exercises  sole  investment  discretion  and that it and any such  account  is a
"qualified  institutional  buyer"  within  the  meaning  of Rule 144A  under the
Securities  Act of  1933,  and is aware  that  the  sale to it is being  made in
reliance on Rule 144A and  acknowledges  that it has received  such  information
regarding the Company as the undersigned has requested  pursuant to Rule 144A or
has  determined  not to request such  information  and that it is aware that the
transferor is relying upon the undersigned's foregoing  representations in order
to claim the exemption from registration provided by Rule 144A.


Dated:
      -----------------------               ------------------------------------
                                            NOTICE: To be executed by
                                                    an executive officer



<PAGE>

                                                                              14


                      [TO BE ATTACHED TO GLOBAL SECURITIES]

              SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY


                         The initial principal amount of this Global Security is
$[ ]. The  following  increases or decreases in this Global  Security  have been
made:

<TABLE>

                                                                                  Signature of
                                                           Principal amount       authorized
             Amount of decrease     Amount of increase     of this Global         signatory of
             in Principal           in Principal           Security following     Trustee or
Date of      Amount of this         Amount of this         such decrease or       Securities
Exchange     Global Security        Global Security        increase               Custodian
- --------     ------------------     ------------------     ------------------     ------------
<S>          <C>                    <C>                    <C>                    <C>



</TABLE>



<PAGE>

                                                                              15


                       OPTION OF HOLDER TO ELECT PURCHASE


                           If you want to elect to have this Security purchased
by the Company pursuant to Section 4.07 (Asset Sale) or 4.12 (Change of Control)
of the  Indenture,  check the box:
                                       [ ]

                           If you  want to  elect to have  only  part of this
Security  purchased  by the  Company pursuant to Section 4.07 or 4.12 of the
Indenture, state the amount:

$


Date:  __________________  Your  Signature:  ___________________________________
(Sign  exactly as your name appears on the other side of the Security)


Signature Guarantee:____________________________________________________________
                    Signature must be guaranteed by a participant
                    in a recognized signature guaranty medallion
                    program or other signature guarantor acceptable
                    to the Trustee.



<PAGE>


                                                                       EXHIBIT A





                           [FORM OF FACE OF SECURITY]

 No.                                                      [up to](3) $__________

                          11 5/8% Senior Note due 2008

                                                       CUSIP No.[52736R AJ l](1)
                                                                [U52799 AE 0](2)
                                                      ISIN No. [US52736RAJ14](1)
                                                               [USU52799AE03](2)
                                                  Common Code No. [012338678](1)
                                                                  [012338732](2)



                  LEVI STRAUSS & CO., a Delaware corporation, promises to pay to
[Cede & Co.]3, or registered assigns, the principal sum [of          Dollars](4)
[as set forth on the Schedule of Increases or Decreases annexed hereto](3)on
January 15, 2001.


                 Interest Payment Dates: January 15 and July 15.

                       Record Dates: January 1 and July 1.


















__________________

 1       Insert for Rule 144A Global Note.

 2       Insert for Reg. S Global Note.

 3       Insert for Global Securities.

 4       Insert for Definitive Securities.

<PAGE>

                                                                               2


                  Additional  provisions  of this  Security are set forth on the
other side of this Security.

                  IN WITNESS WHEREOF, the parties have caused this instrument to
be duly executed.


                                       LEVI STRAUSS & CO.,

                                       by
                                          --------------------------------------
                                          Name:
                                          Title:


                                       by
                                          --------------------------------------
                                          Name:
                                          Title:







TRUSTEE'S CERTIFICATE OF
         AUTHENTICATION

Dated:

CITIBANK, N.A.,

         as Trustee, certifies
         that this is one of
         the Securities referred
         to in the Indenture.



by: ----------------------------------------
         Authorized Signatory




__________________

*/ If the  Security is to be issued in global  form,  add the Global  Securities
Legend  from  Exhibit 1 to  Appendix A and the  attachment  from such  Exhibit 1
captioned  "TO BE  ATTACHED TO GLOBAL  SECURITIES  - SCHEDULE  OF  INCREASES  OR
DECREASES IN GLOBAL SECURITY".



<PAGE>

                                                                               3


                       [FORM OF REVERSE SIDE OF SECURITY]

                          11 5/8% Senior Note due 2008


 1.  Interest.
     --------

                  LEVI STRAUSS & CO., a Delaware  corporation (such corporation,
 and its  successors  and assigns under the Indenture  hereinafter  referred to,
 being herein called the  "Company"),  promises to pay interest on the principal
 amount of this Security at the rate per annum shown above. The Company will pay
 interest  semiannually on January 15 and July 15 of each year.  Interest on the
 Securities  will accrue from the most  recent date to which  interest  has been
 paid or, if no interest has been paid, from January 18, 2000. Interest shall be
 computed on the basis of a 360-day year of twelve  30-day  months.  The Company
 shall pay  interest on overdue  principal  at the rate borne by the  Securities
 plus 1% per  annum,  and it shall  pay  interest  on  overdue  installments  of
 interest at the rate borne by the Securities to the extent lawful.

 2.  Method of Payment
     -----------------

                  The  Company  will  pay  interest  on the  Securities  (except
defaulted  interest) to the Persons who are registered  Holders of Securities at
the close of  business on the January 1 or July 1 next  preceding  the  interest
payment date even if  Securities  are  canceled  after the record date and on or
before the interest payment date. Holders must surrender  Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United  States of  America  that at the time of payment is legal
tender for  payment  of public and  private  debts.  Payments  in respect of the
Securities  represented by a Global Security (including  principal,  premium and
interest)  will be made by wire transfer of immediately  available  funds to the
accounts  specified by The Depository  Trust Company.  The Company will make all
payments in respect of a Definitive Security (including  principal,  premium and
interest),  by mailing a check to the registered address of each Holder thereof;
provided, however, that payments on the Securities may also be made, in the case
- --------  -------
of a Holder of at least $1,000,000 aggregate principal amount of Securities,  by
wire transfer to a U.S.  dollar  account  maintained by the payee with a bank in
the United  States if such  Holder  elects  payment by wire  transfer  by giving
written  notice to the Trustee or the Paying  Agent to such  effect  designating
such account no later than 30 days  immediately  preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).

<PAGE>

                                                                               4


 3.  Paying Agent and Registrar
     --------------------------

                  Initially,   CITIBANK,   N.A.,  a  banking   association  (the
"Trustee"),  will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent,  Registrar or co-registrar  without notice. The Company
or any of its  domestically  incorporated  Wholly Owned  Subsidiaries may act as
Paying Agent, Registrar or co-registrar.

4.  Indenture
    ---------

                  The Company issued the Securities  under an Indenture dated as
of January 18, 2001 (the "Indenture"),  between the Company and the Trustee. The
terms of the  Securities  include  those stated in the  Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
                                                                          ------
ss.ss.  77aaa-77bbbb)  as in effect on the date of the  Indenture  (the  "TIA").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the  Indenture.  The  Securities  are subject to all such terms,  and
Securityholders  are  referred to the  Indenture  and the TIA for a statement of
those terms.

                  The Securities are senior unsecured obligations of the Company
 limited to an aggregate  principal  amount at any one time  outstanding  of (x)
 $850.0  million  less (y) the  aggregate  principal  amount  (on a U.S.  Dollar
 Equivalent  basis) of any Euro Notes issued by the Company (subject to Sections
 2.01  and  2.08  of the  Indenture).  This  Security  is  one  of the  Exchange
 Securities  referred  to in  the  Indenture  issued  in  exchange  for  Initial
 Securities.  The  Securities  include the  Exchange  Securities,  the  Original
 Securities in the aggregate  principal  amount of $380.0 million and additional
 Initial Securities in an aggregate principal amount of up to (x) $350.0 million
 less (y) the aggregate  principal amount (on a U.S. Dollar Equivalent basis) of
 any Euro Notes  issued by the Company  that are not Issue Date Euro Notes.  The
 Exchange  Securities,  the  Original  Securities  and such  additional  Initial
 Securities are treated as a single class of securities under the Indenture. The
 Indenture  imposes  certain  limitations  on the ability of the Company and its
 Restricted  Subsidiaries to, among other things,  make certain  Investments and
 other Restricted Payments,  pay dividends and other distributions,  incur Debt,
 enter into consensual  restrictions  upon the payment of certain  dividends and
 distributions by such Restricted Subsidiaries,  issue or sell shares of capital
 stock  of  such   Restricted   Subsidiaries,   enter  into  or  permit  certain
 transactions  with Affiliates,  create or incur Liens and make Asset Sales. The
 Indenture also imposes limitations on the ability of the Company to consolidate
 or merge with or into any other Person or sell, transfer, assign, lease, convey

<PAGE>

                                                                               5


 or otherwise  dispose  of  all  or  substantially  all  of  the Property of the
 Company.


 5.  Optional Redemption
     -------------------

                  Except  as  set  forth  below,   the  Securities  may  not  be
redeemable  prior to January 15, 2005.  On and after that date,  the Company may
redeem the  Securities  in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid  interest,  if any, 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  that is on or  prior  to the  date of
redemption),  if  redeemed  during the  12-month  period  beginning  on or after
January 15 of the years set forth below:

                                                           Redemption
Period                                                       Price
- ------                                                     ----------

2005                                                        105.813%
2006                                                        102.906%
2007 and thereafter                                         100.000%

                  Notwithstanding  the  foregoing,  on or prior to  January  15,
2004, the Company may redeem up to 33 1/3% of the original  aggregate  principal
amount of the Securities issued with the proceeds from one or more Public Equity
Offerings  by the  Company,  at a  redemption  price  equal  to 111  5/8% of the
principal amount thereof,  plus accrued and unpaid interest thereon,  if any, 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 that
it on or prior to the date of redemption);  provided, however, that after giving
                                            --------  -------
effect  to any  such  redemption,  at least  66 2/3% of the  original  aggregate
principal  amount of the Securities  remains  outstanding.  Any such  redemption
shall be made within 75 days of such Public Equity Offering.

6.  Sinking Fund
    ------------

                  The Securities are not subject to any sinking fund.

<PAGE>

                                                                               6


 7.  Notice of Redemption
     --------------------

                  Notice of  redemption  will be mailed by  first-class  mail at
least 30 days but not  more  than 60 days  before  the  redemption  date to each
Holder of Securities to be redeemed at his or her registered address. Securities
in  denominations  larger  than $1,000 may be redeemed in part but only in whole
multiples of $1,000.  If money  sufficient  to pay the  redemption  price of and
accrued  interest on all Securities (or portions  thereof) to be redeemed on the
redemption  date is deposited  with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases  to accrue on such  Securities  (or such  portions  thereof)  called  for
redemption.


 8.    Repurchase of Securities at the Option of Holders upon Change of Control
       ------------------------------------------------------------------------

                  Upon a Change of Control,  any Holder of Securities  will have
the right,  subject to certain conditions  specified in the Indenture,  to cause
the Company to repurchase  all or any part of the Securities of such Holder at a
purchase  price equal to 101% of the  principal  amount of the  Securities to be
repurchased  plus accrued and unpaid  interest,  if any, to the date of purchase
(subject  to the  right of  Holders  of record on the  relevant  record  date to
receive  interest due on the relevant  interest payment date that is on or prior
to the date of  purchase)  as  provided  in,  and  subject  to the terms of, the
Indenture.

9.  Denominations; Transfer; Exchange
    ---------------------------------

                  The  Securities  are in  registered  form  without  coupons in
denominations  of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange  Securities  in  accordance  with the  Indenture.  Upon any transfer or
exchange,  the  Registrar  and the  Trustee  may  require a Holder,  among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes  required by law or permitted by the  Indenture.  The  Registrar  need not
register  the  transfer of or exchange any  Securities  selected for  redemption
(except,  in the case of a Security to be  redeemed in part,  the portion of the
Security not to be redeemed)  or to transfer or exchange  any  Securities  for a
period of 15 days prior to a selection of  Securities  to be redeemed or 15 days
before an interest payment date.

<PAGE>

                                                                               7


 10.  Persons Deemed Owners
      ---------------------

                  The  registered  Holder of this Security may be treated as the
owner of it for all purposes.

11.  Unclaimed Money
     ---------------

                  If money for the  payment of  principal  or  interest  remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written  request unless an abandoned  property law designates
another Person. After any such payment,  Holders entitled to the money must look
only to the Company and not to the Trustee for payment.

12.  Discharge and Defeasance
     ------------------------

                  Subject to  certain  conditions,  the  Company at any time may
terminate some of or all its obligations  under the Securities and the Indenture
if the Company  deposits with the Trustee money or U.S.  Government  Obligations
for the payment of principal  and interest on the  Securities  to  redemption or
maturity, as the case may be.

13.  Amendment, Waiver
     -----------------

                  Subject to certain exceptions set forth in the Indenture,  (i)
the  Indenture  or the  Securities  may be amended  without  prior notice to any
Securityholder  but  with  the  written  consent  of the  Holders  of at least a
majority in aggregate  principal  amount of the outstanding  Securities and (ii)
any default or  noncompliance  with any provision may be waived with the written
consent  of the  Holders  of at least a  majority  in  principal  amount  of the
outstanding  Securities.   Subject  to  certain  exceptions  set  forth  in  the
Indenture,  without the consent of any Holder of Securities, the Company and the
Trustee may amend the  Indenture or the  Securities  (i) to cure any  ambiguity,
omission,  defect  or  inconsistency;  (ii)  to  comply  with  Article  V of the
Indenture;  (iii) to provide for uncertificated  Securities in addition to or in
place  of  certificated  Securities;   (iv)  to  make  certain  changes  in  the
subordination provisions;  (v) to add Guarantees with respect to the Securities;
(vi) to secure the Securities; (vii) to add additional covenants or to surrender
rights  and  powers  conferred  on  the  Company;  (viii)  to  comply  with  the
requirements of the SEC in order to effect or maintain the  qualification of the
Indenture  under the TIA;  or (ix) to make any  change  that does not  adversely
affect the rights of any Securityholder.

<PAGE>

                                                                               8


 14.  Defaults and Remedies
      ---------------------

                  If an Event of Default occurs and is  continuing,  the Trustee
or the Holders of at least 25% in aggregate  principal  amount of the Securities
then outstanding, subject to certain limitations, may declare all the Securities
to be  immediately  due and payable.  Certain events of bankruptcy or insolvency
are Events of Default and shall result in the Securities  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  Securities  may not enforce the  Indenture  or the
Securities  except as  provided  in the  Indenture.  The  Trustee  may refuse to
enforce the Indenture or the Securities unless it receives reasonable  indemnity
or security. Subject to certain limitations,  Holders of a majority in aggregate
principal  amount of the Securities  then  outstanding may direct the Trustee in
its  exercise  of any  trust or power  under the  Indenture.  The  Holders  of a
majority in aggregate  principal amount of the Securities then  outstanding,  by
written  notice to the Company and the Trustee,  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 or interest  that has become due solely
because of the acceleration.

15.  Trustee Dealings with the Company
     ---------------------------------

                  Subject to certain limitations imposed by the TIA, the Trustee
under the  Indenture,  in its individual or any other  capacity,  may become the
owner  or  pledgee  of  Securities  and may  otherwise  deal  with  and  collect
obligations  owed to it by the Company or its  Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

16.  No Recourse Against Others
     --------------------------

                  A director,  officer, employee or stockholder, as such, of the
Company shall not have any liability  for any  obligations  of the Company under
the  Securities  or the Indenture or for any claim based on, in respect of or by
reason of such  obligations  or their  creation.  By accepting a Security,  each
Securityholder  waives and releases all such  liability.  The waiver and release
are part of the consideration for the issue of the Securities.

<PAGE>

                                                                               9


 17.  Authentication
      --------------

                  This Security shall not be valid until an authorized signatory
of the Trustee (or an  authenticating  agent)  manually signs the certificate of
authentication on the other side of this Security.

18.  Abbreviations
     -------------

                  Customary   abbreviations  may  be  used  in  the  name  of  a
Securityholder  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).

19.  Governing Law
     -------------

                  THIS   SECURITY   SHALL  BE  GOVERNED  BY,  AND  CONSTRUED  IN
ACCORDANCE  WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE  PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

20.  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  Securities  and has  directed  the  Trustee to use CUSIP
numbers in notices of  redemption as a convenience  to  Securityholders.  To the
extent such  numbers  have been  issued,  the Company has caused ISIN and Common
Code  numbers  to be  similarly  printed  on the  Securities  and has  similarly
instructed  the Trustee.  No  representation  is made as to the accuracy of such
numbers  either as printed on the  Securities  or as  contained in any notice of
redemption and reliance may be placed only on the other  identification  numbers
placed thereon.

                  THE  COMPANY  WILL  FURNISH TO ANY HOLDER OF  SECURITIES  UPON
WRITTEN  REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE  WHICH
HAS IN IT THE TEXT OF THIS SECURITY.

<PAGE>

                                                                              10


                                 ASSIGNMENT FORM


To assign this Security, fill in the form below:

I or we assign and transfer this Security to


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

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


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


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

 Date: _______________________ Your Signature: _________________________________


________________________________________________________________________________
Sign  exactly  as your  name  appears  on the  other  side of this  Security.
Signature  must be guaranteed  by a  participant  in a  recognized  signature
guaranty  medallion program or other signature guarantor acceptable to the
Trustee.



<PAGE>

                                                                              11


                       OPTION OF HOLDER TO ELECT PURCHASE

                           IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED
BY THE COMPANY PURSUANT TO SECTION 4.07 (ASSET SALE) OR 4.12 (CHANGE OF CONTROL)
OF THE  INDENTURE,  CHECK
THE BOX: ___
                                                     /    /

                           IF YOU  WANT TO  ELECT TO HAVE  ONLY  PART OF THIS
SECURITY  PURCHASED  BY THE  COMPANY PURSUANT TO SECTION 4.07 OR 4.12 OF THE
INDENTURE, STATE THE AMOUNT:

$


DATE:  __________________  YOUR  SIGNATURE:  __________________
(SIGN  EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THE SECURITY)


SIGNATURE GUARANTEE:_______________________________________
                    SIGNATURE MUST BE GUARANTEED BY A
                    PARTICIPANT IN A RECOGNIZED SIGNATURE
                    GUARANTY MEDALLION PROGRAM OR OTHER
                    SIGNATURE GUARANTOR ACCEPTABLE TO THE
                    TRUSTEE.

<PAGE>

                                                                       EXHIBIT B


                                     Form of
                       Transferee Letter of Representation


[Company]

In care of
 [                  ]
 [                  ]
 [                  ]


Ladies and Gentlemen:


       This certificate is delivered to request a transfer of $[    ] principal
amount of the 11 5/8% Senior Notes due 2008 (the "Securities") of LEVI STRAUSS &
CO. (the "Company").

       Upon transfer,  the Securities would be registered in the name of the new
beneficial owner as follows:

Name:________________________

Address:_____________________

Taxpayer ID Number:__________

       The undersigned represents and warrants to you that:

       1. We are an  institutional  "accredited  investor"  (as  defined in Rule
 501(a)(1),  (2), (3) or (7) under the  Securities  Act of 1933, as amended (the
 "Securities  Act")),  purchasing for our own account or for the account of such
 an institutional  "accredited  investor" at least $250,000  principal amount of
 the Securities,  and we are acquiring the Securities not with a view to, or for
 offer  or sale  in  connection  with,  any  distribution  in  violation  of the
 Securities Act. We have such knowledge and experience in financial and business
 matters as to be capable of evaluating  the merits and risks of our  investment
 in the  Securities,  and we invest in or  purchase  securities  similar  to the
 Securities in the normal course of our business. We, and any accounts for which
 we  are  acting,  are  each  able  to  bear  the  economic  risk  of our or its
 investment.

       2. We understand that the Securities  have not been registered  under the
 Securities Act and,  unless so registered,  may not be sold except as permitted
 in the  following  sentence.  We agree on our own  behalf  and on behalf of any
 investor account for which we are purchasing

<PAGE>

                                                                               2


Securities to offer,  sell or otherwise  transfer such  Securities  prior to the
date that is two years  after  the later of the date of  original  issue and the
last date on which the Company or any  affiliate of the Company was the owner of
such   Securities  (or  any  predecessor   thereto)  (the  "Resale   Restriction
Termination  Date") only (a) to the  Company,  (b)  pursuant  to a  registration
statement that has been declared  effective  under the Securities  Act, (c) in a
transaction  complying with the  requirements  of Rule 144A under the Securities
Act  ("Rule  144A"),   to  a  person  we  reasonably   believe  is  a  qualified
institutional  buyer  under Rule 144A (a "QIB") that is  purchasing  for its own
account  or for the  account  of a QIB and to whom  notice  is  given  that  the
transfer  is being made in  reliance  on Rule 144A,  (d)  pursuant to offers and
sales that occur  outside the United  States  within the meaning of Regulation S
under the Securities Act, (e) to an institutional  "accredited  investor" within
the meaning of Rule 501(a)(1),  (2), (3) or (7) under the Securities Act that is
purchasing  for its own  account  or for the  account  of such an  institutional
"accredited  investor," in each case in a minimum principal amount of Securities
of  $100,000,  or (f)  pursuant  to  any  other  available  exemption  from  the
registration  requirements  of  the  Securities  Act,  subject  in  each  of the
foregoing  cases to any  requirement of law that the disposition of our property
or the property of such investor  account or accounts be at all times within our
or their control and in compliance with any applicable  state  securities  laws.
The  foregoing  restrictions  on resale will not apply  subsequent to the Resale
Restriction  Termination Date. If any resale or other transfer of the Securities
is  proposed  to be made  pursuant  to  clause  (e)  above  prior to the  Resale
Restriction  Termination  Date, the  transferor  shall deliver a letter from the
transferee  substantially  in the form of this  letter  to the  Company  and the
Trustee,  which shall  provide,  among other things,  that the  transferee is an
institutional  "accredited investor" within the meaning of Rule 501(a)(1),  (2),
(3) or (7) under the Securities Act and that it is acquiring such Securities for
investment purposes and not for distribution in violation of the Securities Act.
Each purchaser  acknowledges  that the Company and the Trustee reserve the right
prior to the  offer,  sale or other  transfer  prior to the  Resale  Restriction
Termination Date of the

<PAGE>

                                                                               3


Securities  pursuant to clause (d),  (e) or (f) above to require the delivery of
an opinion of counsel,  certifications or other information  satisfactory to the
Company and the Trustee.



                                                   TRANSFEREE:_________________,

                                                      by:_______________________



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.9
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>EURO INDENTURE, DATED JANUARY 18, 2001, BETWEEN...
<TEXT>

                                            EXECUTION COPY









                               LEVI STRAUSS & CO.

                         11 5/8% Senior Notes due 2008


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


                                 EURO INDENTURE



                          Dated as of January 18 ,2001


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





                                 CITIBANK, N.A.,

                                     Trustee


   =========================================================================


<PAGE>



                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----

                                ARTICLE I

Definitions and Incorporation by Reference
- ------------------------------------------

SECTION 1.01.                   Definitions                                   1
SECTION 1.02.                   Other Definitions                            41
SECTION 1.03.                   Incorporation by Reference of Trust
                                   Indenture Act                             41
SECTION 1.04.                   Rules of Construction                        42


                                ARTICLE II

                                The Securities
- ----------------------------------------------

SECTION 2.01.                   Amount of Securities; Issuable
                                   in Series                                 42
SECTION 2.02.                   Form and Dating                              44
SECTION 2.03.                   Execution and Authentication                 44
SECTION 2.04.                   Registrar and Paying Agent                   45
SECTION 2.05.                   Paying Agent To Hold Money in Trust          46
SECTION 2.06.                   Securityholder Lists                         46
SECTION 2.07.                   Replacement Securities                       47
SECTION 2.08.                   Outstanding Securities                       47
SECTION 2.09.                   Temporary Securities                         47
SECTION 2.10.                   Cancellation                                 48
SECTION 2.11.                   Defaulted Interest                           48
SECTION 2.12.                   CUSIP Numbers                                48


                                ARTICLE III

                                Redemption
                                ----------

SECTION 3.01.                   Notices to Trustee                           49
SECTION 3.02.                   Selection of Securities
                                   To Be Redeemed                            49
SECTION 3.03.                   Notice of Redemption                         49
SECTION 3.04.                   Effect of Notice of Redemption               50
SECTION 3.05.                   Deposit of Redemption Price                  50
SECTION 3.06.                   Securities Redeemed in Part                  51


<PAGE>

                                                                               2

                                ARTICLE IV

                                Covenants
- -----------------------------------------

SECTION 4.01.                   Covenant Suspension                          51
SECTION 4.02.                   Payment of Securities                        52
SECTION 4.03.                   SEC Reports                                  52
SECTION 4.04.                   Limitation on Debt                           52
SECTION 4.05.                   Limitation on Restricted Payments            55
SECTION 4.06.                   Limitation on Liens                          58
SECTION 4.07.                   Limitation on Asset Sales                    58
SECTION 4.08.                   Limitation on Restrictions on
                                   Distributions from Restricted
                                   Subsidiaries                              62
SECTION 4.09.                   Limitation on Transactions with
                                   Affiliates                                64
SECTION 4.10.                   Designation of Restricted and
                                   Unrestricted Subsidiaries                 65
SECTION 4.11.                   Limitation on Sale and Leaseback
                                   Transactions                              67
SECTION 4.12.                   Change of Control                            67
SECTION 4.13.                   Further Instruments and Acts                 69


                                ARTICLE V

                                Successor Company
- -------------------------------------------------

SECTION 5.01.                   When Company May Merge or
                                   Transfer Assets                           69


                                ARTICLE VI

                            Defaults and Remedies 71
- ----------------------------------------------------

SECTION 6.01.                   Events of Default                            71
SECTION 6.02.                   Acceleration                                 74
SECTION 6.03.                   Other Remedies                               74
SECTION 6.04.                   Waiver of Past Defaults                      74
SECTION 6.05.                   Control by Majority                          74
SECTION 6.06.                   Limitation on Suits                          75
SECTION 6.07.                   Rights of Holders to Receive
                                   Payment                                   75
SECTION 6.08.                   Collection Suit by Trustee                   75
SECTION 6.09.                   Trustee May File Proofs of Claim             76
SECTION 6.10.                   Priorities                                   76
SECTION 6.11.                   Undertaking for Costs                        76
SECTION 6.12.                   Waiver of Stay or Extension Laws             77

<PAGE>

                                                                               3


                                ARTICLE VII

                                Trustee
                                -------

SECTION 7.01.                   Duties of Trustee                            77
SECTION 7.02.                   Rights of Trustee                            79
SECTION 7.03.                   Individual Rights of Trustee                 80
SECTION 7.04.                   Trustee's Disclaimer                         80
SECTION 7.05.                   Notice of Defaults                           80
SECTION 7.06.                   Reports by Trustee to Holders                80
SECTION 7.07.                   Compensation and Indemnity                   81
SECTION 7.08.                   Replacement of Trustee                       82
SECTION 7.09.                   Successor Trustee by Merger                  83
SECTION 7.10.                   Eligibility; Disqualification                83
SECTION 7.11.                   Preferential Collection of Claims
                                   Against Company                           84


                                ARTICLE VIII

                       Discharge of Indenture; Defeasance
                       ----------------------------------

SECTION 8.01.                   Discharge of Liability on
                                   Securities; Defeasance                    84
SECTION 8.02.                   Conditions to Defeasance                     85
SECTION 8.03.                   Application of Trust Money                   86
SECTION 8.04.                   Repayment to Company                         87
SECTION 8.05.                   Indemnity for Government
                                   Obligations                               87
SECTION 8.06.                   Reinstatement                                87


                                ARTICLE IX

                                Amendments
- ------------------------------------------

SECTION 9.01.                   Without Consent of Holders                   87
SECTION 9.02.                   With Consent of Holders                      88
SECTION 9.03.                   Compliance with Trust Indenture Act          89
SECTION 9.04.                   Revocation and Effect of Consents
                                   and Waivers                               89
SECTION 9.05.                   Notation on or Exchange of
                                   Securities                                90
SECTION 9.06.                   Trustee To Sign Amendments                   90
SECTION 9.07.                   Payment for Consent                          91


<PAGE>

                                                                               4



                                ARTICLE X

                                  Miscellaneous
- -----------------------------------------------

SECTION 10.01.                  Trust Indenture Act Controls                 91
SECTION 10.02.                  Notices                                      91
SECTION 10.03.                  Communication by Holders with
                                   Other Holders                             92
SECTION 10.04.                  Certificate and Opinion as to
                                   Conditions Precedent                      92
SECTION 10.05.                  Statements Required in Certificate
                                   or Opinion                                92
SECTION 10.06.                  When Securities Disregarded                  93
SECTION 10.07.                  Rules by Trustee, Paying Agent and
                                   Registrar                                 93
SECTION 10.08.                  Legal Holidays                               93
SECTION 10.09.                  Governing Law                                93
SECTION 10.10.                  No Recourse Against Others                   94
SECTION 10.11.                  Successors                                   94
SECTION 10.12.                  Multiple Originals                           94
SECTION 10.13.                  Table of Contents; Headings                  94


Appendix A - Provisions Relating to Initial Securities
             and Exchange Securities
Exhibit 1 to Appendix A
          -  Form of Initial Security
Exhibit A -  Form of Exchange Security
Exhibit B -  Form of Transferee Letter of Representation



<PAGE>



                              CROSS-REFERENCE TABLE


TIA                                             Indenture
Section                                          Section
- -------                                          -------

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.
311(a)                                            7.11
   (b)                                            7.11
   (c)                                            N.A.
312(a)                                            2.06
   (b)                                            N.A.
   (c)                                            N.A.
313(a)                                            7.06
   (b)(1)                                         N.A.
   (b)(2)                                         7.06
   (c)                                            N.A.
   (d)                                            7.06
314(a)                                            4.02;
                                                  4.10;
                                                  N.A.
   (b)                                            N.A.
   (c)(1)                                         N.A.
   (c)(2)                                         N.A.
   (c)(3)                                         N.A.
   (d)                                            N.A.
   (e)                                            N.A.
   (f)                                            4.10
315(a)                                            7.01
   (b)                                            7.05;
                                                  N.A.
   (c)                                            7.01
   (d)                                            7.01
   (e)                                            6.11
316(a)
   (last
sentence)                                         N.A.
   (a)(1)(A)                                      6.05
   (a)(1)(B)                                      6.04
   (a)(2)                                         N.A.
   (b)                                            6.07
317(a)(1)                                         6.08
   (a)(2)                                         6.09
   (b)                                            2.05
318(a)                                            N.A.

                    N.A. Means Not Applicable.

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



<PAGE>


                                    INDENTURE dated as of January 18, 2001,






                                       between  LEVI STRAUSS & CO.,  a  Delaware
                                       corporation (the "Company") and CITIBANK,
                                       N.A., a national banking association duly
                                       organized and existing under the laws  of
                                       the U.S.A., as Trustee (the "Trustee").


                  Each  party  agrees as  follows  for the  benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's euro
denominated  11 5/8% Senior Notes due 2008, to be issued,  from time to time, in
one or more series as in this Indenture provided (the "Initial Securities") and,
if and when issued pursuant to a registered or private  exchange for the Initial
Securities,  the  Company's  11  5/8%  Senior  Notes  due  2008  (the  "Exchange
Securities" and, together with the Initial Securities, the "Securities"):


                                             ARTICLE I

                   Definitions and Incorporation by Reference
                   ------------------------------------------
                  SECTION 1.01.  Definitions.
                                 ------------

                  "Additional Assets" means:

                  (a)  any  Property   (other  than  cash,   cash   equivalents,
         securities  and inventory) to be owned by the Company or any Restricted
         Subsidiary and used in a Related Business; or

                  (b)  Capital  Stock  of a Person  that  becomes  a  Restricted
         Subsidiary as a result of the  acquisition of that Capital Stock by the
         Company or another Restricted Subsidiary from any Person other than the
         Company or an Affiliate of the Company; provided, however, that, in the
         case of this clause (b), the Restricted Subsidiary is primarily engaged
         in a Related Business.

                  "Affiliate" of any specified Person means:

                  (a) any other Person  directly or  indirectly  controlling  or
         controlled  by or under  direct or indirect  common  control  with that
         specified Person, or

                  (b) any other  Person  who is a  director  or  officer of that
         specified Person.



<PAGE>

                                                                               2


                  For the purposes of this definition,  "control" when used with
respect to any Person means the power to direct the  management  and policies of
that Person,  directly or  indirectly,  whether  through the ownership of voting
securities,   by  contract  or  otherwise;   and  the  terms  "controlling"  and
"controlled" have meanings correlative to the foregoing. For purposes of Section
4.09  and  Section  4.07  and  the  definition  of  "Additional   Assets"  only,
"Affiliate"  shall also mean any Beneficial Owner of shares  representing 10% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of
the Company or of rights or warrants to purchase  that Voting Stock  (whether or
not  currently  exercisable)  and any  Person who would be an  Affiliate  of any
Beneficial Owner pursuant to the first sentence hereof.

                  "Asset  Sale"  means any sale,  lease,  transfer,  issuance or
other disposition (or series of related sales, leases,  transfers,  issuances or
dispositions)  by  the  Company  or any  Restricted  Subsidiary,  including  any
disposition by means of a merger,  consolidation  or similar  transaction  (each
referred to for the purposes of this definition as a "disposition"), of

                  (a) any shares of  Capital  Stock of a  Restricted  Subsidiary
         (other than directors' qualifying shares),

                  (b) all or  substantially  all the assets of any  division  or
         line of business of the Company or any Restricted Subsidiary,

                  (c) in  the  case  of any  disposition  by  the  Company  or a
         Restricted Subsidiary to any Person, any other assets of the Company or
         any Restricted Subsidiary outside of the ordinary course of business of
         the Company or such Restricted Subsidiary, or

                  (d) in  the  case  of any  disposition  by  the  Company  to a
         Restricted  Subsidiary of the Company, any other assets of the Company,
         other than  dispositions  in the  ordinary  course of  business  of raw
         materials to a Restricted  Subsidiary to be used in the  manufacture of
         finished goods, of finished goods to a Restricted Subsidiary for resale
         by the Restricted Subsidiary or its designee or of work in process to a
         Restricted Subsidiary,



<PAGE>

                                                                               3



other than, in the case of clause (a), (b), (c) or (d) above,

                  (1) any disposition by a Restricted  Subsidiary to the Company
         or  by  the  Company  or  a  Restricted   Subsidiary  to  a  Restricted
         Subsidiary,

                  (2) any disposition that constitutes a Permitted Investment or
         Restricted Payment permitted by Section 4.05,

                  (3) any  disposition  effected  in  compliance  with the first
         paragraph in Section 5.01,

                  (4) a sale of accounts  receivables  and related assets of the
         type specified in the definition of "Qualified Receivables Transaction"
         to a Receivables Entity,

                  (5) a transfer of accounts  receivables  and related assets of
         the  type  specified  in  the  definition  of  "Qualified   Receivables
         Transaction"  (or  a  fractional   undivided  interest  therein)  by  a
         Receivables   Entity  in  connection   with  a  Qualified   Receivables
         Transaction, and

                  (6) a transfer of accounts receivable of the type specified in
         the definition of "Credit  Facility" that is permitted under clause (b)
         of the second paragraph of Section 4.04.

                  Notwithstanding  the foregoing,  if at any time, the aggregate
Fair Market Value of assets disposed of by the Company to its Subsidiaries since
the Issue Date, other than (a) Permitted  Investments  comprised of cash or cash
equivalents,  (b) dispositions pursuant to paragraphs (4), (5) and (6) above and
(c)  dispositions by the Company to a Restricted  Subsidiary of raw materials to
be used in the  manufacture of finished  goods, of finished goods and of work in
process,  exceeds 10% of Consolidated Tangible Assets, all asset dispositions in
excess thereof shall be treated as Asset Sales subject to the  restrictions  set
forth in Section 4.07. For purposes of this paragraph, the aggregate Fair Market
Value of assets so  transferred at any time shall be calculated by using the sum
of the  Fair  Market  Value  of each  asset  disposition  as of the  date of its
disposition.



<PAGE>

                                                                               4


                  "Attributable  Debt"  in  respect  of  a  Sale  and  Leaseback
Transaction means, at any date of determination,

                  (a) if the Sale and Leaseback  Transaction  is a Capital Lease
         Obligation,  the amount of Debt  represented  thereby  according to the
         definition of "Capital Lease Obligation", and

                  (b) in all other instances, the greater of:

                           (1) the Fair Market Value of the  Property subject to
                  the Sale and Leaseback Transaction, and


                           (2) the present  value  (discounted  at the  interest
                  rate  borne by the  Securities,  compounded  annually)  of the
                  total obligations of the lessee for rental payments during the
                  remaining term of the lease included in the Sale and Leaseback
                  Transaction (including any period for which the lease has been
                  extended).

                  "Average Life" means,  as of any date of  determination,  with
respect to any Debt or Preferred Stock, the quotient obtained by dividing:

                  (a) the sum of the product of the numbers of years (rounded to
         the nearest  one-twelfth of one year) from the date of determination to
         the dates of each successive  scheduled  principal payment of that Debt
         or redemption or similar  payment with respect to that Preferred  Stock
         multiplied by the amount of the payment by

                  (b) the sum of all payments of this kind.

                  "Beneficial Owner" means a beneficial owner as defined in Rule
13d-3 under the Exchange Act, except that:

                  (a) a Person will be deemed to be the Beneficial  Owner of all
         shares that the Person has the right to acquire,  whether that right is
         exercisable immediately or only after the passage of time,

                  (b) for purposes of clause (a) of the definition of "Change of
         Control",  Permitted Holders will be deemed to be the Beneficial Owners
         of any Voting Stock of a corporation  or other legal entity held by any
         other  corporation  or  other  legal  entity  so long as the  Permitted
         Holders  Beneficially Own,  directly or indirectly,  in the aggregate a
         majority of the total



<PAGE>

                                                                               5


         voting  power of the Voting Stock of  that corporation  or other  legal
         entity, and

                  (c) for purposes of clause (b) of the definition of "Change of
         Control",  any  "person"  or  "group"  (as those  terms are  defined in
         Sections  13(d)  and  14(d)  of  the  Exchange  Act  or  any  successor
         provisions to either of the foregoing),  including any group acting for
         the purpose of  acquiring,  holding,  voting or disposing of securities
         within the meaning of Rule  13d-5(b)(1)  under the Exchange Act,  other
         than any one or more of the  Permitted  Holders,  shall be deemed to be
         the  Beneficial  Owners of any Voting Stock of a  corporation  or other
         legal entity held by any other corporation or legal entity ("the parent
         corporation"),  so long as that  person  or  group  Beneficially  Owns,
         directly or indirectly, in the aggregate a majority of the total voting
         power of the Voting Stock of that parent corporation.

The term "Beneficially Own" shall have a corresponding meaning.

                  "Board  of  Directors"  means the  Board of  Directors  of the
Company  (or,  in  the  case  of  Section  4.09(2),  the  applicable  Restricted
Subsidiary)  or any committee  thereof duly  authorized to act on behalf of such
Board.

                  "Board  Resolution" means a copy of a resolution  certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification.

                  "Business Day" means each day that is not a Legal Holiday.

                  "Capital Lease Obligations" means any obligation under a lease
that  is  required  to  be  capitalized  for  financial  reporting  purposes  in
accordance  with GAAP;  and the amount of Debt  represented  by that  obligation
shall be the capitalized amount of the obligations determined in accordance with
GAAP; and the Stated  Maturity  thereof shall be the date of the last payment of
rent or any other amount due under that lease prior to the first date upon which
that lease may be terminated  by the lessee  without  payment of a penalty.  For
purposes of Section 4.06, a Capital Lease  Obligation shall be deemed secured by
a Lien on the Property being leased.



<PAGE>

                                                                               6



                  "Capital Stock" means, with respect to any Person,  any shares
or other  equivalents  (however  designated) of any class of corporate  stock or
partnership interests or any other participations,  rights, warrants, options or
other  interests in the nature of an equity  interest in that Person,  including
Preferred  Stock,  but excluding any debt security  convertible or  exchangeable
into that equity interest.

                  "Capital  Stock  Sale  Proceeds"   means  the  aggregate  cash
proceeds  received  by the  Company  from the  issuance or sale (other than to a
Subsidiary  of  the  Company  or an  employee  stock  ownership  plan  or  trust
established by the Company or the Subsidiary for the benefit of their employees)
by the Company of its Capital  Stock (other than  Disqualified  Stock) after the
Issue Date, net of attorneys' fees,  accountants' fees,  initial  purchasers' or
placement agents' fees,  discounts or commissions and brokerage,  consultant and
other fees actually  incurred in connection with the issuance or sale and net of
taxes paid or payable as a result thereof.

                  "Change  of  Control"  means  the  occurrence  of  any  of the
following events:

                  (a) prior to the first Public Equity  Offering that results in
         a Public  Market,  the  Permitted  Holders  cease to be the  Beneficial
         Owners, directly or indirectly, of a majority of the total voting power
         of the Voting Stock of the Company, whether as a result of the issuance
         of securities of the Company, any merger, consolidation, liquidation or
         dissolution  of  the  Company,  any  direct  or  indirect  transfer  of
         securities by the Permitted Holders or otherwise; or

                  (b) on or after the first Public Equity  Offering that results
         in a Public Market,  if any "person" or "group" (as such terms are used
         in  Sections  13(d)  and  14(d) of the  Exchange  Act or any  successor
         provisions to either of the foregoing),  including any group acting for
         the purpose of  acquiring,  holding,  voting or disposing of securities
         within the meaning of Rule  13d-5(b)(1)  under the Exchange Act,  other
         than any one or more of the Permitted  Holders,  becomes the Beneficial
         Owner, directly or indirectly, of 35% or more of the total voting power
         of the  Voting  Stock  of the  Company;  provided,  however,  that  the
         Permitted Holders are the Beneficial Owners, directly or indirectly, in
         the  aggregate of a lesser  percentage of the total voting power of the
         Voting  Stock of the  Company  than that  other  person  or group;  and
         provided further, that the



<PAGE>

                                                                               7


         provisions of this clause (b) will not apply to Voting Trustees serving
         in that capacity under the Voting Trust Arrangement; or

                  (c) the sale, transfer, assignment, lease, conveyance or other
         disposition,  directly or indirectly,  of all or substantially  all the
         assets of the Company and the Restricted Subsidiaries,  considered as a
         whole (other than a  disposition  of assets as an entirety or virtually
         as an entirety to a Wholly Owned  Restricted  Subsidiary or one or more
         Permitted  Holders)  shall  have  occurred,   or  the  Company  merges,
         consolidates  or amalgamates  with or into any other Person (other than
         one or more  Permitted  Holders) or any other Person (other than one or
         more Permitted  Holders)  merges,  consolidates or amalgamates  with or
         into the Company,  in any event  pursuant to a transaction in which the
         outstanding  Voting  Stock  of the  Company  is  reclassified  into  or
         exchanged  for  cash,   securities  or  other   Property,   other  than
         transaction where:

                           (1) the  outstanding Voting  Stock of the Company  is
                  reclassified  into  or exchanged for other Voting Stock of the
                  Company or  for  Voting Stock of  the surviving corporation or
                  transferee, and

                           (2) the Holders of  the  Voting  Stock of the Company
                  immediately   prior  to  the  transaction  own,   directly  or
                  indirectly,  not less than a majority  of the Voting  Stock of
                  the  Company  or  the  surviving   corporation  or  transferee
                  immediately  after the  transaction and in  substantially  the
                  same proportion as before the transaction; or

                  (d) during any period of two  consecutive  years,  individuals
         who at the beginning of that period  constituted the Board of Directors
         (together with any new directors  whose election or appointment by such
         Board or whose  nomination  for  election  by the  shareholders  of the
         Company was  approved by a vote of not less than  three-fourths  of the
         directors  then  still in  office  who  were  either  directors  at the
         beginning of that period or whose  election or nomination  for election
         was previously so approved or by a vote of the Voting Trustees pursuant
         to the terms of the Voting Trust  Arrangement)  cease for any reason to
         constitute a majority of the Board of Directors then in office; or



<PAGE>

                                                                               8


                  (e) the  shareholders  of the Company  shall have approved any
         plan of liquidation or dissolution of the Company.

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

                  "Commodity Price Protection  Agreement" means, in respect of a
Person,  any  forward  contract,  commodity  swap  agreement,  commodity  option
agreement or other  similar  agreement or  arrangement  designed to protect that
Person against fluctuations in commodity prices.

                  "Company"  means  the  party  named as such in this  Indenture
until a successor replaces it pursuant to the applicable  provisions hereof 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.

                  "Consolidated  Current  Liabilities"  means, as of any date of
determination,  the  aggregate  amount of  liabilities  of the  Company  and its
consolidated Restricted Subsidiaries which may properly be classified as current
liabilities (including taxes accrued as estimated), after eliminating:

                  (a)  all  intercompany  items  between  the  Company  and  any
         Restricted Subsidiary or between Restricted Subsidiaries, and

                  (b) all current maturities of long-term Debt.

                  "Consolidated  Fixed Charges" means, for any period, the total
interest  expense (net of interest  income) of the Company and its  consolidated
Restricted Subsidiaries, plus, to the extent not included in such total interest
expense,   and  to  the  extent  Incurred  by  the  Company  or  its  Restricted
Subsidiaries,

                  (a) interest expense  attributable to leases constituting part
         of a Sale and Leaseback Transaction and to Capital Lease Obligations,

                  (b)  amortization  of debt  discount and debt  issuance  cost,
         including commitment fees,

                  (c) capitalized interest,

                  (d) non-cash interest expense,



<PAGE>

                                                                               9


                  (e)  commissions,  discounts  and other fees and charges  owed
         with respect to letters of credit and bankers' acceptance financing,

                  (f)  net  costs   associated  with  Interest  Rate  Agreements
         (including amortization of fees),

                  (g) Disqualified Stock Dividends,

                  (h) Preferred Stock Dividends,

                  (i)  interest  Incurred  in  connection  with  Investments  in
         discontinued operations,

                  (j)  interest  accruing on any Debt of any other Person to the
         extent  that  Debt  is  Guaranteed  by the  Company  or any  Restricted
         Subsidiary, and

                  (k) the cash  contributions  to any employee  stock  ownership
         plan or similar trust to the extent those contributions are used by the
         plan or trust to pay  interest  or fees to any Person  (other  than the
         Company) in connection with Debt Incurred by the plan or trust.

                  Notwithstanding  anything to the  contrary  contained  herein,
commissions,  discounts, yield and other fees and charges Incurred in connection
with any transaction (including,  without limitation,  any Qualified Receivables
Transaction)  pursuant to which the Company or any Subsidiary of the Company may
sell, convey or otherwise  transfer or grant a security interest in any accounts
receivable  or  related  assets  of the  type  specified  in the  definition  of
"Qualified  Receivables  Transaction"  shall be included in  Consolidated  Fixed
Charges.

                  "Consolidated  Fixed Charges  Coverage Ratio" means, as of any
date of determination, the ratio of:

                  (a) the  aggregate  amount of EBITDA for the most  recent four
         consecutive  fiscal  quarters  ending  at least  45 days  prior to such
         determination date to

                  (b) Consolidated Fixed Charges for those four fiscal quarters;

provided, however, that:
- --------  -------

                           (1) if

                                    (A) since  the  beginning of that period the
                           Company or any Restricted Subsidiary has



<PAGE>

                                                                              10


                           Incurred any  Debt that remains outstanding or Repaid
                           any Debt, or

                                    (B) the transaction  giving rise to the need
                           to calculate the Consolidated  Fixed Charges Coverage
                           Ratio involves an Incurrence or Repayment of Debt,

         Consolidated  Fixed Charges for that period shall be  calculated  after
         giving  effect on a pro forma basis to that  Incurrence or Repayment as
         if the Debt was  Incurred  or Repaid  on the first day of that  period,
         provided  that, in the event of any Repayment of Debt,  EBITDA for that
         period  shall  be  calculated  as if the  Company  or  such  Restricted
         Subsidiary had not earned any interest  income  actually  earned during
         such period in respect of the funds used to Repay such Debt, and

                           (2) if

                                    (A) since the  beginning  of that period the
                           Company or any Restricted  Subsidiary shall have made
                           any  Asset  Sale  or  an  Investment  (by  merger  or
                           otherwise)  in  any  Restricted  Subsidiary  (or  any
                           Person which becomes a Restricted  Subsidiary)  or an
                           acquisition  of  Property  which  constitutes  all or
                           substantially all of an operating unit of a business,

                                    (B) the transaction  giving rise to the need
                           to calculate the Consolidated  Fixed Charges Coverage
                           Ratio   involves   an  Asset  Sale,   Investment   or
                           acquisition, or

                                    (C) since the  beginning  of that period any
                           Person   (that   subsequently   became  a  Restricted
                           Subsidiary  or was merged with or into the Company or
                           any Restricted Subsidiary since the beginning of that
                           period)   shall   have  made  such  an  Asset   Sale,
                           Investment or acquisition,

EBITDA for that period shall be calculated  after giving pro forma effect to the
Asset  Sale,  Investment  or  acquisition  as if the Asset Sale,  Investment  or
acquisition occurred on the first day of that period.

                  If any Debt bears a  floating  rate of  interest  and is being
given pro forma effect, the interest expense on that Debt shall be calculated as
if the base interest rate



<PAGE>

                                                                              11


in effect for the  floating  rate of interest on the date of  determination  had
been the  applicable  base  interest  rate for the entire  period  (taking  into
account any Interest Rate  Agreement  applicable to that Debt if the  applicable
Interest  Rate  Agreement has a remaining  term in excess of 12 months).  In the
event the Capital Stock of any Restricted  Subsidiary is sold during the period,
the Company  shall be deemed,  for purposes of clause (1) above,  to have Repaid
during  that  period the Debt of that  Restricted  Subsidiary  to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for that
Debt after the sale.

                  "Consolidated  Net  Income"  means,  for any  period,  the net
income  (loss)  of the  Company  and its  consolidated  Subsidiaries;  provided,
                                                                       --------
however, that there shall not be included in such Consolidated Net Income:
- -------

                  (a) any net  income  (loss)  of any  Person  (other  than  the
         Company) if that Person is not a Restricted Subsidiary, except that:

                           (1) subject to the exclusion  contained in clause (d)
                  below,  the  Company's  equity  in the net  income of any such
                  Person for that period shall be included in such  Consolidated
                  Net Income up to the aggregate  amount of cash  distributed by
                  that Person  during that period to the Company or a Restricted
                  Subsidiary as a dividend or other  distribution  (subject,  in
                  the case of a dividend or other  distribution  to a Restricted
                  Subsidiary, to the limitations contained in clause (c) below),
                  and

                           (2) the Company's equity in a net loss of that Person
                  other than an Unrestricted Subsidiary for the specified period
                  shall be included in determining such Consolidated Net Income,

                  (b) for purposes of Section 4.05 only,  any net income  (loss)
         of any  Person  acquired  by  the  Company  or any of its  consolidated
         Subsidiaries in a pooling of interests transaction for any period prior
         to the date of the acquisition,

                  (c) any net income (loss) of any Restricted  Subsidiary if the
         Restricted   Subsidiary  is  subject  to   restrictions,   directly  or
         indirectly, on the payment of



<PAGE>

                                                                              12


                  dividends  or  the  making  of   distributions,   directly  or
                  indirectly, to the Company, except that:

                           (1) subject to the exclusion  contained in clause (d)
                  below,   the  Company's  equity  in  the  net  income  of  the
                  Restricted  Subsidiary  for the period  shall be  included  in
                  Consolidated  Net Income up to the aggregate amount that would
                  have  been  permitted  at  the  date  of  determination  to be
                  dividended to the Company or another Restricted  Subsidiary by
                  that Restricted  Subsidiary  without prior approval by a third
                  party (that has not been  obtained),  pursuant to the terms of
                  its  charter  and  all  agreements,   instruments,  judgments,
                  decrees,  orders,  statutes,  rules and government regulations
                  applicable to that Restricted  Subsidiary or its shareholders,
                  during  that  period  as  a  dividend  or  other  distribution
                  (subject,  in the case of a dividend or other  distribution to
                  another Restricted Subsidiary,  to the limitation contained in
                  this clause), and

                           (2)  the  Company's  equity  in a  net  loss  of  the
                  Restricted  Subsidiary  for such  period  shall be included in
                  determining such Consolidated Net Income,

                  (d) any gain  (but not loss)  realized  upon the sale or other
         disposition  of any Property of the Company or any of its  consolidated
         Subsidiaries (including pursuant to any Sale and Leaseback Transaction)
         that is not sold or  otherwise  disposed of in the  ordinary  course of
         business,

                  (e) any extraordinary gain or loss,

                  (f)  the   cumulative   effect  of  a  change  in   accounting
         principles,

                  (g) any  unrealized  gains or  losses  of the  Company  or its
         consolidated Subsidiaries on any Hedging Obligations, and

                  (h) any non-cash  compensation  expense realized for grants of
         performance  shares,   stock  options  or  other  rights  to  officers,
         directors  and employees of the Company or any  Restricted  Subsidiary,
         provided that those shares,  options or other rights can be redeemed at
         the option of the holder only for Capital  Stock of the Company  (other
         than Disqualified Stock).



<PAGE>

                                                                              13


Notwithstanding the foregoing, for purposes of Section 4.05 only, there shall be
excluded  from  Consolidated  Net Income any  dividends,  repayments of loans or
advances or other  transfers  of assets from  Unrestricted  Subsidiaries  to the
Company or a Restricted  Subsidiary to the extent the  dividends,  repayments or
transfers  increase  the  amount of  Restricted  Payments  permitted  under that
covenant pursuant to clause (c)(4) thereof.

                  "Consolidated  Net Tangible  Assets" means,  as of any date of
determination,  the sum of the  amounts  that  would  appear  on a  consolidated
balance sheet of the Company and its consolidated Restricted Subsidiaries as the
total  assets  (less  accumulated  depreciation,  amortization,  allowances  for
doubtful  receivables,  other applicable  reserves and other properly deductible
items) of the Company and its  Restricted  Subsidiaries,  after giving effect to
purchase   accounting  and  after  deducting  therefrom   Consolidated   Current
Liabilities  and,  to the extent  otherwise  included,  the  amounts of (without
duplication):

                  (a) the  excess of cost over  fair  market  value of assets or
         businesses acquired;

                  (b) any  revaluation or other write-up in book value of assets
         subsequent  to the  last  day  of the  fiscal  quarter  of the  Company
         immediately  preceding  the  Issue  Date as a result of a change in the
         method of valuation in accordance with GAAP;

                  (c)   unamortized   debt   discount  and  expenses  and  other
         unamortized deferred charges, goodwill,  patents,  trademarks,  service
         marks, trade names, copyrights, licenses, organization or developmental
         expenses and other intangible items;

                  (d) minority  interests in consolidated  Subsidiaries  held by
         Persons other than the Company or any Restricted Subsidiary;

                  (e) treasury stock;

                  (f) cash or  securities  set aside  and held in a  sinking  or
         other analogous fund established for the purpose of redemption or other
         retirement  of  Capital  Stock to the  extent  such  obligation  is not
         reflected in Consolidated Current Liabilities; and

                  (g) Investments in and assets of Unrestricted Subsidiaries.



<PAGE>

                                                                              14


                  "Consolidated  Tangible  Assets"  means,  as of  any  date  of
determination,  the sum of the amounts of  Consolidated  Net Tangible Assets and
Consolidated Current Liabilities as of such date.

                  "Credit  Facilities" means, with respect to the Company or any
Restricted  Subsidiary,   one  or  more  debt  or  commercial  paper  facilities
(including  related   Guarantees)  with  banks,   investment  banks,   insurance
companies,  mutual funds or other institutional  lenders (including our Existing
Bank Credit  Facilities),  providing  for revolving  credit  loans,  term loans,
receivables or inventory financing (including through the sale of receivables or
inventory to  institutional  lenders or to special  purpose,  bankruptcy  remote
entities formed to borrow from  institutional  lenders against those receivables
or inventory) or trade or standby letters of credit,  in each case together with
any Refinancings thereof by a lender or syndicate of lenders;  provided that, in
the case of a transaction in which any accounts receivable are sold, conveyed or
otherwise  transferred  by the  Company  or any of its  subsidiaries  to another
Person other than a Receivables  Entity,  then that transaction must satisfy the
following three conditions:

                  (a)  if  the  transaction  involves  a  transfer  of  accounts
         receivable  with Fair  Market  Value  equal to or  greater  than  $25.0
         million,  the Board of Directors  shall have  determined  in good faith
         that the transaction is economically fair and reasonable to the Company
         or the  Subsidiary  that sold,  conveyed or  transferred  the  accounts
         receivable,

                  (b) the sale, conveyance or transfer of accounts receivable by
         the Company or the Subsidiary is made at Fair Market Value and

                  (c) the financing  terms,  covenants,  termination  events and
         other  provisions  of  the  transaction   shall  be  market  terms  (as
         determined in good faith by the Board of Directors if Board approval is
         required under clause (a)).

                  "Currency Exchange Protection  Agreement" means, in respect of
a Person,  any foreign  exchange  contract,  currency swap  agreement,  currency
option or other similar agreement or arrangement designed to protect that Person
against fluctuations in currency exchange rates.



<PAGE>

                                                                              15


                  "Debt"  means,  with  respect  to any  Person  on any  date of
determination (without duplication):

                  (a) the principal of and premium (if any) in respect of:

                           (1) debt of the Person for money borrowed, and

                           (2) debt  evidenced  by notes,  debentures,  bonds or
                  other similar  instruments for the payment of which the Person
                  is responsible or liable;

                  (b)  all  Capital  Lease  Obligations  of the  Person  and all
         Attributable Debt in respect of Sale and Leaseback Transactions entered
         into by the Person;

                  (c) all  obligations  of the  Person  issued or assumed as the
         deferred  purchase price of Property,  all conditional sale obligations
         of the  Person  and all  obligations  of the  Person  under  any  title
         retention  agreement (but excluding  trade accounts  payable arising in
         the ordinary course of business);

                  (d) all obligations of the Person for the reimbursement of any
         obligor on any letter of credit,  banker's acceptance or similar credit
         transaction  (other than  obligations with respect to letters of credit
         securing  obligations (other than obligations  described in (a) through
         (c) above)  entered  into in the  ordinary  course of  business  of the
         Person to the extent those  letters of credit are not drawn upon or, if
         and to the extent drawn upon,  the drawing is  reimbursed no later than
         the third Business Day following  receipt by the Person of a demand for
         reimbursement following payment on the letter of credit);

                  (e) the amount of all  obligations  of the Person with respect
         to the  Repayment  of any  Disqualified  Stock or, with  respect to any
         Subsidiary of the Person,  any Preferred Stock (but excluding,  in each
         case, any accrued dividends);

                  (f) all  obligations  of the type  referred  to in clauses (a)
         through (e) of other Persons and all dividends of other Persons for the
         payment of which,  in either case, the Person is responsible or liable,
         directly or indirectly, as obligor,  guarantor or otherwise,  including
         by means of any Guarantee;



<PAGE>

                                                                              16


                  (g) all  obligations  of the type  referred  to in clauses (a)
         through (f) of other Persons secured by any Lien on any Property of the
         Person (whether or not such  obligation is assumed by the Person),  the
         amount of such obligation being deemed to be the lesser of the value of
         that Property or the amount of the obligation so secured; and

                  (h) to the extent not otherwise  included in this  definition,
         Hedging Obligations of such Person.

The amount of Debt of any Person at any date shall be the outstanding balance at
that date of all  unconditional  obligations as described  above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent  obligations at that date. The amount of Debt represented by a
Hedging Obligation shall be equal to:

                  (1) zero if the Hedging  Obligation has been Incurred pursuant
         to clause (e), (f) or (g) of the second paragraph of Section 4.04, or

                  (2) if the  Hedging  Obligation  is not  Incurred  pursuant to
         clauses (e), (f) or (g) of the second  paragraph of Section 4.04,  then
         105% of the aggregate net amount, if any, that would then be payable by
         the Company and any Restricted  Subsidiary on a per counter-party basis
         pursuant   to   Section    6(e)   of   the   ISDA   Master    Agreement
         (Multicurrency-Cross Border) in the form published by the International
         Swaps and Derivatives  Association in 1992 (the "ISDA Form"), as if the
         date of determination  were a date that constitutes or is substantially
         equivalent to an Early  Termination  Date, as defined in the ISDA Form,
         with respect to all  transactions  governed by the ISDA Form,  plus the
         equivalent amount under the terms of any other Hedging Obligations that
         are not  Incurred  pursuant  to clauses  (e),  (f) or (g) of the second
         paragraph  of Section  4.04,  each such amount to be  estimated in good
         faith by the Company.

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

                  "Disqualified  Stock" means,  with respect to any Person,  any
Capital  Stock that by its terms (or by the terms of any security  into which it
is convertible or for which it



<PAGE>

                                                                              17


is  exchangeable,  in  either  case at the  option  of the  holder  thereof)  or
otherwise:

                  (a) matures or is mandatorily redeemable pursuant to a sinking
         fund obligation or otherwise,

                  (b) is or  may  become  redeemable  or  repurchaseable  at the
         option of the holder thereof, in whole or in part, or

                  (c) is convertible or exchangeable at the option of the holder
         thereof for Debt or Disqualified  Stock, on or prior to, in the case of
         clause (a), (b) or (c), the first anniversary of the Stated Maturity of
         the Securities.

                  "Disqualified   Stock  Dividends"  means  all  dividends  with
respect to Disqualified Stock of the Company held by Persons other than a Wholly
Owned  Restricted  Subsidiary.  The amount of any dividend of this kind shall be
equal to the quotient of the dividend divided by the difference  between one and
the maximum  statutory  federal  income tax rate  (expressed as a decimal number
between 1 and 0) then applicable to the Company.

                  "Dollar  Notes" means  the Company's 11 5/8% Senior  Notes due
2008  denominated in U.S.  dollars and issued pursuant to an indenture dated the
date hereof between the Company and Citibank, N.A. as trustee.

                  "EBITDA"  means,  for any period,  an amount equal to, for the
Company and its consolidated Restricted Subsidiaries:

                  (a) the sum of Consolidated  Net Income for that period,  plus
         the following to the extent reducing  Consolidated  Net Income for that
         period:

                           (1) the  provision  for  taxes  based  on  income  or
                  profits or utilized in computing net loss,

                           (2) Consolidated Fixed Charges,

                           (3) depreciation,

                           (4) amortization of intangibles,

                           (5) any other non-cash items (other than any non-cash
                  item to the extent that it represents an accrual of or reserve
                  for cash expenditures in any future period), and



<PAGE>

                                                                              18


                           (6) any one-time, non-recurring expenses relating to,
                  or arising from, any closures of  manufacturing  facilities on
                  or after  the Issue  Date,  in each  case  incurred  within 12
                  months after such closure, minus

                  (b) all non-cash items increasing  Consolidated Net Income for
         that period  (other than any such  non-cash  item to the extent that it
         will result in the receipt of cash payments in any future period).

Notwithstanding  the  foregoing  clause  (a),  the  provision  for taxes and the
depreciation,  amortization and non-cash items of a Restricted  Subsidiary shall
be added to Consolidated Net Income to compute EBITDA only to the extent (and in
the same  proportion)  that the net  income of that  Restricted  Subsidiary  was
included  in  calculating  Consolidated  Net Income and only if a  corresponding
amount would be permitted at the date of  determination  to be dividended to the
Company by that Restricted  Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments,   decrees,  orders,  statutes,  rules  and  governmental  regulations
applicable to that Restricted Subsidiary or its shareholders.

                  "Equipment   Financing   Transaction"  means  any  arrangement
 (together with any Refinancings  thereof) with any Person pursuant to which the
 Company or any Restricted Subsidiary Incurs Debt secured by a Lien on equipment
 or equipment related property of the Company or any Restricted Subsidiary.

                  "Event of Default" has the meaning set forth in Section 6.01

                  "Exchange Act" means the Securities Exchange Act of 1934.

                  "Existing Bank Credit Facilities" means:

                  (a) the Bridge Credit Agreement, dated as of January 31, 2000,
         among the  Company,  Bank of  America,  N.A. as  administrative  agent,
         collateral agent and lender,  The Bank of Nova Scotia,  Citicorp U.S.A.
         Incorporated,  Morgan  Guaranty Trust Company of New York and Bank One,
         N.A., as amended as of July 31, 2000 and September 29, 2000,

                  (b) the Amended and  Restated  1999 180 Day Credit  Agreement,
         dated as of January 31, 2000, among the Company,  Bank of America, N.A.
         as administrative agent,



<PAGE>

                                                                              19


         collateral agent and lender,  The Bank of Nova Scotia,  Citicorp U.S.A.
         Incorporated  and Morgan Guaranty Trust Company of New York, as amended
         as of July 31, 2000, September 29, 2000 and October 13, 2000,

                  (c) the Amended and  Restated  1997 364 Day Credit  Agreement,
         dated as of January 31, 2000, among the Company,  Bank of America, N.A.
         as administrative agent,  collateral agent and lender, The Bank of Nova
         Scotia, Citicorp U.S.A. Incorporated,  Morgan Guaranty Trust Company of
         New York, Commerzbank AG, Credit Lyonnais, Bank One, N.A., The Sumitomo
         Bank,  Ltd., ABN AMRO Bank N.V.,  Banca  Commerciale  Italiana,  Banque
         Nationale de Paris,  Criplo-Cassa di Risparmio delle Provincie Lombarde
         S.p.A.,  Societe Generale,  Mellon Bank National Association,  KBC Bank
         N.V.,  UniCredito  Italiano S.p.A.,  Deutsche Bank  Aktiengesellschaft,
         Wachovia Bank N.A.,  Bankers Trust Company and First  Hawaiian Bank, as
         amended as of July 31, 2000, September 29, 2000 and October 13, 2000.

                  (d) the 1997 Second  Amended and  Restated  Credit  Agreement,
         dated as of January 31, 2000, among the Company,  Bank of America, N.A.
         as administrative agent,  collateral agent and lender, The Bank of Nova
         Scotia, Citicorp U.S.A. Incorporated,  Morgan Guaranty Trust Company of
         New York,  Commerzbank AG, Credit  Lyonnais,  The Chase Manhattan Bank,
         Bank One,  N.A., The Sumitomo  Bank,  Ltd.,  ABN AMRO Bank N.V.,  Banca
         Commerciale  Italiana,  Banque  Nationale  de Paris,  Cariplo-Cassa  di
         Risparmio delle Provincie Lombarde S.p.A., CIBC Inc., The Royal Bank of
         Canada, The Sanwa Bank, Limited,  The  Toronto-Dominion  Bank, KBC Bank
         N.V., PNC Bank N.A., Societe Generale,  BankBoston N.A., The Industrial
         Bank of Japan,  Limited,  Mellon Bank National  Association,  The Tokai
         Bank  Limited,  The Bank of  Tokyo-Mitsubishi  Limited,  Union  Bank of
         California,  N.A.  Banca Monte dei Paschi di Siena  S.p.A.,  UniCredito
         Italiano  S.p.A.,  Deutsche  Bank  Aktiengesellschaft,  San  Paolo  IMI
         S.p.A., Cooperative Centrale  Raiffeisent--Boerenleenbank B.A., UBS AG,
         Wachovia Bank N.A.,  Bankers Trust Company and First  Hawaiian Bank, as
         amended as of July 31, 2000, September 29, 2000 and October 13, 2000.

                  "Existing   Policies"  means  (1)  the  Company's  estate  tax
repurchase  policy under which the Company  repurchases  a portion of a deceased
stockholder's  shares to generate  funds for payment of estate taxes and (2) the
Company's  valuation  policy under which the Company obtains an annual valuation
of the Company's Voting Trust Certificates,  as both policies exist at the Issue
Date or as they may exist from time to



<PAGE>

                                                                              20


time,  provided that if either of these policies is materially amended after the
Issue Date in a manner less favorable to the Company than the policy as existing
on the  Issue  Date,  then that  amended  policy  shall be  deemed  not to be an
Existing Policy.

                  "Fair Market Value" means,  with respect to any Property,  the
price that could be negotiated in an arm's-length  free market  transaction, for
cash,  between a willing  seller and a willing  buyer,  neither of whom is under
undue  pressure or  compulsion  to complete  the  transaction.  For  purposes of
Section  4.05 and Section 4.07 and the  definitions  of  "Qualified  Receivables
Transaction"  and "Credit  Facilities",  Fair Market Value shall be  determined,
except as otherwise provided,

                  (a) if the  Property  has a Fair Market Value equal to or less
         than $25.0 million, by any Officer of the Company, or

                  (b) if the Property has a Fair Market Value in excess of $25.0
         million,  by a majority of the Board of  Directors  and  evidenced by a
         Board Resolution,  dated within 12 months of the relevant  transaction,
         delivered to the Trustee.

                  "Foreign   Restricted  Subsidiary"   means    any   Restricted
Subsidiary which is not organized under the laws of the United States of America
or any State thereof or the District of Columbia.

                  "GAAP"  means  United  States  generally  accepted  accounting
 principles as in effect from time to time, including those set forth:

                  (a) in  the  opinions  and  pronouncements  of the  Accounting
         Principles  Board  of  the  American   Institute  of  Certified  Public
         Accountants,

                  (b) in the  statements  and  pronouncements  of the  Financial
         Accounting Standards Board,

                  (c) in other  statements  by another  entity as  approved by a
         significant segment of the accounting profession, and

                  (d) the 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



<PAGE>

                                                                              21


         in staff accounting  bulletins and similar written  statements from the
         accounting staff of the Commission.

                  "Guarantee" means any obligation,  contingent or otherwise, of
any Person directly or indirectly  guaranteeing any Debt of any other Person and
any obligation, direct or indirect, contingent or otherwise, of that Person:

                  (a) to  purchase  or pay (or  advance or supply  funds for the
         purchase or payment of) the Debt of such other 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

                  (b)  entered  into for the  purpose of  assuring  in any other
         manner the  obligee  against  loss in respect  thereof  (in whole or in
         part);

provided, however, that the term "Guarantee" shall not include:
- --------  -------

                  (1)  endorsements  for  collection  or deposit in the ordinary
         course of business, or

                  (2) a  contractual  commitment  by one  Person  to  invest  in
         another Person for so long as the Investment is reasonably  expected to
         constitute a Permitted  Investment  under clause (a), (b) or (i) of the
         definition of "Permitted Investment".

The  term  "Guarantee"  used as a verb  has a  corresponding  meaning.  The term
"Guarantor" shall mean any Person Guaranteeing any obligation.

                  "Hedging  Obligation"  of any Person means any  obligation  of
that  Person  pursuant  to  any  Interest  Rate  Agreement,   Currency  Exchange
Protection Agreement,  Commodity Price Protection Agreement or any other similar
agreement or arrangement.

                  "Holder"  or  "Securityholder"  means the Person in whose name
the Security is registered on the Security register described in Section 2.04.

                  "Incur" means, with respect to any Debt or other obligation of
any  Person,  to  create,  issue,  incur (by  merger,  conversion,  exchange  or
otherwise),  extend, assume,  Guarantee or become liable in respect of that Debt
or other obligation or the recording, as required pursuant to GAAP or



<PAGE>

                                                                              22


otherwise,  of any Debt or  obligation  on the balance sheet of that Person (and
"Incurrence" and "Incurred"  shall have meanings  correlative to the foregoing);
provided,  however,  that a change in GAAP that results in an obligation of that
- --------   -------
Person  that exists at such time,  and is not  theretofore  classified  as Debt,
becoming Debt shall not be deemed an Incurrence of that Debt;  provided further,
                                                               ----------------
however, that any Debt or other obligations of a Person existing at the time the
- -------
Person becomes a Subsidiary  (whether by merger,  consolidation,  acquisition or
otherwise)  shall be deemed to be  Incurred  by that  Subsidiary  at the time it
becomes a Subsidiary; and provided further, however, that solely for purposes of
                          ----------------  -------
determining  compliance  with Section  4.04,  amortization  of debt  discount or
premium shall not be deemed to be the  Incurrence of Debt,  provided that in the
case of Debt sold at a discount or at a premium, the amount of the Debt Incurred
shall at all times be the aggregate principal amount at Stated Maturity.

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

                  "Independent  Financial  Advisor" means an investment  banking
firm of national  standing or any third party  appraiser  of national  standing,
provided that the firm or appraiser is not an Affiliate of the Company.

                  "Interest Rate Agreement" means, for any Person,  any interest
rate swap agreement,  interest rate option agreement or other similar  agreement
or arrangement designed to protect against fluctuations in interest rates.

                  "Investment"  by any Person means any direct or indirect  loan
(other than  advances to  customers  and  suppliers  in the  ordinary  course of
business  that are recorded as accounts  receivable on the balance sheet of that
Person),  advance or other extension of credit or capital contribution (by means
of  transfers  of cash or other  Property to others or payments  for Property or
services for the account or use of others,  or otherwise) to, or Incurrence of a
Guarantee of any  obligation  of, or purchase or  acquisition  of Capital Stock,
bonds, notes,  debentures or other securities or evidence of Debt issued by, any
other Person.  For purposes of Section 4.05,  Section 4.10 and the definition of
"Restricted Payment", Investment shall include the portion (proportionate to the
Company's equity interest in the Subsidiary) of the Fair Market Value of the net
assets of any  Subsidiary  of the  Company  at the time that the  Subsidiary  is
designated  an  Unrestricted   Subsidiary;   provided,   however,  that  upon  a
                                             --------    -------
redesignation of that Subsidiary as a Restricted  Subsidiary,  the Company shall
be



<PAGE>

                                                                              23


deemed to continue to have a permanent Investment in an Unrestricted  Subsidiary
of an amount (if positive) equal to:

                  (a) the Company's Investment in that Subsidiary at the time of
         such redesignation, less

                  (b)  the  portion   (proportionate  to  the  Company's  equity
         interest in such Subsidiary) of the Fair Market Value of the net assets
         of that  Subsidiary at the time of such  redesignation.  In determining
         the amount of any  Investment  made by transfer of any  Property  other
         than cash, the Property shall be valued at its Fair Market Value at the
         time of the Investment.

                  "Investment  Grade  Rating"  means a rating equal to or higher
than Baa3 (or the equivalent) by Moody's and BBB- (or the equivalent) by S&P.

                  "Issue Date" means the first date on which the  Securities are
initially issued.

                  "Issue Date Dollar  Notes"  means  Dollar  Notes issued on the
first date on which the Dollar Notes are initially issued.

                  "Lien" means, with respect to any Property of any Person,  any
mortgage  or  deed  of  trust,  pledge,   hypothecation,   assignment,   deposit
arrangement,  security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability),  encumbrance, preference,
priority or other security agreement or preferential  arrangement of any kind or
nature  whatsoever  on or with respect to that Property  (including  any Capital
Lease  Obligation,  conditional  sale or other title retention  agreement having
substantially  the same economic  effect as any of the foregoing or any Sale and
Leaseback Transaction).

                  "Moody's"  means  Moody's  Investors  Service,   Inc.  or  any
successor to the rating agency business thereof.

                  "Net  Available  Cash" from any Asset Sale means cash payments
received  therefrom  (including  any cash  payments  received by way of deferred
payment of principal pursuant to a note or installment  receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the



<PAGE>

                                                                              24


acquiring Person of Debt or other  obligations  relating to the Property that is
the subject of that Asset Sale or received in any other non-cash  form), in each
case net of:

                  (a) all legal,  title and recording tax expenses,  commissions
         and other fees (including,  without limitation,  brokers' or investment
         bankers'  commissions or fees) and expenses incurred,  and all Federal,
         state, provincial,  foreign and local taxes required to be accrued as a
         liability under GAAP, as a consequence of the Asset Sale,

                  (b) all  payments  made on any  Debt  that is  secured  by any
         Property subject to the Asset Sale, in accordance with the terms of any
         Lien upon or other security  agreement of any kind with respect to that
         Property, or which must by its terms, or in order to obtain a necessary
         consent to the Asset Sale, or by  applicable  law, be repaid out of the
         proceeds from the Asset Sale,

                  (c) all  distributions  and other payments required to be made
         to minority  interest  holders in  Subsidiaries  or joint ventures as a
         result of the Asset Sale, and

                  (d) the  deduction  of  appropriate  amounts  provided  by the
         seller as a reserve,  in accordance with GAAP,  against any liabilities
         associated with the Property disposed in the Asset Sale and retained by
         the Company or any Restricted Subsidiary after the Asset Sale.

                  "Officer"  means the Chief Executive  Officer,  the President,
the Chief  Financial  Officer,  the Treasurer or the Assistant  Treasurer of the
Company.

                  "Officers'  Certificate"  means a  certificate  signed  by two
Officers of the Company,  at least one of whom shall be the principal  executive
officer or  principal  financial  officer of the Company,  and  delivered to the
Trustee.

                  "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 or the Trustee.

                  "Permitted  Holders"  means the holders of Voting  Stock as of
the Issue  Date,  together  with any  Voting  Trustee  and any  Person  who is a
"Permitted  Transferee"  of  the  holders,  as  that  term  is  defined  in  the
Stockholders  Agreement  dated as of April 15, 1996  between the Company and the
stockholders of the Company party thereto as that



<PAGE>

                                                                              25


Stockholders  Agreement was in effect on the Issue Date, except that transferees
pursuant to Section 2.2(a)(x) of that Stockholders Agreement shall not be deemed
to be Permitted Transferees for purposes of the Indenture.

                  "Permitted  Investment" means any Investment by the Company or
a Restricted Subsidiary in:

                  (a) any  Restricted  Subsidiary or any Person that will,  upon
         the making of such Investment, become a Restricted Subsidiary, provided
         that the primary  business of the  Restricted  Subsidiary  is a Related
         Business;

                  (b) any Person if as a result of the Investment that Person is
         merged or  consolidated  with or into,  or  transfers or conveys all or
         substantially  all  its  Property  to,  the  Company  or  a  Restricted
         Subsidiary,  provided that the Person's  primary  business is a Related
         Business;

                  (c) Temporary Cash Investments;

                  (d)   receivables   owing  to  the  Company  or  a  Restricted
         Subsidiary,  if created or acquired in the ordinary  course of business
         and payable or  dischargeable in accordance with customary trade terms;
         provided,   however,   that  those  trade   terms  may   include   such
         --------    -------
         concessionary  trade terms as the Company or the Restricted  Subsidiary
         deems reasonable under the circumstances;

                  (e) payroll, travel and similar advances to cover matters that
         are expected at the time of those advances  ultimately to be treated as
         expenses  for  accounting  purposes  and that are made in the  ordinary
         course of business;

                  (f) loans  and  advances  to  employees  made in the  ordinary
         course of business consistent with past practices of the Company or the
         applicable  Restricted  Subsidiary,  as the case may be,  provided that
         those loans and  advances  do not exceed  $5.0  million at any one time
         outstanding;

                  (g)  stock,   obligations  or  other  securities  received  in
         settlement  of debts  created in the  ordinary  course of business  and
         owing to the Company or a Restricted  Subsidiary or in  satisfaction of
         judgments;



<PAGE>

                                                                              26


                  (h) any  Person to the extent the  Investment  represents  the
         non-cash  portion of the  consideration  received in connection with an
         Asset Sale consummated in compliance with Section 4.07;

                  (i) a  Receivables  Entity or any  Investment by a Receivables
         Entity in any other Person in connection  with a Qualified  Receivables
         Transaction,  including Investments of funds held in accounts permitted
         or required by the  arrangements  governing that Qualified  Receivables
         Transaction or any related  Indebtedness;  provided that any Investment
         in a  Receivables  Entity  is in the  form of a  Purchase  Money  Note,
         contribution of additional receivables or an equity interest;

                  (j)  customers  or  suppliers  of  the  Company  or any of its
         subsidiaries  in the form of  extensions  of  credit  or  transfers  of
         property,  to the extent otherwise  constituting an Investment,  and in
         the  ordinary  course of business and any  Investments  received in the
         ordinary  course of business in  satisfaction  or partial  satisfaction
         thereof;

                  (k) any Person if the Investments are outstanding on the Issue
         Date and not otherwise described in clauses (a) through (j) above; and

                  (l) any Person made for Fair  Market  Value that do not exceed
         $100.0 million outstanding at any one time in the aggregate.

         "Permitted Liens" means:

                  (a) Liens  (including,  without  limitation  and to the extent
         constituting a Lien,  negative  pledges) to secure Debt permitted to be
         Incurred  under  clause (b) of the second  paragraph  of Section  4.04,
         regardless of whether the Company and the Restricted  Subsidiaries  are
         actually subject to the covenant  contained in Section 4.04 at the time
         the Lien is Incurred;

                  (b) Liens  (including,  without  limitation  and to the extent
         constituting a Lien,  negative  pledges) to secure Debt permitted to be
         Incurred  under  clause (h) of the second  paragraph  of Section  4.04,
         regardless of whether the Company and the Restricted  Subsidiaries  are
         actually subject to the covenant  contained in Section 4.04 at the time
         the Lien is  Incurred,  provided  that  any  Lien of this  kind may not
         extend to any  Property  of the Company or any  Restricted  Subsidiary,
         other than the Property acquired, constructed or leased



<PAGE>

                                                                              27


         with the proceeds of  that Debt  and  any improvements or accessions to
         that Property;

                  (c) Liens for taxes,  assessments or  governmental  charges or
         levies on the Property of the Company or any  Restricted  Subsidiary if
         the same shall not at the time be delinquent or thereafter  can be paid
         without  penalty,   or  are  being  contested  in  good  faith  and  by
         appropriate  proceedings promptly instituted and diligently  concluded,
         provided that any reserve or other appropriate  provision that shall be
         required in conformity with GAAP shall have been made therefor;

                  (d) Liens imposed by law,  such as  carriers',  warehousemen's
         and mechanics'  Liens and other similar  Liens,  on the Property of the
         Company or any Restricted  Subsidiary arising in the ordinary course of
         business and securing  payment of obligations that are not more than 60
         days past due or are being  contested in good faith and by  appropriate
         proceedings;

                  (e) Liens on the  Property  of the  Company or any  Restricted
         Subsidiary  Incurred  in the  ordinary  course  of  business  to secure
         performance  of  obligations  with respect to  statutory or  regulatory
         requirements,  performance or  return-of-money  bonds,  surety bonds or
         other  obligations of a like nature and Incurred in a manner consistent
         with industry practice, including banker's liens and rights of set-off,
         in each case which are not Incurred in connection with the borrowing of
         money,  the  obtaining  of  advances  or credit or the  payment  of the
         deferred  purchase  price of Property and which do not in the aggregate
         impair in any material  respect the use of Property in the operation of
         the business of the Company and the Restricted  Subsidiaries taken as a
         whole;

                  (f)  Liens  on  Property  at  the  time  the  Company  or  any
         Restricted Subsidiary acquired the Property,  including any acquisition
         by means of a merger or  consolidation  with or into the Company or any
         Restricted  Subsidiary;  provided,  however, that any Lien of this kind
                                  --------   -------
         may not extend to any other  Property of the Company or any  Restricted
         Subsidiary;  provided further,  however,  that the Liens shall not have
                      ----------------   -------
         been Incurred in  anticipation of or in connection with the transaction
         or series of  transactions  pursuant to which the Property was acquired
         by the Company or any Restricted Subsidiary;



<PAGE>

                                                                              28


                  (g) Liens on the  Property of a Person at the time that Person
         becomes a Restricted  Subsidiary;  provided,  however, that any Lien of
                                            --------   -------
         this kind may not extend to any other  Property  of the  Company or any
         other  Restricted  Subsidiary  that is not a direct  Subsidiary of that
         Person;  provided further,  however,  that the Lien was not Incurred in
                  ----------------   -------
         anticipation  of or in  connection  with the  transaction  or series of
         transactions   pursuant  to  which  the  Person   became  a  Restricted
         Subsidiary;

                  (h)  pledges or  deposits  by the  Company  or any  Restricted
         Subsidiary under worker's  compensation  laws,  unemployment  insurance
         laws or similar legislation,  or good faith deposits in connection with
         bids, tenders, contracts (other than for the payment of Debt) or leases
         to which the Company or any  Restricted  Subsidiary  or any  Restricted
         Subsidiary  is  party,  or  deposits  to  secure  public  or  statutory
         obligations  of the Company or any Restricted  Subsidiary,  or deposits
         for the payment of rent, in each case  Incurred in the ordinary  course
         of business;

                  (i) Liens  (including,  without  limitation  and to the extent
         constituting  Liens,  negative  pledges),  assignments  and  pledges of
         rights to receive  premiums,  interest or loss  payments  or  otherwise
         arising  in  connection  with  worker's   compensation  loss  portfolio
         transfer  insurance   transactions  or  any  insurance  or  reinsurance
         agreements  pertaining  to  losses  covered  by  insurance,  and  Liens
         (including,  without limitation and to the extent  constituting  Liens,
         negative  pledges)  in favor of insurers  or  reinsurers  on pledges or
         deposits by the Company or any Restricted  Subsidiary  under  workmen's
         compensation laws, unemployment insurance laws or similar legislation;

                  (j) utility  easements,  building  restrictions and such other
         encumbrances  or  charges  against  real  Property  as are of a  nature
         generally existing with respect to properties of a similar character;

                  (k) Liens  arising  out of  judgments  or awards  against  the
         Company or a Restricted Subsidiary with respect to which the Company or
         the Restricted  Subsidiary  shall then be proceeding  with an appeal or
         other proceeding for review;

                  (l) Liens in favor of surety bonds or letters of credit issued
         pursuant  to the  request of and for the  account  of the  Company or a
         Restricted Subsidiary in



<PAGE>

                                                                              29


         the ordinary course of  its business,  provided that these  letters  of
         credit do not constitute Debt;

                  (m)  leases  or  subleases  of real  property  granted  by the
         Company or a Restricted  Subsidiary to any other Person in the ordinary
         course of business  and not  materially  impairing  the use of the real
         property  in the  operation  of the  business  of  the  Company  or the
         Restricted Subsidiary;

                  (n) Liens  (including,  without  limitation  and to the extent
         constituting Liens,  negative pledges) on intellectual property arising
         from intellectual property licenses entered into in the ordinary course
         of business;

                  (o) Liens or negative pledges attaching to or related to joint
         ventures engaged in a Related Business,  restricting Liens on interests
         in those joint ventures;

                  (p) Liens  existing on the Issue Date not otherwise  described
         in clauses (a) through (o) above;

                  (q) Liens not  otherwise  described in clauses (a) through (p)
         above on the Property of any  Restricted  Subsidiary to secure any Debt
         permitted  to be  Incurred  by the  Restricted  Subsidiary  pursuant to
         Section 4.04;

                  (r) Liens on the  Property  of the  Company or any  Restricted
         Subsidiary to secure any Refinancing,  in whole or in part, of any Debt
         secured by Liens  referred to in clause (b),  (e), (f), (g), (k) or (l)
         above;  provided,  however, that any Lien of this kind shall be limited
                 --------   -------
         to all or part of the same  Property  that  secured the  original  Lien
         (together  with  improvements  and accessions to such Property) and the
         aggregate  principal  amount of Debt that is  secured by the Lien shall
         not be increased to an amount greater than the sum of:

                           (1) the outstanding principal amount, or, if greater,
                  the committed  amount,  of the Debt secured by Liens described
                  under clause (b), (e), (f), (g), (k) or (l) above, as the case
                  may be, at the time the original Lien became a Permitted  Lien
                  under the indenture, and

                           (2) an amount necessary to pay any fees and expenses,
                  including premiums and defeasance costs,



<PAGE>

                                                                              30


                  incurred  by  the  Company or  the  Restricted  Subsidiary  in
                  connection with the Refinancing;

                  (s) Liens not  otherwise  permitted by clauses (a) through (r)
         above that are Liens  permitted by the Existing Bank Credit  Facilities
         as they exist on the Issue Date; and

                  (t) Liens not  otherwise  permitted by clauses (a) through (s)
         above  encumbering  assets having an aggregate Fair Market Value not in
         excess of 5.0% of Consolidated Net Tangible Assets, as determined based
         on the  consolidated  balance sheet of the Company as of the end of the
         most recent  fiscal  quarter  ending at least 45 days prior to the date
         the Lien shall be Incurred.

                  "Permitted  Refinancing  Debt" means any Debt that  Refinances
any other Debt, including any successive Refinancings, so long as:

                  (a) the new Debt is in an  aggregate  principal  amount (or if
         Incurred with original issue discount, an aggregate issue price) not in
         excess of the sum of:

                           (1) the  aggregate  principal  amount (or if Incurred
                  with original issue  discount,  the aggregate  accreted value)
                  then outstanding of the Debt being Refinanced, and

                           (2) an amount necessary to pay any fees and expenses,
                  including  premiums  and  defeasance  costs,  related  to  the
                  Refinancing,

                  (b) the  Average  Life of the new Debt is equal to or  greater
         than the Average Life of the Debt being Refinanced,

                  (c) the Stated Maturity of the new Debt is no earlier than the
         Stated Maturity of the Debt being Refinanced, and

                  (d) the new Debt  shall not be senior in right of  payment  to
         the Debt that is being Refinanced;

provided, however, that Permitted Refinancing Debt shall not include:
- --------  -------

                  (x) Debt of a Subsidiary that Refinances Debt of the Company
         or


<PAGE>

                                                                              31


                  (y)  Debt  of the  Company  or a  Restricted  Subsidiary  that
         Refinances Debt of an Unrestricted Subsidiary.

                  "Person" means any individual, corporation, company (including
any limited liability company), association,  partnership, joint venture, trust,
unincorporated  organization,  government or any agency or political subdivision
thereof or any other entity.

                  "Preferred Stock" means any Capital Stock of a Person, however
designated,  which entitles the holder  thereof to a preference  with respect to
the payment of dividends, or as to the distribution of assets upon any voluntary
or involuntary  liquidation  or  dissolution of that Person,  over shares of any
other class of Capital Stock issued by that Person.

                  "Preferred  Stock  Dividends" means all dividends with respect
to Preferred  Stock of  Restricted  Subsidiaries  held by Persons other than the
Company or a Wholly Owned Restricted  Subsidiary.  The amount of any dividend of
this  kind  shall  be equal  to the  quotient  of the  dividend  divided  by the
difference  between one and the maximum statutory federal income rate (expressed
as a  decimal  number  between  1 and 0) then  applicable  to the  issuer of the
Preferred Stock.

                  "principal" of any Debt (including the  Securities)  means the
principal amount of such Debt plus the premium, if any, on such Debt.

                  "pro forma"  means,  with respect to any  calculation  made or
required to be made  pursuant to the terms hereof,  a  calculation  performed in
accordance  with Article 11 of Regulation S-X  promulgated  under the Securities
Act, as interpreted in good faith by the Board of Directors  after  consultation
with the independent certified public accountants of the Company, or otherwise a
calculation made in good faith by the Board of Directors after consultation with
the independent certified public accountants of the Company, as the case may be.

                  "Property" means, with respect to any Person,  any interest of
that Person in any kind of property or asset,  whether real,  personal or mixed,
or tangible or intangible,  including Capital Stock in, and other securities of,
any other  Person.  For  purposes of any  calculation  required  pursuant to the
indenture, the value of any Property shall be its Fair Market Value.

                  "Public Equity Offering" means an underwritten public offering
of common stock of the Company pursuant to



<PAGE>

                                                                              32


an effective registration statement under the Securities Act.

                  "Public Market" means any time after:

                           (a) a Public Equity Offering has been consummated,and

                           (b) at least 15% 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.

                  "Purchase Money Debt" means Debt:

                           (a)  consisting  of the  deferred  purchase  price of
                  property, conditional sale obligations,  obligations under any
                  title retention  agreement,  other purchase money  obligations
                  and  obligations in respect of industrial  revenue  bonds,  in
                  each case where the  maturity  of the Debt does not exceed the
                  anticipated useful life of the Property being financed, and

                           (b) Incurred to finance the acquisition, construction
                  or  lease  by  the Company or a Restricted Subsidiary  of  the
                  Property, including additions and improvements thereto;

provided,  however,  that  the  Debt is  Incurred  within  180  days  after  the
- --------   -------
acquisition,  construction or lease of the Property by the Company or Restricted
Subsidiary.

                  "Qualified  Receivables  Transaction" means any transaction or
 series of  transactions  that may be entered  into by the Company or any of its
 Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell,
 convey or otherwise transfer to:

                  (a) a  Receivables  Entity (in the case of a  transfer  by the
         Company or any of its Subsidiaries) and

                  (b)  any  other  Person  (in  the  case  of  a  transfer  by a
         Receivables Entity),

 or may grant a security  interest  in, any  accounts  receivable  (whether  now
 existing or arising in the  future) of the Company or any of its  Subsidiaries,
 and any assets related thereto including,  without  limitation,  all collateral
 securing those accounts  receivable,  all contracts and all Guarantees or other
 obligations in respect of those accounts



<PAGE>

                                                                              33


receivable,  proceeds of those  accounts  receivable  and other assets which are
customarily   transferred  or  in  respect  of  which  security   interests  are
customarily  granted  in  connection  with  asset  securitization   transactions
involving accounts receivable; provided that:

                  (1)  if  the  transaction  involves  a  transfer  of  accounts
         receivable  with Fair  Market  Value  equal to or  greater  than  $25.0
         million,  the Board of Directors  shall have  determined  in good faith
         that the Qualified  Receivables  Transaction is  economically  fair and
         reasonable to the Company and the Receivables Entity,

                  (2) all sales of accounts  receivable and related assets to or
         by the Receivables Entity are made at Fair Market Value and

                  (3) the financing  terms,  covenants,  termination  events and
         other  provisions  thereof shall be market terms (as determined in good
         faith by the Board of Directors).

                  The grant of a security interest in any accounts receivable of
the  Company  or  any  of its  Restricted  Subsidiaries  to  secure  the  Credit
Facilities shall not be deemed a Qualified Receivables Transaction.

                  "Rating Agencies" mean Moody's and S&P.

                  "Real Estate Financing Transaction" means any arrangement with
any Person  pursuant to which the Company or any  Restricted  Subsidiary  Incurs
Debt  secured  by a Lien on  real  property  of the  Company  or any  Restricted
Subsidiary and related personal property together with any Refinancings thereof.

                  "Receivables Entity" means a Wholly Owned
Subsidiary of the Company (or another Person formed for the purposes of engaging
in a Qualified Receivables  Transaction with the Company in which the Company or
any  Subsidiary of the Company  makes an Investment  and to which the Company or
any Subsidiary of the Company transfers accounts  receivable and related assets)
which  engages in no activities  other than in connection  with the financing of
accounts  receivable of the Company and its  Subsidiaries,  all proceeds thereof
and all rights  (contractual  or other),  collateral  and other assets  relating
thereto, and any business or activities  incidental or related to that business,
and (with respect to any  Receivables  Entity formed after the Issue Date) which
is



<PAGE>

                                                                              34


designated by the Board of Directors (as provided below) as a Receivables Entity
and

                  (a) no portion of the  Indebtedness  or any other  obligations
         (contingent or otherwise) of which

                           (1) is Guaranteed by the Company or any Subsidiary of
                  the Company  (excluding  Guarantees of obligations (other than
                  the principal of, and interest on,  Indebtedness)  pursuant to
                  Standard Securitization Undertakings),

                           (2) is  recourse  to  or obligates the Company or any
                  Subsidiary of the Company in  any  way other than  pursuant to
                  Standard Securitization Undertakings or

                           (3)  subjects any property or asset of the Company or
                  any  Subsidiary  of  the  Company,   directly  or  indirectly,
                  contingently or otherwise,  to the satisfaction thereof, other
                  than pursuant to Standard Securitization Undertakings;

                  (b) with which  neither the Company nor any  Subsidiary of the
         Company  has  any  material   contract,   agreement,   arrangement   or
         understanding other than on terms which the Company reasonably believes
         to be no less  favorable  to the Company or the  Subsidiary  than those
         that might be obtained at the time from Persons that are not Affiliates
         of the Company and

                  (c) to which  neither the Company  nor any  Subsidiary  of the
         Company  has any  obligation  to  maintain  or  preserve  the  entity's
         financial  condition or cause the entity to achieve  certain  levels of
         operating  results  other  than  pursuant  to  Standard  Securitization
         Undertakings.

                  Any  designation of this kind by the Board of Directors  shall
be evidenced  to the Trustee by filing with the Trustee a certified  copy of the
resolution  of the Board of Directors  giving effect to the  designation  and an
Officers'  Certificate   certifying  that  the  designation  complied  with  the
foregoing conditions.

                  "Refinance"  means,  in  respect  of any Debt,  to  refinance,
 extend, renew, refund, repay, prepay, repurchase, redeem, defease or retire, or
 to issue other Debt, in exchange or replacement for, that Debt.



<PAGE>

                                                                              35


                  "Refinanced"   and   "Refinancing"   shall  have   correlative
meanings.

                  "Related   Business"  means  any  business  that  is  related,
ancillary or  complementary  to the businesses of the Company and the Restricted
Subsidiaries on the Issue Date.

                  "Repay"  means,  in  respect  of any Debt,  to repay,  prepay,
repurchase,  redeem,  legally defease or otherwise retire that Debt. "Repayment"
and "Repaid" shall have correlative  meanings.  For purposes of Section 4.07 and
Section 4.04 and the definition of "Consolidated  Fixed Charges Coverage Ratio",
Debt shall be considered to have been Repaid only to the extent the related loan
commitment, if any, shall have been permanently reduced in connection therewith.

                  "Restricted Payment" means:

                  (a) any  dividend  or  distribution  (whether  made  in  cash,
         securities  or other  Property)  declared or paid on or with respect to
         any shares of Capital Stock of the Company or any Restricted Subsidiary
         (including any payment in connection  with any merger or  consolidation
         with or into the Company or any Restricted Subsidiary),  except for any
         dividend or  distribution  that is made to the Company or the parent of
         the  Restricted  Subsidiary  or any  dividend or  distribution  payable
         solely in shares of Capital  Stock (other than  Disqualified  Stock) of
         the Company;

                  (b)  the  purchase,  repurchase,  redemption,  acquisition  or
         retirement  for  value  of any  Capital  Stock  of the  Company  or any
         Restricted  Subsidiary  (other  than from the  Company or a  Restricted
         Subsidiary) or any  securities  exchangeable  for or  convertible  into
         Capital Stock of the Company or any  Restricted  Subsidiary,  including
         the  exercise of any option to exchange  any Capital  Stock (other than
         for or into  Capital  Stock  of the  Company  that is not  Disqualified
         Stock);

                  (c)  the  purchase,  repurchase,  redemption,  acquisition  or
         retirement  for value,  prior to the date for any  scheduled  maturity,
         sinking  fund or  amortization  or other  installment  payment,  of any
         Subordinated  Obligation (other than the purchase,  repurchase or other
         acquisition of any Subordinated Obligation purchased in anticipation of
         satisfying a scheduled maturity, sinking fund or amortization or



<PAGE>

                                                                              36


         other  installment obligation,  in each case due within one year of the
         date of acquisition);

                  (d) any Investment  (other than Permitted  Investments) in any
         Person; or

                  (e) the issuance,  sale or other  disposition of Capital Stock
         of any  Restricted  Subsidiary  to a Person  other than the  Company or
         another  Restricted  Subsidiary  if the  result  thereof  is  that  the
         Restricted  Subsidiary  shall cease to be a Restricted  Subsidiary,  in
         which event the amount of the  "Restricted  Payment"  shall be the Fair
         Market  Value  of  the  remaining  interest,  if  any,  in  the  former
         Restricted  Subsidiary  held by the  Company  and the other  Restricted
         Subsidiaries.

                  "Restricted  Subsidiary"  means any  Subsidiary of the Company
other than an Unrestricted Subsidiary.

                  "S&P" means Standard & Poor's Ratings Service or any successor
to the rating agency business thereof.

                  "Sale and Leaseback  Transaction" means any direct or indirect
arrangement  relating to Property  now owned or hereafter  acquired  whereby the
Company or a Restricted Subsidiary transfers that Property to another Person and
the Company or a Restricted Subsidiary leases it from that other Person together
with any Refinancings thereof.

                  "SEC" means the Securities and Exchange Commission.

                  "Securities Act" means the Securities Act of 1933.

                  "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 Commission.

                  "Standard Securitization  Undertakings" means representations,
warranties,  covenants  and  indemnities  entered  into  by the  Company  or any
Subsidiary  of  the  Company  which  are  customary  in an  accounts  receivable
securitization transaction involving a comparable company.

                  "Stated  Maturity"  means,  with respect to any security,  the
date  specified  in the  security  as the  fixed  date on which the  payment  of
principal  of the  security  is  due  and  payable,  including  pursuant  to any
mandatory  redemption  provision (but excluding any provision  providing for the
repurchase of the security at the option of the



<PAGE>

                                                                              37


holder thereof upon the happening of any  contingency  beyond the control of the
issuer unless that contingency has occurred).

                  "Subordinated  Obligation"  means  any  Debt  of  the  Company
(whether  outstanding  on  the  Issue  Date  or  thereafter  Incurred)  that  is
subordinate  or junior  in right of  payment  to the  Securities  pursuant  to a
written agreement to that effect.

                  "Subsidiary" means, in respect of any Person, any corporation,
company  (including any limited liability  company),  association,  partnership,
joint venture or other  business  entity of which a majority of the total voting
power of the  Voting  Stock is at the time  owned  or  controlled,  directly  or
indirectly, by:

                  (a) that Person,

                  (b) that Person and one or more  Subsidiaries  of that Person,
         or

                  (c) one or more Subsidiaries of that Person.

                  "Temporary Cash Investments" means any of the following:

                  (a) Investments in U.S. Government Obligations maturing within
         365 days of the date of acquisition thereof;

                  (b)   Investments   in   time   deposit   accounts,   banker's
         acceptances, certificates of deposit and money market deposits maturing
         within 180 days of the date of acquisition  thereof issued by a bank or
         trust company  organized under the laws of the United States of America
         or any state thereof  having  capital,  surplus and  undivided  profits
         aggregating  in excess of $500 million or issued by a  commercial  bank
         organized  under the laws of any other  country that is a member of the
         Organization  for Economic  Cooperation  and  Development  having total
         assets in excess of $500 million (or its foreign currency equivalent at
         the time),  and in any case whose long-term debt is rated "A-3" or "A-"
         or higher according to Moody's or S&P (or a similar  equivalent  rating
         by at least one "nationally recognized statistical rating organization"
         (as defined in Rule 436 under the Securities Act));



<PAGE>

                                                                              38


                  (c)  repurchase  obligations  with a term of not more  than 30
         days for  underlying  securities  of the types  described in clause (a)
         entered into with:

                           (1) a  bank  meeting  the qualifications described in
                  clause (b) above, or

                           (2)  any   primary   government   securities   dealer
                  reporting  to the  Market  Reports  Division  of  the  Federal
                  Reserve Bank of New York;

                  (d)  Investments in commercial  paper,  maturing not more than
         270 days after the date of acquisition,  issued by a corporation (other
         than an Affiliate of the Company)  organized and in existence under the
         laws of the United  States of America  or any other  country  that is a
         member of the  Organization  for Economic  Cooperation and Development,
         and in any case with a rating  at the time as of which  any  Investment
         therein is made of "P-1" (or higher)  according to Moody's  or"A-1" (or
         higher)  according to S&P (or a similar  equivalent  rating by at least
         one "nationally recognized statistical rating organization" (as defined
         in Rule 436 under the Securities Act); and

                  (e)  direct  obligations  (or  certificates   representing  an
         ownership  interest  in such  obligations)  of any state of the  United
         States of America (including any agency or instrumentality thereof) for
         the payment of which the full faith and credit of such state is pledged
         and  which are not  callable  or  redeemable  at the  issuer's  option,
         provided that:

                           (1) the long-term debt of the state is rated "A-3" or
                  "A-" or  higher  according  to  Moody's  or S&P (or a  similar
                  equivalent  rating  by at  least  one  "nationally  recognized
                  statistical rating organization" (as defined in Rule 436 under
                  the Securities Act)), and

                           (2) the obligations  mature  within  180  days of the
                  date of acquisition thereof.

                  "TIA" means the Trust Indenture Act of 1939 (15 U.S.C.  ss.ss.
                                                                  ------
77aaa-77bbbb)  as in effect on the date of this  Indenture;  provided,  however,
                                                             --------   -------
that, in the event the TIA is amended  after such date,  "Trust  Indenture  Act"
means, to the extent required by any such amendments, the Trust Indenture Act of
1939 as so amended.



<PAGE>

                                                                              39


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

                  "Trust  Officer" means any officer within the Corporate  Trust
Administration department of the Trustee (or any successor group of the trustee)
with direct  responsibility  for the  administration  of this Indenture and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred  because of his knowledge of and  familiarity  with
the particular subject.

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

                  "Unrestricted Subsidiary" means:

                  (a) any Subsidiary of the Company that is designated after the
         Issue Date as an  Unrestricted  Subsidiary  as  permitted  or  required
         pursuant  to  Section  4.10  and is not  thereafter  redesignated  as a
         Restricted Subsidiary as permitted pursuant thereto; and

                  (b) any Subsidiary of an Unrestricted Subsidiary.

                  "U.S.  Dollar  Equivalent"  means with respect to any monetary
amount in a currency  other  than U.S.  dollars,  at any time for  determination
thereof, the amount of U.S. dollars obtained by converting such foreign currency
involved in such computation into U.S. dollars at the spot rate for the purchase
of U.S.  dollars with the applicable  foreign  currency as published in THE WALL
STREET  JOURNAL in the  "Exchange  Rates"  column  under the  heading  "Currency
Trading"  on the  date  two  Business  Days  prior  to  such  determination.  In
determining the aggregate  principal amount (on a U.S. Dollar  Equivalent basis)
of  Securities  outstanding,  such  amount  will be treated  as the U.S.  Dollar
Equivalent determined as of the date of issuance of such Securities.

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

                  "Voting Stock"  of  any  Person  means  all classes of Capital
Stock or other interests (including partnership



<PAGE>

                                                                              40


interests,  and in the case of the Company,  Voting Trust  Certificates) of that
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.

                  "Voting Trust Arrangement" means the  Voting Trust Arrangement
entered  into as of April 15, 1996 by and among  Robert D. Haas;  Peter E. Haas,
Sr.; Peter E. Haas,  Jr.; and F. Warren  Hellman as the Voting  Trustees and the
stockholders of the Company who are parties thereto.

                  "Voting Trust  Certificates"  means those certificates  issued
pursuant to the Voting Trust Arrangement.

                  "Voting  Trustees" means the persons entitled to act as voting
trustees under the Voting Trust Arrangement.

                  "Wholly Owned  Restricted  Subsidiary"  means,  at any time, a
Restricted   Subsidiary  all  the  Voting  Stock  of  which  (except  directors'
qualifying shares) is at that time owned, directly or indirectly, by the Company
and its other Wholly Owned Subsidiaries.



<PAGE>

                                                                              41


                  SECTION 1.02. Other Definitions.
                                ------------------


                                                                Defined in
                        Term                                     Section
                        ----                                     -------
"Affiliate Transaction"                                            4.09
"Bankruptcy Law"                                                   6.01
"Change of Control Offer"                                          4.12
"Change of Control Payment Date"                                   4.12
"Change of Control Purchase Price"                                 4.12
"covenant defeasance option"                                       8.01
"Custodian"                                                        6.01
"Event of Default"                                                 6.01
"Exchange Security"                                             Appendix A
"Global Security"                                               Appendix A
"legal defeasance option"                                          8.01
"Legal Holiday"                                                    10.08
"Offer Amount"                                                     4.07
"Offer Period"                                                     4.07
"Original Securities"                                              2.01
"Paying Agent"                                                     2.04
"Prepayment Offer"                                                 4.07
"Registered Exchange Offer"                                     Appendix A
"Registrar"                                                        2.04
"Shelf Registration statement"                                  Appendix A
"Surviving Person"                                                 5.01

                  SECTION 1.03.  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 Securities.

                  "indenture security holder" means a Securityholder.

                  "indenture to be qualified" means this Indenture.

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



<PAGE>

                                                                              42


                  "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 1.04.  Rules  of  Construction.   Unless  the  context
                                 ------------------------
 otherwise requires:

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

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

                  (3) "or" is not exclusive;

                  (4) "including" means including without limitation;

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

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

                  (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

                  (8) the principal  amount of any Preferred  Stock shall be the
         greater of (i) the maximum liquidation value of such Preferred Stock or
         (ii) the maximum  mandatory  redemption or mandatory  repurchase  price
         with respect to such Preferred Stock.


                                   ARTICLE II

                                 The Securities
                                 --------------

                  SECTION 2.01.  Amount of Securities;  Issuable in Series.  The
                                 ------------------------------------------
aggregate  principal  amount of Securities (on a U.S. Dollar  Equivalent  basis)
which may be  authenticated  and  delivered  under this  Indenture is (x) $850.0
million less (y) the  aggregate  principal  amount of any Dollar Notes issued by
the Company. All Securities shall be identical in



<PAGE>

                                                                              43


all respects other than issue prices and issuance  dates.  The Securities may be
issued in one or more series; provided, however, that any Securities issued with
                              --------  -------
original  issue  discount  ("OID") for Federal  income tax purposes shall not be
issued  as part of the same  series as any  Securities  that are  issued  with a
different  amount of OID or are not issued with OID. All  Securities  of any one
series shall be substantially identical except as to denomination.

                  Subject  to  Section  2.03,  the  Trustee  shall  authenticate
Securities for original issue on the  Issue  Date  in  the  aggregate  principal
amount of 125,000,000 euro dollars (the "Original Securities").  With respect to
any securities issued after the Issue Date (except for Securities  authenticated
and delivered upon  registration  of transfer of, or in exchange for, or in lieu
of, Original Securities pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix
A), there shall be  established  in or pursuant to a resolution  of the Board of
Directors,  and subject to Section 2.03, set forth,  or determined in the manner
provided in an Officers'  Certificate,  or established in one or more indentures
supplemental hereto, prior to the issuance of such Securities:

                  (1) whether such  Securities  shall be issued as part of a new
         or  existing  series of  Securities  and the  title of such  Securities
         (which shall  distinguish  the Securities of the series from Securities
         of any other series);

                  (2) the aggregate principal amount of such Securities that may
         be authenticated and delivered under this Indenture,  which shall be in
         an aggregate  principal amount (on a U.S. Dollar  Equivalent basis) not
         to exceed (x) $350.0 million less (y) the aggregate principal amount of
         any Dollar  Notes  issued by the Company that are not Issue Date Dollar
         Notes  (except  for   Securities   authenticated   and  delivered  upon
         registration  of transfer of, or in exchange  for, or in lieu of, other
         Securities of the same series  pursuant to Section 2.07,  2.08, 2.09 or
         3.06 or Appendix A and except for Securities which, pursuant to Section
         2.03,  are  deemed  never  to have  been  authenticated  and  delivered
         hereunder);

                  (3) the issue  price  and  issuance  date of such  Securities,
         including the date from which interest on such Securities shall accrue;

                  (4) if applicable,  that such Securities  shall be issuable in
         whole or in part in the form of one or more



<PAGE>

                                                                              44


         Global  Securities and, in such case, the respective  depositories  for
         such Global Securities, the form of any legend or legends that shall be
         borne by any such Global Security in addition to or in lieu of that set
         forth in Exhibit 1 to Appendix A and any  circumstances  in addition to
         or in lieu of those set forth in Section 2.3 of Appendix A in which any
         such  Global  Security  may  be  exchanged  in  whole  or in  part  for
         Securities  registered,  and any  transfer of such  Global  Security in
         whole or in part  may be  registered,  in the name or names of  Persons
         other  than  the  depository  for such  Global  Security  or a  nominee
         thereof; and

                  (5) if applicable, that such Securities shall not be issued in
         the form of  Initial  Securities  subject to  Appendix  A, but shall be
         issued in the form of Exchange Securities as set forth in Exhibit A.

                  If any of the terms of any  series are  established  by action
taken  pursuant  to a  resolution  of the  Board  of  Directors,  a  copy  of an
appropriate  record of such action shall be  certified  by the  Secretary or any
Assistant  Secretary of the Company and  delivered to the Trustee at or prior to
the delivery of the Officers'  Certificate or the trust  indenture  supplemental
hereto setting forth the terms of the series.

                  SECTION  2.02.  Form and  Dating.  Provisions  relating to the
                                  -----------------
Initial  Securities of each series and the Exchange  Securities are set forth in
Appendix  A, which is hereby  incorporated  in and  expressly  made part of this
Indenture.  The Initial Securities of each series and the Trustee's  certificate
of authentication  shall be substantially in the form of Exhibit 1 to Appendix A
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange  Securities and the Trustee's  certificate of  authentication  shall be
substantially  in the form of  Exhibit A,  which is hereby  incorporated  in and
expressly made a part of this Indenture.  The Securities of each series may have
notations,  legends  or  endorsements  required  by law,  stock  exchange  rule,
agreements to which the Company is subject, if any, or usage,  provided that any
such notation,  legend or endorsement is in a form reasonably  acceptable to the
Company. Each Security shall be dated the date of its authentication.  The terms
of the  Securities  of each  series  set forth in  Exhibit 1 to  Appendix  A and
Exhibit A are part of the terms of this Indenture.

                  SECTION 2.03.  Execution  and  Authentication.   Two  Officers
                                 -------------------------------
shall sign the Securities for the Company by manual or facsimile signature.  The
Company's seal shall be



<PAGE>

                                                                              45


impressed,  affixed,  imprinted or  reproduced on the  Securities  and may be in
facsimile form.

                  If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee  authenticates  the  Security,  the Security
shall be valid nevertheless.

                  At any time and from  time to time  after  the  execution  and
delivery of this  Indenture,  the Company may deliver  Securities  of any series
executed  by the  Company to the Trustee  for  authentication,  together  with a
written  order of the Company in the form of an  Officers'  Certificate  for the
authentication  and delivery of such  Securities,  and the Trustee in accordance
with such  written  order of the Company  shall  authenticate  and deliver  such
Securities.

                  A Security shall not be valid until an authorized signatory of
the Trustee  manually signs the certificate of  authentication  on the Security.
The  signature  shall  be  conclusive   evidence  that  the  Security  has  been
authenticated under this Indenture.

                  The Trustee hereby appoints,  Citibank, N.A., London Office of
5 Carmelite Street, London, EC4Y OPA as authenticating agent to authenticate the
Securities  (the   "Authentication   Agent").   The  Authentication   Agent  may
authenticate  the  Securities  whenever the Trustee may do so. Each reference in
this Indenture to authentication  by the Trustee includes  authentication by the
Authentication  Agent.  The  Authentication  Agent  has the same  rights  as any
Registrar, Paying Agent or agent for service of notices and demands.

                  SECTION 2.04.  Registrar  and Paying Agent.  The Company shall
                                 ----------------------------
 maintain an office or agency where Securities may be presented for registration
 of transfer or for  exchange  (the  "Registrar")  and an office or agency where
 Securities  may be presented  for payment (the "Paying  Agent").  The Registrar
 shall keep a register of the Securities and of their transfer and exchange. The
 Company may have one or more  co-registrars  and one or more additional  paying
 agents.  The term "Paying  Agent"  includes any  additional  paying agent.  The
 obligations  of the Paying  Agent and the  Registrar  shall be several  and not
 joint.

                  The Company shall enter into an  appropriate agency  agreement
with any Registrar,  Paying Agent or co-registrar not a party to this Indenture,
which shall  incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The



<PAGE>

                                                                              46


Company  shall notify the Trustee of the name and address of any such agent.  If
the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act
as such and shall be entitled to appropriate  compensation  therefor pursuant to
Section 7.07. The Company or any of its domestically  incorporated  Wholly Owned
Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer agent.

                  The Company initially  appoints the London Office of Citibank,
N.A. as Registrar and Paying Agent in connection with the Securities.

                  SECTION  2.05.  Paying Agent To Hold Money in Trust.  Prior to
                                  ------------------------------------
each due date of the principal  and interest on any Security,  the Company shall
deposit  with the Paying Agent  immediately  available  and freely  transferable
funds in euro to pay such  principal  and  interest  when so becoming  due.  The
Company  shall  require  each Paying  Agent (other than the Trustee) to agree in
writing  that  the  Paying  Agent  shall  hold  in  trust  for  the  benefit  of
Securityholders  or the  Trustee  all  money  held by the  Paying  Agent for the
payment of  principal  of or interest  on the  Securities  and shall  notify the
Trustee of any  default by the Company in making any such  payment.  The Company
shall,  prior to 12 noon (London  Time) on the second  Business Day  immediately
preceding  the payment  date under this  Section 2.05 send to the Paying Agent a
confirmation that payment will be made and the details of the bank through which
the issuer is to make the payment due pursuant to this Section 2.05.  Unless the
Paying Agent has received payment from the Company, it shall not be obliged, but
may, make payment  pursuant to this Section 2.05. If the Paying Agent makes such
payment on behalf of the Company under this Section  2.05,  the Company shall be
liable on demand by the Paying Agent to the Paying Agent the amount so paid.  If
the  Company  or a  Wholly  Owned  Subsidiary  acts as  Paying  Agent,  it shall
segregate  the money held by it as Paying Agent and hold it as a separate  trust
fund.  The Company at any time may require a Paying  Agent to pay all money held
by it to the Trustee and to account for any funds disbursed by the Paying Agent.
Upon  complying  with this  Section,  the  Paying  Agent  shall  have no further
liability for the money delivered to the Trustee.

                  SECTION 2.06. Securityholder Lists. The Trustee shall preserve
                                ---------------------
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of  Securityholders.  If the Trustee is not the
Registrar,  the Company shall  furnish to the Trustee,  in writing at least five
Business Days before each  interest  payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date



<PAGE>

                                                                              47


as  the  Trustee  may   reasonably   require  of  the  names  and  addresses  of
Securityholders.

                  SECTION 2.07. Replacement Securities.  If a mutilated Security
                                -----------------------
is surrendered to the Registrar or if the Holder of a Security  claims that such
Security has been lost,  destroyed or wrongfully  taken, the Company shall issue
and the Trustee shall authenticate a replacement Security 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 Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.

                  Every replacement Security is an additional  obligation of the
Company.

                  SECTION 2.08. Outstanding  Securities.  Securities outstanding
                                ------------------------
at any time are all  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 Security  does not cease to be  outstanding
because the Company or an Affiliate of the Company holds the Security.

                  If a Security 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 Security 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 and interest  payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing,  as the case
may be, then on and after that date such Securities (or portions  thereof) cease
to be outstanding and interest on them ceases to accrue.

                  SECTION   2.09.   Temporary   Securities.   Until   definitive
                                    -----------------------
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate  temporary Securities.  Temporary Securities shall be substantially
in the form of definitive  Securities but may have  variations  that the Company
considers appropriate for temporary Securities.  Without unreasonable delay, the
Company shall



<PAGE>

                                                                              48


prepare and the Trustee shall  authenticate  definitive  Securities  and deliver
them in exchange for temporary Securities.

                  SECTION  2.10.  Cancellation.  The  Company  at any  time  may
                                  -------------
deliver  Securities to the Registrar for cancellation.  The agents shall forward
to the  Registrar  any  Securities  surrendered  to  them  for  registration  of
transfer,  exchange  or  payment.  Unless the  Trustee  and the  Company  direct
otherwise,  the  Registrar  and no one else  shall  cancel  and  dispose  of all
Securities  surrendered  for  registration  of  transfer,  exchange,  payment or
cancellation in its customary  manner.  The Company may not issue new Securities
to replace  Securities  it has  redeemed,  paid or  delivered to the Trustee for
cancellation.

                  SECTION 2.11. Defaulted Interest. If the Company defaults in a
                                -------------------
payment of  interest on the  Securities,  the  Company  shall pay the  defaulted
interest (plus interest on such defaulted  interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the persons who are
Securityholders  on a subsequent  special  record date. The Company shall fix or
cause  to be  fixed  any  such  special  record  date  and  payment  date to the
reasonable  satisfaction  of  the  Trustee  and  shall  promptly  mail  to  each
Securityholder  a notice that states the special  record date,  the payment date
and the amount of defaulted interest to be paid.

                  SECTION  2.12.  CUSIP  Numbers.  The  Company in  issuing  the
                                  ---------------
Securities  may use "CUSIP",  "ISIN" or "Common Code" numbers (if then generally
in use) and,  if so, the Trustee  shall use  "CUSIP",  "ISIN" and "Common  Code"
numbers in notices of redemption as a convenience to Holders; provided, --------
however, that neither the Company nor the Trustee shall have any responsibility
- --------
for any defect in the  "CUSIP",  "ISIN" or "Common  Code" number that appears on
any Security, check, advice of payment or redemption notice, and any such notice
may state that no  representation  is made as to the correctness of such numbers
either  as  printed  on  the  Securities  or as  contained  in any  notice  of a
redemption  and that  reliance  may be placed  only on the other  identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.  The Company shall promptly notify
the Trustee of any change in such numbers.



<PAGE>

                                                                              49


                                   ARTICLE III

                                   Redemption
                                   ----------

                  SECTION  3.01.  Notices to Trustee.  If the Company  elects to
                                  -------------------
 redeem  Securities  pursuant to paragraph 5 of the Securities,  it shall notify
 the Trustee (with a copy to the Registrar) in writing of the  redemption  date,
 the principal  amount of Securities to be redeemed and that such  redemption is
 being made pursuant to paragraph 5 of the Securities.

                  The Company shall give each notice to the Trustee provided for
 in this Section at least 45 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 Securities To Be Redeemed. If fewer
                                ---------------------------------------
than  all the  Securities  are to  be  redeemed,  the  Trustee shall select  the
Securities  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  Securities  not  previously
called for  redemption.  The Trustee may select for  redemption  portions of the
principal of Securities that have denominations  larger than 1,000 euro dollars.
Securities and portions of them the Trustee selects shall be in amounts of 1,000
euro  dollars or a whole  multiple  of 1,000 euro  dollars.  Provisions  of this
Indenture that apply to Securities  called for redemption also apply to portions
of  Securities  called for  redemption.  The  Trustee  shall  notify the Company
promptly of the Securities or portions of Securities to be redeemed.

                  SECTION 3.03.  Notice of Redemption.  At least 30 days but not
                                 ---------------------
more than 60 days before a date for redemption of Securities,  the Company shall
mail a notice of redemption by first-class  mail to each Holder of Securities to
be redeemed and to the Paying Agent and Registrar.

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

                  (1) the redemption date;

                  (2) the redemption price;



<PAGE>

                                                                              50


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

                  (4) that Securities  called for redemption must be surrendered
         to the Paying Agent to collect the redemption price;

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

                  (6)  that,   unless  the  Company   defaults  in  making  such
         redemption payment,  interest on Securities (or portion thereof) called
         for redemption ceases to accrue on and after the redemption date; and

                  (7) that no  representation  is made as to the  correctness or
         accuracy of the CUSIP,  ISIN or Common Code number,  if any,  listed in
         such notice or printed on the Securities.

                  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 at least 45 days before the redemption date.

                  SECTION 3.04.  Effect of Notice of Redemption.  Once notice of
                                 -------------------------------
redemption is mailed, Securities 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 Securities  shall be paid at the redemption
price  stated in the  notice,  plus  accrued  interest  to the  redemption  date
(subject  to the  right of  Holders  of record on the  relevant  record  date to
receive interest due on the related interest payment date that is on or prior to
the date of  redemption).  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.  Prior  to the
                                  -------------------------------
redemption  date,  the Company  shall  deposit with the Paying Agent (or, if the
Company or a Wholly Owned  Subsidiary is the Paying Agent,  shall  segregate and
hold in trust)  money  sufficient  to pay the  redemption  price of and  accrued
interest  (subject to the right of Holders of record on the relevant record date
to receive interest due on the related interest payment date that is on or prior
to the date of  redemption)  on all Securities to be redeemed on that date other
than  Securities or portions of Securities  called for redemption that have been
delivered by the Company to the Registrar for cancellation.



<PAGE>

                                                                              51


                  SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
                                ----------------------------
Security  that is redeemed in part,  the Company  shall  execute and the Trustee
shall  authenticate  for the Holder (at the  Company's  expense) a new  Security
equal in principal amount to the unredeemed portion of the Security surrendered.


                                   ARTICLE IV

                                    Covenants
                                    ---------

                  SECTION 4.01.  Covenant Suspension.  During any period of time
                                 --------------------
that:

                  (a) the  Securities  have  Investment  Grade Ratings from both
         Rating Agencies and

                  (b) no  Default  or  Event  of  Default  has  occurred  and is
         continuing  under  the  Indenture,   the  Company  and  the  Restricted
         Subsidiaries  will not be  subject  to the  following  Sections  of the
         Indenture:  Section  4.04,  Section 4.05,  Section 4.07,  Section 4.08,
         clause  (x) of the third  paragraph  (and as  referred  to in the first
         paragraph)  of Section 4.10,  and clause (e) of the first  paragraph of
         Article 5.

(collectively, the "Suspended Covenants"). In the event that the Company and the
Restricted  Subsidiaries  are not  subject to the  Suspended  Covenants  for any
period of time as a result of the preceding sentence and,  subsequently,  one or
both of the  Rating  Agencies  withdraws  its  rating or  downgrades  the rating
assigned to the  Securities  below the  required  Investment  Grade  Rating or a
Default or Event of Default occurs and is  continuing,  then the Company and the
Restricted  Subsidiaries  will  thereafter  again be  subject  to the  Suspended
Covenants for all periods after that withdrawal,  downgrade, Default or Event of
Default and,  furthermore,  compliance  with the provisions of Section 4.05 with
respect to Restricted Payments made after the time of the withdrawal, downgrade,
Default or Event of Default will be calculated  in accordance  with the terms of
that  covenant  as though  that  covenant  had been in effect  during the entire
period of time from the Issue  Date,  provided  that there will not be deemed to
have occurred a Default or Event of Default with respect to that covenant during
the time that the Company and the  Restricted  Subsidiaries  were not subject to
the Suspended Covenants (or after that time based solely on events that occurred
during that time).



<PAGE>

                                                                              52


                  SECTION  4.02.  Payment  of  Securities.   The  Company  shall
                                  ------------------------
 promptly pay the  principal of and interest on the  Securities on the dates and
 in the manner provided in the Securities and in this  Indenture.  Principal 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 sufficient to
 pay all principal and interest then due.

                  The Company  shall pay  interest on overdue  principal  at the
 rate specified therefor in the Securities, and it shall pay interest on overdue
 installments  of  interest  at the rate borne by the  Securities  to the extent
 lawful.

                  SECTION 4.03.  SEC Reports.  Notwithstanding  that the Company
                                 ------------
may not be subject to the reporting  requirements  of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the Commission and provide the Trustee
and Holders of Securities  with annual  reports and  information,  documents and
other  reports as are specified in Sections 13 and 15(d) of the Exchange Act and
applicable to a U.S. corporation subject to those Sections, and the information,
documents and reports to be so filed and provided at the times specified for the
filing of the information, documents and reports under those Sections; provided,
                                                                       --------
however,  that the Company  shall not be so obligated  to file the  information,
- -------
documents  and reports with the  Commission  if the  Commission  does not permit
those  filings.  The Company shall also comply with the other  provisions of TIA
ss. 314(a).  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  or
determinable  from  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 Officer's Certificates).

                  SECTION 4.04.  Limitation on Debt.  The Company shall not, and
                                 -------------------
 shall not permit any Restricted  Subsidiary to, Incur,  directly or indirectly,
 any Debt  unless,  after  giving  effect  to the  application  of the  proceeds
 thereof,  no Default or Event of Default  would occur as a  consequence  of the
 Incurrence or be continuing following the Incurrence and either:

                  (1) the Debt is Debt of the Company and after giving effect to
         the Incurrence of the Debt and the application of the proceeds thereof,
         the  Consolidated  Fixed Charges  Coverage  Ratio would be greater than
         2.00



<PAGE>

                                                                              53


         to 1.00 if the Debt is Incurred from the Issue Date through January 15,
         2004, and 2.50 to 1.00 if the Debt is Incurred thereafter, or

                  (2) the Debt is Permitted Debt.

                  The term "Permitted Debt" is defined to include the following:

                  (a) Debt of the Company evidenced by the Original Securities;

                  (b) Debt of the Company or a Restricted  Subsidiary  under any
         Credit Facilities,  Incurred by the Company or a Restricted  Subsidiary
         pursuant to a Real Estate Financing  Transaction,  a Sale and Leaseback
         Transaction  or an Equipment  Financing  Transaction,  or Incurred by a
         Receivables Entity in a Qualified  Receivables  Transaction that is not
         recourse  to the  Company  or any other  Restricted  Subsidiary  of the
         Company  (except for Standard  Securitization  Undertakings),  provided
         that the aggregate principal amount of all Debt of this kind at any one
         time outstanding shall not exceed the greater of:

                           (1) $1.6 billion,  which amount shall be  permanently
                  reduced by the amount of Net Available Cash used to Repay Debt
                  under the Credit Facilities pursuant to Section 4.07 and

                           (2) the sum of the amounts equal to:

                                    (A) 50% of the book value of  the  inventory
                           of the Company and the Restricted Subsidiaries and

                                    (B) 85% of the book  value  of the  accounts
                           receivable   of  the  Company   and  the   Restricted
                           Subsidiaries,  in the case of each of clauses (A) and
                           (B) as of the  most  recently  ended  quarter  of the
                           Company for which financial statements of the Company
                           have been provided to the Holders of Securities;

                  (c) Debt of the  Company  owing to and held by any  Restricted
         Subsidiary and Debt of a Restricted Subsidiary owing to and held by the
         Company or any Restricted Subsidiary;  provided,  however, that (1) any
                                                --------   -------
         subsequent  issue or  transfer  of  Capital  Stock or other  event that
         results in any Restricted Subsidiary ceasing



<PAGE>

                                                                              54


         to be a Restricted  Subsidiary or any subsequent  transfer of that Debt
         (except to the Company or a Restricted  Subsidiary) shall be deemed, in
         each case,  to  constitute  the  Incurrence  of that Debt by the issuer
         thereof,  and (2) if the Company is the  obligor on that  Indebtedness,
         the Indebtedness is expressly subordinated to the prior payment in full
         in cash of all obligations with respect to the Securities;

                  (d) Debt of a Restricted Subsidiary outstanding on the date on
         which  that  Restricted  Subsidiary  was  acquired  by the  Company  or
         otherwise became a Restricted  Subsidiary  (other than Debt Incurred as
         consideration  in, or to  provide  all or any  portion  of the funds or
         credit  support  utilized to consummate,  the  transaction or series of
         transactions  pursuant  to which that  Restricted  Subsidiary  became a
         Subsidiary  of the Company or was  otherwise  acquired by the Company),
         provided that at the time that  Restricted  Subsidiary  was acquired by
         the  Company or  otherwise  became a  Restricted  Subsidiary  and after
         giving effect to the  Incurrence  of that Debt,  the Company would have
         been able to Incur $1.00 of  additional  Debt pursuant to clause (1) of
         the first paragraph of this covenant;

                  (e) Debt under  Interest Rate  Agreements  entered into by the
         Company or a Restricted Subsidiary for the purpose of limiting interest
         rate risk in the ordinary  course of the  financial  management  of the
         Company or that Restricted Subsidiary and not for speculative purposes,
         provided that the  obligations  under those  agreements  are related to
         payment  obligations on Debt  otherwise  permitted by the terms of this
         covenant;

                  (f) Debt under Currency Exchange Protection Agreements entered
         into by the  Company  or a  Restricted  Subsidiary  for the  purpose of
         limiting  currency exchange rate risks directly related to transactions
         entered  into by the  Company  or  that  Restricted  Subsidiary  in the
         ordinary course of business and not for speculative purposes;

                  (g) Debt under Commodity Price Protection  Agreements  entered
         into by the Company or a Restricted  Subsidiary in the ordinary  course
         of  the  financial   management  of  the  Company  or  that  Restricted
         Subsidiary and not for speculative purposes;

                  (h) Debt Incurred in respect of Capital Lease  Obligations and
         Purchase Money Debt,  provided that the aggregate  principal  amount of
         all Debt of this kind



<PAGE>

                                                                              55


         does  not  exceed  the Fair  Market  Value,  on the date of  Incurrence
         thereof, of the Property acquired,  constructed or leased, and provided
         further, that the aggregate principal amount outstanding of all Debt of
         this kind at any one time, together with all Permitted Refinancing Debt
         Incurred and outstanding in respect of these Capital Lease  Obligations
         and Purchase Money Debt, does not exceed $50.0 million;

                  (i) Debt outstanding on the Issue Date not otherwise described
         in clauses (a) through (h) above;

                  (j)  Debt of the  Company  or a  Restricted  Subsidiary  in an
         aggregate  principal  amount  outstanding at any one time not to exceed
         $100.0 million; and

                  (k)  Permitted  Refinancing  Debt  Incurred in respect of Debt
         Incurred pursuant to clause (1) of the first paragraph of this covenant
         and clauses (a), (d), (h) and (i) above.

                  SECTION 4.05.  Limitation on Restricted Payments.  The Company
                                 ----------------------------------
shall not make, and shall not permit any Restricted Subsidiary to make, directly
or indirectly, any Restricted Payment if at the time of, and after giving effect
to, the proposed Restricted Payment,

                  (a) a Default or Event of Default  shall have  occurred and be
         continuing,

                  (b) the Company  could not Incur at least $1.00 of  additional
         Debt pursuant to clause (1) of the first paragraph of Section 4.04 or

                  (c) the aggregate  amount of that  Restricted  Payment and all
         other  Restricted  Payments  declared or made since the Issue Date (the
         amount of any  Restricted  Payment,  if made other than in cash,  to be
         based upon Fair Market  Value)  would exceed an amount equal to the sum
         of:

                           (1) 50% of the aggregate amount of
                  Consolidated  Net Income accrued during the period (treated as
                  one  accounting  period)  from  the  beginning  of the  fiscal
                  quarter  during  which the Issue Date occurs to the end of the
                  most recent  fiscal  quarter  ending at least 45 days prior to
                  the date of the Restricted Payment (or if the aggregate amount
                  of Consolidated Net Income for such period shall be a deficit,
                  minus 100% of such deficit), plus



<PAGE>

                                                                              56


                           (2) Capital Stock Sale Proceeds, plus

                           (3) the sum of:

                                (A) the  aggregate  net cash  proceeds  received
                           by the Company or any Restricted  Subsidiary from the
                           issuance or sale after the Issue Date of  convertible
                           or exchangeable  Debt that has been converted into or
                           exchanged for Capital Stock (other than  Disqualified
                           Stock) of the Company, and

                                (B) the aggregate amount by which Debt of the
                           Company or any  Restricted  Subsidiary  is reduced on
                           the Company's  consolidated balance sheet on or after
                           the Issue Date upon the conversion or exchange of any
                           Debt  issued  or sold on or prior to the  Issue  Date
                           that is convertible or exchangeable for Capital Stock
                           (other  than  Disqualified  Stock)  of  the  Company,
                           excluding, in the case of clause (A) or (B):

                                        (x) any Debt issued or sold to the
                                    Company or a Subsidiary of the Company or an
                                    employee  stock   ownership  plan  or  trust
                                    established by the Company or any Subsidiary
                                    for the benefit of their employees, and

                                        (y)  the  aggregate amount  of any  cash
                                    or other Property distributed by the Company
                                    or any Restricted  Subsidiary  upon any such
                                    conversion or exchange, plus

                           (4) an amount equal to the sum of:

                                (A) the  net  reduction  in  Investments  in any
                           Person   other  than  the  Company  or  a  Restricted
                           Subsidiary  resulting from  dividends,  repayments of
                           loans or advances or other transfers of Property,  in
                           each case to the Company or any Restricted Subsidiary
                           from that Person, less the cost of the disposition of
                           those Investments, and

                                (B) the lesser of the net book value or the Fair
                           Market Value of the Company's  equity  interest in an
                           Unrestricted  Subsidiary at the time the Unrestricted
                           Subsidiary is



<PAGE>

                                                                              57


                           designated   a   Restricted   Subsidiary;   provided,
                                                                       --------
                           however,  that the foregoing sum shall not exceed, in
                           -------
                           the case of any  Person,  the  amount of  Investments
                           previously made (and treated as a Restricted Payment)
                           by the Company or any  Restricted  Subsidiary in that
                           Person.

Notwithstanding the foregoing limitation, the Company may:

                  (a) pay  dividends on its Capital  Stock within 60 days of the
         declaration  thereof if, on said declaration  date, the dividends could
         have been paid in compliance  with the  Indenture;  provided,  however,
                                                             --------   -------
         that at the time of the payment of the  dividend,  no other  Default or
         Event of  Default  shall have  occurred  and be  continuing  (or result
         therefrom);  provided  further,  however,  that the  dividend  shall be
                      -----------------   -------
         included in the calculation of the amount of Restricted Payments;

                  (b) purchase,  repurchase, redeem, legally defease, acquire or
         retire  for  value  Capital  Stock  of  the  Company  or   Subordinated
         Obligations   in  exchange   for,  or  out  of  the   proceeds  of  the
         substantially  concurrent  sale of, Capital Stock of the Company (other
         than Disqualified  Stock and other than Capital Stock issued or sold to
         a  Subsidiary  of the Company or an employee  stock  ownership  plan or
         trust  established  by the Company or any Subsidiary for the benefit of
         their employees); provided, however, that
                           --------  -------

                           (1)  the  purchase,  repurchase,   redemption,  legal
                  defeasance, acquisition or retirement shall be excluded in the
                  calculation of the amount of Restricted Payments and

                           (2) the Capital Stock Sale Proceeds from the exchange
                  or sale shall be  excluded  from the  calculation  pursuant to
                  clause (c)(2) above;

                  (c) purchase,  repurchase, redeem, legally defease, acquire or
         retire for value any  Subordinated  Obligations in exchange for, or out
         of the  proceeds of the  substantially  concurrent  sale of,  Permitted
         Refinancing Debt;  provided,  however,  that the purchase,  repurchase,
                            --------   -------
         redemption,  legal  defeasance,  acquisition  or  retirement  shall  be
         excluded in the calculation of the amount of Restricted Payments;

                  (d) pay  scheduled  dividends  (not  constituting  a return on
         capital) on Disqualified Stock of the Company issued pursuant to and in
         compliance with Section 4.04;



<PAGE>

                                                                              58


                  (e) permit a Restricted  Subsidiary that is not a Wholly Owned
         Subsidiary  to  pay  dividends  to   shareholders  of  that  Restricted
         Subsidiary  that are not the parent of that Restricted  Subsidiary,  so
         long as the Company or a  Restricted  Subsidiary  that is the parent of
         that Restricted Subsidiary receives dividends on a pro rata basis or on
         a basis that  results in the  receipt  by the  Company or a  Restricted
         Subsidiary  that  is  the  parent  of  that  Restricted  Subsidiary  of
         dividends or  distributions of greater value than it would receive on a
         pro rata basis; and

                  (f) until January 31, 2002 or the earlier  termination  of all
         of  the  Existing  Bank  Credit  Facilities,  permit  the  making  of a
         Restricted  Payment (as defined in the Existing Bank Credit Facilities,
         without  giving  effect to any waiver or  amendment  thereto  after the
         Issue Date) or the transfer of assets from any Subsidiary to its parent
         (in  each  case,  to the  extent  such a  payment  or  transfer  is not
         permitted to be restricted or limited under Section 7.18 of each of the
         Existing Bank Credit Facilities, without giving effect to any waiver or
         amendment thereto after the Issue Date).

                  SECTION 4.06.  Limitation on Liens. The Company shall not, and
                                 --------------------
shall not permit any Restricted Subsidiary to, directly or indirectly,  Incur or
suffer to exist,  any Lien (other than Permitted Liens) upon any of its Property
(including Capital Stock of a Restricted Subsidiary), whether owned at the Issue
Date or thereafter  acquired,  or any interest  therein or any income or profits
therefrom,  unless  it has made or will make  effective  provision  whereby  the
Securities  will be secured by that Lien  equally and ratably with (or prior to)
all other Debt of the Company or any Restricted Subsidiary secured by that Lien.

                  SECTION 4.07.  Limitation on Asset Sales.   (a)   The  Company
                                 --------------------------
shall not,  and shall not permit  any  Restricted  Subsidiary  to,  directly  or
indirectly, consummate any Asset Sale unless:

                  (i)  the  Company  or  the  Restricted   Subsidiary   receives
         consideration  at the time of the Asset Sale at least equal to the Fair
         Market Value of the Property subject to such Asset Sale;

                  (ii) at least 75% of the consideration paid to the  Company or
         the Restricted  Subsidiary in connection with such Asset Sale is in the
         form of cash or cash equivalents or the assumption by the purchaser of



<PAGE>

                                                                              59


         liabilities  of the Company or any  Restricted  Subsidiary  (other than
         liabilities that are by their terms  subordinated to the Securities) as
         a result of which the Company and the  Restricted  Subsidiaries  are no
         longer obligated with respect to such liabilities,  provided,  however,
                                                             --------   -------
         that in the case of a transaction  involving a sale of any distribution
         center by the Company or a Restricted  Subsidiary and the establishment
         of  an  outsourcing   arrangement   in  which  the  purchaser   assumes
         distribution   responsibilities   on  behalf  of  the  Company  or  the
         Restricted Subsidiary, any credits or other consideration the purchaser
         grants  to the  Company  or the  Restricted  Subsidiary  as part of the
         purchase  price of the  distribution  center,  which  credits  or other
         consideration  effectively  offset future payments due from the Company
         or  the  Restricted   Subsidiary  to  the  purchaser  as  part  of  the
         outsourcing arrangement,  will be considered to be cash equivalents for
         purposes of this clause (ii); and

                  (iii) the  Company  delivers an Officers'  Certificate  to the
         Trustee  certifying  that such  Asset Sale complies with  the foregoing
         clauses (i) and (ii).

                  (b) The Net Available Cash (or any portion thereof) from Asset
Sales may be applied by the Company or a  Restricted  Subsidiary,  to the extent
the Company or such Restricted Subsidiary elects (or is required by the terms of
any Debt):

                  (i) to Repay  Debt under the  Credit  Facilities,  or to Repay
         Debt of the  Company  or any  Restricted  Subsidiary  secured by a Lien
         pursuant  to  Section  4.06 on the  assets  subject  to that Asset Sale
         (excluding,  in any such  case,  any  Debt  owed to the  Company  or an
         Affiliate of the Company); or

                  (ii) to reinvest in Additional  Assets  (including by means of
         an Investment in Additional Assets by a Restricted  Subsidiary with Net
         Available   Cash   received  by  the  Company  or  another   Restricted
         Subsidiary),  provided,  however,  that the Net Available  Cash (or any
                       --------   -------
         portion  thereof)  from Asset Sales from the Company to any  Subsidiary
         must be reinvested in Additional Assets of the Company.

                  (c) Any Net  Available  Cash from an Asset Sale not applied in
accordance  with the  preceding  paragraph  within 360 days from the date of the
receipt of such Net Available Cash shall constitute "Excess Proceeds".



<PAGE>

                                                                              60


                  When the aggregate  amount of Excess  Proceeds not  previously
subject to a Prepayment  Offer (as defined below) exceeds $10.0 million  (taking
into account income earned on those Excess  Proceeds,  if any), the Company will
be required to make an offer to purchase the Securities (the "Prepayment Offer")
which offer shall be in the amount of the Allocable  Excess  Proceeds,  on a pro
rata basis according to principal  amount,  at a purchase price equal to 100% of
the principal amount thereof,  plus accrued and unpaid interest,  if any, to the
purchase date (subject to the right of Holders of record on the relevant  record
date  to  receive  interest  due on the  relevant  interest  payment  date),  in
accordance   with  the   procedures   (including   prorating  in  the  event  of
oversubscription) set forth in this Indenture. To the extent that any portion of
the amount of Net  Available  Cash remains after  compliance  with the preceding
sentence  and  provided  that all  Holders  of  Securities  have been  given the
opportunity  to tender their  Securities  for purchase in  accordance  with this
Indenture,  the  Company or such  Restricted  Subsidiary  may use the  remaining
amount for any  purpose  permitted  by this  Indenture  and the amount of Excess
Proceeds will be reset to zero.

                  The term "Allocable Excess Proceeds" will mean the product of:

                  (a) the Excess Proceeds and

                  (b) a fraction,

                           (1) the numerator of which is the aggregate principal
                  amount  of  the  Securities  outstanding  on the  date  of the
                  Prepayment Offer, and

                           (2)  the  denominator  of  which  is  the  sum of the
                  aggregate  principal  amount of the Securities  outstanding on
                  the date of the Prepayment  Offer and the aggregate  principal
                  amount of other Debt of the Company outstanding on the date of
                  the  Prepayment  Offer  that is pari passu in right of payment
                                                  ---- -----
                  with the  Securities  and subject to terms and  conditions  in
                  respect of Asset Sales similar in all material respects to the
                  covenant described hereunder and requiring the Company to make
                  an offer to purchase such Debt at substantially  the same time
                  as the Prepayment Offer.

                  (d)(1)   Within  five  Business  Days  after  the  Company  is
         obligated  to make a Prepayment  Offer as  described  in the  preceding
         paragraph,  the Company  shall send a written  notice,  by  first-class
         mail, to the Holders of



<PAGE>

                                                                              61


         Securities,  accompanied by  information  regarding the Company and its
         Subsidiaries  as the  Company in good faith  believes  will  enable the
         Holders to make an informed  decision  with respect to that  Prepayment
         Offer. The notice shall state,  among other things,  the purchase price
         and  the  purchase  date,  which  shall  be,  subject  to any  contrary
         requirements  of applicable law, a Business Day no earlier than 30 days
         nor later than 60 days from the date the notice is mailed.

                  (2) Not later  than the date upon  which  written  notice of a
         Prepayment  Offer is  delivered to the Trustee as provided  above,  the
         Company shall deliver to the Trustee an Officers' Certificate as to (i)
         the amount of the  Prepayment  Offer  (the  "Offer  Amount"),  (ii) the
         allocation of the Net Available  Cash from the Asset Sales  pursuant to
         which such  Prepayment  Offer is being made and (iii) the compliance of
         such  allocation with the provisions of Section  4.07(b).  On or before
         the Purchase Date, the Company shall also irrevocably  deposit with the
         Trustee or with the Paying  Agent (or, if the Company or a Wholly Owned
         Subsidiary is the Paying Agent,  shall  segregate and hold in trust) in
         Temporary Cash  Investments  (other than in those  enumerated in clause
         (b) of the definition of Temporary Cash  Investments),  maturing on the
         last day prior to the Purchase  Date or on the  Purchase  Date if funds
         are immediately  available by open of business,  an amount equal to the
         Offer Amount to be held for payment in accordance  with the  provisions
         of this  Section.  Upon the  expiration  of the  period  for  which the
         Prepayment Offer remains open (the "Offer  Period"),  the Company shall
         deliver to the  Trustee for  cancellation  the  Securities  or portions
         thereof that have been  properly  tendered to and are to be accepted by
         the Company.  The Trustee or the Paying  Agent  shall,  on the Purchase
         Date, mail or deliver payment to each tendering Holder in the amount of
         the purchase price.  In the event that the aggregate  purchase price of
         the Securities delivered by the Company to the Trustee is less than the
         Offer Amount,  the Trustee or the Paying Agent shall deliver the excess
         to the Company immediately after the expiration of the Offer Period for
         application in accordance with this Section.

                  (3)  Holders  electing to have a Security  purchased  shall be
         required to  surrender  the  Security,  with an  appropriate  form duly
         completed,  to the Company or its agent at the address specified in the
         notice at least three Business Days prior to the Purchase Date. Holders
         shall be entitled to withdraw their election if



<PAGE>

                                                                              62


          the  Trustee or the Company  receives not later than one Business  Day
          prior to the Purchase Date, a telegram, telex,  facsimile transmission
          or letter setting forth the name of the Holder, the  principal  amount
          of the Security that was delivered  for  purchase  by the Holder and a
          statement  that such Holder is  withdrawing  its election to have such
          Security  purchased.  If at the  expiration  of the Offer  Period  the
          aggregate  principal  amount  of  Securities  surrendered  by  Holders
          exceeds the Offer Amount,  the Company shall select the  Securities to
          be  purchased  on pro  rata  basis  for  all  Securities,  (with  such
          adjustments  as may be deemed  appropriate by the Company so that only
          Securities  in  denominations  of  1,000  euro  dollars,  or  integral
          multiples thereof,  shall be purchased).  Holders whose Securities are
          purchased  only in part  shall  be  issued  new  Securities  equal  in
          principal  amount  to  the  unpurchased   portion  of  the  Securities
          surrendered.

                  (4) At the time the Company delivers Securities to the Trustee
         that are to be accepted for purchase, the Company shall also deliver an
         Officers'  Certificate  stating that such Securities are to be accepted
         by the  Company  pursuant to and in  accordance  with the terms of this
         Section.  A Security shall be deemed to have been accepted for purchase
         at the time the Trustee or the Paying  Agent mails or delivers  payment
         therefor to the surrendering Holder.

                  (5) The Company will 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 Securities pursuant to
 the covenant  described  hereunder.  To the extent that the  provisions  of any
 securities  laws  or  regulations  conflict  with  provisions  of the  covenant
 described  hereunder,  the Company will comply with the  applicable  securities
 laws and  regulations  and will not be deemed to have breached its  obligations
 under the covenant described hereunder by virtue thereof.

                  SECTION 4.08. Limitation on Restrictions on Distributions from
                                ------------------------------------------------
Restricted  Subsidiaries.  The  Company  shall  not,  and shall not  permit  any
- -------------------------
Restricted  Subsidiary to, directly or indirectly,  create or otherwise cause or
suffer  to exist  any  consensual  restriction  on the  right of any  Restricted
Subsidiary to:

                  (a) pay  dividends,  in cash or  otherwise,  or make any other
         distributions on or in respect of its Capital



<PAGE>

                                                                              63


         Stock, or pay any Debt or other obligation owed,  to the Company or any
         other Restricted Subsidiary,

                  (b) make any loans or  advances  to the  Company  or any other
         Restricted Subsidiary or

                  (c)  transfer  any of its Property to the Company or any other
         Restricted Subsidiary. The foregoing limitations will not apply:

                           (1) with  respect to  clauses  (a),  (b) and (c),  to
                  restrictions:

                           (A) in effect on the Issue Date,

                           (B) relating to Debt of a Restricted  Subsidiary  and
                  existing at the time it became a Restricted Subsidiary if such
                  restriction   was  not  created  in  connection   with  or  in
                  anticipation  of the  transaction  or series  of  transactions
                  pursuant  to  which  that  Restricted   Subsidiary   became  a
                  Restricted Subsidiary or was acquired by the Company,

                           (C) that result from the Refinancing of Debt Incurred
                  pursuant to an agreement  referred to in clause  (1)(A) or (B)
                  above  or  in  clause  (2)(A)  or  (B)  below,  provided  that
                  restriction  is no less favorable to the Holders of Securities
                  than  those  under  the  agreement   evidencing  the  Debt  so
                  Refinanced, or

                           (D)  resulting  from the  Incurrence of any Permitted
                  Debt  described  in  clause  (b) of the  second  paragraph  of
                  Section  4.04,  provided  that  the  restriction  is  no  less
                  favorable to the Holders of Securities  than the  restrictions
                  of the same type contained in the Indenture, and

                  (2) with respect to clause (c) only, to restrictions:

                           (A) relating to Debt that is permitted to be Incurred
                  and  secured  without  also  securing  the notes  pursuant  to
                  Section  4.04 and  Section  4.06  that  limit the right of the
                  debtor to dispose of the Property securing that Debt,



<PAGE>

                                                                              64


                           (B) encumbering Property at the time the Property was
                  acquired by the Company or any Restricted Subsidiary,  so long
                  as the restriction  relates solely to the Property so acquired
                  and was not created in connection  with or in  anticipation of
                  the acquisition,

                           (C) resulting from customary  provisions  restricting
                  subletting or assignment of leases or customary  provisions in
                  other agreements (including, without limitation,  intellectual
                  property  licenses  entered  into in the  ordinary  course  of
                  business) that restrict assignment of the agreements or rights
                  thereunder, or

                           (D) which are  customary  restrictions  contained  in
                  asset  sale  agreements  limiting  the  transfer  of  Property
                  pending the closing of the sale.

                  SECTION 4.09. Limitation on Transactions with Affiliates.  The
                                -------------------------------------------
Company shall not, and shall not permit any Restricted  Subsidiary to,  directly
or  indirectly,  conduct  any  business  or enter  into or  suffer  to exist any
transaction or series of transactions  (including the purchase,  sale, transfer,
assignment,  lease,  conveyance  or exchange of any Property or the rendering of
any  service)  with,  or for the  benefit of, any  Affiliate  of the Company (an
"Affiliate Transaction"), unless:

                  (a) the terms of such Affiliate Transaction are:

                           (1) set forth in writing, and

                           (2)  no  less   favorable  to  the  Company  or  that
                  Restricted  Subsidiary,  as the case may be,  than  those that
                  could be obtained  in a  comparable  arm's-length  transaction
                  with a Person that is not an Affiliate of the Company, and

                  (b) if the Affiliate  Transaction  involves aggregate payments
         or value in excess of $10.0 million,  the Board of Directors (including
         a majority  of the  disinterested  members  of the Board of  Directors)
         approves the  Affiliate  Transaction  and, in its good faith  judgment,
         believes that the Affiliate  Transaction  complies with clauses  (a)(1)
         and (2) of this paragraph as evidenced by a Board  Resolution  promptly
         delivered to the trustee.



<PAGE>

                                                                              65


                  Notwithstanding the foregoing  limitation,  the Company or any
Restricted Subsidiary may enter into or suffer to exist the following:

                  (a) any  transaction  or series of  transactions  between  the
         Company and one or more Restricted  Subsidiaries or between two or more
         Restricted  Subsidiaries in the ordinary  course of business,  provided
         that no more than 5% of the total  voting power of the Voting Stock (on
         a fully diluted basis) of any such Restricted Subsidiary is owned by an
         Affiliate of the Company (other than a Restricted Subsidiary);

                  (b) any  Restricted  Payment  permitted to be made pursuant to
         Section 4.05 or any Permitted Investment;

                  (c)  the  payment  of  compensation  (including  amounts  paid
         pursuant  to  employee  benefit  plans) for the  personal  services  of
         officers,  directors  and  employees  of  the  Company  or  any  of the
         Restricted  Subsidiaries,  so long  as,  in the  case of  officers  and
         directors, the Board of Directors in good faith shall have approved the
         terms thereof and deemed the services  theretofore  or thereafter to be
         performed for the compensation to be fair consideration therefor;

                  (d) loans  and  advances  to  employees  made in the  ordinary
         course  of  business  and  consistent  with the past  practices  of the
         Company or that  Restricted  Subsidiary,  as the case may be,  provided
         that  those  loans and  advances  do not  exceed  $5.0  million  in the
         aggregate at any one time outstanding;

                  (e)  any   transaction   effected   as  part  of  a  Qualified
         Receivables  Transaction or any  transaction  involving the transfer of
         accounts  receivable of the type specified in the definition of "Credit
         Facility"  and  permitted  under clause (b) of the second  paragraph of
         Section 4.04; and

                  (f) the  Existing  Policies  or any  transaction  contemplated
         thereby.

                  SECTION  4.10.  Designation  of  Restricted  and  Unrestricted
                                  ----------------------------------------------
Subsidiaries. The Board of Directors may designate any Subsidiary of the Company
- -------------
to be an Unrestricted Subsidiary if:

                  (a)  the  Subsidiary  to be so  designated  does  not  own any
         Capital Stock or Debt of, or own or hold any



<PAGE>

                                                                              66


         Lien  on  any  Property  of,  the  Company  or  any  other   Restricted
         Subsidiary, and

                  (b) any of the following:

                           (1) the  Subsidiary  to  be so  designated  has total
                  assets of $1,000 or less,

                           (2) if the Subsidiary has consolidated assets greater
                  than $1,000,  then the  designation  would be permitted  under
                  Section 4.05, or

                           (3) the designation is effective immediately upon the
                  entity becoming a Subsidiary of the Company.

Unless so designated as an  Unrestricted  Subsidiary,  any Person that becomes a
Subsidiary  of the  Company  will  be  classified  as a  Restricted  Subsidiary;
provided,  however,  that the  Subsidiary  shall not be  designated a Restricted
- --------   -------
Subsidiary and shall be automatically  classified as an Unrestricted  Subsidiary
if either of the  requirements  set forth in  clauses  (x) and (y) of the second
immediately  following  paragraph  will not be satisfied  after giving pro forma
effect to the classification or if the Person is a Subsidiary of an Unrestricted
Subsidiary.

                  Except as  provided  in the first  sentence  of the  preceding
paragraph,  no Restricted  Subsidiary  may be  redesignated  as an  Unrestricted
Subsidiary. In addition, neither the Company nor any Restricted Subsidiary shall
at any time be directly or indirectly liable for any Debt that provides that the
holder  thereof  may (with  the  passage  of time or  notice or both)  declare a
default  thereon or cause the payment thereof to be accelerated or payable prior
to its Stated  Maturity  upon the  occurrence  of a default  with respect to any
Debt, Lien or other obligation of any  Unrestricted  Subsidiary in existence and
classified  as an  Unrestricted  Subsidiary  at  the  time  the  Company  or the
Restricted  Subsidiary  is  liable  for that Debt  (including  any right to take
enforcement action against that Unrestricted Subsidiary).

                  The  Board  of  Directors  may   designate  any   Unrestricted
Subsidiary to be a Restricted  Subsidiary if, immediately after giving pro forma
effect to the designation,

                  (x) the Company could Incur at least $1.00 of additional  Debt
         pursuant to clause (1) of the first paragraph of Section 4.04, and



<PAGE>

                                                                              67


                  (y) no Default or Event of Default  shall have occurred and be
continuing or would result therefrom.

                  Any designation or  redesignation of this kind by the Board of
Directors  will be  evidenced  to the Trustee by filing with the Trustee a Board
Resolution  giving effect to the designation or  redesignation  and an Officers'
Certificate that:

                  (a) certifies that the designation or  redesignation  complies
         with the foregoing provisions, and

                  (b)  gives  the   effective   date  of  the   designation   or
         redesignation,  and the filing with the Trustee to occur within 45 days
         after  the end of the  fiscal  quarter  of the  Company  in  which  the
         designation or  redesignation is made (or, in the case of a designation
         or  redesignation  made during the last fiscal quarter of the Company's
         fiscal year, within 90 days after the end of that fiscal year).

                  SECTION 4.11.  Limitation on Sale and Leaseback  Transactions.
                                 -----------------------------------------------
The Company shall not, and shall not permit any Restricted  Subsidiary to, enter
into any Sale and Leaseback Transaction with respect to any Property unless:

                  (a)  the  Company  or  that  Restricted  Subsidiary  would  be
         entitled to:

                           (1) Incur Debt in an amount equal to the Attributable
                  Debt  with  respect  to that  Sale and  Leaseback  Transaction
                  pursuant to Section 4.04, and

                           (2)  create  a Lien  on the  Property  securing  that
                  Attributable   Debt  without  also  securing  the   Securities
                  pursuant to Section 4.06, and

                  (b)  the  Sale  and  Leaseback   Transaction  is  effected  in
         compliance with Section 4.07.

                  SECTION 4.12. Change of Control.  (a) Upon the occurrence of a
                                ------------------
Change of Control, each Holder of Securities shall have the right to require the
Company to repurchase  all or any part of such Holder's  Securities  pursuant to
the offer  described  below (the "Change of Control  Offer") at a purchase price
(the "Change of Control Purchase Price") equal to 101.0% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the purchase date (subject
to the right of Holders of record on the relevant



<PAGE>

                                                                              68


record date to receive interest due on the relevant interest payment date).

                  (b)  Within  30 days  following  any  Change of  Control,  the
Company  shall (i) cause a notice of the Change of  Control  Offer to be sent at
least once to the Dow Jones News Service or similar business news service in the
United States and (ii) send, by first-class mail, with a copy to the Trustee, to
each Holder of Securities,  at such Holder's  address  appearing in the Security
Register,  a notice  stating:  (A) that a Change of Control  Offer is being made
pursuant to this Section 4.12 and that all  Securities  timely  tendered will be
accepted for payment;  (B) the Change of Control Purchase Price and the purchase
date, which shall be, subject to any contrary  requirements of applicable law, a
Business  Day no earlier  than 30 days nor later than 60 days from the date such
notice is mailed (the "Change of Control Payment Date");  (C) the  circumstances
and relevant facts regarding the Change of Control  (including  information with
respect  to pro forma  historical  income,  cash flow and  capitalization  after
giving effect to the Change of Control);  and (D) the procedures that Holders of
Securities must follow in order to tender their Securities (or portions thereof)
for payment and the procedures  that Holders of Securities  must follow in order
to withdraw an election to tender Securities (or portions thereof) for payment.

                  (c)  Holders  electing to have a Security  purchased  shall be
required to surrender the Security,  with an appropriate form duly completed, to
the Company or its agent at the address  specified  in the notice at least three
Business  Days prior to the Change of Control  Payment  Date.  Holders  shall be
entitled to withdraw their  election if the Trustee or the Company  receives not
later  than one  Business  Day prior to the Change of Control  Payment  Date,  a
telegram,  telex, facsimile transmission or letter setting forth the name of the
Holder,  the principal amount of the Security that was delivered for purchase by
the Holder and a statement that such Holder is withdrawing  its election to have
such Security purchased.

                  (d) On or prior to the Change of  Control  Payment  Date,  the
Company shall irrevocably deposit with the Trustee or with the Paying Agent (or,
if the Company or any of its Wholly Owned  Subsidiaries  is acting as the Paying
Agent,  segregate  and hold in trust) in cash an amount  equal to the  Change of
Control Purchase Price payable to the Holders entitled  thereto,  to be held for
payment in accordance  with the  provisions  of this  Section.  On the Change of
Control Payment Date, the Company shall deliver to the Trustee the Securities or
portions thereof that have been properly



<PAGE>

                                                                              69


tendered to and are to be accepted  by the Company for  payment.  The Trustee or
the Paying Agent shall,  on the Change of Control  Payment Date, mail or deliver
payment to each tendering Holder of the Change of Control Purchase Price. In the
event  that the  aggregate  Change of  Control  Purchase  Price is less than the
amount  delivered by the Company to the Trustee or the Paying Agent, the Trustee
or the Paying Agent, as the case may be, shall deliver the excess to the Company
immediately after the Change of Control Payment Date.

                  (e) The Company will 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 purchase of Securities  pursuant to
this  Section.  To the extent  that the  provisions  of any  securities  laws or
regulations  conflict  with the  provisions  of this  Section,  the Company will
comply  with the  applicable  securities  laws and  regulations  and will not be
deemed to have breached its obligations under this Section by virtue thereof.

                  SECTION 4.13.  Further  Instruments  and Acts. Upon request of
                                 -------------------------------
the Trustee,  the Company shall 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.


                                    ARTICLE V

                                Successor Company
                                -----------------

                  SECTION 5.01.  (a) When Company May Merge or Transfer  Assets.
                                     -------------------------------------------
The Company shall not merge,  consolidate  or amalgamate  with or into any other
Person  (other than a merger of a Wholly Owned  Restricted  Subsidiary  into the
Company) or sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially  all its Property in any one transaction or series of transactions
unless:

                  (a) the Company shall be the surviving  Person (the "Surviving
         Person") or the Surviving  Person (if other than the Company) formed by
         that  merger,  consolidation  or  amalgamation  or to which  that sale,
         transfer, assignment, lease, conveyance or disposition is made shall be
         a  corporation  organized  and  existing  under the laws of the  United
         States of America, any State thereof or the District of Columbia;



<PAGE>

                                                                              70


                  (b) the Surviving Person (if other than the Company) expressly
         assumes, by supplemental indenture in form satisfactory to the Trustee,
         executed and delivered to the Trustee by that Surviving Person, the due
         and punctual  payment of the  principal  of, and  premium,  if any, and
         interest on, all the Securities,  according to their tenor, and the due
         and  punctual  performance  and  observance  of all the  covenants  and
         conditions of the Indenture to be performed by the Company;

                  (c)  in the  case  of a  sale,  transfer,  assignment,  lease,
         conveyance  or  other  disposition  of all  or  substantially  all  the
         Property of the Company,  that Property shall have been  transferred as
         an entirety or virtually as an entirety to one Person;

                  (d)  immediately  before  and  after  giving  effect  to  that
         transaction  or  series  of  transactions  on a pro  forma  basis  (and
         treating,  for  purposes of this  clause (d) and clause (e) below,  any
         Debt that becomes,  or is anticipated  to become,  an obligation of the
         Surviving  Person  or any  Restricted  Subsidiary  as a result  of that
         transaction  or series of  transactions  as having been Incurred by the
         Surviving  Person  or the  Restricted  Subsidiary  at the  time of that
         transaction or series of transactions),  no Default or Event of Default
         shall have occurred and be continuing;

                  (e)  immediately  after giving effect to that  transaction  or
         series  of  transactions  on a pro  forma  basis,  the  Company  or the
         Surviving  Person,  as the case may be, would be able to Incur at least
         $1.00 of  additional  Debt under  clause (1) of the first  paragraph of
         Section  4.04,  provided,  however,  that this  clause (e) shall not be
                         --------   -------
         applicable to the Company merging,  consolidating or amalgamating  with
         or  into  an   Affiliate   incorporated   solely  for  the  purpose  of
         reincorporating  the Company in another  State of the United  States so
         long  as  the  amount  of  Debt  of  the  Company  and  the  Restricted
         Subsidiaries is not increased thereby;

                  (f) the Company shall  deliver,  or cause to be delivered,  to
         the  Trustee,  in form and  substance  reasonably  satisfactory  to the
         Trustee,  an  Officers'  Certificate  and an Opinion of  Counsel,  each
         stating that the transaction and the supplemental indenture, if any, in
         respect  thereto  comply  with this  covenant  and that all  conditions
         precedent  herein  provided for relating to the  transaction  have been
         satisfied; and



<PAGE>

                                                                              71


                  (g) the Company shall have delivered to the Trustee an Opinion
         of Counsel to the effect that the Holders  will not  recognize  income,
         gain or loss  for  Federal  income  tax  purposes  as a  result  of the
         transaction  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 that transaction had not occurred.

                  The Surviving Person shall succeed to, and be substituted for,
and may exercise every right and power of the Company under the  Indenture,  but
the predecessor Company in the case of:

                  (a)  a  sale,  transfer,   assignment,   conveyance  or  other
         disposition  (unless that sale,  transfer,  assignment,  conveyance  or
         other disposition is of all the assets of the Company as an entirety or
         virtually as an entirety), or

                  (b) a lease,  shall not be released from any obligation to pay
         the principal of, premium, if any, and interest on, the Securities.


                                   ARTICLE VI

                              Defaults and Remedies
                              ---------------------

                  SECTION 6.01. Events of Default. The following events shall be
                                ------------------
 "Events of Default":

                  (1) the  Company  defaults  in any  payment of interest on any
         Security  when the  same  becomes  due and  payable,  and such  default
         continues for a period of 30 days;

                  (2) the Company  defaults in the payment of the  principal  of
         any  Security  when the same  becomes  due and  payable  at its  Stated
         Maturity, upon acceleration,  redemption, optional redemption, required
         repurchase or otherwise;

                  (3) the Company fails to comply with Article 5;

                  (4) the Company fails to comply with any covenant or agreement
         in the  Securities or in this  Indenture  (other than a failure that is
         the subject of the  foregoing  clause (1), (2) or (3)) and such failure
         continues for 30 days after  written  notice is given to the Company as
         specified below;



<PAGE>

                                                                              72


                  (5) a default under any Debt by the Company or any  Restricted
         Subsidiary  that results in  acceleration of the maturity of that Debt,
         or failure to pay any such Debt at  maturity,  in an  aggregate  amount
         greater than $25.0  million or its foreign  currency  equivalent at the
         time;

                  (6) the Company or any Significant  Subsidiary  pursuant to or
         within the meaning of any Bankruptcy Law:

                           (A) commences a voluntary case;

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

                           (C) consents to the  appointment of a Custodian of it
                  or for any substantial part of its property; or

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

         or  takes  any  comparable  action  under any foreign  laws relating to
         insolvency;

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

                           (A)  is  for  relief   against  the  Company  or  any
                  Significant Subsidiary in an involuntary case;

                           (B)  appoints  a  Custodian  of  the  Company  or any
                  Significant  Subsidiary  or for  any  substantial  part of its
                  property; or

                           (C)  orders  the  winding  up or  liquidation  of the
                  Company or any Significant Subsidiary; or

                           (D) grants any similar relief under any foreign laws;

         and  in  each  such  case  the  order or decree remains unstayed and in
         effect for 30 days; or

                  (8) any judgment or  judgments  for the payment of money in an
         aggregate  amount in excess of $25.0 million,  or its foreign  currency
         equivalent at the time,  that shall be rendered  against the Company or
         any  Restricted  Subsidiary  and  shall  not be  waived,  satisfied  or
         discharged for any period of 30 consecutive



<PAGE>

                                                                              73


         days during which a stay of enforcement shall not be in effect.

                  The foregoing will constitute  Events of Default  whatever the
reason for any such Event of Default and whether it is voluntary or  involuntary
or is effected by operation of law or pursuant to any judgment,  decree or order
of any  court  or any  order,  rule  or  regulation  of  any  administrative  or
governmental body.

                  The term  "Bankruptcy Law" means Title 11, United States Code,
or any  similar  Federal  or  state  law for the  relief  of  debtors.  The term
"Custodian"  means any receiver,  trustee,  assignee,  liquidator,  custodian or
similar official under any Bankruptcy Law.

                  A Default  under  clause (4) is not an Event of Default  until
 the Trustee or the Holders of at least 25% in aggregate principal amount of the
 Securities then outstanding  notify the Company (and in the case of such notice
 by Holders,  the  Trustee)  of the  Default and the Company  does not cure that
 Default within the time specified after receipt of such notice. The 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  and any event  that with the  giving of notice or the
 lapse of time would become an Event of Default,  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  with
                                  -------------
respect to any of the  Securities  (other than an Event of Default  specified in
Section  6.01(6) or (7) with respect to the Company)  shall have occurred and be
continuing,  the  Trustee  or the  registered  Holders  of not less  than 25% in
aggregate  principal amount of the Securities then outstanding may, by notice to
the  Company  and the  Trustee,  declare to be  immediately  due and payable the
principal amount of all the applicable Securities then outstanding, plus accrued
but unpaid interest to the date of acceleration.  Upon such a declaration,  such
principal  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 and accrued and unpaid interest on all the Securities  shall be
due and payable  immediately without any declaration or other act by the Trustee
or the Holder of the Securities. After any such



<PAGE>

                                                                              74


acceleration  but before a judgment or decree based on  acceleration is obtained
by the Trustee,  the Holders of a majority in aggregate  principal amount of the
outstanding  Securities by notice to the Trustee and the Company may rescind any
declaration  of  acceleration  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 or interest  that has become due solely
because of the  acceleration.  No such  rescission  shall affect any  subsequent
Default or impair any right consequent thereto.

                  SECTION 6.03.  Other  Remedies.  If an Event of Default occurs
                                 ----------------
and is  continuing,  the Trustee may pursue any available  remedy to collect the
payment of principal or interest on the Securities or to enforce the performance
of any provision of the Securities or this Indenture.

                  The  Trustee  may  maintain a  proceeding  even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder 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 a
                                  --------------------------
 majority in aggregate  principal  amount of the Securities then  outstanding by
 notice to the Trustee may waive an existing Default and its consequences except
 (i) a Default in the payment of the  principal  of or interest on a Security or
 (ii) a Default in respect of a  provision  that under  Section  9.02  cannot be
 amended without the consent of each Securityholder  affected. When a Default is
 waived,  it is deemed cured,  but no such waiver shall extend to any subsequent
 or other Default or impair any consequent right.

                  SECTION 6.05.  Control by Majority.  The Holders of a majority
                                 --------------------
in aggregate  principal amount of the Securities then outstanding 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 with
respect  to the  Securities.  However,  the  Trustee  may  refuse to follow  any
direction that conflicts with law or this Indenture or, subject to Section 7.01,
that the  Trustee  determines  is  unduly  prejudicial  to the  rights  of other
Securityholders  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



<PAGE>

                                                                              75


not inconsistent with such direction.  Prior to taking any action hereunder, the
Trustee shall be entitled to reasonable  indemnification  against all losses and
expenses caused by taking or not taking such action.

                  SECTION 6.06.  Limitation on Suits.  A Securityholder  may not
                                 --------------------
pursue any remedy with respect to this Indenture or the Securities unless:

                  (1) such  Holder shall  have  previously  given to the Trustee
         written notice of a continuing Event of Default;

                  (2) the Holders of at least 25% in aggregate  principal amount
         of the Securities then  outstanding  shall have made a written request,
         and such Holder or Holders shall have offered reasonable indemnity,  to
         the Trustee to pursue such proceeding as trustee; and

                  (3) the Trustee has failed to institute  such  proceeding  and
         has not  received  from the Holders of at least a majority in aggregate
         principal amount of the Securities outstanding a direction inconsistent
         with such request, within 60 days after such notice, request and offer.

                  The  foregoing  limitations  on the  pursuit of  remedies by a
Securityholder  shall not apply to a suit  instituted  by a Holder of Securities
for the  enforcement  of payment of the  principal  of, and premium,  if any, or
interest on such Security on or after the  applicable due date specified in such
Security. A Securityholder may not use this Indenture to prejudice the rights of
another  Securityholder  or to obtain a  preference  or  priority  over  another
Securityholder.

                  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 and interest on the Securities  held by such
Holder, on or after the respective due dates expressed in the Securities,  or to
bring suit for the  enforcement of any such payment on or after such  respective
dates, shall not be impaired or affected without the consent of such Holder.

                  SECTION  6.08.  Collection  Suit by  Trustee.  If an  Event of
                                  -----------------------------
 Default  specified  in Section  6.01(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 (together



<PAGE>

                                                                              76


with  interest  on any unpaid  interest  to the extent  lawful)  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  Securityholders
allowed in any judicial  proceedings  relative to the Company,  its creditors or
its 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
and, in the event that the Trustee  shall consent to the making of such payments
directly  to the  Holders,  to pay to the  Trustee  any  amount  due 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.  If  the Trustee collects any money
                                 -----------
or property  pursuant to this  Article 6, it shall pay out the money or property
in the following order:

                  FIRST:  to the  Trustee,  to  the  Authentication  Agent,  the
         Registrar and the Paying Agent for amounts due under Section 7.07;

                  SECOND: to  Securityholders  for amounts due and unpaid on the
         Securities for principal and interest,  ratably,  without preference or
         priority of any kind,  according  to the amounts due and payable on the
         Securities for principal and interest, respectively; and

                  THIRD:  to the Company.

                  The Trustee  may fix a record  date and  payment  date for any
payment to  Securityholders  pursuant to this  Section.  At least 15 days before
such record date, the Company shall mail to each  Securityholder 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,  Authentication  Agent,  Registrar or Paying Agent for any action
 taken or omitted by it as Trustee, Authentication Agent, Registrar or



<PAGE>

                                                                              77


Paying Agent, as applicable, 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 and expenses, 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 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
aggregate principal amount of the Securities.

                  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,  that 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 its
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:

                  (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



<PAGE>

                                                                              78


         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
         any 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;

                  (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) Every  provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.

                  (e) 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.

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

                  (g) 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.

                  (h) 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 and to the  provisions of the TIA and
the provisions of this Article VII shall apply to the Trustee, Registrar, Paying
Agent and Common Depository.



<PAGE>

                                                                              79


                  (i) The  Trustee  shall  not be  deemed  to have  notice  of a
Default  or an Event of Default  unless (a) the  Trustee  has  received  written
notice  thereof from the Company or any Holder or (b) a Trust Officer shall have
actual knowledge thereof.

                  SECTION  7.02.   Rights  of  Trustee.   (a)  The  Trustee  may
                                   --------------------
conclusively  rely on any document  (whether in its original or facsimile  form)
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.  The Trustee may, however, in its discretion make such further inquiry
or  investigation  into  such  facts or  matters  as it may see fit and,  if the
Trustee shall determine to make such further inquiry or investigation,  it shall
be  entitled  to  examine  the  books,  records  and  premises  of the  Company,
personally or by agent or attorney at the expense of the Company and shall incur
no  liability or  additional  liability of any kind by reason of such inquiry or
investigation.

                  (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
the 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 that 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  Securities  shall be 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)  The  permissive  rights  of  the  Trustee  to  do  things
enumerated  in  this  Indenture  shall  not be  construed  as a duty  unless  so
specified herein.

                  (g)  The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this



<PAGE>

                                                                              80


Indenture  at the request or  direction  of any of the Holders  pursuant to this
Indenture,  unless such Holders  shall have  offered to the Trustee  security or
indemnity   satisfactory  to  the  Trustee  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 Securities
and may otherwise deal with the Company or its  Affiliates  with the same rights
it  would  have  if  it  were  not  Trustee.  Any  Paying  Agent,  Registrar  or
co-registrar may do the same with like rights.  However, the Trustee must comply
with Sections 7.10 and 7.11.

                  SECTION 7.04. Trustee's  Disclaimer.  The Trustee shall not be
                                ----------------------
responsible  for and makes no  representation  as to the  validity,  priority or
adequacy of this Indenture or the  Securities,  it shall not be accountable  for
the  Company's  use of the  proceeds  from the  Securities,  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  Securities  or in the
Securities other than the Trustee's certificate of authentication.

                  SECTION  7.05.  Notice of  Defaults.  If a Default or Event of
                                  --------------------
 Default occurs and is continuing and if it is known to the Trustee, the Trustee
 shall  mail to each  Securityholder  notice of the  Default or Event of Default
 within 90 days after it is known to a Trust Officer or written  notice of it is
 received by the Trustee. Except in the case of a Default or Event of Default in
 payment of principal of or interest on any  Security,  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 Securityholders.

                  SECTION  7.06.  Reports by Trustee to Holders.  As promptly as
                                  ------------------------------
practicable  after each December 31 beginning with December 31, 2000, and in any
event  prior  to  March  31 in  each  year,  the  Trustee  shall  mail  to  each
Securityholder  a brief report  dated as of December 31 each year that  complies
with TIA ss.  313(a),  if and to the extent  required  by such  subsection.  The
Trustee shall also comply with TIA ss. 313(b).

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



<PAGE>

                                                                              81


the Securities 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 reasonable  compensation for its services.
 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,  counsel,  accountants and
 experts.  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  acceptance  and  administration  of this  trust  and the
 performance of its duties hereunder except to the extent that the Company shall
 have been actually  prejudiced  as a result of such failure.  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  may have  separate  counsel  and the  Company  shall  pay the fees and
 expenses  of such  counsel.  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.  The
 Company  need  not pay for any  settlement  made  by the  Trustee  without  the
 Company's  consent,  such  consent  not  to  be  unreasonably   withheld.   All
 indemnifications  and releases from liability  granted hereunder to the Trustee
 shall extend to its officers,  directors,  employees,  agents,  successors  and
 assigns.

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

                  The  Company's  payment  obligations  pursuant to this Section
 shall  survive the  resignation  or removal of the Trustee and 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.



<PAGE>

                                                                              82


                  SECTION 7.08.  Replacement of Trustee.  The Trustee may resign
                                 -----------------------
at any time by so notifying the Company.  The Holders of a majority in aggregate
principal amount of the Securities then outstanding 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  aggregate  principal  amount of the  Securities  then
outstanding  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 Securityholders.  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.

                  If a successor  Trustee  does not take  office  within 60 days
after the retiring  Trustee resigns or is removed,  the retiring  Trustee or the
Holders of 10% in aggregate  principal amount of the Securities then outstanding
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
Securityholder  who has been a bona fide  Holder of a Security  for at least six
months may petition any court of competent  jurisdiction  for the removal of the
Trustee and the appointment of a successor Trustee.



<PAGE>

                                                                              83


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

                  If the  Registrar  or Paying  Agent  resigns,  and a successor
Registrar or Paying Agent is not  appointed by the Company  within 60 days after
the retiring Registrar or Paying Agent resigns, the retiring Registrar or Paying
Agent shall have the right to appoint a successor  Registrar or Paying Agent, as
applicable,  which  Registrar  or Paying Agent shall be approved by the Company,
such approval not to be unreasonably withheld.

                  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  or banking
association 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 Securities  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  Securities  so
authenticated;  and in case at that  time any of the  Securities  shall not have
been  authenticated,  any such  successor to the Trustee may  authenticate  such
Securities 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 Securities or in this Indenture  provided
that the certificate of the Trustee shall have.

                  SECTION 7.10. Eligibility; Disqualification. The Trustee shall
                                ------------------------------
at all times satisfy the requirements of TIA ss. 310(a).  The Trustee shall have
(or, in the case of a corporation included in a bank holding company system, the
related bank holding  company  shall have) a combined  capital and surplus of at
least  $50,000,000  as set forth in its (or its related bank holding  company's)
most recent published annual report of condition.  The Trustee shall comply with
TIA ss. 310(b), subject to the penultimate paragraph thereof; provided, however,
                                                              --------  -------
that  there  shall be  excluded  from the  operation  of TIA ss.  310(b)(1)  any
indenture or indentures under which other securities or certificates of interest
or participation in other securities of the Company are



<PAGE>

                                                                              84


outstanding if the requirements for such exclusion set forth in TIA ss.310(b)(1)
are met.

                  SECTION  7.11.   Preferential  Collection  of  Claims  Against
Company.  The Trustee shall comply with TIA ss.  311(a),  excluding any creditor
relationship  listed in TIA ss.  311(b).  A  Trustee  who has  resigned  or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.


                                  ARTICLE VIII

                       Discharge of Indenture; Defeasance
                       ----------------------------------

                  SECTION 8.01.   Discharge   of   Liability   on    Securities;
                                  ----------------------------------------------
Defeasance.  (a) When (i) the Company  delivers  to the Trustee all  outstanding
- -----------
Securities  (other  than  Securities  replaced  pursuant  to  Section  2.07) for
cancellation  or (ii) all  outstanding  Securities  have become due and payable,
whether at  maturity  or as a result of the  mailing  of a notice of  redemption
pursuant to Article III and the Company  irrevocably  deposits  with the Trustee
funds  sufficient  to  pay  at  maturity  or  upon  redemption  all  outstanding
Securities,  including  interest  thereon to  maturity or such  redemption  date
(other than Securities 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 Sections  8.01(c) and 8.02,  the Company at any
time may  terminate (i) all of its  obligations  under the  Securities  and this
Indenture  ("legal  defeasance  option") or (ii) its obligations  under Sections
4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, and 4.12 and the operation
of Sections 6.01(5),  6.01(6), 6.01(7) and 6.01(8) (but, in the case of Sections
6.01(6)  and  (7),  with  respect  only  to  Significant  Subsidiaries)  and the
limitations contained in clause (e) of Article 5 ("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 Securities may not be accelerated  because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities



<PAGE>

                                                                              85


may not be  accelerated  because of an Event of Default  specified  in  Sections
6.01(4)  (with  respect  to  the  covenants  of  Article  IV  identified  in the
immediately preceding  paragraph),  6.01(5),  6.01(6),  6.01(7) or 6.01(8) (with
respect only to  Significant  Subsidiaries  in the case of Sections  6.01(6) and
6.01(7)) or because of the failure of the Company to comply with the limitations
contained in clause (e) of Article 5.

                  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 Sections 2.04,  2.05, 2.06, 2.07, 7.07, 7.08, 8.05 and 8.06 shall
survive until the Securities have been paid in full.  Thereafter,  the Company's
obligations  in  Sections  7.07 and 8.05  shall  survive  such  satisfaction  or
discharge.

                  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 U.S.  Government  Obligations  for the payment of principal of
         and interest on the Securities 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 their
         opinion  that the  payments  of  principal  and  interest  when due and
         without reinvestment on the deposited U.S. 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 and interest
         when due on all the Securities to maturity or  redemption,  as the case
         may be;

                  (3) 123 days pass  after the  deposit  is made and  during the
         123-day  period no Default  specified in Section  6.01(6) or (7) occurs
         with respect to the Company or any other Person making the deposit that
         is continuing at the end of the period;

                  (4) the deposit does not  constitute a default under any other
         agreement or instrument binding on the Company;



<PAGE>

                                                                              86


                  (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  Securityholders  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;

                  (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  Security-holders  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; and

                  (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  Securities  as
         contemplated by this Article VIII have been complied with.

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

                  SECTION 8.03.  Application  of Trust Money.  The Trustee shall
                                 ----------------------------
 hold in trust money or U.S. Government  Obligations  deposited with it pursuant
 to this Article  VIII.  It shall apply the  deposited  money and the money from
 U.S.  Government  Obligations  through the Paying Agent and in accordance  with
 this Indenture to the payment of principal of and interest on the Securities.



<PAGE>

                                                                              87


                  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 or interest  that  remains  unclaimed  for two
years, and, thereafter,  Securityholders  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 U.S.  Government  Obligations or
the principal and interest received on such U.S. Government Obligations.

                  SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
                                --------------
 unable to apply any money or U.S.  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  Securities  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 U.S. 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  Securities
 because  of  the  reinstatement  of  its  obligations,  the  Company  shall  be
 subrogated  to the rights of the  Holders of such  Securities  to receive  such
 payment from the money or U.S.  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 Securities  without notice to or consent
of any Securityholder:

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



<PAGE>

                                                                              88


                  (2) to comply with Article V;

                  (3) to provide for uncertificated Securities in addition to or
         in  place  of  certificated  Securities;  provided,  however,  that the
         uncertificated Securities are issued in registered form for purposes of
         Section 163(f) of the Code or in a manner such that the  uncertificated
         Securities are described in Section 163(f)(2)(B) of the Code;

                  (4) to add Guarantees with respect to the Securities;

                  (5) to secure the  Securities,  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;

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

                  (7) to make any  change  that does not  adversely  affect  the
         rights of any Securityholder; or

                  (8) to provide for the issuance of  additional  Securities  in
         accordance with the Indenture.

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

                  SECTION  9.02.  With  Consent of Holders.  The Company and the
                                  -------------------------
Trustee  may  amend  this  Indenture  or the  Securities  without  notice to any
Securityholder  but  with  the  written  consent  of the  Holders  of at least a
majority  in  aggregate  principal  amount of the  Securities  then  outstanding
(including consents obtained in connection with a tender offer or exchange offer
for the  Securities).  However,  without  the  consent  of  each  Securityholder
affected thereby, an amendment may not:

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

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



<PAGE>

                                                                              89


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

                  (4)  impair  the right of any  Holder to  receive  payment  of
         principal of and interest on such  Holder's  Securities on or after the
         due dates  therefor or to  institute  suit for the  enforcement  of any
         payment on or with respect to such Holder's Securities;

                  (5)  reduce  the  amount   payable  upon  the   redemption  or
         repurchase  of any Security  under Article III or Section 4.07 or 4.12,
         change the time at which any  Security  may be redeemed  in  accordance
         with  Article  III,  or, at any time after a Change of Control or Asset
         Sale has occurred, change the time at which any Change of Control Offer
         or  Prepayment  Offer must be made or at which the  Securities  must be
         repurchased  pursuant  to such  Change of Control  Offer or  Prepayment
         Offer;

                  (6) make any Security  payable in money other than that stated
         in the Security;

                  (7) release any security  interest  that may have been granted
         in  favor  of the  Holders  other  than  pursuant  to the  terms of the
         agreement granting that security interest;

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

                  (9) subordinate the Securities to any other  obligation of the
         Company

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

                  After an amendment under this Section becomes  effective,  the
Company  shall  mail  to   Securityholders  a  notice  briefly  describing  such
amendment. The failure to give such notice to all Securityholders, 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 Securities  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



<PAGE>

                                                                              90


Holder of a Security shall bind the Holder and every  subsequent  Holder of that
Security  or  portion  of the  Security  that  evidences  the  same  debt as the
consenting  Holder's Security,  even if notation of the consent or waiver is not
made on the Security.  However,  any such Holder or subsequent Holder may revoke
the consent or waiver as to such Holder's Security or portion of the Security 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  Securityholder.  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  Securityholders  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
Securityholders 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
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  Securities.  If an
                                  ---------------------------------------
 amendment  changes the terms of a Security,  the Trustee may require the Holder
 of the Security to deliver such Security to the Trustee.  The Trustee may place
 an appropriate  notation on the Security regarding the changed terms and return
 such  Security to the Holder.  Alternatively,  if the Company or the Trustee so
 determines,  the  Company in  exchange  for the  Security  shall  issue and the
 Trustee shall  authenticate  a new Security  that  reflects the changed  terms.
 Failure to make the  appropriate  notation or to issue a new Security 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



<PAGE>

                                                                              91


Opinion of Counsel  stating that such  amendment is  authorized  or permitted by
this Indenture.

                  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 Securities  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  solicitation  documents  relating to such  consent,
waiver or agreement.


                                    ARTICLE X

                                  Miscellaneous
                                  -------------

                  SECTION 10.01. Trust Indenture Act Controls.  If any provision
                                 -----------------------------
of this Indenture limits,  qualifies or conflicts with another provision that is
required to be included in this  Indenture by the TIA,  the  required  provision
shall control.

                  SECTION 10.02.  Notices.  Any notice or communication shall be
                                  --------
 in writing and  delivered  in person or mailed by  first-class  mail or sent by
 facsimile (with a hard copy delivered in person or by mail promptly thereafter)
 and addressed as follows:

                                    if to the Company:

                                    Levi Strauss & Co.
                                    Levi's Plaza
                                    1155 Battery Street
                                    San Francisco, CA 94111
                                    Facsimile: (415) 501-7650

                                    Attention of:  Legal Department


                                    if to the Trustee:

                                    Citibank, N.A.,
                                    111 Wall Street, 14th Floor
                                    New York, NY 10005

                                    Attention of: Citibank Agency and Trust
                                                  Services



<PAGE>

                                                                              92

                  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  Securityholder  shall
be mailed to the Securityholder at the Securityholder'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 Securityholder
or any  defect in it shall not  affect  its  sufficiency  with  respect to other
Securityholders.  If a notice or  communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.

                  SECTION  10.03.  Communication  by Holders with Other Holders.
                                   ---------------------------------------------
Securityholders   may  communicate   pursuant  to  TIA  ss.  312(b)  with  other
Securityholders  with  respect  to their  rights  under  this  Indenture  or the
Securities.  The Company,  the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).

                  SECTION  10.04.  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.

                  SECTION 10.05.  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;



<PAGE>

                                                                              93


                  (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 or opinion 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

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

                  SECTION 10.06.  When  Securities  Disregarded.  In determining
                                  ------------------------------
whether  the  Holders  of the  required  principal  amount  of  Securities  have
concurred in any direction,  waiver or consent,  Securities owned by the Company
or by any Person  directly or indirectly  controlling  or controlled by or under
direct or indirect  common  control with the Company  shall be  disregarded  and
deemed not to be  outstanding,  except  that,  for the  purpose  of  determining
whether the Trustee shall be protected in relying on any such direction,  waiver
or consent,  only  Securities  that the  Trustee  knows are so owned shall be so
disregarded.  Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.

                  SECTION 10.07.  Rules by Trustee,  Paying Agent and Registrar.
                                  ----------------------------------------------
The  Trustee  may  make  reasonable   rules  for  action  by  or  a  meeting  of
Securityholders.  The  Registrar and the Paying Agent or  co-registrar  may make
reasonable rules for their functions.

                  SECTION  10.08.  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.  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.

                  SECTION   10.09.   Governing   Law.  THIS  INDENTURE  AND  THE
                            -------------------------
SECURITIES  SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT  GIVING  EFFECT TO  APPLICABLE  PRINCIPLES  OF
CONFLICTS  OF LAW TO THE  EXTENT  THAT THE  APPLICATION  OF THE LAWS OF  ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.



<PAGE>

                                                                              94


                  SECTION  10.10.  No  Recourse   Against  Others.  A  director,
                                   -------------------------------
officer,  employee or  stockholder,  as such,  of the Company shall not have any
liability  for any  obligations  of the  Company  under the  Securities  or this
Indenture  or for any  claim  based  on,  in  respect  of or by  reason  of such
obligations  or their  creation.  By accepting a Security,  each  Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.

                  SECTION  10.11.  Successors.  All agreements of the Company in
                                   -----------
this Indenture and the Securities  shall bind its successors.  All agreements of
the Trustee in this Indenture shall bind its successors.

                  SECTION 10.12.  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.

                  SECTION  10.13.  Table of  Contents;  Headings.  The  table of
                                   ------------------------------
contents,  cross-reference  sheet 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.



<PAGE>

                                                                              95


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


                                          LEVI STRAUSS & CO.,


                                          by

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


                                          CITIBANK, N.A.,


                                          by
                                             ---------------------------------
                                             Name:
                                             Title:



                                          CITIBANK, N.A., LONDON, as
                                          Registrar and Paying Agent

                                          by
                                             --------------------------------
                                             Name:
                                             Title:



<PAGE>


                                                                      APPENDIX A





                    PROVISIONS RELATING TO INITIAL SECURITIES
                    -----------------------------------------
                             AND EXCHANGE SECURITIES
                             -----------------------



         1. Definitions
            -----------

         1.1      Definitions
                  -----------

                  For the purposes of this Appendix A the following  terms shall
have the meanings indicated below:

                  "Clearstream" means Clearstream Banking, S.A.,  formerly known
as Cedel Bank, S.A., or any successor securities clearing agency.

                  "Common Depository" means Citibank, N.A., London.

                  "Definitive Security" means a certificated Initial Security or
Exchange  Security  or Private  Exchange  Security  bearing,  if  required,  the
restricted securities legend set forth in Section 2.3(d).

                  "Depository"  means Clearstream,  Euroclear,  their respective
nominees and their respective successors.

                  "Distributed   Compliance   Period",   with   respect  to  any
Securities,  means the period of 40 consecutive  days beginning on and including
the later of (i) the day on which such  Securities  are first offered to persons
other than distributors (as defined in Regulation S under the Securities Act) in
reliance  on  Regulation  S and  (ii)  the  Issue  Date  with  respect  to  such
Securities.

                  "Dollar Notes" means the  Company's 11 5/8%  Senior Notes  due
2008  denominated in U.S.  dollars and issued pursuant to an indenture dated the
date hereof between the Company and Citibank, N.A. as trustee.

                  "Euroclear" means Euroclear Bank as operator of the  Euroclear
System or any successor securities clearing agency.

                  "Exchange  Securities" means the 11 5/8% Senior Notes due 2008
to be issued pursuant to the Indenture in connection with a Registered  Exchange
Offer pursuant to the Registration Agreement.

                  "IAI"  means  an   institutional   "accredited   investor"  as
described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.


<PAGE>

                                                                               2


                  "Initial  Purchasers" means Salomon Smith Barney Inc., Banc of
America  Securities  LLC, Scotia Capital (USA) Inc.,  Chase  Securities Inc. and
Banc One Capital Markets, Inc.

                  "Initial  Securities" means the 11 5/8% Senior Notes due 2008,
to be issued from time to time,  in one or more  series as provided  for in this
Indenture.

                  "Issue Date Dollar  Notes"  means  Dollar  Notes issued on the
first date on which the Dollar Notes are initially issued.

                  "Original   Securities"   means  Initial   Securities  in  the
aggregate  principal  amount of 125.0 million euro dollars issued on January 18,
2001.

                  "Private Exchange" means the offer by the Company, pursuant to
Section 2 of the  Registration  Agreement dated January 18, 2001, or pursuant to
any similar provision of any other Registration  Agreement, to issue and deliver
to certain  purchasers,  in  exchange  for the Initial  Securities  held by such
purchasers as part of their initial  distribution,  a like  aggregate  principal
amount of Private Exchange Securities.

                  "Private  Exchange  Securities" means the 11 5/8% Senior Notes
due 2008 to be issued  pursuant to this  Indenture in connection  with a Private
Exchange pursuant to a Registration Agreement.

                  "Purchase   Agreement"  means  the  Purchase  Agreement  dated
January 12, 2001, among the Company and the Initial  Purchasers  relating to the
Original  Securities,  or any similar  agreement  relating to any future sale of
Initial Securities by the Company.

                  "QIB" means a  "qualified  institutional  buyer" as defined in
Rule 144A.

                  "Registered  Exchange  Offer"  means the offer by the Company,
pursuant to a Registration  Agreement, to certain Holders of Initial Securities,
to issue and deliver to such Holders, in exchange for the Initial Securities,  a
like aggregate  principal  amount of Exchange  Securities  registered  under the
Securities Act.

                  "Registration   Agreement"  means  the   Registration   Rights
Agreement dated January 18, 2001,  among the Company and the Initial  Purchasers
relating to the Original



<PAGE>

                                                                               3


Securities,  or  any  similar  agreement  relating  to  any  additional  Initial
Securities.

                  "Rule 144A  Securities"  means all Initial  Securities offered
and sold to QIBs in reliance on Rule 144A.

                  "Securities"  means the Initial  Securities  and the  Exchange
Securities, treated as a single class.

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

                  "Shelf Registration  Statement" means a registration statement
issued  by the  Company  in  connection  with  the  offer  and  sale of  Initial
Securities  or  Private  Exchange   Securities   pursuant  to  the  Registration
Agreement.

                  "Transfer Restricted  Securities" means Definitive  Securities
and any other  Securities that bear or are required to bear the legend set forth
in Section 2.3(d) hereto.

                  "U.S.  Dollar  Equivalent"  means with respect to any monetary
amount in a currency  other  than U.S.  dollars,  at any time for  determination
thereof, the amount of U.S. dollars obtained by converting such foreign currency
involved in such computation into U.S. dollars at the spot rate for the purchase
of U.S.  dollars with the applicable  foreign  currency as published in THE WALL
STREET  JOURNAL in the  "Exchange  Rates"  column  under the  heading  "Currency
Trading"  on the  date  two  Business  Days  prior  to  such  determination.  In
determining the aggregate  principal amount (on a U.S. Dollar  Equivalent basis)
of  Securities  outstanding,  such  amount  will be treated  as the U.S.  Dollar
Equivalent determined as of the date of issuance of such Securities.

         1.2      Other Definitions
                  -----------------

                                         Defined in
                                         ----------
         Term                             Section:
         ----                             -------

"Agent Members"  .......................... 2.1(b)
"Global  Security"  ....................... 2.1(a)
"IAI Global  Security"  ................... 2.1(a)
"Regulation S"  ........................... 2.1
"Rule 144A"  .............................. 2.1
"Rule 144A Global  Security"  ............. 2.1(a)
"Regulation S Global Security" ............ 2.1(a)



<PAGE>

                                                                               4


         2.       The Securities
                  --------------
         2.1      Form and Dating
                  ---------------

                  The  Initial  Securities  will  be  offered  and  sold  by the
Company,  from time to time,  pursuant to one or more Purchase  Agreements.  The
Initial  Securities  will be resold  initially  only to QIBs in reliance on Rule
144A under the  Securities  Act ("Rule  144A") and in reliance on  Regulation  S
under the Securities Act ("Regulation S"). Initial  Securities may thereafter be
transferred to, among others,  QIBs,  purchasers in reliance on Regulation S and
IAIs under Rule 501(a)(1),  (2), (3) or (7) under the Securities Act, subject to
the restrictions on transfer set forth herein.

                  (a) Global  Securities.  Initial  Securities  initially resold
                      -------------------
pursuant  to Rule  144A  shall be  issued  initially  in the form of one or more
permanent global Securities in definitive,  fully registered form (collectively,
the "Rule 144A Global Security"),  Initial Securities  initially resold pursuant
to  Regulation  S shall be issued  initially  in the form of one or more  global
securities  (collectively,  the "Regulation S Global  Security") and, subject to
Section 2.4 hereof,  Initial  Securities  transferred  subsequent to the initial
resale  thereof  to IAIs  shall be issued  initially  in the form of one or more
permanent global securities in definitive,  fully registered form (collectively,
the "IAI Global  Security"),  in each case without interest coupons and with the
global securities legend and restricted securities legend set forth in Exhibit 1
hereto,  which shall be  deposited  on behalf of the  purchasers  of the Initial
Securities represented thereby with the Common Depository, and registered in the
name of the  Depository  or a nominee of the  Depository,  duly  executed by the
Company and authenticated by the Trustee as provided in this Indenture. The Rule
144A Global  Security,  IAI Global Security and Regulation S Global Security are
collectively  referred to herein as "Global Securities." The aggregate principal
amount of the Global  Securities may from time to time be increased or decreased
by  adjustments  made on the  records of the  Trustee  and the  Depository  or a
nominee of the Depository as hereinafter provided.

                  (b)  Book-Entry  Provisions.  This Section  2.1(b) shall apply
                       -----------------------
 only to a Global Security deposited with or on behalf of the Depository.

                  The Company shall execute and the Trustee shall, in accordance
 with this Section 2.1(b) and pursuant to an order of the Company,  authenticate
 and  deliver  initially  one or  more  Global  Securities  that  (a)  shall  be
 registered  in the name of the  Depository  for such Global  Security or Global
 Securities



<PAGE>

                                                                               5


or the nominee of such  Depository  and (b) shall be delivered by the Trustee to
such  Depository or pursuant to such  Depository's  instructions  or held by the
Trustee as Common Depository.

                  Members  of,  participants  in, or  account  holders  in,  the
Depository  ("Agent  Members")  shall have no rights under this  Indenture  with
respect to any Global  Security held on their behalf by the Depository or by the
Trustee as Common  Depository or under such Global Security,  and the Depository
may be treated by the  Company,  the Trustee and any agent of the Company or the
Trustee  as the  absolute  owner  of  such  Global  Security  for  all  purposes
whatsoever.  Notwithstanding  the  foregoing,  nothing  herein shall prevent the
Company,  the  Trustee or any agent of the  Company or the  Trustee  from giving
effect to any written certification,  proxy or other authorization  furnished by
the Depository or impair,  as between the Depository and its Agent Members,  the
operation of customary practices of the Depository governing the exercise of the
rights of a holder of a beneficial interest in any Global Security.

                  (c)  Definitive Securities.  Except as provided in Section 2.3
                       ----------------------
or 2.4, owners of beneficial interests in Global Securities will not be entitled
to receive physical delivery of Definitive Securities.

                  2.2   Authentication.   The  Trustee  shall  authenticate  and
                        ---------------
deliver:  (1) Original  Securities for original issue in an aggregate  principal
amount of 125.0 million euro dollars, (2) additional Initial Securities,  if and
when  issued,  in an aggregate  principal  amount (on a U.S.  Dollar  Equivalent
basis) of up  to(x)$350.0  million less (y) the  aggregate  principal  amount of
Dollar Notes issued by the Company that are not Issue Date Dollar Notes, and (3)
the  Exchange  Securities  or Private  Exchange  Securities  for issue only in a
Registered Exchange Offer or a Private Exchange,  respectively,  pursuant to the
Registration  Agreement,  for a like principal  amount of Initial  Securities or
Private Exchange Securities, as applicable,  upon a written order of the Company
signed by two Officers or by an Officer and either an Assistant  Treasurer or an
Assistant  Secretary of the Company.  Such order shall specify the amount of the
Securities  to be  authenticated  and the date on which  the  original  issue of
Securities is to be  authenticated  and whether the Securities are to be Initial
Securities or Exchange Securities.  The aggregate principal amount of Securities
outstanding at any time (on a U.S. Dollar  Equivalent  basis) may not exceed (x)
$850.0 million less (y) the aggregate principal amount of Dollar Notes issued by
the Company, except as provided in Section 2.08 of this Indenture.



<PAGE>

                                                                               6


                  2.3  Transfer and Exchange.   (a)  Transfer  and  Exchange  of
                       ----------------------        ---------------------------
Definitive Securities. When Definitive Securities are presented to the Registrar
- ----------------------
or a co-registrar with a request:

                  (x) to register the transfer of such Definitive Securities; or

                  (y) to  exchange  such  Definitive  Securities  for  an  equal
         principal   amount  of  Definitive   Securities  of  other   authorized
         denominations,

the Registrar or  co-registrar  shall register the transfer or make the exchange
as  requested  if its  reasonable  requirements  for such  transaction  are met;
provided,  however, that the Definitive  Securities  surrendered for transfer or
- --------   -------
exchange:

                  (i)  shall  be  duly  endorsed  or  accompanied  by a  written
         instrument of transfer in form  reasonably  satisfactory to the Company
         and the Registrar or co-registrar,  duly executed by the Holder thereof
         or his attorney duly authorized in writing; and

                  (ii)  if  such   Definitive   Securities   bear  a  restricted
         securities legend,  they are being transferred or exchanged pursuant to
         an  effective  registration  statement  under  the  Securities  Act  or
         pursuant to clause (A), (B) or (C) below,  and are  accompanied  by the
         following additional information and documents, as applicable:

                           (A) if such Definitive Securities are being delivered
                  to the Registrar by a Holder for  registration  in the name of
                  such  Holder,  without  transfer,  a  certification  from such
                  Holder to that effect; or

                           (B) if   such   Definitive   Securities   are   being
                  transferred to the Company, a certification to that effect; or

                           (C)  if  such   Definitive   Securities   are   being
                  transferred  pursuant to an  exemption  from  registration  in
                  accordance  with  Rule 144  under the  Securities  Act,  (i) a
                  certification  to  that  effect  and  (ii) if the  Company  so
                  requests,  an opinion of counsel or other evidence  reasonably
                  satisfactory to it as to the compliance with the  restrictions
                  set forth in the legend set forth in Section 2.3(d)(i).



<PAGE>

                                                                               7


                  (b)   Transfer    and    Exchange   of   Global    Securities.
                        --------------------------------------------------------

                  (i)  The  transfer  and  exchange  of  Global   Securities  or
         beneficial  interests  therein shall be effected through the Registrar,
         in accordance with this Indenture (including applicable restrictions on
         transfer set forth herein, if any) and the procedures of the Depository
         therefor.  A transferor of a beneficial  interest in a Global  Security
         shall deliver a written order given in accordance  with the Registrar's
         procedures containing  information regarding the participant account of
         the Depository to be credited with a beneficial  interest in the Global
         Security and such  account  shall be credited in  accordance  with such
         instructions with a beneficial  interest in the Global Security and the
         account of the Person making the transfer shall be debited by an amount
         equal  to  the  beneficial   interest  in  the  Global  Security  being
         transferred.  In the case of a transfer of a  beneficial  interest in a
         Global  Security to an IAI, the transferee must furnish a signed letter
         to the Trustee containing certain representations and agreements in the
         form of Exhibit C hereto.

                  (ii) If the  proposed  transfer is a transfer of a  beneficial
         interest  in one Global  Security to a  beneficial  interest in another
         Global  Security,  the  transferee or  transferor,  as the case may be,
         shall furnish to the  Registrar  such  certificates  required to ensure
         such transfer  complies with Rule 144A or Regulation S, as the case may
         be, and the  Registrar  shall reflect on its books and records the date
         and an increase in the principal amount of the Global Security to which
         such interest is being  transferred in an amount equal to the principal
         amount of the interest to be so  transferred,  and the Registrar  shall
         reflect on its books and records the date and a corresponding  decrease
         in the principal amount of the Global Security from which such interest
         is being transferred.

                  (iii)  Notwithstanding any other provisions of this Appendix A
         (other than the provisions set forth in Section 2.4), a Global Security
         may not be transferred as a whole except by the Depository to a nominee
         of the  Depository or by a nominee of the  Depository to the Depository
         or another  nominee of the  Depository or by the Depository or any such
         nominee  to a  successor  Depository  or a  nominee  of such  successor
         Depository.

                  (iv) In the event  that a Global  Security  is  exchanged  for
         Definitive Securities pursuant to Section 2.4 prior to the consummation
         of a Registered



<PAGE>

                                                                               8


         Exchange Offer or the effectiveness of a Shelf  Registration  Statement
         with respect to such Securities,  such Securities may be exchanged only
         in accordance with such procedures as are substantially consistent with
         the  provisions  of  this  Section  2.3  (including  the  certification
         requirements  set  forth  on  the  reverse  of the  Initial  Securities
         intended  to  ensure  that  such  transfers   comply  with  Rule  144A,
         Regulation S or such other applicable exemption from registration under
         the  Securities  Act, as the case may be) and such other  procedures as
         may from time to time be adopted by the Company.

                  (c) Legend.
                      -------

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

         "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
         AMENDED (THE "SECURITIES  ACT"). THE HOLDER HEREOF,  BY PURCHASING THIS
         NOTE,  AGREES FOR THE BENEFIT OF THE COMPANY  THAT THIS NOTE MAY NOT BE
         RESOLD,  PLEDGED  OR  OTHERWISE  TRANSFERRED  (X)  PRIOR TO THE  SECOND
         ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO)
         OR (Y) BY ANY HOLDER THAT WAS AN  AFFILIATE  OF THE COMPANY AT ANY TIME
         DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER,  IN EITHER
         CASE  OTHER  THAN  (1) TO THE  COMPANY,  (2) SO LONG  AS  THIS  NOTE IS
         ELIGIBLE  FOR RESALE  PURSUANT  TO RULE 144A UNDER THE  SECURITIES  ACT
         ("RULE  144A"),  TO A PERSON WHOM THE SELLER  REASONABLY  BELIEVES IS A
         QUALIFIED   INSTITUTIONAL   BUYER  WITHIN  THE  MEANING  OF  RULE  144A
         PURCHASING  FOR  ITS OWN  ACCOUNT  OR FOR THE  ACCOUNT  OF A  QUALIFIED
         INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE,  PLEDGE OR
         OTHER  TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY
         THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
         REVERSE OF THIS NOTE),  (3) IN AN OFFSHORE  TRANSACTION  IN  ACCORDANCE
         WITH  REGULATION S UNDER THE  SECURITIES  ACT (AS  INDICATED BY THE BOX
         CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE
         OF THIS NOTE), (4) TO AN INSTITUTION  THAT IS AN "ACCREDITED  INVESTOR"
         AS DEFINED IN RULE 501(a)(1),  (2), (3) OR (7) UNDER THE SECURITIES ACT
         (AS INDICATED BY THE BOX CHECKED BY THE  TRANSFEROR ON THE  CERTIFICATE
         OF TRANSFER ON THE  REVERSE OF THIS NOTE) THAT IS  ACQUIRING  THIS NOTE
         FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE



<PAGE>

                                                                               9


         WHICH MAY BE OBTAINED  FROM THE COMPANY OR THE TRUSTEE IS  DELIVERED BY
         THE TRANSFEREE TO THE COMPANY AND TRUSTEE, (5) PURSUANT TO AN EXEMPTION
         FROM  REGISTRATION  UNDER THE  SECURITIES  ACT PROVIDED BY RULE 144 (IF
         APPLICABLE)  UNDER THE SECURITIES  ACT, OR (6) PURSUANT TO AN EFFECTIVE
         REGISTRATION  STATEMENT  UNDER  THE  SECURITIES  ACT,  IN EACH  CASE IN
         ACCORDANCE  WITH ANY  APPLICABLE  SECURITIES  LAWS OF ANY  STATE OF THE
         UNITED STATES. AN INSTITUTIONAL  ACCREDITED  INVESTOR HOLDING THIS NOTE
         AGREES  THAT IT WILL  FURNISH  TO THE  COMPANY  AND  THE  TRUSTEE  SUCH
         CERTIFICATES  AND OTHER  INFORMATION AS THEY MAY REASONABLY  REQUIRE TO
         CONFIRM  THAT  ANY  TRANSFER  BY IT OF  THIS  NOTE  COMPLIES  WITH  THE
         FOREGOING  RESTRICTIONS.  THE HOLDER HEREOF,  BY PURCHASING  THIS NOTE,
         REPRESENTS  AND AGREES FOR THE BENEFIT OF THE COMPANY  THAT IT IS (1) A
         QUALIFIED  INSTITUTIONAL  BUYER  WITHIN THE MEANING OF RULE 144A OR (2)
         PURCHASING FROM A PERSON NOT PARTICIPATING IN THE INITIAL  DISTRIBUTION
         OF  THIS  SECURITY  (OR  ANY  PREDECESSOR  SECURITY),  THAT  IT  IS  AN
         INSTITUTION  THAT  IS AN  "ACCREDITED  INVESTOR"  AS  DEFINED  IN  RULE
         501(a)(1),  (2),  (3) OR (7)  UNDER THE  SECURITIES  ACT AND THAT IT IS
         HOLDING THIS NOTE FOR INVESTMENT  PURPOSES AND NOT FOR  DISTRIBUTION OR
         (3) A NON-U.S.  PERSON  OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
         (OR AN ACCOUNT  SATISFYING THE  REQUIREMENTS OF PARAGRAPH  (k)(2)(i) OF
         RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT."

Each Definitive Security will also bear the following additional legend:

                  "IN CONNECTION  WITH ANY TRANSFER,  THE HOLDER WILL DELIVER TO
                  THE REGISTRAR AND TRANSFER AGENT SUCH  CERTIFICATES  AND OTHER
                  INFORMATION AS SUCH TRANSFER  AGENT MAY REASONABLY  REQUIRE TO
                  CONFIRM  THAT  THE  TRANSFER   COMPLIES   WITH  THE  FOREGOING
                  RESTRICTIONS."

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

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

                           (B)  in the case of  any Transfer Restricted Security
                  that is represented by a Global Security,



<PAGE>

                                                                              10


                  the Registrar shall permit the Holder thereof to exchange such
                  Transfer Restricted Security for a Security that does not bear
                  the legends set forth above and rescind any restriction on the
                  transfer of such Transfer Restricted Security,

in either case,  if the Holder  certifies in writing to the  Registrar  that its
request for such  exchange was made in reliance on Rule 144 (such  certification
to be in the form set forth on the reverse of the Initial Security).

                  (iii) After a transfer of any  Initial  Securities  or Private
         Exchange  Securities,  as the case may be,  during  the  period  of the
         effectiveness  of a Shelf  Registration  Statement with respect to such
         Initial  Securities or Private  Exchange  Securities,  all requirements
         pertaining  to  restricted  legends on such  Initial  Security  or such
         Private  Exchange  Security will cease to apply and an Initial Security
         or  Private  Exchange  Security,  as the case may be,  in  global  form
         without  restricted  legends will be available to the transferee of the
         beneficial  interests of such Initial  Securities  or Private  Exchange
         Securities.  Upon the occurrence of any of the circumstances  described
         in this paragraph, the Company will deliver an Officers' Certificate to
         the  Trustee  instructing  the  Trustee  to  issue  Securities  without
         restricted legends.

                  (iv) Upon the consummation of a Registered Exchange Offer with
         respect to the Initial Securities  pursuant to which certain Holders of
         such Initial Securities are offered Exchange Securities in exchange for
         their Initial  Securities,  Exchange  Securities in global form without
         the  restricted  legends  will be  available  to Holders or  beneficial
         owners that exchange such Initial  Securities (or beneficial  interests
         therein) in such Registered  Exchange Offer. Upon the occurrence of any
         of the  circumstances  described  in this  paragraph,  the Company will
         deliver an Officers' Certificate to the Trustee instructing the Trustee
         to issue Securities without restricted legends.

                  (d) Cancelation or Adjustment of Global Security. At such time
                      ---------------------------------------------
as all beneficial  interests in a Global Security have either been exchanged for
Definitive Securities,  redeemed,  repurchased or canceled, such Global Security
shall be returned by the Depository to the Registrar for cancelation or retained
and  canceled  by the  Trustee.  At any time prior to such  cancelation,  if any
beneficial interest in a Global Security is exchanged for Definitive Securities,
redeemed, repurchased or canceled, the principal amount of Securities



<PAGE>

                                                                              11


represented by such Global Security shall be reduced and an adjustment  shall be
made  on the  books  and  records  of the  Trustee  (if it is  then  the  Common
Depository for such Global  Security) with respect to such Global  Security,  by
the Trustee or the Common Depository, to reflect such reduction.

                  (e)  Obligations  with Respect to Transfers  and  Exchanges of
                       ---------------------------------------------------------
         Securities.
         -----------

                  (i) To permit  registrations  of transfers and exchanges,  the
         Company  shall execute and the Trustee  shall  authenticate  Definitive
         Securities and Global  Securities at the Registrar's or  co-registrar's
         request.

                  (ii) No service charge shall be made for any  registration  of
         transfer or  exchange,  but the  Company  may require  payment of a sum
         sufficient  to  cover  any  transfer  tax,   assessments,   or  similar
         governmental  charge  payable in connection  therewith  (other than any
         such transfer taxes, assessments or similar governmental charge payable
         upon exchange or transfer  pursuant to Sections 3.06,  4.08 and 9.05 of
         this Indenture).

                  (iii) The Registrar or  co-registrar  shall not be required to
         register  the  transfer  of or exchange  of any  Security  for a period
         beginning  15 days before the mailing of a notice of  redemption  or an
         offer to repurchase  Securities  or 15 days before an interest  payment
         date.

                  (iv)  Prior  to  the  due  presentation  for  registration  of
         transfer of any Security,  the Company,  the Trustee, the Paying Agent,
         the  Registrar  or any  co-registrar  may deem and treat the  person in
         whose name a  Security  is  registered  as the  absolute  owner of such
         Security  for the  purpose of  receiving  payment of  principal  of and
         interest  on  such  Security  and for all  other  purposes  whatsoever,
         whether or not such Security is overdue,  and none of the Company,  the
         Trustee,  the Paying Agent, the Registrar or any co-registrar  shall be
         affected by notice to the contrary.

                  (v) All  Securities  issued  upon  any  transfer  or  exchange
         pursuant to the terms of this  Indenture  shall  evidence the same debt
         and shall be entitled to the same benefits  under this Indenture as the
         Securities surrendered upon such transfer or exchange.



<PAGE>

                                                                              12


                  (f)  No Obligation of the Trustee.

                  (i) The Trustee shall have no  responsibility or obligation to
         any beneficial owner of a Global  Security,  a member of, a participant
         in, or  account  holder in the  Depository  or any  other  Person  with
         respect to the accuracy of the records of the Depository or its nominee
         or of any participant,  member or account holder thereof,  with respect
         to any  ownership  interest in the  Securities  or with  respect to the
         delivery to any participant,  member, account holder,  beneficial owner
         or other Person (other than the  Depository)  of any notice  (including
         any notice of redemption or  repurchase)  or the payment of any amount,
         under  or  with   respect  to  such   Securities.   All   notices   and
         communications  to be given to the Holders and all  payments to be made
         to  Holders  under  the  Securities  shall be given or made only to the
         registered Holders (which shall be the Depository or its nominee in the
         case of a Global  Security).  The  rights of  beneficial  owners in any
         Global Security shall be exercised only through the Depository  subject
         to the applicable  rules and procedures of the Depository.  The Trustee
         may rely and  shall be fully  protected  in  relying  upon  information
         furnished by the Depository with respect to its members,  participants,
         account holders and any beneficial owners.

                  (ii) The Trustee  shall have no obligation or duty to monitor,
         determine or inquire as to compliance with any restrictions on transfer
         imposed under this  Indenture or under  applicable  law with respect to
         any transfer of any interest in any Security  (including  any transfers
         between or among Depository  participants,  members, account holders or
         beneficial  owners  in any  Global  Security)  other  than  to  require
         delivery of such  certificates  and other  documentation or evidence as
         are expressly  required by, and to do so if and when expressly required
         by, the terms of this  Indenture,  and to examine the same to determine
         substantial compliance as to form with the express requirements hereof.

                  2.4  Definitive Securities
                       ---------------------

                  (a) A Global  Security  deposited  with the Depository or with
the Trustee as Common Depository pursuant to Section 2.1 shall be transferred to
the  beneficial  owners  thereof  in the  form of  Definitive  Securities  in an
aggregate  principal  amount  equal  to the  principal  amount  of  such  Global
Security,  in exchange for such Global Security,  only if such transfer complies
with  Section  2.3  and (i)  the  Depository  notifies  the  Company  that it is
unwilling or unable to continue as a Depository for such Global Security and the



<PAGE>

                                                                              13


Company  is  unable  to locate a  qualified  successor  within 90 days or (ii) a
Default or an Event of  Default  has  occurred  and is  continuing  or (iii) the
Company, in its sole discretion,  notifies the Trustee in writing that it elects
to cause the issuance of Definitive Securities under this Indenture.

                  (b) Any Global Security that is transferable to the beneficial
owners  thereof  pursuant  to this  Section  2.4  shall  be  surrendered  by the
Depository to the Registrar, to be so transferred, in whole or from time to time
in part, without charge,  and the Trustee shall  authenticate and deliver,  upon
such  transfer  of each  portion of such  Global  Security,  an equal  aggregate
principal   amount  of  Definitive   Securities  of  authorized   denominations.
Definitive  Securities  issued in exchange for any portion of a Global  Security
transferred  pursuant  to this  Section  shall be  executed,  authenticated  and
delivered only in denominations of 1,000 euro dollars and any integral  multiple
thereof  and  registered  in such  names as the  Depository  shall  direct.  Any
Definitive Security delivered in exchange for an interest in the Global Security
shall,  except as  otherwise  provided by Section  2.3(d),  bear the  restricted
securities legend set forth in Exhibit 1 hereto.

                  (c) The  registered  Holder  of a Global  Security  may  grant
proxies and otherwise authorize any Person,  including Agent Members and Persons
that may hold interests through Agent Members,  to take any action that a Holder
is entitled to take under this Indenture or the Securities.

                  (d)  In  the  event  of the  occurrence  of any of the  events
specified in Section  2.4(a)(i),  (ii) or (iii),  the Company will promptly make
available  to the  Trustee a  reasonable  supply  of  Definitive  Securities  in
definitive, fully registered form without interest coupons.



<PAGE>



                                                                       EXHIBIT 1
                                                                   to APPENDIX A




                       [FORM OF FACE OF INITIAL SECURITY]

                           [Global Securities Legend]

                  UNLESS  THIS   CERTIFICATE   IS  PRESENTED  BY  AN  AUTHORIZED
REPRESENTATIVE  OF THE EUROCLEAR  CLEARANCE SYSTEM  ("EUROCLEAR") OR CLEARSTREAM
BANKING,  SOCIETE  ANONYME  ("CLEARSTREAM"),  TO THE  COMPANY  OR ITS  AGENT FOR
REGISTRATION OF TRANSFER,  EXCHANGE OR PAYMENT,  AND ANY  CERTIFICATE  ISSUED IS
REGISTERED  IN THE NAME OF  CITIVIC  NOMINEES  LIMITED  OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED  REPRESENTATIVE  OF CLEARSTREAM OR EUROCLEAR,  AS THE
CASE MAY BE (AND ANY  PAYMENT IS MADE TO CITIVIC  NOMINEES  LIMITED,  OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED  REPRESENTATIVE  OF CLEARSTREAM OR
EUROCLEAR,  AS THE CASE MAY BE),  ANY  TRANSFER,  PLEDGE OR OTHER USE HEREOF FOR
VALUE OR  OTHERWISE BY OR TO ANY PERSON IS WRONGFUL  INASMUCH AS THE  REGISTERED
OWNER HEREOF, CITIVIC NOMINEES LIMITED, HAS AN INTEREST HEREIN.

                  TRANSFERS  OF  THIS  GLOBAL   SECURITY  SHALL  BE  LIMITED  TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CLEARSTREAM OR EUROCLEAR, AS
THE CASE MAY BE, OR TO A  SUCCESSOR  THEREOF  OR SUCH  SUCCESSOR'S  NOMINEE  AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE  RESTRICTIONS  SET FORTH IN THE INDENTURE  REFERRED TO ON
THE REVERSE HEREOF.


                         [Restricted Securities Legend]

                  THIS NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF
 1933, AS AMENDED (THE "SECURITIES  ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
 NOTE,  AGREES FOR THE BENEFIT OF THE COMPANY  THAT THIS NOTE MAY NOT BE RESOLD,
 PLEDGED OR OTHERWISE  TRANSFERRED  (X) PRIOR TO THE SECOND  ANNIVERSARY  OF THE
 ISSUANCE HEREOF (OR ANY PREDECESSOR  SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
 WAS AN AFFILIATE  OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS  PRECEDING
 THE DATE OF SUCH TRANSFER,  IN EITHER CASE, OTHER THAN (1) TO THE COMPANY,  (2)
 SO LONG AS THIS NOTE IS  ELIGIBLE  FOR RESALE  PURSUANT  TO RULE 144A UNDER THE
 SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
 A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR
 ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED  INSTITUTIONAL  BUYER TO WHOM
 NOTICE IS GIVEN  THAT THE  RESALE,  PLEDGE OR OTHER  TRANSFER  IS BEING MADE IN
 RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
 CERTIFICATE  OF  TRANSFER  ON THE  REVERSE OF THIS  NOTE),  (3) IN AN  OFFSHORE
 TRANSACTION  IN  ACCORDANCE  WITH  REGULATION  S UNDER THE  SECURITIES  ACT (AS
 INDICATED BY THE BOX CHECKED BY THE  TRANSFEROR ON THE  CERTIFICATE OF TRANSFER
 ON THE REVERSE



<PAGE>

                                                                               2


OF THIS NOTE), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY THE
BOX CHECKED BY THE  TRANSFEROR ON THE  CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY)  THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT  PURPOSES AND NOT
FOR  DISTRIBUTION,  AND A CERTIFICATE  WHICH MAY BE OBTAINED FROM THE COMPANY OR
THE TRUSTEE IS  DELIVERED  BY THE  TRANSFEREE  TO THE  COMPANY  AND  TRUSTEE,(5)
PURSUANT TO AN EXEMPTION FROM REGISTRATION  UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 (IF  APPLICABLE)  UNDER  THE  SECURITIES  ACT,  OR (6)  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT,  IN EACH CASE IN
ACCORDANCE  WITH ANY  APPLICABLE  SECURITIES  LAWS OF ANY  STATE  OF THE  UNITED
STATES.  AN INSTITUTIONAL  ACCREDITED  INVESTOR HOLDING THIS NOTE AGREES THAT IT
WILL  FURNISH  TO THE  COMPANY  AND THE  TRUSTEE  SUCH  CERTIFICATES  AND  OTHER
INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF
THIS NOTE  COMPLIES  WITH THE  FOREGOING  RESTRICTIONS.  THE HOLDER  HEREOF,  BY
PURCHASING THIS NOTE,  REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT
IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2)
PURCHASING FROM A PERSON NOT  PARTICIPATING IN THE INITIAL  DISTRIBUTION OF THIS
SECURITY (OR ANY  PREDECESSOR  SECURITY),  THAT IT IS AN INSTITUTION  THAT IS AN
"ACCREDITED  INVESTOR" AS DEFINED IN RULE  501(a)(1),  (2), (3) OR (7) UNDER THE
SECURITIES ACT AND THAT IT IS HOLDING THIS NOTE FOR INVESTMENT  PURPOSES AND NOT
FOR  DISTRIBUTION OR (3) A NON-U.S.  PERSON OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH  (k)(2)(i) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.


                         [Definitive Securities Legend]

IN CONNECTION  WITH ANY  TRANSFER,  THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH  CERTIFICATES  AND OTHER  INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY  REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.



<PAGE>


                       [FORM OF FACE OF INITIAL SECURITY]



 No.                    [up to](3)[English Pound Symbol Appears Here]
                                                                      ---------

                               11 5/8% Senior Note due 2008

                                                CUSIP No. [52736R AH 5](1)
                                                          [U52799 AD 2](2)
                                                ISIN No. [XS0123432725](1)
                                                         [XS0123430604](2)
                                                Common Code No.[012343272](1)
                                                               [012343060](2)


LEVI STRAUSS & CO., a Delaware corporation, promises to pay to [Citivic Nominees
Limited](3),  or registered assigns, the principal sum [of                Euros]
(3) [as set forth on the Schedule of Increases or Decreases annexed hereto](3)on
January 15, 2008.

                  Interest Payment Dates: January 15 and July 15.

                  Record Dates: January 1 and July 1.



















- ----------------------
   (1) Insert for Rule 144A Global Note.

   (2) Insert for Reg. S Global Note.

   (3) Insert for Definitive Securities.



<PAGE>

                                                                               2


                  Additional  provisions  of this  Security are set forth on the
other side of this Security.


                  IN WITNESS WHEREOF, the parties have caused this instrument to
be duly executed.


                                          LEVI STRAUSS & CO.,


                                           by
                                              --------------------------------
                                              Name:
                                              Title:


                                           by
                                              --------------------------------
                                              Name:
                                              Title:




TRUSTEE'S CERTIFICATE OF
         AUTHENTICATION

 Dated:  January 18, 2001

 CITIBANK, N.A.,
         as Trustee, certifies
         that this is one of
         the Securities referred
         to in the Indenture.



by:
   -----------------------------
   Authorized Signatory



<PAGE>

                                                                               3


                   [FORM OF REVERSE SIDE OF INITIAL SECURITY]

                          11 5/8% Senior Note due 2008


 1.  Interest
     --------

                  (a)  LEVI  STRAUSS  &  CO.,  a  Delaware   corporation   (such
corporation,  and its  successors  and assigns under the  Indenture  hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will  pay  interest  semiannually  on  January  15 and  July  15 of  each  year,
commencing  July 15, 2001.  Interest on the Securities will accrue from the most
recent date to which  interest  has been paid or, if no interest  has been paid,
from January 18, 2001. Interest shall be computed on the basis of a 360-day year
of twelve 30-day months.  The Company shall pay interest on overdue principal at
the rate borne by the Securities plus 1% per annum, and it shall pay interest on
overdue  installments  of  interest at the rate borne by the  Securities  to the
extent lawful.

                  (b) Special Interest.  The holder of this Security is entitled
                      -----------------
 to the benefits of a  Registration  Rights  Agreement,  dated as of January 18,
 2001,  among the Company and the  Purchasers  named therein (the  "Registration
 Agreement").  Capitalized  terms  used in this  paragraph  (b) but not  defined
 herein have the meanings assigned to them in the Registration Agreement. In the
 event that (i) neither the Exchange Offer Registration  Statement nor the Shelf
 Registration  Statement  has been filed with the  Commission on or prior to the
 60th day following the date of the original  issuance of the  Securities,  (ii)
 the Exchange Offer Registration Statement has not been declared effective on or
 prior to the 120th  day  following  the date of the  original  issuance  of the
 Securities,  (iii) neither the Registered  Exchange Offer has been  consummated
 nor the Shelf Registration Statement has been declared effective on or prior to
 the 150th day following the date of the original issuance of the Securities, or
 (iv) after the Shelf Registration  Statement has been declared effective,  such
 Registration   Statement  thereafter  ceases  to  be  effective  or  usable  in
 connection  with  resales  of the  Securities  at any time that the  Company is
 obligated to maintain the  effectiveness  thereof  pursuant to the Registration
 Agreement  (each such event referred to in clauses (i) through (iv) above being
 referred  to  herein  as a  "Registration  Default"),  interest  (the  "Special
 Interest") shall accrue (in addition to stated interest on the Securities) from
 and including the date on which the first such Registration Default shall occur
 to but excluding the date on which all Registration Defaults have



<PAGE>

                                                                               4


been cured,  at a rate per annum equal to 0.25% of the  principal  amount of the
Securities;  provided, however, that such rate per annum shall increase by 0.25%
per annum  from and  including  the 91st day after the first  such  Registration
Default  (and  each  successive  91st  day  thereafter)  unless  and  until  all
Registration  Defaults have been cured;  provided further,  however,  that in no
event shall the Special  Interest accrue at a rate in excess of 1.00% per annum.
The  Special  Interest  will be payable  in cash  semiannually  in arrears  each
January 15 and July 15.

 2.  Method of Payment
     -----------------

                  The  Company  will  pay  interest  on the  Securities  (except
defaulted  interest) to the Persons who are registered  Holders of Securities at
the close of  business on the January 1 or July 1 next  preceding  the  interest
payment date even if  Securities  are  canceled  after the record date and on or
before the interest payment date. Holders must surrender  Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in euro or any successor money of the European Union that at the time of payment
is legal tender for payment of public and private debts.  Payments in respect of
the Securities  represented by a Global Security (including  principal,  premium
and interest)  will be made by wire transfer of immediately  available  funds to
the accounts specified by the Euroclear Clearance System or Clearstream Banking,
S.A.  The Company  will make all  payments in respect of a  Definitive  Security
(including  principal,  premium  and  interest),  by  mailing  a  check  to  the
registered address of each Holder thereof;  provided,  however, that payments on
the Securities  may also be made, in the case of a Holder of at least  1,000,000
euro dollars  aggregate  principal  amount of Securities,  by wire transfer to a
euro  account  maintained  by the  payee  with a bank in a  member  state of the
European  Union if such Holder elects payment by wire transfer by giving written
notice to the  Trustee  and the Paying  Agent to such  effect  designating  such
account no later than 30 days  immediately  preceding  the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).

 3.  Paying Agent and Registrar
     --------------------------

                  Initially,  CITIBANK,  N.A.,  a  banking  association,  London
Office, 5 Carmelite Street, London, EC4Y OPA (the "Trustee"), will act as Paying
Agent and  Registrar.  The  Company  may  appoint  and change any Paying  Agent,
Registrar or co-registrar without notice. The Company or any of its domestically
incorporated  Wholly Owned  Subsidiaries  may act as Paying Agent,  Registrar or
co-registrar.



<PAGE>

                                                                               5



4.   Indenture
     ---------

                  The Company issued the Securities  under an Indenture dated as
of January 18, 2001 (the "Indenture"),  between the Company and the Trustee. The
terms of the  Securities  include  those stated in the  Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
                                                                          ------
ss.ss.  77aaa-77bbbb)  as in effect on the date of the  Indenture  (the  "TIA").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the  Indenture.  The  Securities  are subject to all such terms,  and
Securityholders  are  referred to the  Indenture  and the TIA for a statement of
those terms.

                  The Securities are senior unsecured obligations of the Company
limited to an aggregate  principal amount (on a U.S. Dollar Equivalent basis) at
any one time outstanding of (x) $850.0 million less (y) the aggregate  principal
amount of Dollar Notes issued by the Company  (subject to Sections 2.01 and 2.08
of the Indenture).  [This Security is one of the Original Securities referred to
in the Indenture  issued in an aggregate  principal amount of 125.0 million euro
dollars.  The Securities  include the Original  Securities,  additional  Initial
Securities  that may be issued under the  Indenture  in an  aggregate  principal
amount (on a U.S. Dollar  Equivalent basis) of up to (x) $350.0 million less (y)
the  aggregate  principal  amount of Dollar Notes issued by the Company that are
not Issue Date Dollar Notes, and any Exchange  Securities issued in exchange for
Initial Securities].  [This Security is one of the additional Initial Securities
in an aggregate  principal amount (on a U.S. Dollar  Equivalent  basis) of up to
(x) $350.0  million  less (y) the  aggregate  principal  amount of Dollar  Notes
issued by the  Company  that are not Issue Date  Dollar  Notes.  The  Securities
include such  additional  Securities,  the Original  Securities  in an aggregate
principal  amount of 125.0  million  euro  dollars  previously  issued under the
Indenture and any Exchange Securities issued in exchange for Initial Securities.
The  additional  Initial  Securities,  the Original  Securities and the Exchange
Securities are treated as a single class of securities under the Indenture.] The
Original  Securities,  such  additional  Initial  Securities  and  the  Exchange
Securities are treated as a single class of securities under the Indenture.  The
Indenture  imposes  certain  limitations  on the  ability of the Company and its
Restricted  Subsidiaries  to, among other things,  make certain  Investments and
other Restricted Payments,  pay dividends and other distribu- tions, incur Debt,
enter into  consensual  restrictions  upon the payment of certain  dividends and
distributions by such Restricted  Subsidiaries,  issue or sell shares of capital
stock of such Restricted Subsidiaries, enter into or permit certain transactions
with Affiliates, create or incur Liens



<PAGE>

                                                                               6


and make Asset Sales.  The Indenture also imposes  limitations on the ability of
the  Company  to  consolidate  or merge  with or into any other  Person or sell,
transfer, assign, lease, convey or otherwise dispose of all or substantially all
of the Property of the Company.

5.   Optional Redemption
     -------------------

                  Except  as  set  forth  below,   the  Securities  may  not  be
redeemable  prior to January 15, 2005.  On and after that date,  the Company may
redeem the  Securities  in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid  interest,  if any, to the  redemption  date  (subject to the
right of Holders of record on the relevant record date



<PAGE>

                                                                               7



to receive  interest  due on the  relevant  interest  payment date that is on or
prior to the  date of  redemption),  if  redeemed  during  the  12-month  period
beginning on or after January 15 of the years set forth below:

                                Redemption
Period                            Price
- ------                            -----

2005 ..........................  105.813%
2006 ..........................  102.906%
2007 and thereafter ...........  100.000%


                  Notwithstanding  the  foregoing,  on or prior to  January  15,
2004, the Company may redeem up to 33 1/3% of the original  aggregate  principal
amount of the Securities issued with the proceeds from one or more Public Equity
Offerings  by the  Company,  at a  redemption  price  equal  to 111  5/8% of the
principal amount thereof,  plus accrued and unpaid interest thereon,  if any, 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 that
it on or prior to the date of redemption);  provided, however, that after giving
effect  to any  such  redemption,  at least  66 2/3% of the  original  aggregate
principal  amount of the Securities  remains  outstanding.  Any such  redemption
shall be made within 75 days of such Public Equity Offering.

6.   Sinking Fund
     ------------

                  The Securities are not subject to any sinking fund.

7.   Notice of Redemption
     --------------------

                  Notice of  redemption  will be mailed by  first-class  mail at
least 30 days but not  more  than 60 days  before  the  redemption  date to each
Holder of Securities to be redeemed at his or her registered address. Securities
in denominations larger than 1,000 euro dollars may be redeemed in part but only
in whole  multiples  of 1,000  euro  dollars.  If  money  sufficient  to pay the
redemption price of and accrued interest on all Securities (or portions thereof)
to be redeemed on the  redemption  date is deposited with the Paying Agent on or
before the redemption  date and certain other  conditions are satisfied,  on and
after such date interest  ceases to accrue on such  Securities (or such portions
thereof) called for redemption.


<PAGE>

                                                                               8



 8.  Repurchase of Securities at the Option of Holders upon Change of Control
     ------------------------------------------------------------------------

                  Upon a Change of Control,  any Holder of Securities  will have
the right,  subject to certain conditions  specified in the Indenture,  to cause
the Company to repurchase  all or any part of the Securities of such Holder at a
purchase  price equal to 101% of the  principal  amount of the  Securities to be
repurchased  plus accrued and unpaid  interest,  if any, to the date of purchase
(subject  to the  right of  Holders  of record on the  relevant  record  date to
receive  interest due on the relevant  interest payment date that is on or prior
to the date of  purchase)  as  provided  in,  and  subject  to the terms of, the
Indenture.

9.   Denominations; Transfer; Exchange
     ---------------------------------

                  The  Securities  are in  registered  form  without  coupons in
denominations of 1,000 euro dollars and whole multiples of 1,000 euro dollars. A
Holder may transfer or exchange  Securities  in accordance  with the  Indenture.
Upon any  transfer  or  exchange,  the  Registrar  and the Trustee may require a
Holder,  among other things,  to furnish  appropriate  endorsements  or transfer
documents  and to pay any taxes  required by law or permitted by the  Indenture.
The  Registrar  need not register  the  transfer of or exchange  any  Securities
selected  for  redemption  (except,  in the case of a Security to be redeemed in
part, the portion of the Security not to be redeemed) or to transfer or exchange
any  Securities for a period of 15 days prior to a selection of Securities to be
redeemed or 15 days before an interest payment date.
10.  Persons Deemed Owners
     ---------------------

                  The  registered  Holder of this Security may be treated as the
owner of it for all purposes.

11.  Unclaimed Money
     ---------------

                  If money for the  payment of  principal  or  interest  remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written  request unless an abandoned  property law designates
another Person. After any such payment,  Holders entitled to the money must look
only to the Company and not to the Trustee for payment.

12.  Discharge and Defeasance
     ------------------------

                  Subject to  certain  conditions,  the  Company at any time may
terminate some of or all its obligations  under the Securities and the Indenture
if the Company deposits with the



<PAGE>

                                                                               9


Trustee money or U.S.  Government  Obligations  for the payment of principal and
interest on the Securities to redemption or maturity, as the case may be.

13.  Amendment, Waiver
     -----------------

                  Subject to certain exceptions set forth in the Indenture,  (i)
the  Indenture  or the  Securities  may be amended  without  prior notice to any
Securityholder  but  with  the  written  consent  of the  Holders  of at least a
majority in aggregate  principal  amount of the outstanding  Securities and (ii)
any default or  noncompliance  with any provision may be waived with the written
consent  of the  Holders  of at least a  majority  in  principal  amount  of the
outstanding  Securities.   Subject  to  certain  exceptions  set  forth  in  the
Indenture,  without the consent of any Holder of Securities, the Company and the
Trustee may amend the  Indenture or the  Securities  (i) to cure any  ambiguity,
omission,  defect  or  inconsistency;  (ii)  to  comply  with  Article  V of the
Indenture;  (iii) to provide for uncertificated  Securities in addition to or in
place  of  certificated  Securities;   (iv)  to  make  certain  changes  in  the
subordination provisions;  (v) to add Guarantees with respect to the Securities;
(vi) to secure the Securities; (vii) to add additional covenants or to surrender
rights  and  powers  conferred  on  the  Company;  (viii)  to  comply  with  the
requirements of the SEC in order to effect or maintain the  qualification of the
Indenture  under the TIA;  or (ix) to make any  change  that does not  adversely
affect the rights of any Securityholder.

14.  Defaults and Remedies
     ---------------------

                  If an Event of Default occurs and is  continuing,  the Trustee
or the Holders of at least 25% in aggregate  principal  amount of the Securities
then outstanding, subject to certain limitations, may declare all the Securities
to be  immediately  due and payable.  Certain events of bankruptcy or insolvency
are Events of Default and shall result in the Securities  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  Securities  may not enforce the  Indenture  or the
Securities  except as  provided  in the  Indenture.  The  Trustee  may refuse to
enforce the Indenture or the Securities unless it receives reasonable  indemnity
or security. Subject to certain limitations,  Holders of a majority in aggregate
principal  amount of the Securities  then  outstanding may direct the Trustee in
its  exercise  of any  trust or power  under the  Indenture.  The  Holders  of a
majority in aggregate  principal amount of the Securities then  outstanding,  by
written notice



<PAGE>

                                                                              10


to the Company and the Trustee,  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 or interest  that has become due solely  because of the
acceleration.

15.  Trustee Dealings with the Company
     ---------------------------------

                  Subject to certain limitations imposed by the TIA, the Trustee
under the  Indenture,  in its individual or any other  capacity,  may become the
owner  or  pledgee  of  Securities  and may  otherwise  deal  with  and  collect
obligations  owed to it by the Company or its  Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

16.  No Recourse Against Others
     --------------------------

                  A director,  officer, employee or stockholder, as such, of the
Company shall not have any liability  for any  obligations  of the Company under
the  Securities  or the Indenture or for any claim based on, in respect of or by
reason of such  obligations  or their  creation.  By accepting a Security,  each
Securityholder  waives and releases all such  liability.  The waiver and release
are part of the consideration for the issue of the Securities.

17.  Authentication
     --------------

                  This Security shall not be valid until an authorized signatory
of the Trustee (or an  authenticating  agent)  manually signs the certificate of
authentication on the other side of this Security.

18.  Abbreviations
     -------------

                  Customary   abbreviations  may  be  used  in  the  name  of  a
Securityholder  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).

19.  Governing Law
     -------------

                  THIS   SECURITY   SHALL  BE  GOVERNED  BY,  AND  CONSTRUED  IN
ACCORDANCE  WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE  PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.



<PAGE>

                                                                              11



20.  CUSIP, ISIN and Common Code 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  Securities  and has  directed  the  Trustee to use CUSIP
numbers in notices of  redemption as a convenience  to  Securityholders.  To the
extent such  numbers  have been  issued,  the Company has caused ISIN and Common
Code  numbers  to be  similarly  printed  on the  Securities  and has  similarly
instructed  the Trustee.  No  representation  is made as to the accuracy of such
numbers  either as printed on the  Securities  or as  contained in any notice of
redemption and reliance may be placed only on the other  identification  numbers
placed thereon.

                  THE  COMPANY  WILL  FURNISH TO ANY HOLDER OF  SECURITIES  UPON
WRITTEN  REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE  WHICH
HAS IN IT THE TEXT OF THIS SECURITY.



<PAGE>

                                                                              12


                                 ASSIGNMENT FORM


To assign this Security, fill in the form below:

I or we assign and transfer this Security to


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

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


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


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

 Date: ________________ Your Signature: _____________________


 ____________________________________________________________
Sign exactly as your name appears on the other side of this Security.

In  connection  with any  transfer of any of the  Securities  evidenced  by this
certificate  occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such  Securities  and the last date,  if any, on which such  Securities  were
owned by the Company or any Affiliate of the Company,  the undersigned  confirms
that such Securities are being transferred in accordance with its terms:

 CHECK ONE BOX BELOW

       (1)    [ ]        to the Company; or

       (2)    [ ]        pursuant to an effective registration statement under
                         the Securities Act of 1933; or

       (3)    [ ]        inside the United States to a "qualified  institutional
                         buyer" (as defined in Rule 144A under the Securities
                         Act of 1933) that purchases for its own account or for
                         the account of a qualified  institutional buyer to whom
                         notice is given that such transfer is being made in
                         reliance on Rule 144A, in each



<PAGE>

                                                                              13



                         case pursuant to and in compliance with Rule 144A under
                         the Securities Act of 1933; or

       (4)    [ ]        outside  the United  States in an offshore  transaction
                         within the meaning of Regulation S under the Securities
                         Act in compliance  with Rule 904 under the Securities
                         Act of 1933; or

       (5)    [ ]        to an institutional "accredited investor"  (as  defined
                         in Rule 501(a)(1), (2), (3) or (7) under the Securities
                         Act of 1933) that has furnished to the Trustee a signed
                         letter containing certain representations and
                         agreements (the form of which letter can be obtained
                         from the Trustee or the Company); or

       (6)    [ ]        pursuant to another available exemption from
                         registration  provided by Rule 144 under the Securities
                         Act of 1933.

       Unless one of the boxes is checked,  the Trustee  will refuse to register
       any of the  Securities  evidenced by this  certificate in the name of any
       person other than the registered holder thereof; provided,  however, that
       if box (4),  (5) or (6) is checked,  the Trustee  may  require,  prior to
       registering  any such transfer of the  Securities,  such legal  opinions,
       certifications  and  other  information  as the  Company  has  reasonably
       requested  to confirm  that such  transfer  is being made  pursuant to an
       exemption  from,  or in a  transaction  not subject to, the  registration
       requirements of the Securities Act of 1933.


                                                     --------------------------
                                                            Your Signature

Signature Guarantee:

Date: -------------------                            --------------------------
Signature must be guaranteed                         Signature of Signature
by a participant in a                                       Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable to the Trustee


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



<PAGE>

                                                                              14


              TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

                  The undersigned  represents and warrants that it is purchasing
this  Security  for its own  account  or an  account  with  respect  to which it
exercises  sole  investment  discretion  and that it and any such  account  is a
"qualified  institutional  buyer"  within  the  meaning  of Rule 144A  under the
Securities  Act of  1933,  and is aware  that  the  sale to it is being  made in
reliance on Rule 144A and  acknowledges  that it has received  such  information
regarding the Company as the undersigned has requested  pursuant to Rule 144A or
has  determined  not to request such  information  and that it is aware that the
transferor is relying upon the undersigned's foregoing  representations in order
to claim the exemption from registration provided by Rule 144A.


              Dated: ---------------------    --------------------------------
                                              NOTICE: To be executed by
                                                      an executive officer



<PAGE>

                                                                              15


                      [TO BE ATTACHED TO GLOBAL SECURITIES]

              SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

                         The initial principal amount of this Global Security is
       [          ] euro dollars. The following  increases  or decreases in this
       Global Security have been made:


<TABLE>
<S>           <C>                     <C>                   <C>                    <C>
Date of       Amount of decrease      Amount of increase    Principal amount       Signature of
Exchange      in  Principal           in Principal          of this Global         authorized
              Amount of this          Amount of this        Security following     signatory of
              Global Security         Global Security       such decrease or       Trustee or Common
                                                            increase               Depository
</TABLE>



<PAGE>

                                                                              16


                       OPTION OF HOLDER TO ELECT PURCHASE


                  If you want to elect to have this  Security  purchased  by the
 Company  pursuant to Section  4.07 (Asset  Sale) or 4.12 (Change of Control) of
 the Indenture, check the box:

                                [   ]

                  If you  want to  elect  to  have  only  part of this  Security
purchased  by the  Company  pursuant to Section  4.07 or 4.12 of the  Indenture,
state the amount:

Euro dollars


Date:                           Your Signature:
     ---------------------                     -------------------------------
(Sign exactly as your name appears on the other side of the Security)


Signature Guarantee:
                    ----------------------------------------------------------
                    Signature must be guaranteed by a participant in a
                    recognized signature guaranty medallion program or other
                    signature guarantor acceptable to the Trustee.



<PAGE>


                                                                       EXHIBIT A





                       [FORM OF FACE OF EXCHANGE SECURITY]

 No.                        [up to](3) Euro dollars
 ---                                                -------------

                          11 5/8% Senior Note due 2008

                                                  CUSIP No.    [52736R AH 5](1)
                                                               [U52799 AD 2](2)
                                                  ISIN No.    [XS0123432725](1)
                                                              [XS0123430604](2)
                                                  Common Code No.[012343272](1)
                                                                 [012343060](2)


                  LEVI STRAUSS & CO., a Delaware corporation, promises to pay to
[Citivic Nominees Limited]3, or registered assigns, the principal sum [of
          Euros](4) [as set forth on the Schedule of Increases or Decreases
annexed hereto](3)on January 15, 2008.

                  Interest Payment Dates:  January 15 and July 15.

                  Record Dates:  January 1 and July 1.

                  Additional  provisions  of this  Security are set forth on the
other side of this Security.


                  IN WITNESS WHEREOF, the parties have caused this instrument to
be duly executed.


                                                     LEVI STRAUSS & CO.,

                                                     by
                                                       ------------------------
                                                       Name:
                                                       Title:

                                                     by
                                                       ------------------------
                                                       Name:
                                                       Title:

- -----------------------
 (1)   Insert for Rule 144 A Global.

 (2)   Insert for Reg. S Global Note.

 (3)   Insert for Global Securities.

 (4)   Insert for Definitive Securities



<PAGE>

                                                                               2


 TRUSTEE'S CERTIFICATE OF
      AUTHENTICATION

 Dated:  January 18, 2001

 CITIBANK, N.A.,

         as Trustee, certifies
         that this is one of
         the Securities referred
         to in the Indenture.



 by:
     ------------------------------
         Authorized Signatory




- ------------------------
*/ If the  Security is to be issued in global  form,  add the Global  Securities
Legend  from  Exhibit 1 to  Appendix A and the  attachment  from such  Exhibit 1
captioned  "TO BE  ATTACHED TO GLOBAL  SECURITIES  - SCHEDULE  OF  INCREASES  OR
DECREASES IN GLOBAL SECURITY".



<PAGE>

                                                                               3


                       [FORM OF REVERSE SIDE OF SECURITY]

                          11 5/8% Senior Note due 2008


 1.  Interest
     --------

                  LEVI STRAUSS & CO. a Delaware  corporation (such  corporation,
and its  successors  and assigns  under the Indenture  hereinafter  referred to,
being herein  called the  "Company"),  promises to pay interest on the principal
amount of this Security at the rate per annum shown above.  The Company will pay
interest  semiannually  on January 15 and July 15 of each year.  Interest on the
Securities will accrue from the most recent date to which interest has been paid
or, if no interest  has been paid,  from  January 18,  2001.  Interest  shall be
computed on the basis of a 360-day  year of twelve  30-day  months.  The Company
shall pay interest on overdue principal at the rate borne by the Securities plus
1% per annum,  and it shall pay interest on overdue  installments of interest at
the rate borne by the Securities to the extent lawful.

2.   Method of Payment
     -----------------

                  The  Company  will  pay  interest  on the  Securities  (except
defaulted  interest) to the Persons who are registered  Holders of Securities at
the close of  business on the January 1 or July 1 next  preceding  the  interest
payment date even if  Securities  are  canceled  after the record date and on or
before the interest payment date. Holders must surrender  Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in euro or any successor money of the European Union that at the time of payment
is legal tender for payment of public and private debts.  Payments in respect of
the Securities  represented by a Global Security (including  principal,  premium
and interest)  will be made by wire transfer of immediately  available  funds to
the accounts specified by the Euroclear Clearance System or Clearstream Banking,
S.A.  The Company  will make all  payments in respect of a  Definitive  Security
(including  principal,  premium  and  interest),  by  mailing  a  check  to  the
registered address of each Holder thereof;  provided,  however, that payments on
the Securities  may also be made, in the case of a Holder of at least  1,000,000
euro dollars  aggregate  principal  amount of Securities,  by wire transfer to a
euro  account  maintained  by the  payee  with a bank in a  member  state of the
European  Union if such Holder elects payment by wire transfer by giving written
notice to the  Trustee  and the Paying  Agent to such  effect  designating  such
account no later than 30 days



<PAGE>

                                                                               4


immediately  preceding  the relevant due date for payment (or such other date as
the Trustee may accept in its discretion).

3.   Paying Agent and Registrar
     --------------------------

                  Initially,  CITIBANK,  N.A.,  a  banking  association,  London
Office, 5 Carmelite Street, London, EC4Y OPA (the "Trustee"), will act as Paying
Agent and  Registrar.  The  Company  may  appoint  and change any Paying  Agent,
Registrar or co-registrar without notice. The Company or any of its domestically
incorporated  Wholly Owned  Subsidiaries  may act as Paying Agent,  Registrar or
co-registrar.

4.   Indenture
     ---------

                  The Company issued the Securities  under an Indenture dated as
of January 18, 2001 (the "Indenture"),  between the Company and the Trustee. The
terms of the  Securities  include  those stated in the  Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
                                                                          ------
ss.ss.  77aaa-77bbbb)  as in effect on the date of the  Indenture  (the  "TIA").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the  Indenture.  The  Securities  are subject to all such terms,  and
Securityholders  are  referred to the  Indenture  and the TIA for a statement of
those terms.

                  The Securities are senior unsecured obligations of the Company
limited to an aggregate  principal amount (on a U.S. Dollar Equivalent basis) at
any one time outstanding of (x) $850.0 million  aggregate  principal amount less
(y) the  aggregate  principal  amount of  Dollar  Notes  issued  by the  Company
(subject to Sections  2.01 and 2.08 of the  Indenture).  This Security is one of
the  Exchange  Securities  referred to in the  Indenture  issued in exchange for
Initial Securities. The Securities include the Exchange Securities, the Original
Securities in the aggregate  principal  amount of 125.0 million euro dollars and
additional Initial Securities in an aggregate principal amount (on a U.S. Dollar
Equivalent  basis) of up to (x) $350.0 million less (y) the aggregate  principal
amount of Dollar  Notes  issued by the  Company  that are not Issue Date  Dollar
Notes.  The Exchange  Securities,  the Original  Securities and such  additional
Initial  Securities  are  treated  as a single  class of  securities  under  the
Indenture.  The  Indenture  imposes  certain  limitations  on the ability of the
Company and its  Restricted  Subsidiaries  to, among other things,  make certain
Investments  and other  Restricted  Payments,  pay dividends and other distribu-
tions,  incur  Debt,  enter into  consensual  restrictions  upon the  payment of
certain  dividends and distributions by such Restricted  Subsidiaries,  issue or
sell shares of capital stock of such Restricted



<PAGE>

                                                                               5


Subsidiaries,  enter into or permit certain transactions with Affiliates, create
or incur Liens and make Asset Sales.  The Indenture also imposes  limitations on
the ability of the Company to consolidate or merge with or into any other Person
or  sell,  transfer,  assign,  lease,  convey  or  otherwise  dispose  of all or
substantially all of the Property of the Company.

5.   Optional Redemption
     -------------------

                  Except  as  set  forth  below,   the  Securities  may  not  be
redeemable  prior to January 15, 2005.  On and after that date,  the Company may
redeem the  Securities  in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid  interest,  if any, to the  redemption  date  (subject to the
right of Holders of record on the relevant record date



<PAGE>

                                                                               6


to receive  interest  due on the  relevant  interest  payment date that is on or
prior to the  date of  redemption),  if  redeemed  during  the  12-month  period
beginning on or after January 15 of the years set forth below:


                                       Redemption
Period                                   Price
- ------                                   -----

2005 .................................. 105.813%
2006 .................................. 102.906%
2007 and thereafter ................... 100.000%


                  Notwithstanding  the  foregoing,  on or prior to  January  15,
2003, the Company may redeem up to 33 1/3% of the original  aggregate  principal
amount of the Securities issued with the proceeds from one or more Public Equity
Offerings  by the  Company,  at a  redemption  price  equal  to 111  5/8% of the
principal amount thereof,  plus accrued and unpaid interest thereon,  if any, 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 that
it on or prior to the date of redemption);  provided, however, that after giving
effect  to any  such  redemption,  at least  66 2/3% of the  original  aggregate
principal  amount of the Securities  remains  outstanding.  Any such  redemption
shall be made within 75 days of such Public Equity Offering.

6.   Sinking Fund
     ------------

                  The Securities are not subject to any sinking fund.

7.   Notice of Redemption
     --------------------

                  Notice of  redemption  will be mailed by  first-class  mail at
least 30 days but not  more  than 60 days  before  the  redemption  date to each
Holder of Securities to be redeemed at his or her registered address. Securities
in denominations larger than 1,000 euro dollars may be redeemed in part but only
in whole  multiples  of 1,000  euro  dollars.  If  money  sufficient  to pay the
redemption price of and accrued interest on all Securities (or portions thereof)
to be redeemed on the  redemption  date is deposited with the Paying Agent on or
before the redemption  date and certain other  conditions are satisfied,  on and
after such date interest  ceases to accrue on such  Securities (or such portions
thereof) called for redemption.



<PAGE>

                                                                               7


8.   Repurchase of Securities at the Option of Holders upon Change of Control
     ------------------------------------------------------------------------

                  Upon a Change of Control,  any Holder of Securities  will have
the right,  subject to certain conditions  specified in the Indenture,  to cause
the Company to repurchase  all or any part of the Securities of such Holder at a
purchase  price equal to 101% of the  principal  amount of the  Securities to be
repurchased  plus accrued and unpaid  interest,  if any, to the date of purchase
(subject  to the  right of  Holders  of record on the  relevant  record  date to
receive  interest due on the relevant  interest payment date that is on or prior
to the date of  purchase)  as  provided  in,  and  subject  to the terms of, the
Indenture.

9.   Denominations; Transfer; Exchange
     ---------------------------------

                  The  Securities  are in  registered  form  without  coupons in
denominations of 1,000 euro dollars and whole multiples of 1,000 euro dollars. A
Holder may transfer or exchange  Securities  in accordance  with the  Indenture.
Upon any  transfer  or  exchange,  the  Registrar  and the Trustee may require a
Holder,  among other things,  to furnish  appropriate  endorsements  or transfer
documents  and to pay any taxes  required by law or permitted by the  Indenture.
The  Registrar  need not register  the  transfer of or exchange  any  Securities
selected  for  redemption  (except,  in the case of a Security to be redeemed in
part, the portion of the Security not to be redeemed) or to transfer or exchange
any  Securities for a period of 15 days prior to a selection of Securities to be
redeemed or 15 days before an interest payment date.

10.  Persons Deemed Owners
     ---------------------

                  The  registered  Holder of this Security may be treated as the
owner of it for all purposes.

11.  Unclaimed Money
     ---------------

                  If money for the  payment of  principal  or  interest  remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written  request unless an abandoned  property law designates
another Person. After any such payment,  Holders entitled to the money must look
only to the Company and not to the Trustee for payment.

12.  Discharge and Defeasance
     ------------------------

                  Subject to  certain  conditions,  the  Company at any time may
terminate some of or all its obligations  under the Securities and the Indenture
if the Company deposits with the



<PAGE>

                                                                               8


Trustee money or U.S.  Government  Obligations  for the payment of principal and
interest on the Securities to redemption or maturity, as the case may be.

13.  Amendment, Waiver

                  Subject to certain exceptions set forth in the Indenture,  (i)
the  Indenture  or the  Securities  may be amended  without  prior notice to any
Securityholder  but  with  the  written  consent  of the  Holders  of at least a
majority in aggregate  principal  amount of the outstanding  Securities and (ii)
any default or  noncompliance  with any provision may be waived with the written
consent  of the  Holders  of at least a  majority  in  principal  amount  of the
outstanding  Securities.   Subject  to  certain  exceptions  set  forth  in  the
Indenture,  without the consent of any Holder of Securities, the Company and the
Trustee may amend the  Indenture or the  Securities  (i) to cure any  ambiguity,
omission,  defect  or  inconsistency;  (ii)  to  comply  with  Article  V of the
Indenture;  (iii) to provide for uncertificated  Securities in addition to or in
place  of  certificated  Securities;   (iv)  to  make  certain  changes  in  the
subordination provisions;  (v) to add Guarantees with respect to the Securities;
(vi) to secure the Securities; (vii) to add additional covenants or to surrender
rights  and  powers  conferred  on  the  Company;  (viii)  to  comply  with  the
requirements of the SEC in order to effect or maintain the  qualification of the
Indenture  under the TIA;  or (ix) to make any  change  that does not  adversely
affect the rights of any Securityholder.

14.  Defaults and Remedies
     ---------------------

                  If an Event of Default occurs and is  continuing,  the Trustee
or the Holders of at least 25% in aggregate  principal  amount of the Securities
then outstanding, subject to certain limitations, may declare all the Securities
to be  immediately  due and payable.  Certain events of bankruptcy or insolvency
are Events of Default and shall result in the Securities  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  Securities  may not enforce the  Indenture  or the
Securities  except as  provided  in the  Indenture.  The  Trustee  may refuse to
enforce the Indenture or the Securities unless it receives reasonable  indemnity
or security. Subject to certain limitations,  Holders of a majority in aggregate
principal  amount of the Securities  then  outstanding may direct the Trustee in
its  exercise  of any  trust or power  under the  Indenture.  The  Holders  of a
majority in aggregate  principal amount of the Securities then  outstanding,  by
written notice



<PAGE>

                                                                               9


to the Company and the Trustee,  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 or interest  that has become due solely  because of the
acceleration.

15.  Trustee Dealings with the Company
     ---------------------------------

                  Subject to certain limitations imposed by the TIA, the Trustee
under the  Indenture,  in its individual or any other  capacity,  may become the
owner  or  pledgee  of  Securities  and may  otherwise  deal  with  and  collect
obligations  owed to it by the Company or its  Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

16.  No Recourse Against Others
     --------------------------

                  A director,  officer, employee or stockholder, as such, of the
Company shall not have any liability  for any  obligations  of the Company under
the  Securities  or the Indenture or for any claim based on, in respect of or by
reason of such  obligations  or their  creation.  By accepting a Security,  each
Securityholder  waives and releases all such  liability.  The waiver and release
are part of the consideration for the issue of the Securities.

17.  Authentication
     --------------

                  This Security shall not be valid until an authorized signatory
of the Trustee (or an  authenticating  agent)  manually signs the certificate of
authentication on the other side of this Security.

18.  Abbreviations
     -------------

                  Customary   abbreviations  may  be  used  in  the  name  of  a
Securityholder  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).

19.  Governing Law
     -------------

                  THIS   SECURITY   SHALL  BE  GOVERNED  BY,  AND  CONSTRUED  IN
ACCORDANCE  WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE  PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.



<PAGE>

                                                                              10


20.  CUSIP, ISIN and Common Code 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  Securities  and has  directed  the  Trustee to use CUSIP
numbers in notices of  redemption as a convenience  to  Securityholders.  To the
extent such  numbers  have been  issued,  the Company has caused ISIN and Common
Code  numbers  to be  similarly  printed  on the  Securities  and has  similarly
instructed  the Trustee.  No  representation  is made as to the accuracy of such
numbers  either as printed on the  Securities  or as  contained in any notice of
redemption and reliance may be placed only on the other  identification  numbers
placed thereon.

                  THE  COMPANY  WILL  FURNISH TO ANY HOLDER OF  SECURITIES  UPON
WRITTEN  REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE  WHICH
HAS IN IT THE TEXT OF THIS SECURITY.



<PAGE>

                                                                              11


                                 ASSIGNMENT FORM


To assign this Security, fill in the form below:

I or we assign and transfer this Security to


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

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


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


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

Date:                    Your Signature:
     -------------------                ----------------------

- -----------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.  Signature
must be guaranteed by a participant in a recognized signature guaranty medallion
program or other signature guarantor acceptable to the Trustee.



<PAGE>

                                                                              12


                       OPTION OF HOLDER TO ELECT PURCHASE


                  IF YOU WANT TO ELECT TO HAVE THIS  SECURITY  PURCHASED  BY THE
 COMPANY  PURSUANT TO SECTION  4.07 (ASSET  SALE) OR 4.12 (CHANGE OF CONTROL) OF
 THE INDENTURE, CHECK THE BOX:

                                [  ]

                           IF YOU  WANT  TO  ELECT  TO  HAVE  ONLY  PART OF THIS
SECURITY PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.07
OR 4.12 OF THE INDENTURE, STATE THE AMOUNT:

Euro Dollars


DATE:             YOUR SIGNATURE:
     ------------                -----------------------------------
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THE SECURITY)


SIGNATURE GUARANTEE:
                    --------------------------------------------------
                    SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A
                    RECOGNIZED SIGNATURE GUARANTY MEDALLION PROGRAM OR
                    OTHER SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEE.



<PAGE>


                                                                       EXHIBIT B




                                     Form of
                       Transferee Letter of Representation


[Company]

In care of
[                  ]
[                  ]
[                  ]


Ladies and Gentlemen:


                  This  certificate  is  delivered  to  request  a  transfer  of
[     ] euro dollars principal amount of the 11 5/8%  Senior Notes due 2008 (the
"Securities") of LEVI STRAUSS & CO. (the "Company").

                  Upon transfer,  the Securities would be registered in the name
of the new beneficial owner as follows:

Name:
     ----------------------------
Address:
        -------------------------
Taxpayer ID Number:
                   --------------
                  The undersigned represents and warrants to you that:

                  1. We are an institutional  "accredited  investor" (as defined
in Rule 501(a)(1),  (2), (3) or (7) under the Securities Act of 1933, as amended
(the  "Securities  Act")),  purchasing for our own account or for the account of
such an institutional  "accredited  investor" at least $250,000 principal amount
of the  Securities,  and we are acquiring the  Securities not with a view to, or
for offer or sale in  connection  with,  any  distribution  in  violation of the
Securities  Act. We have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our investment in
the  Securities,  and  we  invest  in or  purchase  securities  similar  to  the
Securities in the normal course of our business.  We, and any accounts for which
we are acting, are each able to bear the economic risk of our or its investment.

                  2.  We understand that the Securities have not been registered
under the  Securities Act and,  unless so registered,  may not be sold except as
permitted in the following sentence. We agree on our own behalf and on




<PAGE>

                                                                               2


behalf of any investor account for which we are purchasing  Securities to offer,
sell or otherwise  transfer such Securities  prior to the date that is two years
after  the  later of the date of  original  issue and the last date on which the
Company or any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company,  (b)  pursuant  to a  registration  statement  that has  been  declared
effective  under the  Securities  Act, (c) in a transaction  complying  with the
requirements of Rule 144A under the Securities Act ("Rule 144A"), to a person we
reasonably believe is a qualified  institutional buyer under Rule 144A (a "QIB")
that is  purchasing  for its own account or for the account of a QIB and to whom
notice is given that the  transfer is being made in  reliance on Rule 144A,  (d)
pursuant  to offers and sales that occur  outside the United  States  within the
meaning  of  Regulation  S under the  Securities  Act,  (e) to an  institutional
"accredited  investor"  within the meaning of Rule  501(a)(1),  (2),  (3) or (7)
under the  Securities  Act that is  purchasing  for its own  account  or for the
account  of such  an  institutional  "accredited  investor,"  in each  case in a
minimum principal amount of Securities of $100,000, or (f) pursuant to any other
available  exemption from the  registration  requirements of the Securities Act,
subject  in each of the  foregoing  cases  to any  requirement  of law  that the
disposition of our property or the property of such investor account or accounts
be at all  times  within  our  or  their  control  and in  compliance  with  any
applicable state securities laws. The foregoing  restrictions on resale will not
apply subsequent to the Resale  Restriction  Termination  Date. If any resale or
other  transfer of the  Securities is proposed to be made pursuant to clause (e)
above prior to the Resale  Restriction  Termination  Date, the transferor  shall
deliver a letter from the transferee substantially in the form of this letter to
the Company and the Trustee,  which shall provide,  among other things, that the
transferee is an institutional  "accredited investor" within the meaning of Rule
501(a)(1),  (2),  (3) or (7) under the  Securities  Act and that it is acquiring
such Securities for investment purposes and not for distribution in violation of
the Securities Act. Each purchaser acknowledges that the Company and the Trustee
reserve the right prior to the offer, sale or other transfer prior to the Resale
Restriction Termination Date of the





<PAGE>

                                                                               3


Securities  pursuant to clause (d),  (e) or (f) above to require the delivery of
an opinion of counsel,  certifications or other information  satisfactory to the
Company and the Trustee.



                          TRANSFEREE:
                                     -----------------------,

                           by:
                              ------------------------------


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.42
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>AMENDMENT TO DEFERRED COMPENSATION PLAN FOR ....
<TEXT>

                               LEVI STRAUSS & CO.

                    DEFERRED COMPENSATION PLAN FOR EXECUTIVES


                                    AMENDMENT




         WHEREAS,  LEVI STRAUSS & CO.  ("LS&CO.")  maintains the Levi Strauss &
Co.  Deferred  Compensation  Plan for  Executives  (the "Plan");

         WHEREAS, Article 10 of the Plan provides that the Board of Directors of
LS&CO. is authorized to amend the Plan;

         WHEREAS, LS&CO. desires to amend the Plan to add a fixed eleven percent
(11%) interest  measurement standard under Article 5 of the Plan effective as of
March 1, 2000;

         WHEREAS,  by resolutions duly adopted on April 23, 1996, the Board of
Directors of LS&CO.  authorized Robert D. Haas,  Chairman of the Board, to adopt
certain  amendments  to the Plan and to  delegate to certain  other  officers of
LS&CO. the authority to adopt certain amendments to the Plan; and

         WHEREAS,  on December  2, 1996,  Robert D. Haas  delegated  to Donna J.
Goya,  Senior Vice President of Global Human  Resources,  the authority to amend
the Plan, subject to specified limits, and such delegation has not been amended,
rescinded or superseded as of the date hereof; and

         WHEREAS, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;

         NOW, THEREFORE, the Plan is hereby amended as follows,  effective as of
the dates set forth below:

1.       Paragraph  (b)(1) of Article 5 of the Plan is hereby amended, effective
         as of March 1, 2000,  by adding the following to the end thereof:

                  "Notwithstanding  the  foregoing,  if a  Participant  does not
         select an investment fund under  subparagraph  (a), above, with respect
         to Deferred  Compensation  under the Plan, income on the entire balance
         of a  Participant's  account  shall be tracked  and valued on a monthly
         basis as follows:

                  (i)      for  any  month  prior  to  March  1,  2000,  at  the
                           applicable  rate as  specified  under the prior  Plan
                           document,  on the last day of the  calendar  month on
                           which the interest is valued,

                  (ii)     for any month beginning on or after March 1, 2000:

<PAGE>

                           (A)      with respect to any amounts  deferred  under
                                    the Plan prior to March 1, 2000 and eligible
                                    to be  tracked  and  valued  at  one-twelfth
                                    (1/12)  of  the  annual  rate   charged  for
                                    commercial loans, as most recently announced
                                    by  Bank  of  America   in  San   Francisco,
                                    California, effective on the last day of the
                                    calendar  month on  which  the  interest  is
                                    valued,   plus  one-twelfth  (1/12)  of  two
                                    percent  (2%) per annum  (referred to herein
                                    as the "Prime Plus 2% Tracking Option"),  at
                                    the greater of:

                                    (i)     one-twelfth (1/12) of eleven percent
                                            (11%) per annum; or

                                    (ii)    the Prime Plus 2% Tracking Option.

                           (B)      with respect to any amounts  deferred  under
                                    the Plan but not  eligible to be tracked and
                                    valued at the Prime Plus 2% Tracking Option,
                                    at one-twelfth (1/2) of eleven percent (11%)
                                    per annum.

                                                    * * * * *

         IN WITNESS WHEREOF, the undersigned has set her hand hereunto,  on this
___ day of March, 2000.

                                            LEVI STRAUSS & CO.


                                            ------------------------------------
                                            Donna J. Goya
                                            Senior Vice President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.43
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>AMENDMENTS TO EMPLOYEE INVESTMENT PLAN
<TEXT>



                           EMPLOYEE INVESTMENT PLAN OF
                               LEVI STRAUSS & CO.


                                   AMENDMENTS


         WHEREAS, LEVI STRAUSS & CO.("LS&CO.") maintains the Employee Investment
Plan of Levi Strauss & Co. (the "EIP"); and

         WHEREAS, Section 18 of the EIP provides that LS&CO. may amend the EIP
at any time and for any reason; and

         WHEREAS, LS&CO. desires to amend the EIP effective April 3, 2000 to
eliminate the one year service requirement for employee contributions; and

         WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of LS&CO.  authorized Robert D. Haas,  Chairman of the Board, to adopt
certain  amendments  to the EIP and to  delegate  to certain  other  officers of
LS&CO. the authority to adopt certain amendments to the EIP; and

         WHEREAS,  on December  2, 1996,  Robert D. Haas  delegated  to Donna J.
Goya,  Senior Vice President for Global Human Resources,  the authority to amend
the EIP, subject to specified limits,  and such delegation has not been amended,
rescinded or superseded as of the date hereof; and

         WHEREOF, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;

         NOW, THEREFORE,  the EIP is hereby amended as follows,  effective as of
the dates set forth below:

1.       Effective as of April 3, 2000, the second to last sentence of Section
         2.66 of the EIP is hereby amended to read as follows:

                  "All Service will be  aggregated,  whether or not such Service
         is performed  consecutively,  and every partial month will be deemed to
         be one full month of  Service,  except that only full  calendar  months
         will be taken into account for purposes of eligibility for (a) becoming
         a Member under  Section 3.1 and, (b) the  Matching  Contribution  under
         Section 5.1."

2.       Effective as of April 3, 2000, Section 3.1 of the EIP is hereby amended
         in its entirety to read as follows:

                  "3.1  Commencement  of  Membership.  Each  Employee  who was a
         Member in the Plan on the Effective  Date will continue to be a Member.
         Prior to April 3, 2000,  each Employee who was not a Member in the Plan

<PAGE>

         on the Effective  Date,  will become a Member in the Plan on the first
         day of the pay period  coinciding  with or next  following  the day on
         which he or she completes a Year of Service.  Effective as of April 3,
         2000,  each Employee will become a Member in the Plan on the first day
         of the pay  period  coinciding  with or next  following  the date such
         Employees  performs one Hour of Service.  Upon  becoming a Member,  an
         Employee will  designate a  Beneficiary  under Section 2.8 and Section
         14."

3.       Effective as of April 3, 2000, the first sentence of Section 5.1 of the
         EIP is hereby amended to read as follows:

                  "Except as provided  below,  for each period (an  "Accumulated
         Period")  during a Plan Year with respect to the pay period  coinciding
         with or next  following  the day on which a Member  completes a Year of
         Service,  the Company will make a Matching  Contribution to the Plan in
         an  amount  equal  to  50%  of  each  Member's  Contributions  for  the
         Accumulation Period."

                                      * * *

         IN WITNESS WHEREOF, the undersigned has set her hand hereunto, on March
____, 2000.

                                               LEVI STRAUSS & CO.



                                               ---------------------------------
                                               Donna J. Goya
                                               Senior Vice President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.44
<SEQUENCE>9
<FILENAME>0009.txt
<DESCRIPTION>AMENDMENTS TO CAPITAL ACCUMULATION PLAN
<TEXT>



                          CAPITAL ACCUMULATION PLAN OF
                               LEVI STRAUSS & CO.


                                   AMENDMENTS


         WHEREAS, LEVI STRAUSS & CO.("LS&CO.") maintains the Capital
Accumulation Plan of Levi Strauss & Co. (the "CAP"); and

         WHEREAS, Part 2, Q&A-33 of the CAP provides that LS&CO. may amend the
CAP at any time and for any reason; and

         WHEREAS, LS&CO. desires to amend the CAP effective April 3, 2000 to
eliminate the one year service requirement for employee contributions; and

         WHEREAS, by resolutions duly adopted on April 23, 1996, the Board of
Directors of LS&CO.  authorized Robert D. Haas,  Chairman of the Board, to adopt
certain  amendments  to the CAP and to  delegate  to certain  other  officers of
LS&CO. the authority to adopt certain amendments to the CAP; and

         WHEREAS,  on December  2, 1996,  Robert D. Haas  delegated  to Donna J.
Goya,  Senior Vice President for Global Human Resources,  the authority to amend
the CAP, subject to specified limits,  and such delegation has not been amended,
rescinded or superseded as of the date hereof; and

         WHEREOF, the amendments herein are within such limits to the delegated
authority of Donna J. Goya;

         NOW, THEREFORE,  the CAP is hereby amended as follows,  effective as of
the dates set forth below:

1.       Effective as of April 3, 2000, the first bullet of Part 1 of the CAP is
         hereby amended in its entirety to read as follows:

                  "Prior to April 3, 2000,  Home Office  payroll  employees  are
                  eligible to  participate in the Plan if they have completed at
                  least one year of service and would be eligible to participate
                  in the Employee Investment Plan ("EIP") if not for that plan's
                  exclusion  of  employees   whose   compensation   exceeds  the
                  applicable maximum limitation.  Effective as of April 3, 2000,
                  Home Office  payroll  employees are eligible to participate in
                  the Plan if they have  completed  at least one hour of service
                  and would be  eligible  to  participate  in the EIP if not for
                  that plan's exclusion of employees whose compensation  exceeds
                  the applicable maximum limitation."

<PAGE>

2.       Effective as of April 3, 2000, the fourth sentence of Part 2, Q&A-3 of
         the CAP is hereby amended to read as follows:

                  "In order to otherwise  have been eligible to  participate  in
                  the EIP,  you must (1) have at least one year of service as an
                  employee  of the  Company or any  subsidiary  of the  Company;
                  except that  effective as of April 3, 2000, you must have only
                  one hour of  service  as an  employee  of the  Company  or any
                  subsidiary  of the Company,  and (2)  currently be paid on the
                  Home  Office  payroll  and  employed  by  the  Company  or any
                  subsidiary of the Company that has adopted the EIP."

3.       Effective as of April 3, 2000, Part 2, Q&A-5 of the CAP is hereby
         amended in its entirety to read as follows:

                  "Prior  to  April  3,   2000,   you  may   enroll   and  begin
                  participation  in the Plan  effective  on the first day of any
                  payroll  period after you have  completed  one year of service
                  (whether  before or after the  effective  date of the Plan) if
                  you otherwise are an eligible employee at that time. Effective
                  as  of  April  3,   2000,   you  may  enroll  and  begin  your
                  participation  in the Plan  effective  on the first day of any
                  payroll  period  coinciding  with or  following  the  date you
                  perform one hour of service,  if you otherwise are an eligible
                  employee at that time."

4.       Effective as of April 3, 2000, the first sentence of Part 2, Q&A-7 of
         the CAP is hereby amended to read as follows:

                  "After  you  have   completed   one  year  of  service,   your
                  contributions  deducted  from each  paycheck  and AIP  payment
                  under the Plan earn the Match,  which is an  employer  payment
                  equal to 75% of your contributions under the Plan."

                                      * * *

         IN WITNESS WHEREOF, the undersigned has set her hand hereunto, on March
____, 2000.

                                               LEVI STRAUSS & CO.



                                               ---------------------------------
                                               Donna J. Goya
                                               Senior Vice President


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.45
<SEQUENCE>10
<FILENAME>0010.txt
<DESCRIPTION>AMENDMENT TO DEFERRED COMPENSATION PLAN FOR.......
<TEXT>



                               LEVI STRAUSS & CO.

                    DEFERRED COMPENSATION PLAN FOR EXECUTIVES

               (AS AMENDED AND RESTATED EFFECTIVE AUGUST 1, 2000)
                  (INCLUDING AMENDMENTS THROUGH MARCH 1, 2000)

                                    ARTICLE 1
                                  INTRODUCTION
                                  ------------

      1.1      PURPOSE OF PLAN.  In 1971,  the Board of  Directors  of Levi
               ---------------
Strauss & Co.  ("LS&CO.")  adopted the Levi  Strauss  Associates  Inc.  Deferred
Compensation  Plan for  Executives  (the  "Plan")  to  provide  a means by which
certain  eligible  employees of LS&CO.  and its  participating  subsidiaries may
elect to defer receipt of a portion of their compensation, and to defer all or a
portion of certain bonuses to save for retirement.

      1.2      STATUS OF PLAN.  The Plan is intended to be an  unfunded  plan
               --------------
maintained  by  LS&CO.   "primarily  for  the  purpose  of  providing   deferred
compensation for a select group of management or highly  compensated  employees"
within the meaning of Sections  201(2),  301(a)(3),  and 401(a)(4) of ERISA, and
shall be interpreted and administered consistent with this intent.

      1.3      EFFECTIVE  DATE.  Since the Plan's  inception in 1971,  the Plan
               ---------------
has been amended and restated from time to time. Effective as of August 1, 2000,
LS&CO.  hereby  amends and  restates  the Plan and further  renames the Plan the
"Levi Strauss & Co. Deferred Compensation Plan for Executives."

<PAGE>

                                    ARTICLE 2

                                   DEFINITIONS
                                   -----------

      2.1      ACCOUNT means an account established for the benefit of a
               -------
Participant under Section 5.1.

      2.2      ADMINISTRATOR means the entity or individual(s) responsible for
               -------------
the administration of the Plan under Article 8. The Administrative  Committee of
the  Retirement Plans (the  "Administrative  Committee")  or its delegate shall
serve as the Administrator.

      2.3      AIP means the Levi Strauss & Co. Annual Incentive Plan, as
               ---
amended from time to time.

      2.4      BENEFICIARY means  beneficiary or beneficiaries  designated by a
               -----------
Participant or otherwise under Article 7 to receive an amount,  if any,  payable
from such Participant's Account upon the death of the Participant.

      2.5      BONUS DEFERRAL(S) means all or a portion  of  Bonuses  that is
               -----------------
deferred  by a  Participant  under Section 4.2 with respect to a Plan Year.

      2.6      BONUSES  means the  bonuses  eligible  for Bonus  Deferrals,  and
               -------
includes  payments made under (i) the AIP, (ii) the LTIP,  (iii) the LTPP,  (iv)
the Leadership  Shares Plan of Levi Strauss & Co., as amended from time to time,
(v) any  regularly  paid bonus  program of  LS&CO.,  and (vi) any  non-recurring
special bonus that the  Administrator  designates,  in writing,  as eligible for
Bonus Deferrals.

      2.7      BRP means the Levi Strauss & Co. Excess Benefit Restoration Plan
               ---
or the Levi Strauss & Co.  Supplemental  Benefit  Restoration  Plan,  as each is
amended from time to time, to the extent that benefits payable thereunder result
from Code limitations applicable to the HOPP.

      2.8      CODE means the Internal  Revenue Code of 1986, as amended from
               ----
time to time, and the  regulations and rulings issued  thereunder.  Reference to
any section or subsection of the Code  includes  reference to any  comparable or
succeeding provisions of any legislation that amends,  supplements,  or replaces
such section or subsection.

      2.9      COMPENSATION means the base salary payable by the Employer to the
               ------------
Eligible  Employee for services  performed  during any Plan Year, which would be
includible in gross  income,  before  deductions  made to this Plan and the EIP.
Compensation shall exclude:  (i) payments or contributions made to LS&CO.'s Long
Term  Disability  Plan, (ii) payments or  contributions  made to any other group
insurance  or  employee  benefit  plan  maintained  by LS&CO.,  and (iii)  Bonus
Deferrals  under this Plan.  With respect to Eligible  Employees  on  expatriate
assignment,  Compensation  shall be adjusted for appropriate  expatriate-related
deductions and allowances, as determined by the Administrator in its discretion.

     2.10      DISABILITY means "Total and Permanent Disability" (or any
               ----------
successor term) as defined in the HOPP.

                                       2

<PAGE>


     2.11      EFFECTIVE DATE means August 1, 2000, the date of this amendment
               --------------
and restatement.

     2.12      EIP means the  Employee  Investment  Plan of Levi  Strauss & Co.,
               ---
as  amended  from time to time,  or any successor plan.

     2.13      ELECTIVE  DEFERRAL means the portion of Compensation  that is
               ------------------
deferred by a Participant  under  Section 4.1 with respect to a Plan Year.

     2.14       ELIGIBLE  EMPLOYEE means, as of the Effective Date, any employee
                 ------------------
of the Employer employed under home office payroll of LS&CO. and who
(i)customarily works 20 or more hours per week, (ii) is paid on a salaried
basis,  and (iii) is classified as either a Home Office Grade 9 employee or a
"Banded" employee.  The following employees shall not be eligible to participate
in the Plan: (i) employees who are paid on a commission basis, and
(ii) employees  who are  precluded  from participation  in the Plan under the
terms of an agreement  governing his or her employment  with an Employer.  Prior
to the Effective  Date,  Eligible  Employee shall have the meaning as specified
under the prior Plan document.

     2.15      EMPLOYER  means LS&CO.  or a domestic  subsidiary  of LS&CO.,
               --------
including a  wholly-owned  subsidiary  of a wholly-owned subsidiary of LS&CO.

     2.16      ERISA means the Employee Retirement  Income Security Act of 1974,
               -----
as amended from time to time, and the regulations and rulings issued thereunder.
Reference  to any  section or  subsection  of ERISA  includes  reference  to any
comparable or succeeding provisions of any legislation that amends,  supplements
or replaces such section or subsection.

     2.17      HOPP means the Revised Home Office  Pension  Plan of Levi Strauss
               ----
& Co., as amended from time to time,  or any successor plan.

     2.18      LS&CO.  means Levi Strauss & Co.
               ------

     2.19      LTIP means the Levi Strauss & Co. Long-Term Incentive Plan, as
               ----
amended from time to time.

     2.20      LTPP means the Levi Strauss & Co. Long-Term Performance Plan, as
               ----
amended from time to time.

     2.21      PARTICIPANT  means any  Eligible  Employee or former  Eligible
               -----------
Employee who  participates  in the Plan in accordance with Article 3.

     2.22      PENSION  MAKE-UP  DEFERRED  COMPENSATION  means an  amount  equal
to the  difference  between  (i) the  amount of  benefits  that  would have been
payable to or for the  Eligible  Employee  under the HOPP or the BRP but for the
deferral  of  Compensation  and Bonuses  under the Plan,  and (ii) the amount of
benefits  actually payable to or for the Eligible Employee under the HOPP or the
BRP.  The  Pension  Make-Up  Deferred  Compensation  shall be vested only to the
extent such amounts would be vested under such plans, as applicable.

                                       3

<PAGE>

     2.23      PLAN means the Levi  Strauss & Co.  Deferred  Compensation  Plan
               ----
for  Executives,  as amended from time to time.

     2.24      PLAN YEAR  means the calendar year.
               ---------

     2.25      RETIREMENT means any termination of an Eligible Employee's
               ----------
employment with an Employer with the right to an immediate benefit payable under
the HOPP. If an Eligible  Employee is not a participant  in the HOPP at the time
of his or her  termination of employment,  retirement  shall be determined as if
the Eligible  Employee had been a  participant  in the HOPP at such time and was
eligible for an immediate benefit under the HOPP.

                                       4


<PAGE>


                                    ARTICLE 3
                                  PARTICIPATION
                                  -------------


      3.1      COMMENCEMENT OF  PARTICIPATION.  An Eligible  Employee shall
               ------------------------------
become a Participant in the Plan on the first date on which an Elective Deferral
or Bonus Deferral is credited to his or her Account.

      3.2      CONTINUED  PARTICIPATION.  A Participant  in the Plan shall
               ------------------------
continue to be a  Participant  as long as any amount remains credited to his o
her Account.
















                                       5

<PAGE>


                                    ARTICLE 4

                                    DEFERRALS
                                    ---------


      4.1      ELECTIVE  DEFERRALS.  With respect to any Plan Year, an Eligible
               -------------------
Employee may irrevocably elect to defer a percentage of his or her Compensation,
subject to a minimum  Elective  Deferral of 5% and a maximum  Elective Deferral
of 33-1/3%.

      4.2      BONUS  DEFERRALS.  With respect to any Plan Year,  an Eligible
               ----------------
Employee  may  irrevocably  elect  to defer  all or part of his or her  Bonuses,
subject to a minimum  Bonus  Deferral of $5,000 or 5%  (whichever is greater) of
each type of Bonus and a maximum of 100% (but  reduced by any  applicable  taxes
required to be withheld under Section 10.8) of each type of Bonus Deferral.

      4.3      PENSION MAKE-UP DEFERRED  COMPENSATION.  Each Eligible  Employee
               --------------------------------------
may be credited with a Pension  Make-Up  Deferred  Compensation as determined by
the Administrator,  in its discretion. The Pension Make-Up Deferred Compensation
is automatically  deferred based on the Eligible  Employee's  Elective and Bonus
Deferrals and paid in accordance with Section 6.3.

      4.4      ELECTIONS.
               ---------

               (a)      TIME FOR FILING ELECTIONS.

                        (i)         ELECTIVE DEFERRALS.  Generally,  an election
                                    to defer  Compensation  paid in a Plan  Year
                                    must be  filed  with  the  Administrator  by
                                    mid-December of the preceding Plan Year. The
                                    Administrator   will  notify  each  Eligible
                                    Employee  of  the  applicable  deadline  for
                                    filing elections.

                        (ii)        NEWLY ELIGIBLE EMPLOYEE.  In the case of (A)
                                    an  Eligible  Employee  in his or her  first
                                    year of  employment,  and (B) an  individual
                                    who  becomes an  Eligible  Employee  after a
                                    Plan Year  commences,  an  election to defer
                                    Compensation must be made within thirty (30)
                                    days  after  the  Eligible  Employee  either
                                    commences  employment or becomes an Eligible
                                    Employee,  as  applicable,  and at least two
                                    (2) weeks  before  the  commencement  of the
                                    first  payroll  period to which the election
                                    is effective. Notwithstanding the foregoing,
                                    such  elections  are  not  permitted   after
                                    November 15 for current  year  Compensation.
                                    Such   elections  are  effective  only  with
                                    respect to  Compensation  received after the
                                    effective date of the election.

                        (iii)       BONUS  DEFERRALS.  Elections  to  defer  any
                                    Bonus  must  be  made  at  least  12  months
                                    preceding  the  date  the  particular  Bonus
                                    would otherwise vest.

               (b)      ELECTION  FORMS.  Elections  to defer  Compensation  and
                        Bonuses  must be timely  filed on forms  provided by the
                        Administrator and must specify the time and form of

                                       6

<PAGE>

                        payment in accordance with the provisions of Article 6.
                        All deferral elections made pursuant to this Article 4
                        shall be  irrevocable from  and  after the  last  date
                        permitted  for  making  such  elections.  An  Eligible
                        Employee  may  change a prior  election  up to the date
                        established under Section 4.4(a).

               (c)      NO  ELECTION.  If no election to defer  Compensation  or
                        Bonuses  is filed for a given Plan  Year,  the  election
                        form filed for the immediately  preceding year shall not
                        apply for subsequent  Plan Years,  and no deferrals will
                        be made for such Plan Year.











                                       7


<PAGE>


                                    ARTICLE 5
                                    ACCOUNTS
                                    --------


      5.1      ACCOUNTS.  The Administrator shall establish an Account for each
               --------
Participant  to reflect  Elective  Deferrals  and Bonus  Deferrals  made for the
Participant's  benefit  together with any adjustments for income,  gain or loss,
and any  payments  made from the  Participant's  Account.  Except as provided in
Section 5.2, a separate Account shall be established for Elective  Deferrals and
each  type of Bonus  Deferral  for each  Participant  for each  Plan  Year.  The
Accounts are established solely for the purpose of tracking Elective  Deferrals,
Bonus Deferrals,  and any income adjustments  thereto. The Accounts shall not be
used to segregate assets for payment of any amounts deferred under the Plan.

      5.2      INCOME TRACKING.  Elective Deferrals and Bonus Deferrals in an
               ---------------
Account  shall be  credited  with  income,  gain or loss,  as  reflected  by the
performance of investments  offered by the Administrator.  Such income,  gain or
loss  shall  be  computed  as of the  last  day of each  calendar  month  on the
undistributed  balance  of  each  Account  at the end of  such  calendar  month.
Participants  may select an  investment  fund or funds that shall be tracked for
purposes of valuing and  crediting  income on the balance of each  Participant's
Account.  For  purposes of tracking  performance,  a  Participant  must select a
single  investment  with respect to 100% of Elective  Deferrals for a given Plan
Year and 100% of each type of Bonus Deferral for a given Plan Year. Participants
may not apportion their Elective  Deferrals or each type of Bonus Deferral for a
given year among different  investment  funds. If a Participant  makes identical
elections (including,  but not limited to, the amount or percentage of deferral,
payment options, death payment options, Beneficiary designations, and investment
funds) with  respect to  Elective  Deferrals  in  consecutive  Plan Years,  such
Elective  Deferrals  will be treated as a single  Account for purposes of income
tracking. If a Participant makes identical elections (including, but not limited
to, the  amount or  percentage  of  deferral,  payment  options,  death  payment
options,  Beneficiary  designations,  and  investment  funds) with  respect to a
particular  type of  Bonus  Deferral  in  consecutive  Plan  Years,  such  Bonus
Deferrals will be treated as a single  Account for purposes of income  tracking.
The  Pension  Make-Up  Deferred  Compensation  shall  not be  eligible  for  the
crediting of income, gain or loss, under this Section 5.2.

      If a Participant does not select an investment fund, the default income
standard,  described below,  shall apply.

               (a)      INVESTMENT  FUNDS.  The   Administrator,   in  its  sole
                        discretion,  shall  offer  to  Participants  one or more
                        investment  funds,  which  may  be  changed,   added  or
                        eliminated  from time to time,  without an  amendment to
                        the Plan. The investment funds may include  alternatives
                        that are  diversified and have different risk and return
                        characteristics.

               (b)      DEFAULT  INCOME  STANDARD.  If a  Participant  does  not
                        select an investment fund under subparagraph (a), above,
                        with respect to Elective and Bonus  Deferrals  under the
                        Plan in accordance  with the  procedures  established by


                                       8

<PAGE>

                        the Administrator,  income on the  entire  balance of a
                        Participant's  Account  shall be tracked and valued on a
                        monthly basis as follows:

                        (i)         for  any  month  prior  to  March  1,  2000,
                                    at the applicable  rate as  specified  under
                                    the prior  Plan document,  on the last day
                                    of the  calendar month on which the interest
                                    is valued,

                        (ii)        for any month beginning on or after March 1,
                                    2000:

                                    (A)    with respect to any amounts  deferred
                                           under the Plan that as of March 1,
                                           2000 were being tracked and valued at
                                           one-twelfth  (1/12) of the  annual
                                           rate  charged  for  commercial loans,
                                           as most recently announced by Bank of
                                           America in San Francisco, California,
                                           effective  on the last  day of the
                                           calendar month on which the interest
                                           is valued,  plus one-twelfth  (1/12)
                                           of  two  percent  (2%)  per  annum
                                           (referred to herein as the "Prime
                                           Plus 2% Tracking Option"), at the
                                           greater of:

                                           (i)     one-twelfth (1/12) of eleven
                                                   percent (11%) per annum; or

                                           (ii)    the Prime Plus 2% Tracking
                                                   Option.

                                    (B)    with respect to any amounts  deferred
                                           under the Plan  that as of March 1,
                                           2000 were not being  tracked  and
                                           valued at the Prime Plus 2% Tracking
                                           Option, at one-twelfth (1/12) of
                                           eleven percent (11%) per annum.

      5.3      CHANGING INCOME TRACKING ELECTIONS.  During any Plan Year, a
               ----------------------------------
Participant may elect to change the investment fund used to track and value his
or her Account. Any election change received by LS&CO. on or before the last day
of any  calendar  month  shall be  effective  as of the first day of the
following month. Any election change received by LS&CO. after the last day of
any calendar month shall be effective as of the first day of the second
following month. For purposes of this Section 5.3, a Participant must select a
single investment with respect to 100% of his or her Account.

                                       9

<PAGE>

                                   ARTICLE 6

                                    PAYMENTS
                                    --------


      6.1      ELECTION AS TO TIME AND FORM OF PAYMENT (ELECTIVE AND BONUS
               -----------------------------------------------------------
               DEFERRALS).
               ----------

               (a)      GENERAL PAYMENT  OPTIONS.  A Participant may irrevocably
                        elect any one of the following  payment options
                        applicable to his or her Elective and Bonus Deferrals
                        made for any given Plan Year:

                        (i)         Monthly  installments  over a ten (10)  year
                                    period  commencing  at  age  70-1/2  or,  if
                                    later,  termination  of employment  (for any
                                    reason,  including  by  reason  of  death or
                                    involuntary discharge);

                        (ii)        Monthly  installments  over a period that is
                                    not less  than  five (5) years and no longer
                                    than ten (10)  years to start at a  specific
                                    date or age; or

                        (iii)       A lump sum payment at any future date, as
                                    selected by the Participant.

                                    If a  Participant  fails to elect a  payment
                        option for Elective and Bonus  Deferrals made in a given
                        Plan Year in accordance with the procedures  established
                        by the Administrator, payment of such Deferrals shall be
                        made in  accordance  with Section  6.1(a)(i).  Except as
                        provided in Section 6.1(c), in no event shall payment of
                        a  Participant's  Elective  and  Bonus  Deferrals  begin
                        before  a  Participant  terminates  employment  with the
                        Employer. Except as provided in Section 6.2, an election
                        under  this  Section   6.1(a),   including  the  default
                        election under Section  6.1(a)(i),  shall be irrevocable
                        from and after the last date  permitted  for making such
                        election.

               (b)      PAYMENT  OPTIONS UPON DEATH. A Participant may elect one
                        of the following  payment  options  applicable to his or
                        her Elective and Bonus Deferrals made for any given Plan
                        Year  in  the  event   the   Participant   dies   before
                        terminating employment,  or after terminating employment
                        but before payments have commenced:

                        (i)         Monthly installments over a ten (10) year
                                    period commencing at the date the
                                    Participant pant would have attained  age
                                    70-1/2  or, if  later, the date of the
                                    Participant's death;

                        (ii)        Monthly  installments over a period  that is
                                    not  less  than  five (5)  years  and no
                                    longer than ten (10) years  commencing after
                                    the date of the Participant's  death; or

                                       10

<PAGE>


                        (iii)       A lump sum payment at any designated time
                                    within five (5) years after the date of the
                                    Participant's  death,  as  selected  by  the
                                    Participant.

                                    If a  Participant  fails to elect a  payment
                        option under for Elective and Bonus  Deferrals made in a
                        given  Plan  Year  in  accordance  with  the  procedures
                        established  by  the  Administrator,   payment  of  such
                        Deferrals shall be made to the Participant's Beneficiary
                        in accordance with Section 6.1(b)(i).  A Participant can
                        modify or revoke his or her payment  options  under this
                        Section  6.1(b) at any time  prior to his or her date of
                        death without the consent of the Beneficiary by filing a
                        new  "Designation  of  Beneficiary  Form," or such other
                        form as prescribed by the  Administrator.  The last such
                        designated payment option with respect to an Elective or
                        Bonus Deferral shall control; provided, however, that no
                        designation, modification or revocation thereof shall be
                        effective unless received by the Administrator  prior to
                        the  Participant's  death  and in no  event  shall it be
                        effective as of a date prior to such receipt.

                                    In the event that a  Participant  dies after
                        terminating   employment   and   after   payments   have
                        commenced,  but before all payments have been made,  the
                        remaining  payments  shall  continue  to be made to such
                        Participant's  Beneficiary  in the same time and form as
                        the  Participant's  payment option  immediately prior to
                        the date of the Participant's death.

               (c)      IN-SERVICE  PAYMENTS.  In addition to the above  payment
                        options,   a  Participant  may  elect  to  have  amounts
                        representing  a  particular  Bonus for a given Plan Year
                        deferred  under the Plan to be paid as follows:  (i) 20%
                        of  the   Bonus   paid  as   soon  as   administratively
                        practicable  after  such  Bonus  is  determined  by  the
                        awarding  Employer,  and (ii) the  remaining  80% of the
                        Bonus paid in four annual installments (as determined by
                        the Plan Administrator) beginning in the following year.
                        If a Participant  terminates  employment  for any reason
                        other  than  death or  retires  prior to  receiving  the
                        entire amount of the Bonus,  payments  shall continue to
                        be made to such Participant in annual  installments.  In
                        the event a  Participant  dies  prior to  receiving  the
                        entire amount of the Bonus,  payments  shall continue to
                        be made  to such  Participant's  Beneficiary  in  annual
                        installments.  A  Participant  must elect  this  payment
                        option  at the  time he or she  files  his or her  Bonus
                        Deferrals election in accordance with Article 4.

               (d)      SCOPE  OF  ELECTIONS.  Except  as  provided  in  Section
                        6.1(b), the elections under this Section 6.1 shall apply
                        to Elective  Deferrals and Bonus  Deferrals for the Plan
                        Year for which the election form is filed. A Participant
                        may elect  different  payment options for deferrals made
                        in subsequent Plan Years in accordance with this Article
                        6.

               (e)      PRIOR  ELECTIONS.   Notwithstanding  the  foregoing  and
                        subject to any  election  made  during an open  election
                        period, if an individual was a Participant on

                                       11

<PAGE>

                        October 1, 1985,  and  prior to  October 1,  1985  filed
                        with the Administrator  a  confirmation of each prior
                        election, such  Participant  shall  have his or her
                        Elective  and Bonus Deferrals paid pursuant to such
                        elections.

      6.2      ACCELERATION  OF  PAYMENTS.  With respect to Elective  Deferrals
               --------------------------
and Bonus Deferrals that are to be paid in accordance with Section  6.1(a)(i) or
Section 6.1(b)(i) and for which payment has not commenced, a Participant who has
terminated  his or her  employment  with the  Employer  or, in the event of such
Participant's death, his or her Beneficiary may request to accelerate payment of
such Deferrals in accordance with this Section 6.2.

         With respect to Elective Deferrals and Bonus Deferrals that are paid in
accordance with Section  6.1(a)(i) and for which payment has not commenced,  the
Participant  may request (i) to receive a lump sum payment at a time  designated
by the  Participant,  or (ii) to begin  monthly  or  annual  installments  on an
earlier  date,  payable  over a period of not less than one (1) year but no more
than ten (10) years after a specific date or age.

         With respect to Elective Deferrals and Bonus Deferrals that are paid in
accordance with Section  6.1(b)(i) and for which payment has not commenced prior
to the date of a Participant's death, the Participant's  Beneficiary may request
(i) to receive a lump sum payment at a time  designated by the  Beneficiary,  or
(ii) to begin monthly or annual  installments on an earlier date, payable over a
period of not less than one (1) year but no more than ten (10)  years  after the
date of Participant's death.

         To request an acceleration of payments  pursuant to this Section 6.2, a
Participant  or a  Beneficiary  shall  file a  written  petition  with  the U.S.
Retirement  Benefits  Department  of LS&CO.  setting  forth the  reasons for the
acceleration.  The U.S.  Retirement Benefits Department will submit the petition
to the Administrative Committee for consideration. The Administrative Committee,
or its  delegate,  in its  sole  discretion,  shall  make its  determination  to
accelerate  payments  based on the facts and  circumstances  of each  individual
case.  The  Administrative  Committee,  or  its  delegate,  shall  consider  the
following factors (which shall be applied in an objective and  nondiscriminatory
manner):

                        (i)         The availability of the funds necessary to
                                    satisfy the amount of the payment without
                                    adversely affecting LS&CO.'s liquidity
                                    position; and

                        (ii)        The  existence of any other factors that
                                    indicate the acceleration of  payment  would
                                    not be in the  best interest   of   LS&CO.
                                    and   the   Participant   or Beneficiary, or
                                    would adversely affect the ability of
                                    other Participants or Beneficiaries to defer
                                    Compensation and Bonuses under the Plan.


      6.3      TIME AND FORM OF PAYMENT FOR PENSION MAKE-UP DEFERRED
               -----------------------------------------------------
               COMPENSATION.
               ------------

               (a)      TIME  FOR   PAYMENT.   The  Pension   Make-Up   Deferred
                        Compensation  shall be paid at the same time and form as
                        benefits paid under the HOPP or the BRP, as  applicable.
                        If  the  Pension   Make-Up   Deferred   Compensation  is
                        attributable  to two or more  such  plans,  the time and
                        form of each component of the Pension  Make-Up Deferred

                                       12

<PAGE>

                        Compensation shall be determined in accordance with the
                        applicable plan.

               (b)      INVOLUNTARY DISTRIBUTION. Notwithstanding the foregoing,
                        if (i) the  Participant  is not  entitled  to  receive a
                        benefit under the BRP, and (ii) the present value of the
                        vested Pension Make-Up Deferred  Compensation is $50,000
                        or less, such amount shall be paid to the Participant or
                        his  or  her  Beneficiary  in a  lump  sum  as  soon  as
                        administratively  practicable  following  termination of
                        employment  with  the  Employer.  For  purposes  of this
                        Section  6.3,  the  Administrator  shall  determine  the
                        present   value   of  the   Pension   Make-Up   Deferred
                        Compensation in a uniform and nondiscriminatory manner.

                  A payment  pursuant to this Section 6.3 shall  extinguish such
         Participant's  or  Beneficiary's  right to the Pension Make-Up Deferred
         Compensation  with  respect  to  employment  prior  to the date of such
         payment.

      6.4      WITHDRAWAL DUE TO HARDSHIP.
               --------------------------

               (a)      HARDSHIP.  If  a  Participant  or,  in  the  case  of  a
                        Participant's  death, a Beneficiary suffers an immediate
                        "hardship"   (as  defined  in  this  Section  6.4),  the
                        Administrative  Committee,  in its sole discretion,  may
                        pay to the  Participant or Beneficiary a lump sum amount
                        from  his or  her  Account  necessary  to  alleviate  or
                        satisfy the hardship,  provided such hardship  cannot be
                        relieved by another source, including but not limited to
                        the liquidation of the  Participant's  or  Beneficiary's
                        assets or a loan from a commercial  source on commercial
                        terms,  but only to the extent such  liquidation or loan
                        would not cause  hardship.  A Participant or Beneficiary
                        (as the case may be) shall make a written request to the
                        Administrative  Committee,  on a form  prescribed by the
                        Administrative   Committee,   and  shall   provide  such
                        additional  information as the Administrative  Committee
                        may require. The following are deemed "hardships:"

                        (i)         Expenses for medical care either  previously
                                    incurred    by    the    Participant,    the
                                    Participant's  spouse  or  any of his or her
                                    dependents (as defined in Code Section 152),
                                    or necessary for such  individuals to obtain
                                    medical  care (as  described in Code Section
                                    213(d));

                        (ii)        Costs directly related to the purchase of a
                                    principal residence for the Participant;

                        (iii)       Payment  of  tuition,   related  educational
                                    fees,  and room and board  expenses  for the
                                    next 12 months of  post-secondary  education
                                    for  the  Participant,   the   Participant's
                                    spouse  or any of  his  or her  children  or
                                    dependents (as defined in Code Section 152);

                                       13

<PAGE>

                        (iv)        Payments  necessary  to  prevent  eviction
                                    of the Participant from his or her principal
                                    residence  or foreclosure on the mortgage of
                                    that residence;

                        (v)         Payment of funeral expenses for a family
                                    member or relative of the Participant; and

                        (vi)        Payment for such other needs,  circumstances
                                    or events which the Administrative
                                    Committee in its sole discretion, determines
                                    are consistent with the goals of LS&CO. for
                                    the Plan.

               (b)      CANCELLATION  OF  ELECTIVE  DEFERRALS.  In the event the
                        Administrative    Committee    approves    a    hardship
                        distribution  to a  Participant  under this Section 6.4,
                        all Elective Deferrals shall  automatically  cease for a
                        period of three (3) months,  beginning no later than the
                        second  payroll  period  following the date on which the
                        hardship  request  is  approved  by  the  Administrative
                        Committee.

      6.5      INVOLUNTARY DISTRIBUTION. Notwithstanding anything in this
               ------------------------
               Article  6  to  the  contrary,  if a Participant's  employment is
               terminated  for any reason, and the  aggregate  balance of his or
               her Accounts are $50,000 or less at the time of such termination,
               a lump sum payment of the Account balance shall be made as soon
               as administratively practicable following termination of
               employment  with  the  Employer.  The  balance  of  such
               Participant's Account shall be determined without regard to  any
               election for   in-service   payments   of  a Participant's  Bonus
               made in accordance  with  Section 6.1(c) and  shall be  valued
               as of the last day of the month during which the Participant's
               employment is terminated.  This provision shall not require
               payment to be made with respect to elections  made prior to
               January 1, 1983 and reaffirmed prior to June 15, 1985.

                                       14

<PAGE>


                                    ARTICLE 7
                                  BENEFICIARIES
                                  -------------


      7.1      DESIGNATION BY  PARTICIPANT.  Each  Participant  shall designate
one or more persons as his or her  Beneficiary for each Account by notifying the
Administrator, in writing, at any time before the Participant's death, on a form
prescribed by the Administrator. In addition, a Participant may modify or revoke
his or her Beneficiary  designation  under this Section 7.1 at any time prior to
his or her death  without the consent of any prior  Beneficiary  by filing a new
"Designation  of  Beneficiary  Form," or such  other form as  prescribed  by the
Administrator.  The last such designation  with respect to a particular  Account
shall  control;  provided,   however,  that  no  designation,   modification  or
revocation thereof shall be effective unless received by the Administrator prior
to the  Participant's  death and in no event shall it be  effective as of a date
prior to such receipt.

      7.2      LACK OF DESIGNATION.  If no beneficiary is designated at the time
of a Participant's death, or no designated Beneficiary survives the Participant,
then payment of a  Participant's  Account balance shall be made to the following
persons in the order listed:

               (i)      To the Participant's surviving spouse, if any;

               (ii)     If the  Participant  has no  surviving  spouse,  then to
                        his or her  living children;

               (iii)    If the Participant has no living  children,  then to his
                        or her living parents;

               (iv)     If the  Participant has no living parents,  then to his
                        or her  living  brothers  and  sisters;  or

               (v)      If the  Participant has no  living brothers and sisters,
                        then to his or her estate.

         The Administrator, in its sole and absolute discretion, shall determine
the right of such  persons to receive  the  benefit  payable  with  respect to a
Participant,  if any.  If the  Administrator  is in doubt as to the right of any
person to receive such payment, the Administrator may, in its discretion, direct
the Employer  (i) to retain such amount,  without  liability  for any  interest,
until the rights to a Participant's  Account balance are determined,  or (ii) to
pay such amount into any court of  appropriate  jurisdiction,  and such  payment
shall completely discharge the liability of the Plan and the Employer.

                                       15

<PAGE>


                                   ARTICLE 8

                               PLAN ADMINISTRATION
                               -------------------


      8.1      PLAN ADMINISTRATION AND INTERPRETATION. Except as indicated
               --------------------------------------
otherwise in the Plan, the  Administrative  Committee of the Retirement Plans or
its  delegate  shall  be the  Administrator  of the  Plan.  The  Administrator's
interpretations  and constructions of the Plan and actions taken pursuant to its
authority,  except as otherwise  determined  by the Board of Directors of LS&CO.
shall be binding and conclusive on all persons for all purposes.

      8.2      INFORMATION  REQUIRED.  Each Participant  shall provide the
               ---------------------
Administrator with such pertinent information  concerning him or her, and his or
her Beneficiary relating to Plan administration or participation as specified or
required by the  Administrator.  No Eligible  Employee or  Beneficiary  or other
person  shall  have any rights or be  entitled  to any  benefits  under the Plan
unless such information is provided.

      8.3      INCAPACITY.  If the Administrator  finds that any person entitled
               ----------
to payment  under the Plan is unable to care for his or her  affairs  because of
illness, accident, or because he or she is a minor, then any payment due (unless
a prior claim has been made by a duly  appointed  guardian,  committee  or other
legal  representative),  in the Administrator's sole discretion,  may be paid to
his or her spouse, a child, a parent,  a sibling,  or any other person deemed by
the  Administrator to have incurred expenses for such person, in such manner and
proportions  as  the  Administrator  may  determine.   Any  such  payment  shall
constitute a complete discharge of the Employer's liability under the Plan.

      8.4      CLAIMS PROCEDURE.
               ----------------

      STEP 1:           Filing a Claim
                        --------------
      If a  Participant  does not agree  that the  provisions  of this Plan have
been applied  correctly  such  Participant  may file a claim in writing with the
Administrator in care of the U.S. Retirement Benefits, Manager, Human Resources.
Such claim shall be submitted to the U.S. Retirement  Benefits,  Manager,  Human
Resources, Levi Strauss & Co., P.O. Box 7215, San Francisco, CA 94120.

      STEP 2:           Claim Denial (90 to 180 days)
                        -----------------------------
      If the claim is denied in whole or in part, the Administrator will send
the  Participant  a letter  explaining  why his or her claim was denied and will
include the following  information:  (i) specific  references to Plan provisions
that  apply,  (ii)  whether  any  further  information  is needed to review  the
Participant's  claim, and (iii) an explanation as to how to file an appeal.  The
Administrator  will send the  Participant a claim denial within ninety (90) days
after such  Participant  files his or her claim,  unless  special  circumstances
require  a longer  period of time to  review  such  claim.  If an  extension  is
required,  the  Administrator  will send the Participant a notice explaining why
the extension is needed and the date by which the Administrator  expects to make
its  decision.   In  no  case,   however,   will  a   Participant   receive  the
Administrator's  claim denial  letter later than  one-hundred  eighty (180) days
after such Participant filed his or her claim. If a Participant does not receive
a claim denial or notice of extension from the Administrator within ninety (90)

                                       16

<PAGE>

days after the Participant filed his or her claim, such claim will be deemed
denied and the Participant may file a written appeal.

      STEP 3:           Appealing a Claim Denial (60 days)
                        ----------------------------------
      If a Participant  disagrees with the claim denial, he or she may appeal
to the  Administrator  in writing within sixty (60) days after receiving a claim
denial.  If the  Participant  fails to file a written  appeal  within sixty (60)
days, the original  decision of the  Administrator  will become final. An appeal
shall be submitted to the Administrator in care of the U.S. Retirement Benefits,
Manager, Human Resources,  Levi Strauss & Co., P.O. Box 7215, San Francisco,  CA
94120. A Participant filing an appeal shall include all related facts to support
his or her right to Plan benefits and the reasons why such Participant  believes
the  Administrator's  denial is wrong. A Participant may hire an attorney or use
other legal  assistance,  at his or her own expense,  in  preparing  the written
appeal and may examine any related Plan documents.

      STEP 4:           Final Decision (60 to 120 days)
                        -------------------------------
      Upon receipt of a Participant's  written appeal, the Administrator will
re-examine the facts and come to a final decision as to whether the claim denial
is correct.  The  Administrator  will notify such  Participant  of its  decision
within sixty (60) days after receipt of his or her written appeal,  unless there
are special circumstances (such as a hearing) that would require a longer review
period.  The  Administrator  will  notify the  Participant  if there are special
circumstances  and  an  extension  is  required.  In no  case,  however,  will a
Participant receive the  Administrator's  decision later than one-hundred twenty
(120)  days  after  such  Participant  filed  his or her  written  appeal.  If a
Participant  does not  receive a claim  denial or notice of  extension  from the
Administrator  within  sixty  (60) days after the  Participant  filed his or her
appeal, such appeal will be deemed denied.

         The   Administrator's   final   decision  will  include  the  following
information:  (i) specific reasons for the  Administrator's  decision,  and (ii)
reference to Plan provisions on which the denial is based. If the  Administrator
overrules the claim denial,  in whole or in part, the  Participant  will receive
any Plan benefits owed based on the Administrator's determination.

                                       17


<PAGE>


                                   ARTICLE 9

                            AMENDMENT AND TERMINATION
                            -------------------------

         The Board of Directors of LS&CO.  or its delegate  shall have the right
to amend, suspend, or terminate the Plan, in whole or in part. In no event shall
any action pursuant to this Article 9 adversely  affect the rights of any person
with respect to amounts that have been  credited to his or her Account  prior to
the date of such action, as determined by the Administrator.













                                       18


<PAGE>


                                   ARTICLE 10

                                  MISCELLANEOUS
                                  -------------


     10.1      NO FUNDING.
               ----------

               (a)      The Plan  constitutes  a promise by the Employer to make
                        payments in accordance  with the terms of the Plan.  The
                        Plan shall be unfunded and all  payments  made under the
                        Plan  shall be made in cash from the  general  assets of
                        the Employer.  Nothing in the Plan shall be construed to
                        give any employee or of any other  person  rights to any
                        specific  assets of the Employer or of any other person.
                        Participants and beneficiaries under the Plan shall have
                        the  status  of  general  unsecured   creditors  of  the
                        Employer.  In  all  events,  it is  the  intent  of  the
                        Employer  that the Plan be treated as  unfunded  for tax
                        purposes  and for  purposes  of  Title I of  ERISA.

               (b)      Except as provided in Article 5, the Employer  shall not
                        establish a separate fund,  trust or account in the name
                        of any Participant or Beneficiary to hold assets payable
                        to a Participant. Any sponsor of a financial entity that
                        is used for  purposes  of income  tracking  shall not be
                        responsible   for  any  payments  under  the  Plan,  and
                        Participants shall not have an account  established with
                        such entity in connection  with their  participation  in
                        the Plan.  If LS&CO.  establishes  an account  with such
                        financial  entity for purposes of income  tracking,  any
                        increases to or  distributions  from such account  shall
                        remain the  property  of LS&CO.

               (c)      Nothing  contained herein shall be construed to create a
                        trust of any kind or a fiduciary relationship between an
                        Employer or the  Administrator and any employee or other
                        person.

     10.2      EFFECT ON OTHER PLANS. Except as otherwise provided under any
               ---------------------
qualified retirement plans maintained by the Employer,  Compensation and Bonuses
deferred under this Plan shall not be included in "covered compensation" for the
crediting  of  benefits  or  contributions  to any  qualified  retirement  plans
maintained  by the  Employer,  including  but not limited to any  pension  plan,
profit-sharing  plan,  stock purchase plan,  employee  savings plan, or employee
stock ownership plan.  Other benefit plans shall not be affected by Elective and
Bonus Deferrals under this Plan.

     10.3      NON-ASSIGNABILITY.
               -----------------

               (a)      NO  ASSIGNMENT.  Except as  provided  in  Article 7 or
                        otherwise in this Section  10.3,  none of the  benefits,
                        payments,  proceeds  or  claims  of any  Participant  or
                        Beneficiary  shall  be  subject  to  any  claim  of  any
                        creditor  of any  Participant  or  Beneficiary,  and, in
                        particular,  the same shall not be subject to attachment
                        or garnishment or other legal process by any creditor of
                        such  Participant  or  Beneficiary.   In  addition,   no
                        Participant  or  Beneficiary  shall  have  any  right to
                        alienate, anticipate, commute, pledge, encumber  or

                                       19

<PAGE>

                        assign any of the benefits or payments or proceeds which
                        he or she may expect to receive, contingently or
                        otherwise under the Plan.

                        Any (i) attempt by a Participant  or  Beneficiary  to
                        alienate,  anticipate,  commute,  pledge, encumber or
                        assign  any  amounts  payable  under the Plan,  or by
                        reason of his or her bankruptcy,  or (ii) other event
                        that makes such  payment  subject to his or her debts
                        or liabilities or would otherwise devolve upon anyone
                        else, the Administrator  may, in its sole discretion,
                        terminate such person's  interest in any such payment
                        and direct  that such  payment be held and applied to
                        or for the benefit of such person, his or her spouse,
                        children or other dependents, or in such other manner
                        as the Administrator may deem proper.

               (b)      QUALIFIED DOMESTIC RELATIONS ORDERS. Notwithstanding any
                        provision in the Plan to the contrary,  a  Participant's
                        benefits   under  the  Plan  shall  be  payable  to  any
                        "alternate   payee"   (as   defined   in  Code   Section
                        414(p)(8)),   as  provided  in  any  qualified  domestic
                        relations  order  within  the  meaning  of Code  Section
                        414(p)(1)(A) as if the Plan were subject to Code Section
                        414(p).  The Administrator,  in its sole discretion,  or
                        its  designee,  shall make all relevant  determinations,
                        including,   but  not  limited  to,  whether  the  order
                        constitutes a qualified  domestic relations order within
                        the meaning of Code Section 414(p)(1)(A).  The rights of
                        any  alternate   payee  hereunder  are  subject  to  the
                        provisions  of  the  Plan,  and  the  Administrator  may
                        require an alternate  payee to  acknowledge  that his or
                        her rights are subject to such provisions.

     10.4      NOTICES AND  COMMUNICATIONS.  All notices,  statements,  reports
               ---------------------------
and other  communications  from the Administrator to any employee,  Participant,
Beneficiary,  or other  person  required  or  permitted  under the Plan shall be
deemed to have been duly given when  personally  delivered to, when  transmitted
using  facsimile or other  electronic  media, or when mailed  first-class  mail,
postage  prepaid and addressed to, such  employee,  Participant,  Beneficiary or
other person at his or her address last appearing on the records of the Company.
All  elections,   designations,   requests,  notices,   instructions  and  other
communications  from  a  Participant,   Beneficiary,  or  other  person  to  the
Administrator  required or permitted  under the Plan shall be in such form as is
prescribed  from  time to time by the  Administrator,  and  shall be  mailed  by
first-class  mail,  transmitted by facsimile,  electronic media, or delivered to
such  location as shall be specified by the  Administrator.  Such  communication
shall be deemed to have been given and delivered only upon actual receipt by the
Administrator at such location.

     10.5      LIMITATION OF PARTICIPANT'S RIGHTS. Nothing contained in the Plan
               ----------------------------------
shall be  construed  to  confer  upon any  person  the right to be  employed  or
continue in the employ of the Employer,  or to  interfere,  in any way, with the
Employer's right to terminate the employment of a Participant in the Plan at any
time, with or without cause.

     10.6      PARTICIPANTS BOUND. Any action with respect to the Plan taken by
               ------------------
the  Administrator or any action authorized by or taken at the direction of the
Administrator or the Employer shall be conclusive upon all Participants and

                                       20

<PAGE>

Beneficiaries entitled to benefits under the Plan.

     10.7      RECEIPT AND  RELEASE.  Any payment to any  Participant  or
               --------------------
Beneficiary in  accordance  with the  provisions  of the Plan  shall,  to the
extent thereof,  be in full  satisfaction  of all claims  against the  Employer
and the Administrator, and the Administrator may require such Participant  or
Beneficiary,  as a condition precedent to such payment, to execute a receipt and
release to such effect.  If any  Participant or Beneficiary is determined by the
Administrator  to be incompetent  by reason of physical or mental  disability or
other legal disability (including minority) to give a valid receipt and release,
the  Administrator may cause the payment or payments becoming due to such person
to be made to another person for his or her benefit  without  responsibility  on
the part of the  Administrator or the Employer to follow the application of such
funds.

     10.8      WITHHOLDING OF TAXES. LS&CO. shall withhold from all deferrals
               ---------------------------
and distributions made under the Plan any taxes  required to be withheld by any
law or regulations of the federal,  state,  or local  government.

     10.9      HEADINGS.  All headings and subheadings  in the Plan are provided
               --------
for  convenience  only and are not to be considered in the construction of the
provisions in the Plan.

    10.10      GOVERNING LAW AND SEVERABILITY.  The Plan shall be governed,
               ------------------------------
administered and construed in all respects under and by the laws of the State of
California.  If  any  provision  is  held  or  found  by a  court  of  competent
jurisdiction  to be invalid or  unenforceable,  the remaining  provisions  shall
continue to be fully effective.

                                      * * *

         IN WITNESS WHEREOF, the undersigned officer of LS&CO. has executed this
document to certify its adoption effective as of this ___ day of ____________,
2000.



                              LEVI STRAUSS & CO.


                              ------------------------------------
                              Fred D. Paulenich
                              Senior Vice President of Worldwide Human Resources


                                       21


<PAGE>


                                TABLE OF CONTENTS
________________________________________________________________________________

SECTION                                                                     PAGE
________________________________________________________________________________

ARTICLE 1 INTRODUCTION........................................................1

   1.1   PURPOSE OF PLAN......................................................1
   1.2   STATUS OF PLAN.......................................................1
   1.3   EFFECTIVE DATE.......................................................1

ARTICLE 2 DEFINITIONS.........................................................2

   2.1   ACCOUNT..............................................................2
   2.2   ADMINISTRATOR........................................................2
   2.3   AIP..................................................................2
   2.4   BENEFICIARY..........................................................2
   2.5   BONUS DEFERRAL(S)....................................................2
   2.6   BONUSES..............................................................2
   2.7   BRP..................................................................2
   2.8   CODE.................................................................2
   2.9   COMPENSATION.........................................................2
   2.10  DISABILITY...........................................................2
   2.11  EFFECTIVE DATE.......................................................3
   2.12  EIP..................................................................3
   2.13  ELECTIVE DEFERRAL....................................................3
   2.14  ELIGIBLE EMPLOYEE....................................................3
   2.15  EMPLOYER.............................................................3
   2.16  ERISA................................................................3
   2.17  HOPP.................................................................3
   2.18  LS&CO................................................................3
   2.19  LTIP.................................................................3
   2.20  LTPP.................................................................3
   2.21  PARTICIPANT..........................................................3
   2.22  PENSION MAKE-UP DEFERRED COMPENSATION................................3
   2.23  PLAN.................................................................4
   2.24  PLAN YEAR............................................................4
   2.25  RETIREMENT...........................................................4

ARTICLE 3 PARTICIPATION.......................................................5

   3.1   COMMENCEMENT OF PARTICIPATION........................................5
   3.2   CONTINUED PARTICIPATION..............................................5

ARTICLE 4 DEFERRALS...........................................................6

   4.1   ELECTIVE DEFERRALS...................................................6
   4.2   BONUS DEFERRALS......................................................6
   4.3   PENSION MAKE-UP DEFERRED COMPENSATION................................6
   4.4   ELECTIONS............................................................6

ARTICLE 5 ACCOUNTS............................................................8

   5.1   ACCOUNTS.............................................................8
   5.2   INCOME TRACKING......................................................8
   5.3   CHANGING INCOME TRACKING ELECTIONS...................................9


                                       i


<PAGE>


ARTICLE 6 PAYMENTS...........................................................10

   6.1   ELECTION AS TO TIME AND FORM OF PAYMENT (ELECTIVE AND BONUS
         DEFERRALS)..........................................................10
   6.2   ACCELERATION OF PAYMENTS............................................12
   6.3   TIME AND FORM OF PAYMENT FOR PENSION MAKE-UP DEFERRED COMPENSATION..12
   6.4   WITHDRAWAL DUE TO HARDSHIP..........................................13
   6.5   INVOLUNTARY DISTRIBUTION............................................14

ARTICLE 7 BENEFICIARIES......................................................15

   7.1   DESIGNATION BY PARTICIPANT..........................................15
   7.2   LACK OF DESIGNATION.................................................15

ARTICLE 8 PLAN ADMINISTRATION................................................16

   8.1   PLAN ADMINISTRATION AND INTERPRETATION..............................16
   8.2   INFORMATION REQUIRED................................................16
   8.3   INCAPACITY..........................................................16
   8.4   CLAIMS PROCEDURE....................................................16

ARTICLE 9 AMENDMENT AND TERMINATION..........................................18


ARTICLE 10 MISCELLANEOUS.....................................................19

   10.1  NO FUNDING..........................................................19
   10.2  EFFECT ON OTHER PLANS...............................................19
   10.3  NON-ASSIGNABILITY...................................................19
   10.4  NOTICES AND COMMUNICATIONS..........................................20
   10.5  LIMITATION OF PARTICIPANT'S RIGHTS..................................20
   10.6  PARTICIPANTS BOUND..................................................20
   10.7  RECEIPT AND RELEASE.................................................21
   10.8  WITHHOLDING OF TAXES................................................21
   10.9  HEADINGS............................................................21
   10.10 GOVERNING LAW AND SEVERABILITY......................................21


                                       ii

<PAGE>


















                               LEVI STRAUSS & CO.
                    DEFERRED COMPENSATION PLAN FOR EXECUTIVES
               (AS AMENDED AND RESTATED EFFECTIVE AUGUST 1, 2000)
                  (INCLUDING AMENDMENTS THROUGH MARCH 1, 2000)




















</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.46
<SEQUENCE>11
<FILENAME>0011.txt
<DESCRIPTION>AMENDMENT TO EMPLOYEE INVESTMENT PLAN
<TEXT>



                           EMPLOYEE INVESTMENT PLAN OF
                               LEVI STRAUSS & CO.


                                    AMENDMENT


         WHEREAS,  LEVI STRAUSS & CO. ("LS&CO.")  maintains the Employee
Investment Plan of Levi Strauss & Co. (the "EIP"); and

         WHEREAS, Section 18 of the EIP provides that LS&CO. may amend the EIP
at any time and for any reason; and

         WHEREAS,  LS&CO.  desires to amend the EIP to provide an additional
method of distribution after the death of a Participant; and

         WHEREAS,  by resolutions  duly  adopted on June 22, 2000,  the Board of
Directors of LS&CO. authorized Philip A. Marineau, President and Chief Executive
Officer,  to  adopt  amendments  to the EIP and to  delegate  to  certain  other
officers of LS&CO. the authority to adopt amendments to the EIP; and

         WHEREAS,  on June 22, 2000, Philip A. Marineau  delegated to any Senior
Vice  President,  Human  Resources,  including  Fred D.  Paulenich,  Senior Vice
President of Worldwide Human Resources,  the authority to amend the EIP (subject
to specified  limits) and such  delegation  has not been  amended,  rescinded or
superseded as of the date hereof; and

         WHEREAS, the amendments herein are within such limits to the delegated
authority of Fred D. Paulenich;

         NOW, THEREFORE,  effective of the date set forth below, Section 11.7 of
the EIP is hereby amended in its entirety as follows:

         "11.7 Death Benefit.
               -------------

                  (a)  If a  Member  dies  on or  after  the  commencement  of a
distribution  of his or her Plan Benefit in accordance  with Section 11.5(a) but
before the  entire  interest  of his or her Plan  Benefit  is  distributed,  the
remaining  portion of such  Member's  Plan  Benefit will be  distributed  to the
Member's  Beneficiary  in a  single  lump  sum  payment  as soon  as  reasonably
practicable after the Member's death.

                  (b)  Subject  to Section  11.6,  if a Member  dies  before the
commencement  of a  distribution  of his or her Plan Benefit in accordance  with
Section 11.5(a),  then the Member's  Beneficiary will be entitled to receive the
Member's  Plan Benefit as soon as  reasonably  practical  after the  Beneficiary
files  a  claim  with  the  Administrative  Committee  on the  prescribed  form.
Regardless  of whether  the  Beneficiary  files a claim with the  Administrative
Committee on the prescribed form, except as provided below, such Member's entire
interest in his or her Plan Benefit will be distributed to the Member's

<PAGE>

Beneficiary on or before the December 31 of the calendar year which contains the
fifth  anniversary  of the date of such Member's death. Notwithstanding the
foregoing sentence, if a Member dies before the  commencement of a distribution
of his or her Plan Benefit in accordance  with Section  11.5(a) and if (i) any
portion of such Plan Benefit is payable to or for the benefit of a  "Designated
Beneficiary,"  as defined under section  401(a)(9) of the Code,  and (ii) such
portion will be  distributed  (in accordance  with  Regulations  prescribed  by
the  IRS)  over  the  life of such Designated Beneficiary (or over a period not
extending  beyond  the  life expectancy of such Designated Beneficiary), then:

                           (i) in the event that such Designated  Beneficiary is
         not the Member's  Surviving  Spouse,  the  distribution of such portion
         will  commence  on or  before  the  December  31 of the  calendar  year
         immediately following the calendar year in which the Member died; and

                           (ii) in the event that such Designated Beneficiary is
        the Member's  Surviving  Spouse,  the  distribution of such portion will
        commence on or before the later of:

                                    (A)     the  December  31  of  the  calendar
                  year  immediately  following  the calendar year in which the
                  Member dies; and

                                    (B)     the  December 31 of the  calendar
                  year in which the Member  would have attained age 70-1/2.

In the event that such Designated  Beneficiary is the Member's Surviving Spouse,
but such Surviving Spouse dies before the distribution to him or her begin, this
Section 11.7(b) shall be applied as if the Surviving Spouse were the Member. Any
payment  of a  Member's  Plan  Benefit  under  this  Section  11.7  shall  be in
accordance with section 401(a)(9) of the Code."

                                      * * *

         IN WITNESS WHEREOF,  LS&CO. has caused this instrument to be executed
by its duly authorized  officer this _____ day of ____________________, 2000.

                              LEVI STRAUSS & CO.


                              --------------------------------------------------
                              Fred D. Paulenich
                              Senior Vice President of Worldwide Human Resources


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.47
<SEQUENCE>12
<FILENAME>0012.txt
<DESCRIPTION>AMENDMENTS TO CAPITAL ACCUMULATION PLAN,..........
<TEXT>



                          CAPITAL ACCUMULATION PLAN OF
                               LEVI STRAUSS & CO.
                               ------------------

                               LEVI STRAUSS & CO.
                      SUPPLEMENTAL BENEFIT RESTORATION PLAN
                      -------------------------------------

                           EMPLOYEE INVESTMENT PLAN OF
                               LEVI STRAUSS & CO.
                               ------------------

                                   AMENDMENTS


         WHEREAS, LEVI STRAUSS & CO. ("LS&CO.") maintains the Capital
Accumulation Plan of Levi Strauss & Co. (the "CAP"), the Levi Strauss & Co.
Supplemental Benefit Restoration Plan (the "SBRP"), and the Employee Investment
Plan of Levi Strauss & Co. (the "EIP") (collectively referred to as the
"Plans"); and

         WHEREAS, Q&A-33 of Part 2 of the CAP provides that LS&CO. may amend the
CAP at any time and for any reason; and

         WHEREAS, LS&CO. desires to amend and restate the CAP in its entirety
effective January 1, 2001; and

         WHEREAS, Section VIII of the SBRP provides that LS&CO. may amend the
SBRP, in whole or in part; and

         WHEREAS,  LS&CO. desires to amend the SBRP, effective January 1, 2001,
to eliminate future benefits under the SBRP relating to defined contribution
plans; and

         WHEREAS, Section 18 of the EIP provides that LS&CO. may amend the EIP
at any time and for any reason;

         WHEREAS, LS&CO. desires to amend the EIP, effective January 1, 2001, to
clarify that  participants who transfer to the CAP during any Plan Year will not
be  eligible  to  re-enter  the EIP until the first pay period of January of the
next Plan Year; and

         WHEREAS,  by  resolutions  duly adopted on June 22, 2000,  the Board of
Directors of LS&CO. authorized Philip A. Marineau, President and Chief Executive
Officer,  to take  certain  actions  with  respect  to the Plans and to  further
delegate the authority to take certain actions with respect to the Plans; and

         WHEREAS,  on June 22, 2000, Philip A. Marineau  delegated to any Senior
Vice  President,  Human  Resources,  including  Fred D.  Paulenich,  Senior Vice
President of Worldwide  Human  Resources,  the authority to take certain actions
with respect to the Plans and such delegation has not been amended, rescinded or
superseded as of the date hereof; and

<PAGE>

         WHEREAS, the amendments herein are within the delegated authority of
Fred D. Paulenich;

         NOW  THEREFORE,  effective as of January 1, 2001,  the Plans are hereby
amended as follows:

1.       The CAP is hereby amended and restated, in its entirety, as set forth
         in the Exhibit attached hereto.

2.       The first  sentence of the second  paragraph of the Preamble to the
         SBRP is hereby amended in its entirety to read as follows:

                           "The  Plan is  intended  to (i)  supplement  benefits
         under the Revised  Home Office  Pension  Plan of Levi Strauss & Co. and
         the Levi Strauss & Co. Revised Employee Retirement Plan (the "Qualified
         Plans")  maintained by Levi Strauss & Co. (the "Company") to the extent
         such  benefits are reduced due to the limits of section  401(a)(17)  of
         the Code, and (ii) provide  benefits  pursuant to the 1999  Enhancement
         that cannot be paid under the Qualified Plans due to  nondiscrimination
         rules under the Code."

3.       Section II of the SBRP is hereby amended in its entirety to read as
         follows:

                           "Each  employee  whose  benefits  under the Qualified
         Plans are reduced as a result of the limitations on benefits imposed by
         section 401(a)(17) of the Code or as a result of the application of the
         nondiscrimination  rules  under  the Code to  benefits  under  the 1999
         Enhancement, shall participate in the Plan unless he shall elect not to
         participate in the Plan by written  notice to the Committee  whereby he
         waives all present and future rights to benefits under the Plan."

4.       The first sentence of Section III of the SBRP is hereby amended in its
         entirety to read as follows:

                           "Subject to  paragraph  (c) below,  the amount of the
         benefit  payable  to or in respect of an  Eligible  Employee  hereunder
         shall be the sum of the amounts described in paragraphs (a) and (b):"

5.       Current  paragraphs (b) and (c) of Section III of the SBRP and any
         references  thereto are hereby deleted in their entirety.

6.       Current  paragraphs  (d) and  (e) of  Section  III of the  SBRP and any
         references  thereto are  hereby redesignated as paragraphs (b) and (c),
         respectively.

7.       Subparagraphs  (2) and (3) of paragraph (a) of Section IV and any
         references  thereto are hereby  deleted in their entirety.

<PAGE>

8.       Section 4.2 of the EIP is hereby  amended by adding the  following
         sentence to the end thereof to read as follows:

         "If any Member is affected by this  limitation,  the Member will not be
         permitted to make any Member  Contributions to the Plan until the first
         pay period of the January  following  the end of the Plan Year in which
         such Member is affected by this limitation."

                                      * * *

         IN WITNESS WHEREOF,  LS&CO. has caused this instrument to be executed
by its duly authorized  officer this ___ day of _______________________, 20____.


                              LEVI STRAUSS & CO.

                              ---------------------------------
                              Fred D. Paulenich
                              Senior Vice President of Worldwide Human Resources

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.48
<SEQUENCE>13
<FILENAME>0013.txt
<DESCRIPTION>AMENDMENTS TO EMPLOYEE INVESTMENT PLAN
<TEXT>



                           EMPLOYEE INVESTMENT PLAN OF
                               LEVI STRAUSS & CO.

                                   AMENDMENTS


         WHEREAS, LEVI STRAUSS & CO. ("LS&CO.") maintains the Employee
Investment Plan of Levi Strauss & Co. (the "EIP"); and

         WHEREAS, Section 18 of the EIP provides that LS&CO. may amend the EIP
at any time and for any reason; and

         WHEREAS,  LS&CO.  desires to amend the EIP to permit all highly
compensated  employees to  participate in the EIP effective January 1, 2001; and

         WHEREAS,  because all highly compensated employees will become eligible
to participate in the EIP effective January 1, 2001, LS&CO. desires to amend the
EIP effective  January 1, 2001 to exclude certain  compensation from being taken
into account for deferral purposes;

         WHEREAS,  LS&CO.  desires to amend the EIP effective January 1, 2001 to
increase the percentage of pre-tax and post-tax  contributions  of non-highly
compensated  members from ten percent of their  compensation to fifteen percent;
and

         WHEREAS,  LS&CO.  desires to amend the EIP effective  January 1, 2001
to limit  the  total  contributions  a member  can make in any plan  year to ten
percent of the  compensation  limit under  section  401(a)(17)  of the  Internal
Revenue Code; and

         WHEREAS,   LS&CO.   desires  to  amend  the  EIP  to  reflect   various
administrative   changes,   such  as  granting  the  Investment  Committee  full
discretion  to select  investment  funds  offered  under the EIP,  changing  the
default  investment  option  in the  event  a  member  fails  to  file a  proper
investment  direction,  and changing the procedure relating to how undeliverable
checks are reinvested; and

         WHEREAS,  LS&CO.  desires to amend the EIP effective April 3, 2000 to
clarify  that,  similar  to  newly  hired  employees,  the one  year of  service
requirement  with respect to  eligibility  to  participate  was  eliminated  for
rehired and transferred employees; and

         WHEREAS,  by  resolutions  duly adopted on June 22, 2000,  the Board of
Directors of LS&CO. authorized Philip A. Marineau, President and Chief Executive
Officer, to take certain actions with respect to the EIP and to further delegate
the authority to take certain actions with respect to the EIP; and

         WHEREAS,  on June 22, 2000, Philip A. Marineau  delegated to any Senior
Vice  President,  Human  Resources,  including  Fred D.  Paulenich,  Senior Vice
President of Worldwide

<PAGE>

Human  Resources,  the authority to take certain actions with respect to the EIP
and such delegation has not been amended, rescinded or superseded as of the date
hereof; and

         WHEREAS, the amendments herein are within the delegated authority of
Fred D. Paulenich;

         NOW THEREFORE, effective as of the dates set forth herein, LS&CO.
amends the EIP as follows:

1.       Effective as of January 1, 2001, the second sentence of Section 2.14 of
         the EIP is  hereby  amended  by  deleting  the  phrase  ", and  amounts
         deferred   under  the   Company's   Deferred   Compensation   Plan  for
         executives."

2.       Effective  as of January  1,  2001,  paragraph  (l) of  Section  2.17
         of the EIP is hereby  amended in its entirety to read as follows:

                           "(l) A Highly Compensated  Employee,  with respect to
         the eligibility to make Member  Contributions  or receive an allocation
         of Matching Contributions,  Nonelective  Contributions,  Profit Sharing
         Contributions  and  Forfeitures  only,  except as other  provided under
         Section 3.5(b)."

3.       Effective  as of April 3,  2000,  Section  3.2 of the EIP is hereby
         amended  in its  entirety  to read as follows:

                  "3.2 REHIRED AND TRANSFERRED EMPLOYEES.  Effective as of April
         3, 2000, a former  Employee who is rehired will be eligible to begin or
         resume  membership in the Plan on the first  Membership Date coincident
         with or next  following  the date he or she  attains  or returns to the
         status of an Employee. Prior to April 3, 2000, a former Employee who is
         rehired will be eligible to begin or resume  membership  in the Plan on
         the first Membership Date coinciding with or next following the date he
         or she  attains  or  returns  to the  status  of an  Employee  and  has
         completed  a Year of  Service.  Effective  as of April 3,  2000,  if an
         employee of the Company or an Affiliated  Company transfers  employment
         either to the Company or to another employment  classification and as a
         result  qualifies  as  an  Employee,  then  such  Employee  will  begin
         membership in the Plan on the first  Membership Date coincident with or
         next  following  the date he or she attains the status of an  Employee.
         Prior to April 3, 2000,  if an employee of the Company or an Affiliated
         Company  transfers  employment  either  to the  Company  or to  another
         employment  classification  and as a result  qualifies  as an Employee,
         then  such  Employee  will  begin  membership  in the Plan on the first
         Membership  Date  coincident  with or next following the date he or she
         attains the status of an Employee and has completed a Year of Service."

4.       Effective  as of January  1,  2001,  Section  2.23 of the EIP is hereby
         amended  by adding the  following before the last paragraph thereof:

<PAGE>

                  "Notwithstanding  the  foregoing,  effective  for  Plan  Years
         beginning after December 31, 1996, the term Highly Compensated Employee
         means any Employee who:

                           (c) Was a five  percent  (5%) owner of the Company or
         an Affiliated  Company (as defined in section 416(i)(1) of the Code) at
         any time during the Plan Year or the preceding Plan Year; or

                           (d)   For   the   preceding    Plan   Year   received
         'compensation'  (as defined  below)  from the Company or an  Affiliated
         Company in excess of eighty  thousand  dollars  ($80,000),  as adjusted
         under Regulations or rulings issued by the IRS."

5.       Effective as of January 1, 2001, the EIP is hereby amended by deleting
         Appendix E in its entirety.

6.       Effective  as of  January  1,  2001,  paragraph  (b) of  Section  3.5
         of the EIP is hereby  amended in its entirety to read as follows:

                           "(b)   Eligible   Highly    Compensated    Employees.
         Notwithstanding  Section  3.5(a),  a Highly  Compensated  Employee  who
         satisfies the  eligibility  requirements of Section 3.1 may participate
         in the Plan for all or a portion  of a Plan  Year as a Member  provided
         that  he  or  she  is  included  in  an  eligible  category  of  Highly
         Compensated Employees described in paragraphs (b)(i) or (b)(ii), below:

                                    (i) For any Plan Year ending in or after the
                  1996  calendar  year,  Highly   Compensated   Employees  whose
                  compensation (as determined  pursuant to Section 2.23) for the
                  prior Plan Year did not exceed  ninety five  thousand  dollars
                  ($95,000); or

                                   (ii) Effective as of January 1, 2001, all
                  Highly Compensated Employees."

7.       Effective  as of January 1, 2001,  Section  4.1 of the EIP is hereby
         amended in its  entirety  to read as follows:

                  "4.1 ELECTION TO MAKE CONTRIBUTIONS. A Member whose membership
                       ------------------------------
         is not suspended  under Sections 3.3 or 3.5 may elect,  as of the first
         day  of  any  pay  period  in  any  month,   to  begin  making   Member
         Contributions  to the Plan in one percent (1%) increments of his or her
         Compensation,  without regard to the  compensation  limit under section
         401(a)(17)  of the  Code,  up to a  maximum  of ten  percent  (10%) (or
         effective as of January 1, 2001,  fifteen percent (15%) with respect to
         those Members who are not Highly Compensated Employees). The Member may
         elect  to  make   such   Member   Contributions   either   as   Pre-Tax
         Contributions,  Post-Tax  Contributions,  or any combination thereof. A
         Member's  election to make Pre-Tax  Contributions  will  constitute  an
         election (for federal tax purposes and, wherever  permitted,  for state
         and local tax purposes) to have his or her taxable Compensation reduced
         by the amount of all Pre-Tax Contributions."

<PAGE>

8.       Effective  as of January 1, 2001,  Section  4.2 of the EIP is hereby
         amended in its  entirety  to read as follows:

                  "4.2 MAXIMUM PRE-TAX  CONTRIBUTIONS AND MEMBER  CONTRIBUTIONS.
                       --------------------------------------------------------
         The  sum of a  Member's  Pre-Tax  Contributions  to the  Plan  for  any
         calendar  year  and  the  portion  of  the  Member's   Profit   Sharing
         Contribution  which the Member could have  received in cash during such
         calendar  year (if the Member  does not elect to receive  such  portion
         under Section 6.2) will not exceed seven thousand dollars ($7,000),  as
         adjusted from time to time under section 402(g)(5) of the Code for cost
         of  living  adjustments.  If any  Member's  Pre-Tax  Contributions  are
         affected  by this  limitation,  the Member  will  continue to make such
         contributions as Post-Tax  Contributions to the Plan unless such Member
         elects to suspend  such  contributions  as  provided  in  Section  4.3.
         Notwithstanding any provision in the Plan to the contrary, effective as
         of January 1, 2001,  the sum of a Member's  Pre-Tax  Contributions  and
         Post-Tax  Contributions  for  any  Plan  Year  and the  portion  of the
         Member's  Profit  Sharing  Contribution  which the  Member  could  have
         received in cash during such Plan Year (if the Member does not elect to
         receive  such  portion  under  Section 6.2) will not exceed ten percent
         (10%) of the  compensation  limit  for such  Plan  Year  under  section
         401(a)(17)  of the Code,  as adjusted  from time to time under  section
         401(a)(17) of the Code for cost of living adjustments."

9.       Effective  as of January 1, 2001,  Section  4.3 of the EIP is hereby
         amended in its  entirety  to read as follows:

                  "4.3 CHANGE OR SUSPENSION OF  CONTRIBUTIONS.  A Member, at any
                       --------------------------------------
         time, may change the rate of his or her Member Contributions within the
         percentage limitation described in Section 4.1 or may change the nature
         of such  Member  Contributions  as Pre-Tax  Contributions  or  Post-Tax
         Contributions  by filing the  prescribed  form with the  Administrative
         Committee,  or by  utilizing  such other  notification  procedure as is
         prescribed by the  Administrative  Committee.  A Member may suspend all
         Member   Contributions   by  filing  the   prescribed   form  with  the
         Administrative  Committee,  or by  utilizing  such  other  notification
         procedure  as is  prescribed  by  the  Administrative  Committee.  Such
         changes  in rate or nature of Member  Contributions  or  suspension  of
         Member  Contributions  will  become  effective  as soon  as  reasonably
         practicable after the date the form is filed with or notice is received
         by  the  Administrative   Committee.   Notwithstanding  the  foregoing,
         effective  January 1, 2001, with respect to a Member who transfers from
         the status of a Highly Compensated Employee to a non-Highly Compensated
         Employee  at the end of a Plan Year,  such Member may elect to increase
         his or her  Member  Contributions  for the  following  Plan  Year up to
         fifteen percent (15%) of his or her Compensation, without regard to the
         compensation limit under section 401(a)(17),  with such increase in the
         Member  Contributions  becoming effective with the pay period beginning
         as soon as reasonably  practicable following the end of such Plan Year.
         Further,  effective  January  1,  2001,  with  respect  to a Member who
         transfers  from the status of a  non-Highly  Compensated  Employee to a
         Highly  Compensated  Employee at the end of a Plan Year,  such Member's
         prior election will  automatically  be decreased  (beginning  with such
         Member's Post-Tax Contributions, if any) to ten percent (10%) of his or
         her  Compensation,  without  regard  to the  compensation  limit  under
         section 401(a)(17),  in the event  that his or her election  prior to

<PAGE>

         becoming a Highly  Compensated Employee  was greater  than ten percent
         (10%),  with  such  decrease  in  the  Member  Contributions  becoming
         effective  with  the  pay  period   beginning  as  soon  as  reasonably
         practicable following the end of such Plan Year."

10.      Effective as of January 1, 2001,  the first  paragraph of Section 5.1
         of the EIP is hereby  amended in its entirety to read as follows:

                  "5.1 MATCHING  CONTRIBUTIONS.  Except as provided  below,  for
                       -----------------------
         each period (an  'Accumulation  Period') during a Plan Year,  beginning
         with the pay period  coinciding with or next following the day on which
         a Member completes a Year of Service,  the Company will make a Matching
         Contribution  to the Plan in an amount equal to fifty  percent (50%) of
         such  Member's  Member   Contributions  for  the  Accumulation  Period,
         provided  that Member  Contributions  in excess of ten percent (10%) of
         such Member's  Compensation,  without regard to the compensation  limit
         under  section  401(a)(17)  of the  Code,  shall  not be  matched.  The
         Matching  Contribution  will be reduced by any amount  which  cannot be
         allocated  to  the  Member  because  of  the  contribution   limitation
         described in Section 12.1.  The Board of Directors may determine in its
         sole discretion that:"

11.      Effective as of the date this amendment is adopted,  the EIP is hereby
         amended by deleting  Appendix C in its entirety.

12.      Effective as of the date this  amendment is adopted,  Section  7.1(a)
         of the EIP is hereby  amended in its entirety to read as follows:

                           "(a) In General.  All  contributions to the Plan will
         be held by the Trustee for investment and  reinvestment  as part of the
         Trust Fund under the Trust  Agreement.  The Trust Fund will  consist of
         Funds  or  other  investment  vehicles  designated  by  the  Investment
         Committee,  as may be amended from time to time in the sole  discretion
         of the Investment Committee."

13.      Effective  as of the  date  this  amendment  is  adopted,  the last two
         sentences  of the first  paragraph of Section 7.2 of the EIP are hereby
         amended to read as follows:

         "If the  Member  fails to file any  investment  directions,  his or her
         share of any Profit Sharing Contribution allocated to his or her Profit
         Sharing 401(k) Account and Profit Sharing Regular  Account,  his or her
         Member   Contributions,   Matching   Contributions,   and   Nonelective
         Contributions  will be deposited in a Fund designated from time to time
         by the Investment Committee in its sole discretion."

14.      Effective as of November 15, 1999, Section 11.9 of the EIP is hereby
         amended to read as follows:

                  "11.9 UNDELIVERABLE CHECKS. In the event that a Benefit cannot
                        --------------------
         be delivered, the Account of the Member (or Beneficiary, as applicable)
         shall be  recredited  with the amount of the  Benefit  which  cannot be
         delivered.  Such Benefit shall be reinvested in the Fidelity Retirement

<PAGE>

         Money Market Fund (or such as the  Investment Committee, in its sole
         discretion, determines  is most  similar to a money  market  fund with
         respect to its risk characteristics), except that the Benefit relating
         to any  undeliverable  check  returned after November 15, 1999 shall be
         reinvested  in the same  Fund(s) from which it was  withdrawn  based on
         both the Member's (or  Beneficiary's,  if applicable)  prior investment
         allocation  percentage  and the Funds(s) net  asset  value  as of the
         applicable reinvestment date."

                                      * * *

         IN WITNESS WHEREOF,  LS&CO. has caused this instrument to be executed
by its duly authorized  officer this _____ day of _______________________, 2000.



                              LEVI STRAUSS & CO.


                              --------------------------------------------
                              Fred D. Paulenich
                              Senior Vice President of Worldwide Human Resources

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.49
<SEQUENCE>14
<FILENAME>0014.txt
<DESCRIPTION>AMENDMENT TO CAPITAL ACCUMULATION PLAN, PLAN......
<TEXT>



                                                                   EXHIBIT 10.49












                          CAPITAL ACCUMULATION PLAN OF
                               LEVI STRAUSS & CO.
               (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2001)

                       PLAN DOCUMENT AND EMPLOYEE BOOKLET
                       __________________________________



<PAGE>


                 CAPITAL ACCUMULATION PLAN OF LEVI STRAUSS & CO.
               (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2001)

                       PLAN DOCUMENT AND EMPLOYEE BOOKLET

INTRODUCTION                           Beginning  in 1996,  Levi  Strauss  & Co.
                                       ("LS&CO.")    established   the   Capital
                                       Accumulation  Plan of Levi  Strauss & Co.
                                       (the "Plan"). The Plan provides a vehicle
                                       by which  certain  eligible  employees of
                                       LS&CO.   or   its    subsidiaries    that
                                       participate under the Employee Investment
                                       Plan  (the  "EIP")   (collectively,   the
                                       "Company")    can    supplement     their
                                       retirement   savings  by  contributing  a
                                       portion  of their  eligible  compensation
                                       through  after-tax payroll deduction upon
                                       reaching the maximum  contribution amount
                                       allowed under the EIP. Eligible after-tax
                                       contributions    under   the   Plan   are
                                       deposited   into  an  individual   retail
                                       brokerage   account  offered  by  Charles
                                       Schwab & Co., Inc. (the "Account"), which
                                       must be  established  through  LS&CO.  In
                                       addition,  after  completing  one year of
                                       service with the Company,  each  eligible
                                       employee who  contributes  under the Plan
                                       through  after-tax payroll deduction will
                                       receive a Company  matching  contribution
                                       in his or her Account equal to 75% of his
                                       or her contribution.

                                       The   benefits   and   other   provisions
                                       described  in  this  Plan   Document  and
                                       Employee  Booklet are  effective  only if
                                       you  are  eligible  to  participate   and
                                       become a participant in the Plan.

                                       THE COMPANY DOES NOT  ENDORSE,  RECOMMEND
                                       OR GUARANTEE  ANY  INVESTMENT  OR SERVICE
                                       OFFERED,  PROVIDED OR PROMISED BY CHARLES
                                       SCHWAB & CO., INC.  ("CHARLES SCHWAB") OR
                                       ANY OTHER OFFEROR OF INVESTMENTS. BECAUSE
                                       THE  ACCOUNT  IS  A  REGULAR   INDIVIDUAL
                                       RETAIL BROKERAGE ACCOUNT,  YOU ARE SOLELY
                                       RESPONSIBLE  FOR SELECTING AND MONITORING
                                       YOUR INVESTMENT  CHOICES,  PAYING RELATED
                                       COMMISSIONS   AND   CHARGES,    AND   FOR
                                       INVESTMENT  RESULTS FROM PARTICIPATING IN
                                       THE PLAN. COMPANY  INVOLVEMENT IS LIMITED
                                       TO  ESTABLISHING  YOUR AFTER-TAX  PAYROLL
                                       DEDUCTION   AND   MAKING   THE   MATCHING
                                       CONTRIBUTION.  ALL FUNDS  CONTRIBUTED  BY
                                       YOU AND THE  COMPANY  UNDER  THE PLAN ARE
                                       DEPOSITED INTO YOUR ACCOUNT.  NEITHER THE
                                       COMPANY  NOR ANY TRUST HOLDS ANY OF THESE
                                       FUNDS.



<PAGE>



WHO IS ELIGIBLE TO                     During  any "Plan  Year,"  as  defined
PARTICIPATE IN THE                     below,  you are  eligible  to participate
PLAN?                                  in the Plan if you are currently employed
                                       by the Company and meet ALL of the
                                       following requirements:

                                       [ ]  You were eligible to participate and
                                            elected to participate in the EIP
                                            during the Plan Year; and

                                       [ ]  You  contributed  the maximum amount
                                            permitted  under the EIP  during the
                                            Plan Year. For example, for the Plan
                                            Year  ending in November  2001,  the
                                            maximum   amount   that  you   could
                                            contribute to the EIP was $17,000.

                                       The "Plan  Year" for the Plan is LS&CO.'s
                                       fiscal  year,  which  ends  on  the  last
                                       Sunday of each November.

HOW CAN I ENROLL IN THE PLAN?          If you are eligible to  participate  in
                                       the Plan and have an existing Account,
                                       then you will be automatically enrolled
                                       in the Plan.  In the event  that you do
                                       not have an  existing  Account,  you must
                                       submit a completed  and signed  "Charles
                                       Schwab & Co., Inc.  account  application
                                       form" to U.S.  Retirement  Benefits  (and
                                       NOT to Charles  Schwab) to  enroll in the
                                       Plan. Please send the form to: Levi
                                       Strauss & Co., U.S. Retirement Benefits,
                                       1155 Battery Street KO/1, San  Francisco,
                                       CA 94111.

WHEN WILL I BECOME A PARTICIPANT?      If you are eligible to participate and
                                       become enrolled in the Plan, you will be-
                                       come a participant in the Plan as of the
                                       date on which your after-tax
                                       contributions  are credited to your
                                       Account. If you properly set up your
                                       Account by the pay period in which you
                                       contributed the maximum amount under the
                                       EIP, your after-tax contributions will
                                       begin to be credited to your Account as
                                       of the following  pay period.  If you do
                                       not have an existing Account at the time
                                       you become eligible, your after-tax
                                       contributions will usually begin to be
                                       credited to  your  Account within  three
                                       or four weeks  after your Account is
                                       established.  PLEASE NOTE THAT YOU  WILL
                                       NOT BE PERMITTED TO MAKE ANY RETROACTIVE
                                       CONTRIBUTIONS TO THE PLAN.

HOW LONG CAN I PARTICIPATE IN THE      You can  continue  to  participate in the
PLAN?                                  Plan through the last pay period in
                                       December of each year, provided that you
                                       continue to be paid on the Home Office
                                       payroll of LS&CO. through  such  date.
                                       If you cease  being paid on the Home
                                       Office  payroll  before such date, then
                                       your participation  under the  Plan  will
                                       cease as of the last pay period  in which
                                       you are paid on the Home Office payroll
                                       of LS&CO.

                                       EXAMPLE.  JEAN IS PAID ON THE HOME OFFICE
                                       PAYROLL  OF  LS&CO.  DURING  THE 2001 AND
                                       2002 PLAN YEARS. JEAN PARTICIPATED IN THE
                                       EIP   DURING   THE  2001  PLAN  YEAR  AND
                                       CONTRIBUTED   10%  OF  HER  EIP   COVERED
                                       COMPENSATION.  IN THE FIRST PAY PERIOD OF
                                       APRIL  2001,  JEAN  REACHED  THE  MAXIMUM
                                       CONTRIBUTION  AMOUNT  UNDER  THE  EIP FOR

<PAGE>

                                       THAT PLAN YEAR (I.E., $17,000) AND HAD AN
                                       EXISTING ACCOUNT. BEGINNING WITH THE NEXT
                                       PAY  PERIOD OF APRIL  2001,  SHE BECAME A
                                       PARTICIPANT   IN  THE   PLAN.   JEAN  MAY
                                       CONTINUE  PARTICIPATING IN THE PLAN UNTIL
                                       THE LAST PAY PERIOD IN DECEMBER  2001. AS
                                       OF THE FIRST PAY PERIOD IN JANUARY  2002,
                                       JEAN  WILL  AGAIN  BE  ELIGIBLE  TO  MAKE
                                       PRE-TAX  CONTRIBUTIONS  UNDER THE EIP. IF
                                       JEAN   CONTRIBUTES   THE  MAXIMUM  AMOUNT
                                       PERMITTED  UNDER THE EIP DURING 2002, SHE
                                       WILL AGAIN BECOME ELIGIBLE TO PARTICIPATE
                                       IN THE PLAN  THROUGH  THE LAST PAY PERIOD
                                       IN DECEMBER 2002.

                                       If you  cease  being  paid  on  the  Home
                                       Office  payroll while you  participate in
                                       the Plan,  you will not be  permitted  to
                                       make any additional  contributions to the
                                       Plan through  payroll  deduction  and you
                                       will  not  be  entitled  to  receive  the
                                       Company  match.  However,  if you  resume
                                       being  paid on the  Home  Office  payroll
                                       before the last pay period of December in
                                       the year in which you participated in the
                                       Plan and have an existing  Account,  then
                                       you will be eligible to  recommence  your
                                       participation  in the Plan. If you do not
                                       have an existing  Account when you resume
                                       being paid on Home Office  payroll,  then
                                       you will be eligible to  recommence  your
                                       participation in the Plan as of the first
                                       pay  period  after you  reestablish  your
                                       Account.  Please note that your after-tax
                                       contributions   to  your   Account   will
                                       usually  restart  within  three  or  four
                                       weeks     after    your     Account    is
                                       reestablished.   AGAIN,  PLEASE  REMEMBER
                                       THAT YOU WILL  NOT BE  PERMITTED  TO MAKE
                                       ANY  RETROACTIVE   CONTRIBUTIONS  TO  THE
                                       PLAN.

HOW MUCH MAY I                         You may contribute up to 10% (in 1%
CONTRIBUTE TO THE                      increments) of your "covered compensa-
PLAN DURING EACH PAY                   tion," as defined below, to your Account
PERIOD?                                during each pay period that you are
                                       eligible to participate  in  the  Plan.
                                       Unless  you specify otherwise,  your CAP
                                       contribution percentage  will  be the
                                       percentage you elected under the EIP
                                       (up to 10%).

                                       If your  covered  compensation  increases
                                       during  the  year,  the  amount  of  your
                                       payroll  deduction  to the Plan will also
                                       increase  because your deduction is based
                                       on    your    designated     contribution
                                       percentage.  Likewise,  if  your  covered
                                       compensation  decreases  during the year,
                                       the amount of your  payroll  deduction to
                                       the Plan will also decrease.

                                       "Covered  compensation"  means  your base
                                       salary, AIP bonus, including deferrals of
                                       such    amounts    under   the   Deferred
                                       Compensation Plan for Executives.

CAN I CHANGE MY  PAYROLL  DEDUCTION?   You may increase (up to 10%),  decrease,
                                       or stop your payroll deductions to the
                                       Plan at any time. Your request will
                                       become effective as soon as practicable
                                       following   the  date  you  submit   your
                                       request.  Generally,  your  request  will
                                       take at least two pay  periods  to become
                                       effective.

<PAGE>

WHAT HAPPENS TO MY PAYROLL DEDUCTION?  The amount deducted from your paycheck,
                                       along with the Company match, will be
                                       sent to Charles Schwab and automatically
                                       deposited  into a  money  market  fund in
                                       your   Account.   You  may  then  contact
                                       Charles  Schwab  directly to request that
                                       your   funds  be   redirected   to  other
                                       investments   offered   through   Charles
                                       Schwab.

BESIDES PAYROLL DEDUCTIONS,  IS THERE  Generally, you are permitted to contri-
ANY OTHER WAY TO  CONTRIBUTE  TO THE   bute up to 10% of your covered
PLAN?                                  compensation to your Account only through
                                       payroll deductions. However, there are
                                       two important exceptions to this general
                                       rule.

                                       [ ]  You   may   transfer    funds   from
                                            non-payroll  sources to your Account
                                            at any time by sending a  hand-drawn
                                            personal  check  directly to Charles
                                            Schwab  and  NOT  to  the   Company.
                                            Because  you own your  Account,  you
                                            are    permitted   to   make   these
                                            contributions to your Account at any
                                            time.  HOWEVER,  SUCH OUTSIDE  FUNDS
                                            WILL  NOT BE  ELIGIBLE  FOR  THE 75%
                                            COMPANY MATCH.

                                       [ ]  If you receive your AIP bonus in the
                                            same pay period that you contributed
                                            the maximum amount  permitted  under
                                            the EIP,  then you will be permitted
                                            to   do   a   one-time   retroactive
                                            "make-up"   contribution   to   your
                                            Account by  submitting  a hand-drawn
                                            personal  check  to U.S.  Retirement
                                            Benefits,  PROVIDED that you have an
                                            existing Account AND U.S. Retirement
                                            Benefits   receives  your  check  no
                                            later  than 30 days  after  it sends
                                            you notification of your right to do
                                            such  make-up   contribution.   Your
                                            maximum  AIP  make-up   contribution
                                            will  be  limited  to  10%  of  that
                                            portion of your AIP bonus (including
                                            AIP  deferrals  under  the  Deferred
                                            Compensation  Plan  for  Executives)
                                            that cannot be taken into account as
                                            covered  compensation under the EIP.
                                            If you  have  completed  one year of
                                            service  with  the   Company,   your
                                            eligible  AIP  make-up  contribution
                                            will also  receive  the 75%  Company
                                            match;  however,  appropriate  taxes
                                            will be  withheld  from the  Company
                                            match. SEE SECTION,  BELOW, ENTITLED
                                            "WHAT IS THE AMOUNT OF THE  MATCHING
                                            CONTRIBUTION?"

                                       EXAMPLE.  CHRIS  PARTICIPATED  IN THE EIP
                                       DURING THE 2001 PLAN YEAR AND  ELECTED TO
                                       CONTRIBUTE   10%  OF  HIS   EIP   COVERED
                                       COMPENSATION.  BY THE FIRST PAY PERIOD OF
                                       FEBRUARY 2001, HE HAD CONTRIBUTED $16,500
                                       TO THE  EIP.  IN THAT  SAME  PAY  PERIOD,
                                       CHRIS  RECEIVED HIS AIP BONUS OF $60,000.
                                       ONLY  $5,000 OF CHRIS'  $60,000 AIP BONUS
                                       WAS  TAKEN   INTO   ACCOUNT   AS  COVERED
                                       COMPENSATION  UNDER  THE EIP  BECAUSE  HE
                                       REACHED   THE   EIP'S   $17,000   MAXIMUM
                                       CONTRIBUTION  LIMIT FOR 2001. THIS IS THE
                                       CASE BECAUSE 10% OF $5,000 IF $500, WHICH
                                       IS THE  AMOUNT  HE  NEEDED  TO REACH  THE
                                       $17,000 LIMIT. THUS,  ASSUMING THAT CHRIS
                                       BECOMES A  PARTICIPANT  IN THE PLAN AS OF
                                       THE SECOND PAY  PERIOD OF FEBRUARY 2001

<PAGE>

                                       AND THAT HE HAS  COMPLETED ONE YEAR OF
                                       SERVICE WITH THE COMPANY AS OF SUCH DATE,
                                       HE WILL BE PERMITTED TO DO A  MAKE-UP
                                       CONTRIBUTION TO THE PLAN UP TO  $5,500
                                       (I.E., $55,000 X 10%).  THIS $5,500
                                       CONTRIBUTION  TO THE  PLAN WILL ALSO BE
                                       ELIGIBLE FOR THE 75% COMPANY MATCH.

WHAT IS THE AMOUNT OF THE MATCHING     Upon completion of one year of service
CONTRIBUTION?                          with the Company, the Company matches 75%
                                       of your payroll and eligible  AIP make-up
                                       contributions to the Plan. Because the
                                       Company match is immediately  taxable
                                       income, appropriate taxes will be with-
                                       held from your regular pay so that the
                                       entire Company match can go into  your
                                       Account. However, if you make an eligible
                                       AIP make-up contribution to the Plan,
                                       your hand-drawn personal check and
                                       Company match (after appropriate  taxes
                                       are withheld from such match) will be
                                       deposited into your Account.

IN WHOSE NAME WILL MY ACCOUNT BE       Your  Account  will  be  a  regular
REGISTERED?                            individual  brokerage  account registered
                                       in your name with  Charles  Schwab.
                                       Unlike the EIP,  you (not a trust)  will
                                       own the investments directly  and in your
                                       name. No funds are set aside in a trust
                                       or held by the Company.

HOW CAN I INVEST THE FUNDS IN MY       You will need to contact  Charles  Schwab
ACCOUNT?                               directly and select how to invest  the
                                       funds in your  Account.  Charles  Schwab
                                       offers  various investment  options  for
                                       you to choose from. Because  your Account
                                       is a regular individual brokerage account
                                       you have sole responsibility to make and
                                       monitor your investments under the  Plan.
                                       Your investments through the Account can
                                       go up or down, and any risk of loss is
                                       borne by you. The Company's only involve-
                                       ment  is limited   to   making   the
                                       match   and depositing  your payroll and
                                       eligible AIP make-up contributions to the
                                       Plan.

                                       ALSO,  YOU SHOULD BE AWARE  THAT  CHARLES
                                       SCHWAB     MAY     HAVE     REQUIREMENTS,
                                       LIMITATIONS, COMMISSIONS, CONDITIONS, AND
                                       FEES WITH  RESPECT TO THE  INVESTMENT  OF
                                       FUNDS  CONTRIBUTED TO YOUR ACCOUNT.  SUCH
                                       MATTERS ARE SOLELY  WITHIN THE CONTROL OF
                                       CHARLES   SCHWAB  AND  NOT  THE  COMPANY.
                                       FULFILLMENT  OR  COMPLIANCE  WITH  ANY OF
                                       THESE   REQUIREMENTS,    LIMITATIONS   OR
                                       CONDITIONS AND PAYMENT OF ANY COMMISSIONS
                                       AND FEES IS YOUR PERSONAL RESPONSIBILITY.

DOES THE  COMPANY  PROTECT ME AND MY   The Company will not protect or guarantee
INVESTMENTS IF MY INVESTMENTS          your Account in any way. Thus, for
LOSE MONEY?                            example, if your investments lose money,
                                       the stock markets crash, or Charles
                                       Schwab files bankruptcy or is otherwise
                                       unable to cover the funds credited to
                                       your Account, you alone will assume the
                                       risk of loss on your investments.  SINCE
                                       EACH INVESTMENT OPTION PRESENTS VARYING
                                       DEGREES OF RISK AND RETURN CHARACTER-
                                       ISTICS, YOU SHOULD CONSULT  WITH  YOUR
                                       FINANCIAL ADVISOR BEFORE SELECTING WHICH
                                       INVESTMENT OPTIONS ARE RIGHT FOR YOU.


<PAGE>



WILL I RECEIVE ACCOUNT STATEMENTS?     Charles Schwab will send you periodic
                                       statements regarding your Account balance
                                       and transaction confirmations. The
                                       frequency and content of any information
                                       regarding your Account are the sole
                                       responsibility of Charles Schwab, and not
                                       the Company.

MAY I WITHDRAW FUNDS FROM MY ACCOUNT   Because you own your Account,  you are
WHILE I AM EMPLOYED BY THE COMPANY?    permitted to withdraw funds at any time.
                                       However, please remember that if you with
                                       draw your funds and close your Account,
                                       you will need to timely  re-open  your
                                       Account in order to avoid any interrup-
                                       tion  in your  payroll and eligible AIP
                                       make-up contributions to the  Plan if you
                                       reach  the EIP  maximum contribution
                                       limit.

WHAT ARE MY OPTIONS WITH RESPECT TO    After your separation from employment
MY ACCOUNT AFTER MY SEPARATION FROM    with the Company,  you are  permitted to
EMPLOYMENT  WITH THE  COMPANY?         request a withdrawal  from your  Account
                                       at any time. The Company has no involve-
                                       ment with your Account after you separate
                                       from  employment.  However,  if a Company
                                       match is mistakenly  made to your Account
                                       following    your     separation     from
                                       employment,  the  Company  has a right to
                                       obtain a refund of that money.

WHAT ARE THE TAX CONSEQUENCES OF       The  federal  income tax laws are complex
PARTICIPATING IN THE PLAN?             and change from time to time. The follow-
                                       ing description is based on the current
                                       federal income tax laws and does not
                                       discuss tax consequences of participating
                                       in the Plan under any local,  state,  or
                                       foreign  tax laws. Also, the following
                                       description is intended  solely to be
                                       general and should not  be  relied  upon
                                       as  specific   tax advice.    BECAUSE
                                       EACH INDIVIDUAL'S SITUATION IS UNIQUE,
                                       YOU SHOULD  CONSULT WITH YOUR TAX ADVISOR
                                       ABOUT THE SPECIFIC TAX  CONSEQUENCES OF
                                       PARTICIPATING IN THE PLAN.

                                       The  Plan  is  a   voluntary   investment
                                       program.  There  is no  identifiable  tax
                                       benefit  to you by  participating  in the
                                       Plan.  Specifically,  you should be aware
                                       of the following:

                                       [ ]  Your payroll deduction contributions
                                            are made on an after-tax basis. This
                                            means  that your  contributions  are
                                            included  in your  gross  income and
                                            are   subject  to  federal   income,
                                            employment     (including     Social
                                            Security) and other taxes.

                                       [ ]  You will have  taxable  income  upon
                                            the  payment of the  Company  match.
                                            The  Company is required to withhold
                                            specific    amounts    of   tax   in
                                            connection with the match.

                                       [ ]  Buying and  selling  securities  and
                                            other  investments  in your  Account
                                            may generate taxable income,  either
                                            as capital gains or ordinary income.
                                            It will be  your  responsibility  to
                                            report   this  income  and  pay  any
                                            applicable taxes.

<PAGE>

                                       [ ]  In order for you to correctly report
                                            and pay any taxes  with  respect  to
                                            the investment of your Account,  you
                                            must accurately record your basis in
                                            any investment.

                                       YOU  SOLELY  BEAR THE  RESPONSIBILITY  TO
                                       ASCERTAIN  ANY  REPORTABLE   INCOME  WITH
                                       RESPECT TO YOUR ACCOUNT,  AND REPORT SUCH
                                       INCOME AND PAY ANY APPLICABLE  TAXES. FOR
                                       INFORMATION RELATING TO ANY TAX FOR WHICH
                                       YOU  ARE  LIABLE  WITH  RESPECT  TO  YOUR
                                       ACCOUNT,   YOU  SHOULD   CONTACT   EITHER
                                       CHARLES  SCHWAB,  ANY  OTHER  OFFEROR  OF
                                       INVESTMENTS HELD IN YOUR ACCOUNT,  AND/OR
                                       YOUR TAX ADVISOR.

IS THIS A TAX-QUALIFIED PLAN?          The Plan is a  non-qualified  retirement
                                       plan,  which means that the Plan is not
                                       qualified under Sections 401(a),  401(k),
                                       or 423 of the Internal   Revenue  Code.
                                       Thus, the  benefits  offered  under  such
                                       Sections of the Code,  including but not
                                       limited to deferral of taxes on contribu-
                                       tions or investment earnings,  are not
                                       available to you by participating in the
                                       Plan.

IS THIS  AN  ERISA  PLAN?              The  Plan  is not subject to any of the
                                       provisions  of the Employee  Retirement
                                       Income Security Act of 1974, including
                                       but not limited to the reporting,
                                       disclosure, and fiduciary responsibility
                                       rules.

CAN THE PLAN BE AMENDED OR             LS&CO.  reserves the right to amend,
TERMINATED?                            suspend or terminate the Plan at any time
                                       and for any  reason,  in  whole  or in
                                       part,  including  the existence,  timing,
                                       or amount of the Company  match,  the
                                       suspension rules or the  brokerage  firm.
                                       The Plan may be amended in writing by
                                       the Board of Directors  of LS&CO.  or by
                                       any person to whom the Board of Directors
                                       has delegated such authority.

                                       In  addition,  Charles  Schwab may change
                                       its rules,  policies,  investment choices
                                       and fee and commissions structure.  Those
                                       changes,     and    any    communications
                                       describing  such  changes,  are the  sole
                                       responsibility of Charles Schwab.

WHO ADMINISTERS THE PLAN?              The  Plan  is  administered  by  the
                                       Administrative  Committee  for Retirement
                                       Plans, to the extent described below. The
                                       Administrative Committee, or its delegate
                                       is responsible for administration of the
                                       Plan in the following respects:

                                       [ ]  Determination of eligibility to
                                            participate;

                                       [ ]  Interpretation of the Plan; and

                                       [ ]  The  provision of forms  relating to
                                            participation in the Plan, excluding
                                            any forms required by Charles Schwab
                                            in connection with your Account.

<PAGE>

WHAT ARE CHARLES SCHWAB'S              With  respect  to the Plan,  Charles
RESPONSIBILITIES UNDER THE PLAN?       Schwab is responsible  for the following:

                                       [ ]  The investments offered to Plan
                                            participants;

                                       [ ]  The provision of information to Plan
                                            participants   regarding   Accounts,
                                            including   but   not   limited   to
                                            information regarding assets held in
                                            your  Account,  dividends  paid with
                                            respect  to   Account   investments,
                                            gains  or  losses  on   transactions
                                            involving your Account  investments,
                                            and  taxes  for  which  you  may  be
                                            liable with  respect to your Account
                                            or its investments; and

                                       [ ]  The  execution  of  your  investment
                                            instructions  with  respect  to your
                                            Account.

                                       CHARLES  SCHWAB  HAS SOLE  RESPONSIBILITY
                                       WITH RESPECT TO YOUR ACCOUNT. THE COMPANY
                                       IS NOT RESPONSIBLE FOR ANY  REQUIREMENTS,
                                       CONDITIONS,  INVESTMENT  OPTIONS OR OTHER
                                       DECISIONS BY CHARLES  SCHWAB,  OR FOR THE
                                       CONTENT  OR TIMING OF ANY  COMMUNICATIONS
                                       OR REPORTS FROM CHARLES SCHWAB.

WHO DO I CONTACT FOR ADDITIONAL        If you have  any  questions  about  the
INFORMATION ABOUT THE PLAN?            Plan,  please  contact  U.S. Retirement
                                       Benefits:

                                                U.S. Retirement Benefits
                                                Levi Strauss & Co.
                                                P.O. Box 7215
                                                San Francisco, CA 94120
                                                Phone: (415) 501-1532

                                       The   Company   may  from  time  to  time
                                       distribute information about the Plan via
                                       hard copy, email, or voicemail.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.50
<SEQUENCE>15
<FILENAME>0015.txt
<DESCRIPTION>SECOND AMENDMENT TO BRIDGE CREDIT AGREEMENT.......
<TEXT>



                               LEVI STRAUSS & CO.

                                SECOND AMENDMENT
                  TO BRIDGE CREDIT AGREEMENT AND LIMITED WAIVER


                  This SECOND  AMENDMENT TO BRIDGE CREDIT  AGREEMENT AND LIMITED
WAIVER (this  "AMENDMENT") is dated as of September 29, 2000 and entered into by
and among Levi Strauss & Co., a Delaware corporation ("COMPANY");  the financial
institutions  party hereto  ("BANKS");  Bank of America,  N.A. as Administrative
Agent  for  Banks  ("ADMINISTRATIVE  AGENT");  and  Bank  of  America,  N.A.  as
Collateral Agent for Banks ("COLLATERAL  AGENT"),  and is made with reference to
that certain Bridge Credit Agreement dated as of January 31, 2000, as amended by
First  Amendment to Bridge Credit  Agreement and Limited Waiver dated as of July
31, 2000 (the "CREDIT  AGREEMENT"),  by and among  Company;  Banks;  the several
financial  institutions  party thereto as Co-Syndication  Agents;  the financial
institution  party thereto as  Documentation  Agent;  Administrative  Agent; and
Collateral Agent.  Capitalized  terms used herein without  definition shall have
the same meanings herein as set forth in the Credit Agreement.

                                    RECITALS

                  WHEREAS, Company and Banks desire to amend the Credit Agree-
ment as set forth below; and

                  WHEREAS,   Company  has  requested   Banks  to  waive  certain
provisions of the Credit Agreement as set forth below.

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
agreements,  provisions and covenants herein contained, the parties hereto agree
as follows:

                  SECTION 1.        AMENDMENTS TO THE CREDIT AGREEMENT

                  1.1      AMENDMENTS TO ARTICLE VI: AFFIRMATIVE COVENANTS
                           -----------------------------------------------

                  A.       Sections 6.11(a)(ii) and 6.11(a)(iii) of the Credit
Agreement are hereby amended to read in their entirety as follows:

                           "[intentionally omitted]"

                  B.       Section 6.11(c) of the Credit Agreement is hereby
amended to read in its entirety as follows:

                  "Derivative/FX  Contracts.  Company  shall use its  reasonable
                  -------------------------
efforts to deliver to Administrative  Agent executed copies of amendments to the
existing master agreements pursuant to which Lender Derivative/FX  Contracts are
issued  providing  that the  obligations  of  Company  and  FinServ  under  such
agreements will be secured by the Collateral Documents."

                                       1

<PAGE>

                  1.2      AMENDMENTS TO ARTICLE VII:  NEGATIVE COVENANTS
                           ----------------------------------------------

                  A.       Section 7.1(f) of the Credit Agreement is hereby
amended by deleting the reference to "$5,000,000" contained therein and
substituting "$25,000,000" therefor.

                  B.       Section 7.1(t) of the Credit Agreement is hereby
amended by deleting the reference to "$5,000,000" contained therein and
substituting "$10,000,000" therefor.

                  C.       Section 7.2(r) of the Credit Agreement is hereby
amended by deleting the reference to "$2,000,000" contained therein and
substituting "$10,000,000" therefor.

                  D.       Section 7.2 of the Credit Agreement is hereby amended
by (i) deleting the word "and" at the end of clause (t) thereof;  (ii) deleting
the period at the end of clause  (u)  thereof  and  substituting  the phrase ";
and" therefor; and (iii) adding the following as new clause (v) thereof:

                  "(v) Negative  Pledges with respect to property of Company and
its Subsidiaries  contained in documentation for any Capital Markets Transaction
permitted by Section 7.1(m) provided such Negative  Pledges (i) expressly permit
Liens in favor of  Administrative  Agent  and  Liens  on  equipment  subject  to
Equipment Financing Transactions, real property subject to Real Estate Financing
Transactions,  accounts  receivable  subject to  Permitted  Foreign  Receivables
Purchase  Facilities and property subject to any other Lien permitted by Section
7.2 and (ii) do not  require  the  Securities  issued  in such  Capital  Markets
Transactions to be secured by such permitted Liens."

                  E.       Section 7.3(m) of the Credit Agreement is hereby
amended by deleting the reference to "$2,000,000" contained therein and
substituting  "$10,000,000" therefor.

                  SECTION 2.        WAIVER

                  2.1      WAIVER OF SECTION 6.11(C)
                           -------------------------

                  The undersigned Banks,  constituting  Majority Banks under the
Credit Agreement, hereby waive compliance with the provisions of Section 6.11(c)
of the Credit  Agreement  for the period  commencing  on August 31,  2000 to and
including the date of this Amendment.

                  2.2      LIMITATION OF WAIVER
                           --------------------

                  Without  limiting the  generality of the provisions of Section
10.1 of the  Credit  Agreement,  the waiver  set forth  herein  shall be limited
precisely  as written and relates  solely to a waiver of  compliance  by Company
with the provisions of Section 6.11(c) of the Credit Agreement in the manner and
to the extent  described above, and nothing in this Amendment shall be deemed to
(a)  constitute  a waiver of  compliance  by Company with respect to (i) Section
6.11(c) of the Credit  Agreement  in any other  instance or (ii) any other term,
provision  or  condition  of the Credit  Agreement  or any other  instrument  or
agreement  referred  to  therein  or (b)  prejudice  any  right or  remedy  that
Administrative  Agent,  Collateral Agent or any Bank may now have or may have in
the  future  under or in  connection  with the  Credit  Agreement  or any  other
instrument or agreement referred to therein.

                                       2

<PAGE>

                  SECTION 3.        COMPANY'S REPRESENTATIONS AND WARRANTIES

                  In order to induce Banks to enter into this  Amendment  and to
amend the Credit Agreement in the manner provided herein, Company represents and
warrants  to each Bank that the  following  statements  are  true,  correct  and
complete:

                  A.       CORPORATE POWER AND AUTHORITY.  Company has all
requisite  corporate  power and  authority to enter into this  Amendment  and to
carry out the transactions  contemplated by, and perform its obligations  under,
the Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT").

                  B.       AUTHORIZATION OF AGREEMENTS.  The execution and
delivery of this  Amendment and the  performance  of the Amended  Agreement have
been duly authorized by all necessary corporate action on the part of Company.

                  C.       NO CONFLICT.  The execution and delivery by Company
of this Amendment and the performance by Company of the Amended Agreement do not
and  will  not (i)  violate  any of its  Organization  Documents  or any  order,
judgment  or decree  of any court or other  Governmental  Authority  binding  on
Company,  (ii) conflict with, result in a breach of, constitute a default under,
or require the  termination of, any  Contractual  Obligation of Company,  except
where such conflicts,  breaches,  defaults and  terminations,  in the aggregate,
would  not have a  Material  Adverse  Effect,  (iii)  result in or  require  the
creation  or  imposition  of any Lien of any nature  whatsoever  upon any of the
properties  or  assets  of  Company  (other  than  pursuant  to  the  Collateral
Documents)  or (iv)  require any  approval of  stockholders  or any  approval or
consent of any Person under any  Contractual  Obligation of Company except where
the failure to obtain such  approvals and consents  would not, in the aggregate,
have a Material Adverse Effect.

                  D.       GOVERNMENTAL CONSENTS.  The execution and delivery by
Company  of this  Amendment  and  the  performance  by  Company  of the  Amended
Agreement do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by, any Governmental Authority.

                  E.       BINDING OBLIGATION.  This Amendment and the Amended
Agreement  have been duly  executed and delivered by Company and are the legally
valid and  binding  obligations  of  Company,  enforceable  against  Company  in
accordance with their respective terms,  except as enforcement may be limited by
bankruptcy, insolvency,  reorganization,  moratorium or similar laws relating to
or limiting  creditors' rights generally or by equitable  principles relating to
enforceability,  whether  enforcement  is  sought in a  proceeding  at law or in
equity.

                  SECTION 4.        MISCELLANEOUS

                  A.       REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS.

                  (i)      On and after the date hereof, each reference in the
         Credit Agreement to "this  Agreement",  "hereunder",  "hereof",
         "herein"  or words of like import  referring to the Credit  Agreement,
         and each  reference in the other Loan Documents to the "Credit
         Agreement", "thereunder", "thereof" or words of like import  referring
         to the Credit  Agreement  shall mean and be a reference to the Amended
         Agreement.

                                       3

<PAGE>

                  (ii)     Except as specifically amended by this Amendment, the
         Credit  Agreement  and the other Loan  Documents  shall  remain in full
         force and effect and are hereby ratified and confirmed.

                  (iii)    The  execution, delivery  and   performance  of  this
         Amendment shall not, except as expressly provided herein,  constitute a
         waiver of any provision of, or operate as a waiver of any right,  power
         or remedy of Administrative Agent,  Collateral Agent or any Bank under,
         the Credit Agreement or any of the other Loan Documents.

                  B.       GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY,
AND  CONSTRUED IN  ACCORDANCE  WITH,  THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING  SECTION  5-1401 OF THE GENERAL  OBLIGATIONS  LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

                  C.       COUNTERPARTS;  EFFECTIVENESS. This Amendment may be
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed an original,  but all such counterparts together shall constitute but one
and the same instrument;  signature pages may be detached from multiple separate
counterparts  and attached to a single  counterpart so that all signature  pages
are  physically  attached to the same  document.  This  Amendment  shall  become
effective  upon the  execution of a  counterpart  hereof by Company and Majority
Banks and receipt by Company and  Administrative  Agent of written or telephonic
notification of such execution and authorization of delivery thereof.



                                       4

<PAGE>


                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Amendment  to be duly  executed  and  delivered  by  their  respective  officers
thereunto duly authorized as of the date first written above.

                           LEVI STRAUSS & CO.


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



                           BANK OF AMERICA, N.A., as a Bank


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



                           THE BANK OF NOVA SCOTIA, as a Co-Syndication Agent
                           and a Bank


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



                           CITICORP U.S.A. INCORPORATED,  as a Co-Syndication
                           Agent and as a Bank


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



                           MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
                           Documentation Agent and as a Bank


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

                                      S-1

<PAGE>


                           BANK ONE, N.A., as a Bank


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



                           BANK OF AMERICA, N.A., as Administrative Agent


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


                           BANK OF AMERICA, N.A., as Collateral Agent


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


ACKNOWLEDGED:


BATTERY STREET ENTERPRISES, INC.

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

LEVI STRAUSS FINANCIAL CENTER
CORPORATION

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

LEVI STRAUSS FUNDING, LLC

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

LEVI STRAUSS GLOBAL FULFILLMENT
SERVICES, INC.

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



                                      S-2

<PAGE>


LEVI STRAUSS GLOBAL OPERATIONS, INC.

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

LEVI STRAUSS INTERNATIONAL

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

LEVI STRAUSS LATIN AMERICA, INC.

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

LEVI'S ONLY STORES, INC.

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

NF INDUSTRIES, INC.

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




                                      S-3


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.51
<SEQUENCE>16
<FILENAME>0016.txt
<DESCRIPTION>SECOND AMENDMENT TO AMENDED AND RESTATED 1997.....
<TEXT>



                               LEVI STRAUSS & CO.

                                SECOND AMENDMENT
            TO AMENDED AND RESTATED 1997 364 DAY CREDIT AGREEMENT AND
                                 LIMITED WAIVER


                  This SECOND  AMENDMENT  TO AMENDED AND  RESTATED  1997 364 DAY
CREDIT AGREEMENT AND LIMITED WAIVER (this  "AMENDMENT") is dated as of September
29,  2000  and  entered  into  by and  among  Levi  Strauss  & Co.,  a  Delaware
corporation ("COMPANY"); the financial institutions party hereto ("BANKS"); Bank
of America,  N.A.  as Agent for Banks  ("AGENT");  and Bank of America,  N.A. as
Collateral Agent for Banks ("COLLATERAL  AGENT"),  and is made with reference to
that certain  Amended and  Restated  1997 364 Day Credit  Agreement  dated as of
January 31, 2000, as amended by First Amendment to Amended and Restated 1997 364
Day Credit  Agreement and Limited  Waiver dated as of July 31, 2000 (the "CREDIT
AGREEMENT"),  by and among Company;  Banks; the several  financial  institutions
party thereto as Senior  Managing  Agents;  the several  financial  institutions
party  thereto as Managing  Agents;  the several  financial  institutions  party
thereto as Co-Agents; Agent; and Collateral Agent. Capitalized terms used herein
without  definition  shall  have the same  meanings  herein  as set forth in the
Credit Agreement.

                                    RECITALS

                  WHEREAS, Company and Banks desire to amend the Credit Agree-
ment as set forth below; and

                  WHEREAS,   Company  has  requested   Banks  to  waive  certain
provisions of the Credit Agreement as set forth below.

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
agreements,  provisions and covenants herein contained, the parties hereto agree
as follows:

                  SECTION 1.        AMENDMENTS TO THE CREDIT AGREEMENT

                  1.1      AMENDMENT TO ARTICLE II:  THE CREDITS
                           -------------------------------------

                  A.       Sections 6.11(a)(ii) and 6.11(a)(iii) of the Credit
Agreement are hereby amended to read in their entirety as follows:

                           "[intentionally omitted]"

                  B.       Section 6.11(c) of the Credit Agreement is hereby
amended to read in its entirety as follows:

                  "Derivative/FX  Contracts.  Company  shall use its  reasonable
                   ------------------------
efforts to deliver to Agent executed copies of amendments to the existing master
agreements pursuant to which

                                       1

<PAGE>

Lender  Derivative/FX  Contracts are issued  providing  that the  obligations of
Company  and FinServ  under such  agreements  will be secured by the  Collateral
Documents (as defined in the Bridge Credit Agreement)."

                  1.2      AMENDMENTS TO ARTICLE VII:  NEGATIVE COVENANTS
                           ----------------------------------------------

                  A.       Section 7.1(f) of the Credit Agreement is hereby
amended  by  deleting  the  reference  to  "$5,000,000"  contained  therein  and
substituting "$25,000,000" therefor.

                  B.       Section 7.1(t) of the Credit Agreement is hereby
amended  by  deleting  the  reference  to  "$5,000,000"  contained  therein  and
substituting "$10,000,000" therefor.

                  C.       Section 7.2(r) of the Credit Agreement is hereby
amended  by  deleting  the  reference  to  "$2,000,000"  contained  therein  and
substituting "$10,000,000" therefor.

                  D.       Section 7.2 of the Credit Agreement is hereby amended
by (i) deleting the word "and" at the end of clause (t) thereof;  (ii)  deleting
the period at the end of clause (u) thereof and  substituting the phrase "; and"
therefor; and (iii) adding the following as new clause (v) thereof:

                  "(v) Negative  Pledges with respect to property of Company and
its Subsidiaries  contained in documentation for any Capital Markets Transaction
permitted by Section 7.1(m) provided such Negative  Pledges (i) expressly permit
Liens in favor of Agent and Liens on equipment  subject to  Equipment  Financing
Transactions,  real  property  subject to Real  Estate  Financing  Transactions,
accounts receivable subject to Permitted Foreign Receivables Purchase Facilities
and property  subject to any other Lien permitted by Section 7.2 and (ii) do not
require the Securities issued in such Capital Markets Transactions to be secured
by such permitted Liens."

                  E.       Section 7.3(m) of the Credit Agreement is hereby
amended  by  deleting  the  reference  to  "$2,000,000"  contained  therein  and
substituting "$10,000,000" therefor.

                  SECTION 2.        WAIVER

                  2.1      WAIVER OF SECTION 6.11(c)
                           -------------------------

                  The undersigned Banks,  constituting  Majority Banks under the
Credit Agreement, hereby waive compliance with the provisions of Section 6.11(c)
of the Credit  Agreement  for the period  commencing  on August 31,  2000 to and
including the date of this Amendment.

                  2.2      LIMITATION OF WAIVER
                           --------------------

                  Without  limiting the  generality of the provisions of Section
10.1 of the  Credit  Agreement,  the waiver  set forth  herein  shall be limited
precisely  as written and relates  solely to a waiver of  compliance  by Company
with the provisions of Section 6.11(c) of the Credit Agreement in the manner and
to the extent  described above, and nothing in this Amendment shall be deemed to
(a)  constitute  a waiver of  compliance  by Company with respect to (i) Section
6.11(c) of the Credit  Agreement  in any other  instance or (ii) any other term,
provision  or

                                       2

<PAGE>

condition of the Credit Agreement or any other instrument or agreement  referred
to therein or (b) prejudice any right or remedy that Agent,  Collateral Agent or
any Bank may now have or may have in the future under or in connection  with the
Credit Agreement or any other instrument or agreement referred to therein.

                  SECTION 3.        COMPANY'S REPRESENTATIONS AND WARRANTIES

                  In order to induce Banks to enter into this  Amendment  and to
amend the Credit Agreement in the manner provided herein, Company represents and
warrants  to each Bank that the  following  statements  are  true,  correct  and
complete:

                  A.       CORPORATE POWER AND AUTHORITY.  Company has all
requisite  corporate  power and  authority to enter into this  Amendment  and to
carry out the transactions  contemplated by, and perform its obligations  under,
the Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT").

                  B.       AUTHORIZATION OF AGREEMENTS.  The execution and deli-
very of this Amendment and the  performance  of the Amended  Agreement have been
duly authorized by all necessary corporate action on the part of Company.

                  C.       NO CONFLICT. The execution and delivery by Company of
this Amendment and the  performance  by Company of the Amended  Agreement do not
and  will  not (i)  violate  any of its  Organization  Documents  or any  order,
judgment  or decree  of any court or other  Governmental  Authority  binding  on
Company,  (ii) conflict with, result in a breach of, constitute a default under,
or require the  termination of, any  Contractual  Obligation of Company,  except
where such conflicts,  breaches,  defaults and  terminations,  in the aggregate,
would  not have a  Material  Adverse  Effect,  (iii)  result in or  require  the
creation  or  imposition  of any Lien of any nature  whatsoever  upon any of the
properties  or  assets  of  Company  (other  than  pursuant  to  the  Collateral
Documents)  or (iv)  require any  approval of  stockholders  or any  approval or
consent of any Person under any  Contractual  Obligation of Company except where
the failure to obtain such  approvals and consents  would not, in the aggregate,
have a Material Adverse Effect.

                  D.       GOVERNMENTAL CONSENTS.  The execution and delivery by
Company  of this  Amendment  and  the  performance  by  Company  of the  Amended
Agreement do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by, any Governmental Authority.

                  E.       BINDING OBLIGATION.  This Amendment and the Amended
Agreement  have been duly  executed and delivered by Company and are the legally
valid and  binding  obligations  of  Company,  enforceable  against  Company  in
accordance with their respective terms,  except as enforcement may be limited by
bankruptcy, insolvency,  reorganization,  moratorium or similar laws relating to
or limiting  creditors' rights generally or by equitable  principles relating to
enforceability,  whether  enforcement  is  sought in a  proceeding  at law or in
equity.

                                       3

<PAGE>

                  SECTION 4.        MISCELLANEOUS

                  A.       REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS.

                  (i) On and after the date hereof, each reference in the Credit
         Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
         of like import referring to the Credit Agreement, and each reference in
         the other  Loan  Documents  to the  "Credit  Agreement",  "thereunder",
         "thereof"  or words of like import  referring  to the Credit  Agreement
         shall mean and be a reference to the Amended Agreement.

                  (ii) Except as  specifically  amended by this  Amendment,  the
         Credit  Agreement  and the other Loan  Documents  shall  remain in full
         force and effect and are hereby ratified and confirmed.

                  (iii)  The  execution,   delivery  and   performance  of  this
         Amendment shall not, except as expressly provided herein,  constitute a
         waiver of any provision of, or operate as a waiver of any right,  power
         or remedy of Agent,  Collateral  Agent or any Bank  under,  the  Credit
         Agreement or any of the other Loan Documents.

                  B.       GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY,
AND  CONSTRUED IN  ACCORDANCE  WITH,  THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING  SECTION  5-1401 OF THE GENERAL  OBLIGATIONS  LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

                  C.       COUNTERPARTS;  EFFECTIVENESS. This Amendment may be
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed an original,  but all such counterparts together shall constitute but one
and the same instrument;  signature pages may be detached from multiple separate
counterparts  and attached to a single  counterpart so that all signature  pages
are  physically  attached to the same  document.  This  Amendment  shall  become
effective  upon the  execution of a  counterpart  hereof by Company and Majority
Banks and receipt by Company and Agent of written or telephonic  notification of
such execution and authorization of delivery thereof.


                  [Remainder of page intentionally left blank]

                                       4

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly  executed  and  delivered  by  their  respective  officers  thereunto  duly
authorized as of the date first written above.



                                    LEVI STRAUSS & CO.


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



                                    ABN AMRO BANK N.V.


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


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



                                    AIMCO CDO SERIES 2000-A


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



                                    ALLSTATE LIFE INSURANCE COMPANY


                                    By:____________________________
                                    Name:
                                    Title:



                                    BANCA COMMERCIALE ITALIANA LOS ANGELES
                                    FOREIGN BRANCH


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


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



                                    BANK OF AMERICA, N.A.


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

<PAGE>


                                    THE BANK OF NOVA SCOTIA


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



                                    BANK ONE, N.A.


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



                                    BANKERS TRUST COMPANY


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



                                    BNP PARIBAS (formerly BANQUE NATIONALE DE
                                    PARIS)


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


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



                                    CARIPLO - CASSA DI RISPARMIO DELLE PROVINCIE
                                    LOMBARDE SPA


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


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



                                    CITICORP U.S.A. INCORPORATED


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

<PAGE>

                                    COMMERZBANK AG
                                    NEW YORK AND GRAND CAYMAN BRANCHES


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


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



                                    DEUTSCHE BANK AKTIENGESELLSCHAFT,
                                    NEW YORK BRANCH AND/OR CAYMAN ISLANDS
                                    BRANCH


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


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



                                    FIRST HAWAIIAN BANK


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



                                    FRANKLIN CLO I LIMITED


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



                                    GOLDMAN SACHS & COMPANY


                                    By:___________________________
                                    Name:
                                    Title:



                                    INDOSUEZ CAPITAL FUNDING IIA LIMITED


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

<PAGE>

                                    KBC BANK N.V.


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


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



                                    MELLON BANK, N.A.


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



                                    ML CLO XV PILGRIM AMERICA


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



                                    ML CLO XX PILGRIM AMERICA (CAYMAN) LTD.


                                    By:_____________________________
                                    Name:
                                    Title:



                                    MORGAN GUARANTY TRUST COMPANY OF NEW YORK


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



                                    PIMCO HIGH YIELD FUND


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



                                    SEQUILS-PILGRIM I LTD.


                                    By:____________________________
                                    Name:
                                    Title:

<PAGE>


                                    SOCIETE GENERALE NEW YORK BRANCH


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



                                    THE SUMITOMO BANK, LIMITED


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



                                    UNICREDITO ITALIANO S.P.A.


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


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



                                    WACHOVIA BANK N.A.


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



                                    WELLS FARGO BANK, NATIONAL ASSOCIATION


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



                                    BANK OF AMERICA, N.A., as Agent


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



                                    BANK OF AMERICA, N.A., as Collateral Agent


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

<PAGE>


ACKNOWLEDGED:


BATTERY STREET ENTERPRISES, INC.

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

LEVI STRAUSS FINANCIAL CENTER
CORPORATION

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

LEVI STRAUSS FUNDING, LLC

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

LEVI STRAUSS GLOBAL FULFILLMENT
SERVICES, INC.

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

LEVI STRAUSS GLOBAL OPERATIONS, INC.

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

LEVI STRAUSS INTERNATIONAL

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

LEVI STRAUSS LATIN AMERICA, INC.

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

LEVI'S ONLY STORES, INC.

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

NF INDUSTRIES, INC.

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


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.52
<SEQUENCE>17
<FILENAME>0017.txt
<DESCRIPTION>SECOND AMENDMENT TO AMENDED AND RESTATED 199 180..
<TEXT>



                               LEVI STRAUSS & CO.

                                SECOND AMENDMENT
            TO AMENDED AND RESTATED 1999 180 DAY CREDIT AGREEMENT AND
                                 LIMITED WAIVER


                  This SECOND  AMENDMENT  TO AMENDED AND  RESTATED  1999 180 DAY
CREDIT AGREEMENT AND LIMITED WAIVER (this  "AMENDMENT") is dated as of September
29,  2000  and  entered  into  by and  among  Levi  Strauss  & Co.,  a  Delaware
corporation ("COMPANY"); the financial institutions party hereto ("BANKS"); Bank
of America, N.A. as Administrative Agent for Banks ("ADMINISTRATIVE AGENT"); and
Bank of America, N.A. as Collateral Agent for Banks ("COLLATERAL AGENT"), and is
made with  reference  to that certain  Amended and Restated  1999 180 Day Credit
Agreement dated as of January 31, 2000, as amended by First Amendment to Amended
and Restated 1999 180 Day Credit  Agreement and Limited  Waiver dated as of July
31, 2000 (the "CREDIT  AGREEMENT"),  by and among  Company;  Banks;  the several
financial institutions party thereto as Co-Documentation Agents;  Administrative
Agent; and Collateral Agent.  Capitalized  terms used herein without  definition
shall have the same meanings herein as set forth in the Credit Agreement.

                                    RECITALS

                  WHEREAS, Company and Banks desire to amend the Credit
Agreement as set forth below; and

                  WHEREAS,   Company  has  requested   Banks  to  waive  certain
provisions of the Credit Agreement as set forth below.

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
agreements,  provisions and covenants herein contained, the parties hereto agree
as follows:

                  SECTION 1.        AMENDMENTS TO THE CREDIT AGREEMENT

                  1.1      AMENDMENT TO ARTICLE I:  DEFINITIONS
                           ------------------------------------

                  A.       Sections 6.11(a)(ii) and 6.11(a)(iii) of the Credit
Agreement are hereby amended to read in their entirety as follows:

                           "[intentionally omitted]"

                  B.       Section 6.11(c) of the Credit Agreement is hereby
amended to read in its entirety as follows:

                  "Derivative/FX  Contracts.  Company  shall use its  reasonable
                   ------------------------
efforts to deliver to Administrative  Agent executed copies of amendments to the
existing master agreements

                                       1

<PAGE>

pursuant to which Lender  Derivative/FX  Contracts are issued providing that the
obligations of Company and FinServ under such  agreements will be secured by the
Collateral Documents (as defined in the Bridge Credit Agreement)."

                  1.2      AMENDMENTS TO ARTICLE VII:  NEGATIVE COVENANTS
                           ----------------------------------------------

                  A.       Section 7.1(f) of the Credit Agreement is hereby
amended  by  deleting  the  reference  to  "$5,000,000"  contained  therein  and
substituting "$25,000,000" therefor.

                  B.       Section 7.1(t) of the Credit Agreement is hereby
amended  by  deleting  the  reference  to  "$5,000,000"  contained  therein  and
substituting "$10,000,000" therefor.

                  C.       Section 7.2(r) of the Credit Agreement is hereby
amended  by  deleting  the  reference  to  "$2,000,000"  contained  therein  and
substituting "$10,000,000" therefor.

                  D.       Section 7.2 of the Credit Agreement is hereby amended
by (i) deleting the word "and" at the end of clause (t) thereof;  (ii)  deleting
the period at the end of clause (u) thereof and  substituting the phrase "; and"
therefor; and (iii) adding the following as new clause (v) thereof:

                  "(v) Negative  Pledges with respect to property of Company and
its Subsidiaries  contained in documentation for any Capital Markets Transaction
permitted by Section 7.1(m) provided such Negative  Pledges (i) expressly permit
Liens in favor of  Administrative  Agent  and  Liens  on  equipment  subject  to
Equipment Financing Transactions, real property subject to Real Estate Financing
Transactions,  accounts  receivable  subject to  Permitted  Foreign  Receivables
Purchase  Facilities and property subject to any other Lien permitted by Section
7.2 and (ii) do not  require  the  Securities  issued  in such  Capital  Markets
Transactions to be secured by such permitted Liens."

                  E.       Section 7.3(m) of the Credit Agreement is hereby
amended  by  deleting  the  reference  to  "$2,000,000"  contained  therein  and
substituting "$10,000,000" therefor.

                  SECTION 2.        WAIVER

                  2.1      WAIVER OF SECTION 6.11(c)
                           -------------------------

                  The undersigned Banks,  constituting  Majority Banks under the
Credit Agreement, hereby waive compliance with the provisions of Section 6.11(c)
of the Credit  Agreement  for the period  commencing  on August 31,  2000 to and
including the date of this Amendment.

                  2.2      LIMITATION OF WAIVER
                           --------------------

                  Without  limiting the  generality of the provisions of Section
10.1 of the  Credit  Agreement,  the waiver  set forth  herein  shall be limited
precisely  as written and relates  solely to a waiver of  compliance  by Company
with the provisions of Section 6.11(c) of the Credit Agreement in the manner and
to the extent  described above, and nothing in this Amendment shall be deemed to
(a)  constitute  a waiver of  compliance  by Company with respect to (i) Section
6.11(c) of the Credit  Agreement  in any other  instance or (ii) any other term,
provision  or

                                       2

<PAGE>

condition of the Credit Agreement or any other instrument or agreement  referred
to therein  or (b)  prejudice  any right or remedy  that  Administrative  Agent,
Collateral  Agent or any Bank may now have or may have in the future under or in
connection  with the  Credit  Agreement  or any other  instrument  or  agreement
referred to therein.

                  SECTION 3.        COMPANY'S REPRESENTATIONS AND WARRANTIES

                  In order to induce Banks to enter into this  Amendment  and to
amend the Credit Agreement in the manner provided herein, Company represents and
warrants  to each Bank that the  following  statements  are  true,  correct  and
complete:

                  A.       CORPORATE POWER AND AUTHORITY.  Company has all
requisite  corporate  power and  authority to enter into this  Amendment  and to
carry out the transactions  contemplated by, and perform its obligations  under,
the Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT").

                  B.       AUTHORIZATION OF AGREEMENTS.  The execution and deli-
very of this Amendment and the  performance  of the Amended  Agreement have been
duly authorized by all necessary corporate action on the part of Company.

                  C.       NO CONFLICT. The execution and delivery by Company of
this Amendment and the  performance  by Company of the Amended  Agreement do not
and  will  not (i)  violate  any of its  Organization  Documents  or any  order,
judgment  or decree  of any court or other  Governmental  Authority  binding  on
Company,  (ii) conflict with, result in a breach of, constitute a default under,
or require the  termination of, any  Contractual  Obligation of Company,  except
where such conflicts,  breaches,  defaults and  terminations,  in the aggregate,
would  not have a  Material  Adverse  Effect,  (iii)  result in or  require  the
creation  or  imposition  of any Lien of any nature  whatsoever  upon any of the
properties  or  assets  of  Company  (other  than  pursuant  to  the  Collateral
Documents)  or (iv)  require any  approval of  stockholders  or any  approval or
consent of any Person under any  Contractual  Obligation of Company except where
the failure to obtain such  approvals and consents  would not, in the aggregate,
have a Material Adverse Effect.

                  D.       GOVERNMENTAL CONSENTS.  The execution and delivery by
Company  of this  Amendment  and  the  performance  by  Company  of the  Amended
Agreement do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by, any Governmental Authority.

                  E.       BINDING OBLIGATION.  This Amendment and the Amended
Agreement  have been duly  executed and delivered by Company and are the legally
valid and  binding  obligations  of  Company,  enforceable  against  Company  in
accordance with their respective terms,  except as enforcement may be limited by
bankruptcy, insolvency,  reorganization,  moratorium or similar laws relating to
or limiting  creditors' rights generally or by equitable  principles relating to
enforceability,  whether  enforcement  is  sought in a  proceeding  at law or in
equity.

                                       3

<PAGE>

                  SECTION 4.        MISCELLANEOUS

                  A.       REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS.

                  (i) On and after the date hereof, each reference in the Credit
         Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
         of like import referring to the Credit Agreement, and each reference in
         the other  Loan  Documents  to the  "Credit  Agreement",  "thereunder",
         "thereof"  or words of like import  referring  to the Credit  Agreement
         shall mean and be a reference to the Amended Agreement.

                  (ii) Except as  specifically  amended by this  Amendment,  the
         Credit  Agreement  and the other Loan  Documents  shall  remain in full
         force and effect and are hereby ratified and confirmed.

                  (iii)  The  execution,   delivery  and   performance  of  this
         Amendment shall not, except as expressly provided herein,  constitute a
         waiver of any provision of, or operate as a waiver of any right,  power
         or remedy of Administrative Agent,  Collateral Agent or any Bank under,
         the Credit Agreement or any of the other Loan Documents.

                  B.       GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY,
AND  CONSTRUED IN  ACCORDANCE  WITH,  THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING  SECTION  5-1401 OF THE GENERAL  OBLIGATIONS  LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

                  C.       COUNTERPARTS;  EFFECTIVENESS. This Amendment may be
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed an original,  but all such counterparts together shall constitute but one
and the same instrument;  signature pages may be detached from multiple separate
counterparts  and attached to a single  counterpart so that all signature  pages
are  physically  attached to the same  document.  This  Amendment  shall  become
effective  upon the  execution of a  counterpart  hereof by Company and Majority
Banks and receipt by Company and  Administrative  Agent of written or telephonic
notification of such execution and authorization of delivery thereof.


                  [Remainder of page intentionally left blank]



                                       4

<PAGE>

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Amendment  to be duly  executed  and  delivered  by  their  respective  officers
thereunto duly authorized as of the date first written above.

                           LEVI STRAUSS & CO.


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



                           BANK OF AMERICA, N.A., as a Bank


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



                           THE BANK OF NOVA SCOTIA, as a Co-Documentation Agent
                           and as a Bank


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



                           CITICORP U.S.A. INCORPORATED,  as a Co-Documentation
                           Agent and as a Bank


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



                           MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
                           Co-Documentation Agent and as a Bank


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

                                      S-1

<PAGE>



                           BANK OF AMERICA, N.A., as Administrative Agent


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


                           BANK OF AMERICA, N.A., as Collateral Agent


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


ACKNOWLEDGED:


BATTERY STREET ENTERPRISES, INC.

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

LEVI STRAUSS FINANCIAL CENTER
CORPORATION

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

LEVI STRAUSS FUNDING, LLC

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

LEVI STRAUSS GLOBAL FULFILLMENT
SERVICES, INC.

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

LEVI STRAUSS GLOBAL OPERATIONS, INC.

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



                                      S-2

<PAGE>

LEVI STRAUSS INTERNATIONAL

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

LEVI STRAUSS LATIN AMERICA, INC.

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

LEVI'S ONLY STORES, INC.

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

NF INDUSTRIES, INC.

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





                                      S-3


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.53
<SEQUENCE>18
<FILENAME>0018.txt
<DESCRIPTION>SECOND AMENDMENT TO 1997 SECOND AMENDED AND.......
<TEXT>



                               LEVI STRAUSS & CO.

                                SECOND AMENDMENT
            TO 1997 SECOND AMENDED AND RESTATED CREDIT AGREEMENT AND
                                 LIMITED WAIVER


                  This  SECOND  AMENDMENT  TO 1997 SECOND  AMENDED AND  RESTATED
CREDIT AGREEMENT AND LIMITED WAIVER (this  "AMENDMENT") is dated as of September
29,  2000  and  entered  into  by and  among  Levi  Strauss  & Co.,  a  Delaware
corporation ("COMPANY"); the financial institutions party hereto ("BANKS"); Bank
of America,  N.A.  as Agent for Banks  ("AGENT");  and Bank of America,  N.A. as
Collateral Agent for Banks ("COLLATERAL  AGENT"),  and is made with reference to
that  certain  1997 Second  Amended and Restated  Credit  Agreement  dated as of
January 31,  2000,  as amended by First  Amendment  to 1997  Second  Amended and
Restated  Credit  Agreement  and Limited  Waiver  dated as of July 31, 2000 (the
"CREDIT  AGREEMENT"),  by  and  among  Company;  Banks;  the  several  financial
institutions  party thereto as Senior  Managing  Agents;  the several  financial
institutions   party  thereto  as  Managing   Agents;   the  several   financial
institutions   party  thereto  as  Co-Agents;   Agent;  and  Collateral   Agent.
Capitalized  terms used herein without  definition  shall have the same meanings
herein as set forth in the Credit Agreement.

                                    RECITALS

                  WHEREAS, Company and Banks desire to amend the Credit
Agreement as set forth below; and

                  WHEREAS,   Company  has  requested   Banks  to  waive  certain
provisions of the Credit Agreement as set forth below.

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
agreements,  provisions and covenants herein contained, the parties hereto agree
as follows:

                  SECTION 1.        AMENDMENTS TO THE CREDIT AGREEMENT

                  1.1      AMENDMENTS TO ARTICLE VI:  AFFIRMATIVE COVENANTS
                           ------------------------------------------------

                  A.       Sections 6.11(a)(ii) and 6.11(a)(iii) of the Credit
Agreement are hereby amended to read in their entirety as follows:

                            "[intentionally omitted]"

                  B.       Section 6.11(c) of the Credit Agreement is hereby
amended to read in its entirety as follows:

                  "Derivative/FX  Contracts.  Company  shall use its  reasonable
                   ------------------------
efforts to deliver to Agent executed copies of amendments to the existing master
agreements pursuant to which

                                       1

<PAGE>

Lender  Derivative/FX  Contracts are issued  providing  that the  obligations of
Company  and FinServ  under such  agreements  will be secured by the  Collateral
Documents (as defined in the Bridge Credit Agreement)."

                  1.2      AMENDMENTS TO ARTICLE VII:  NEGATIVE COVENANTS
                           ----------------------------------------------

                  A.       Section 7.1(f) of the Credit Agreement is hereby
amended  by  deleting  the  reference  to  "$5,000,000"  contained  therein  and
substituting "$25,000,000" therefor.

                  B.       Section 7.1(t) of the Credit Agreement is hereby
amended  by  deleting  the  reference  to  "$5,000,000"  contained  therein  and
substituting "$10,000,000" therefor.

                  C.       Section 7.2(r) of the Credit Agreement is hereby
amended  by  deleting  the  reference  to  "$2,000,000"  contained  therein  and
substituting "$10,000,000" therefor.

                  D. Section 7.2 of the Credit  Agreement  is hereby  amended by
(i) deleting the word "and" at the end of clause (t) thereof;  (ii) deleting the
period at the end of clause  (u)  thereof  and  substituting  the phrase "; and"
therefor; and (iii) adding the following as new clause (v) thereof:

                  "(v) Negative  Pledges with respect to property of Company and
its Subsidiaries  contained in documentation for any Capital Markets Transaction
permitted by Section 7.1(m) provided such Negative  Pledges (i) expressly permit
Liens in favor of Agent and Liens on equipment  subject to  Equipment  Financing
Transactions,  real  property  subject to Real  Estate  Financing  Transactions,
accounts receivable subject to Permitted Foreign Receivables Purchase Facilities
and property  subject to any other Lien permitted by Section 7.2 and (ii) do not
require the Securities issued in such Capital Markets Transactions to be secured
by such permitted Liens."

                  E.       Section 7.3(m) of the Credit Agreement is hereby
amended  by  deleting  the  reference  to  "$2,000,000"  contained  therein  and
substituting "$10,000,000" therefor.

                  SECTION 2.        WAIVER

                  2.1      WAIVER OF SECTION 6.11(c)
                           -------------------------

                  The undersigned Banks,  constituting  Majority Banks under the
Credit Agreement, hereby waive compliance with the provisions of Section 6.11(c)
of the Credit  Agreement  for the period  commencing  on August 31,  2000 to and
including the date of this Amendment.

                  2.2      LIMITATION OF WAIVER
                           --------------------

                  Without  limiting the  generality of the provisions of Section
10.1 of the  Credit  Agreement,  the waiver  set forth  herein  shall be limited
precisely  as written and relates  solely to a waiver of  compliance  by Company
with the provisions of Section 6.11(c) of the Credit Agreement in the manner and
to the extent  described above, and nothing in this Amendment shall be deemed to
(a)  constitute  a waiver of  compliance  by Company with respect to (i) Section
6.11(c) of the Credit  Agreement  in any other  instance or (ii) any other term,
provision  or

                                       2

<PAGE>

condition of the Credit Agreement or any other instrument or agreement  referred
to therein or (b) prejudice any right or remedy that Agent,  Collateral Agent or
any Bank may now have or may have in the future under or in connection  with the
Credit Agreement or any other instrument or agreement referred to therein.

                  SECTION 3.        COMPANY'S REPRESENTATIONS AND WARRANTIES

                  In order to induce Banks to enter into this  Amendment  and to
amend the Credit Agreement in the manner provided herein, Company represents and
warrants  to each Bank that the  following  statements  are  true,  correct  and
complete:

                  A.       CORPORATE POWER AND AUTHORITY.  Company has all
requisite  corporate  power and  authority to enter into this  Amendment  and to
carry out the transactions  contemplated by, and perform its obligations  under,
the Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT").

                  B.       AUTHORIZATION OF AGREEMENTS.  The execution and deli-
very of this Amendment and the  performance  of the Amended  Agreement have been
duly authorized by all necessary corporate action on the part of Company.

                  C.       NO CONFLICT. The execution and delivery by Company of
this Amendment and the  performance  by Company of the Amended  Agreement do not
and  will  not (i)  violate  any of its  Organization  Documents  or any  order,
judgment  or decree  of any court or other  Governmental  Authority  binding  on
Company,  (ii) conflict with, result in a breach of, constitute a default under,
or require the  termination of, any  Contractual  Obligation of Company,  except
where such conflicts,  breaches,  defaults and  terminations,  in the aggregate,
would  not have a  Material  Adverse  Effect,  (iii)  result in or  require  the
creation  or  imposition  of any Lien of any nature  whatsoever  upon any of the
properties  or  assets  of  Company  (other  than  pursuant  to  the  Collateral
Documents)  or (iv)  require any  approval of  stockholders  or any  approval or
consent of any Person under any  Contractual  Obligation of Company except where
the failure to obtain such  approvals and consents  would not, in the aggregate,
have a Material Adverse Effect.

                  D.       GOVERNMENTAL CONSENTS.  The execution and delivery by
Company  of this  Amendment  and  the  performance  by  Company  of the  Amended
Agreement do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by, any Governmental Authority.

                  E.       BINDING OBLIGATION.  This Amendment and the Amended
Agreement  have been duly  executed and delivered by Company and are the legally
valid and  binding  obligations  of  Company,  enforceable  against  Company  in
accordance with their respective terms,  except as enforcement may be limited by
bankruptcy, insolvency,  reorganization,  moratorium or similar laws relating to
or limiting  creditors' rights generally or by equitable  principles relating to
enforceability,  whether  enforcement  is  sought in a  proceeding  at law or in
equity.

                                       3

<PAGE>

                  SECTION 4.        MISCELLANEOUS

                  A.       REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS.

                  (i) On and after the date hereof, each reference in the Credit
         Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
         of like import referring to the Credit Agreement, and each reference in
         the other  Loan  Documents  to the  "Credit  Agreement",  "thereunder",
         "thereof"  or words of like import  referring  to the Credit  Agreement
         shall mean and be a reference to the Amended Agreement.

                  (ii) Except as  specifically  amended by this  Amendment,  the
         Credit  Agreement  and the other Loan  Documents  shall  remain in full
         force and effect and are hereby ratified and confirmed.

                  (iii)  The  execution,   delivery  and   performance  of  this
         Amendment shall not, except as expressly provided herein,  constitute a
         waiver of any provision of, or operate as a waiver of any right,  power
         or remedy of Agent,  Collateral  Agent or any Bank  under,  the  Credit
         Agreement or any of the other Loan Documents.

                  B.       GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY,
AND  CONSTRUED IN  ACCORDANCE  WITH,  THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING  SECTION  5-1401 OF THE GENERAL  OBLIGATIONS  LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

                  C.       COUNTERPARTS;  EFFECTIVENESS. This Amendment may be
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed an original,  but all such counterparts together shall constitute but one
and the same instrument;  signature pages may be detached from multiple separate
counterparts  and attached to a single  counterpart so that all signature  pages
are  physically  attached to the same  document.  This  Amendment  shall  become
effective  upon the  execution of a  counterpart  hereof by Company and Majority
Banks and receipt by Company and Agent of written or telephonic  notification of
such execution and authorization of delivery thereof.


                  [Remainder of page intentionally left blank]



                                       4

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly  executed  and  delivered  by  their  respective  officers  thereunto  duly
authorized as of the date first written above.



                                    LEVI STRAUSS & CO.


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



                                    ABN AMRO BANK N.V.


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


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



                                    AIMCO CDO SERIES 2000-A


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



                                    ARCHIMEDES FUNDING III LTD.


                                    By:___________________________
                                    Name:
                                    Title:



                                    ARCHIMEDES FUNDING LLC


                                    By:___________________________
                                    Name:
                                    Title:

<PAGE>

                                    BANCA COMMERCIALE ITALIANA LOS ANGELES
                                    FOREIGN BRANCH


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


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



                                    BANCA MONTE DEI PASCHI DI SIENA SPA


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


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



                                    BANK OF AMERICA, N.A.


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



                                    THE BANK OF NOVA SCOTIA


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



                                    BANK ONE, N.A.


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



                                    BANKERS TRUST COMPANY


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


<PAGE>

                                    BNP PARIBAS


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


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



                                    CAPTIVA III FINANCE LTD.


                                    By:____________________________
                                    Name:
                                    Title:



                                    CAPTIVA IV FINANCE LTD.


                                    By:_____________________________
                                    Name:
                                    Title:



                                    CARIPLO - CASSA DI RISPARMIO DELLE PROVINCIE
                                    LOMBARDE SPA


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


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



                                    CIBC INC.


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



                                    CITICORP U.S.A. INCORPORATED


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

<PAGE>


                                    COMMERZBANK AG
                                    NEW YORK AND GRAND CAYMAN BRANCHES


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


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



                                    CYPRESS MANAGEMENT PARTNERSHIP


                                    By:_____________________________
                                    Name:
                                    Title:



                                    DEUTSCHE BANK AKTIENGESELLSCHAFT,
                                    NEW YORK BRANCH AND/OR CAYMAN ISLANDS
                                    BRANCH


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


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



                                    FERNWOOD ASSOCIATES L.P.


                                    By:____________________________
                                    Name:
                                    Title:



                                    FIRST HAWAIIAN BANK


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



                                    FLEET NATIONAL BANK (f/k/a BANKBOSTON, N.A.)


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

<PAGE>


                                    FRANKLIN FLOATING RATE TRUST


                                    By:____________________________
                                    Name:
                                    Title:



                                    GALAXY CLO 1999-1, LTD.


                                    By:____________________________
                                    Name:
                                    Title:



                                    GOLDMAN SACHS & COMPANY


                                    By:___________________________
                                    Name:
                                    Title:



                                    THE INDUSTRIAL BANK OF JAPAN, LIMITED


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



                                    INDOSUEZ CAPITAL FUNDING III LIMITED,
                                    BY INDOSUEZ CAPITAL AS PORTFOLIO ADVISOR


                                    By:_____________________________
                                    Name:
                                    Title:



                                    INDOSUEZ CAPITAL FUNDING IV L.P.,
                                    BY INDOSUEZ CAPITAL AS PORTFOLIO ADVISOR


                                    By:_____________________________
                                    Name:
                                    Title:



                                    INDOSUEZ CAPITAL FUNDING VI LIMITED


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


<PAGE>


                                    KZH SOLEIL LLC


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



                                    MELLON BANK, N.A.


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



                                    NEMEAN CLO, LTD.


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



                                    MORGAN GUARANTY TRUST COMPANY OF NEW YORK


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



                                    COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEEN-
                                    BANK B.A., "RABOBANK NEDERLAND", NEW YORK
                                    BRANCH


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


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



                                    SALOMON BROTHERS HOLDING COMPANY INC.


                                    By:______________________________
                                    Name:
                                    Title:


<PAGE>


                                    THE SANWA BANK, LIMITED


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



                                    SOCIETE GENERALE NEW YORK BRANCH


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



                                    THE SUMITOMO BANK, LIMITED


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



                                    THE TOKAI BANK LIMITED


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



                                    UBS AG, STAMFORD BRANCH


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



                                    UNICREDITO ITALIANO S.P.A.


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


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


<PAGE>


                                    WACHOVIA BANK N.A.


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



                                    BANK OF AMERICA, N.A., as Agent


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



                                    BANK OF AMERICA, N.A., as Collateral Agent


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



ACKNOWLEDGED:


BATTERY STREET ENTERPRISES, INC.

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

LEVI STRAUSS FINANCIAL CENTER
CORPORATION

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

LEVI STRAUSS FUNDING, LLC

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

LEVI STRAUSS GLOBAL FULFILLMENT
SERVICES, INC.

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

LEVI STRAUSS GLOBAL OPERATIONS, INC.

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


<PAGE>


LEVI STRAUSS INTERNATIONAL

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

LEVI STRAUSS LATIN AMERICA, INC.

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

LEVI'S ONLY STORES, INC.

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

NF INDUSTRIES, INC.

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




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.54
<SEQUENCE>19
<FILENAME>0019.txt
<DESCRIPTION>THIRD AMENDMENT TO AMENDED AND RESTATED 1999 .....
<TEXT>




                               LEVI STRAUSS & CO.

                                 THIRD AMENDMENT
              TO AMENDED AND RESTATED 1999 180 DAY CREDIT AGREEMENT


                  This THIRD  AMENDMENT  TO AMENDED  AND  RESTATED  1999 180 DAY
CREDIT AGREEMENT (this  "AMENDMENT") is dated as of October 13, 2000 and entered
into by and among Levi Strauss & Co., a Delaware  corporation  ("Company");  the
financial  institutions  party  hereto  ("BANKS");  Bank  of  America,  N.A.  as
Administrative  Agent for Banks  ("ADMINISTRATIVE  AGENT"); and Bank of America,
N.A.  as  Collateral  Agent for  Banks  ("COLLATERAL  AGENT"),  and is made with
reference to that certain  Amended and  Restated  1999 180 Day Credit  Agreement
dated as of January  31,  2000,  as amended by First  Amendment  to Amended  and
Restated 1999 180 Day Credit  Agreement and Limited  Waiver dated as of July 31,
2000 and Second  Amendment to Amended and Restated 1999 180 Day Credit Agreement
and Limited Waiver dated as of September 29, 2000 (the "CREDIT  AGREEMENT"),  by
and among Company;  Banks; the several financial  institutions  party thereto as
Co-Documentation Agents; Administrative Agent; and Collateral Agent. Capitalized
terms used herein without  definition shall have the same meanings herein as set
forth in the Credit Agreement.

                                    RECITALS

                  WHEREAS,   Company  and  Banks  desire  to  amend  the  Credit
Agreement as set forth below.

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
agreements,  provisions and covenants herein contained, the parties hereto agree
as follows:

                  SECTION 1.        AMENDMENT TO THE CREDIT AGREEMENT

                  1.1      AMENDMENT TO ARTICLE II: THE CREDITS
                           ------------------------------------

                  A.       Section 2.6(a) of the Credit Agreement is hereby
amended by adding the following as the penultimate sentence thereof:

                           "Company  may,  if so  specified  in  the  applicable
         notice  of  Commitment   reduction,   request  that  any  reduction  of
         Commitments  pursuant  to this  Section  2.6 be  applied  to reduce the
         Commitment  reductions  under Section  2.8(b) in forward  chronological
         order;  PROVIDED  that  (A) the  amount  of such  voluntary  Commitment
         reduction is equal to the Three Facility Commitment  Reduction Fraction
         times the aggregate  amount of prepayments  and  commitment  reductions
         made pursuant to  subclauses  (A), (B) and (C) of this  paragraph,  (B)
         Company   simultaneously   makes  a  voluntary   prepayment   of  loans
         outstanding under the 1997 Second Amended and Restated Credit Agreement
         in an amount equal to the Three Facility Commitment  Reduction Fraction
         (as defined  therein)  TIMES the aggregate  amount of  prepayments  and
         commitment  reductions  made pursuant to subclauses (A), (B) and (C) of
         this  paragraph,


                                       1

<PAGE>


         and (C) Company  simultaneously  makes a voluntary  prepayment of loans
         outstanding  under  the  Amended  and  Restated  1997  364  Day  Credit
         Agreement in an amount equal to the Three Facility Commitment Reduction
         Fraction (as defined therein) TIMES the aggregate amount of prepayments
         and commitment  reductions made pursuant to subclauses (A), (B) and (C)
         of this paragraph; PROVIDED FURTHER that the prepayments and commitment
         reductions  set forth in  subclauses  (B) and (C) above are  applied to
         reduce scheduled principal payments and commitment reductions under the
         applicable credit agreements in forward chronological order."

                  SECTION 2.        COMPANY'S REPRESENTATIONS AND WARRANTIES

                  In order to induce Banks to enter into this  Amendment  and to
amend the Credit Agreement in the manner provided herein, Company represents and
warrants  to each Bank that the  following  statements  are  true,  correct  and
complete:

                  A.       CORPORATE POWER AND AUTHORITY.  Company has all
requisite  corporate  power and  authority to enter into this  Amendment  and to
carry out the transactions  contemplated by, and perform its obligations  under,
the Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT").

                  B.       AUTHORIZATION OF AGREEMENTS.  The execution and
delivery of this  Amendment and the  performance  of the Amended  Agreement have
been duly authorized by all necessary corporate action on the part of Company.

                  C.       NO CONFLICT.  The execution and delivery by Company
of this Amendment and the performance by Company of the Amended Agreement do not
and  will  not (i)  violate  any of its  Organization  Documents  or any  order,
judgment  or decree  of any court or other  Governmental  Authority  binding  on
Company,  (ii) conflict with, result in a breach of, constitute a default under,
or require the  termination of, any  Contractual  Obligation of Company,  except
where such conflicts,  breaches,  defaults and  terminations,  in the aggregate,
would  not have a  Material  Adverse  Effect,  (iii)  result in or  require  the
creation  or  imposition  of any Lien of any nature  whatsoever  upon any of the
properties  or  assets  of  Company  (other  than  pursuant  to  the  Collateral
Documents)  or (iv)  require any  approval of  stockholders  or any  approval or
consent of any Person under any  Contractual  Obligation of Company except where
the failure to obtain such  approvals and consents  would not, in the aggregate,
have a Material Adverse Effect.

                  D.       GOVERNMENTAL CONSENTS.  The execution and delivery by
Company  of this  Amendment  and  the  performance  by  Company  of the  Amended
Agreement do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by, any Governmental Authority.

                  E.       BINDING OBLIGATION.  This Amendment and the Amended
Agreement  have been duly  executed and delivered by Company and are the legally
valid and  binding  obligations  of  Company,  enforceable  against  Company  in
accordance with their respective terms,  except as enforcement may be limited by
bankruptcy, insolvency,  reorganization,  moratorium or similar laws relating to
or limiting  creditors' rights generally or by equitable  principles relating to
enforceability,  whether  enforcement  is  sought in a  proceeding  at law or in
equity.

                                       2

<PAGE>


                  SECTION 3.        MISCELLANEOUS

                  A.       REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS.

                  (i) On and after the date hereof, each reference in the Credit
         Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
         of like import referring to the Credit Agreement, and each reference in
         the other  Loan  Documents  to the  "Credit  Agreement",  "thereunder",
         "thereof"  or words of like import  referring  to the Credit  Agreement
         shall mean and be a reference to the Amended Agreement.

                  (ii) Except as  specifically  amended by this  Amendment,  the
         Credit  Agreement  and the other Loan  Documents  shall  remain in full
         force and effect and are hereby ratified and confirmed.

                  (iii)  The  execution,   delivery  and   performance  of  this
         Amendment shall not, except as expressly provided herein,  constitute a
         waiver of any provision of, or operate as a waiver of any right,  power
         or remedy of Administrative Agent,  Collateral Agent or any Bank under,
         the Credit Agreement or any of the other Loan Documents.

                  B.       GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY,
AND  CONSTRUED IN  ACCORDANCE  WITH,  THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING  SECTION  5-1401 OF THE GENERAL  OBLIGATIONS  LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

                  C. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed
in any  number of  counterparts  and by  different  parties  hereto in  separate
counterparts,  each of which when so executed and  delivered  shall be deemed an
original,  but all such  counterparts  together shall constitute but one and the
same  instrument;  signature  pages  may  be  detached  from  multiple  separate
counterparts  and attached to a single  counterpart so that all signature  pages
are  physically  attached to the same  document.  This  Amendment  shall  become
effective  upon the  execution of a  counterpart  hereof by Company and Majority
Banks and receipt by Company and  Administrative  Agent of written or telephonic
notification of such execution and authorization of delivery thereof.


                  [Remainder of page intentionally left blank]


                                       3

<PAGE>


                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Amendment  to be duly  executed  and  delivered  by  their  respective  officers
thereunto duly authorized as of the date first written above.

                            LEVI STRAUSS & CO.


                            By:_________________________________________________
                            Title:______________________________________________



                            BANK OF AMERICA, N.A., as a Bank


                            By:_________________________________________________
                            Title:______________________________________________



                            THE BANK OF NOVA SCOTIA, as a Co-Documentation Agent
                            and as a Bank


                            By:_________________________________________________
                            Title:______________________________________________



                            CITICORP U.S.A. INCORPORATED,  as a Co-Documentation
                            Agent and as a Bank


                            By:_________________________________________________
                            Title:______________________________________________



                            MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
                            Co-Documentation Agent and as a Bank


                            By:_________________________________________________
                            Title:______________________________________________


                                      S-1


<PAGE>


                            BANK OF AMERICA, N.A., as Administrative Agent


                            By:_________________________________________________
                            Title:______________________________________________


                            BANK OF AMERICA, N.A., as Collateral Agent


                            By:_________________________________________________
                            Title:______________________________________________


ACKNOWLEDGED:


BATTERY STREET ENTERPRISES, INC.

By:___________________________________________________
Title:________________________________________________

LEVI STRAUSS FINANCIAL CENTER
CORPORATION

By:___________________________________________________
Title:________________________________________________

LEVI STRAUSS FUNDING, LLC

By:___________________________________________________
Title:________________________________________________

LEVI STRAUSS GLOBAL FULFILLMENT
SERVICES, INC.

By:___________________________________________________
Title:________________________________________________

LEVI STRAUSS GLOBAL OPERATIONS, INC.

By:___________________________________________________
Title:________________________________________________


                                       S-2

<PAGE>


LEVI STRAUSS INTERNATIONAL

By:___________________________________________________
Title:________________________________________________

LEVI STRAUSS LATIN AMERICA, INC.

By:___________________________________________________
Title:________________________________________________

LEVI'S ONLY STORES, INC.

By:___________________________________________________
Title:________________________________________________

NF INDUSTRIES, INC.

By:___________________________________________________
Title:________________________________________________


                                      S-3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.55
<SEQUENCE>20
<FILENAME>0020.txt
<DESCRIPTION>THIRD AMENDMENT TO AMENDED AND RESTATED 1997 .....
<TEXT>



                               LEVI STRAUSS & CO.

                                 THIRD AMENDMENT
              TO AMENDED AND RESTATED 1997 364 DAY CREDIT AGREEMENT


                  This THIRD  AMENDMENT  TO AMENDED  AND  RESTATED  1997 364 DAY
CREDIT AGREEMENT (this  "AMENDMENT") is dated as of October 13, 2000 and entered
into by and among Levi Strauss & Co., a Delaware  corporation  ("Company");  the
financial  institutions party hereto ("BANKS");  Bank of America,  N.A. as Agent
for Banks  ("Agent");  and Bank of America,  N.A. as Collateral  Agent for Banks
("COLLATERAL  AGENT"),  and is made with  reference to that certain  Amended and
Restated 1997 364 Day Credit  Agreement dated as of January 31, 2000, as amended
by First  Amendment to Amended and Restated  1997 364 Day Credit  Agreement  and
Limited  Waiver  dated as of July 31, 2000 and Second  Amendment  to Amended and
Restated 1997 364 Day Credit  Agreement and Limited Waiver dated as of September
29, 2000 (the "CREDIT  AGREEMENT"),  by and among  Company;  Banks;  the several
financial  institutions  party thereto as Senior  Managing  Agents;  the several
financial  institutions  party thereto as Managing Agents; the several financial
institutions   party  thereto  as  Co-Agents;   Agent;  and  Collateral   Agent.
Capitalized  terms used herein without  definition  shall have the same meanings
herein as set forth in the Credit Agreement.

                                    RECITALS

                  WHEREAS,   Company  and  Banks  desire  to  amend  the  Credit
Agreement as set forth below.

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
agreements,  provisions and covenants herein contained, the parties hereto agree
as follows:

                  SECTION 1.        AMENDMENT TO THE CREDIT AGREEMENT

                  1.1      AMENDMENT TO ARTICLE II: THE CREDITS
                           ------------------------------------

                  A.       Section 2.5(a)  of the Credit Agreement is hereby
amended by adding the following as the final sentence thereof:

                  "Company  may, if so  specified  in the  applicable  notice of
prepayment, request that any prepayment of Loans pursuant to this Section 2.5 be
applied to reduce the principal  amounts  payable and  corresponding  Commitment
reductions under Section 2.7 in forward  chronological order;  PROVIDED that (A)
the  amount  of  such  voluntary  prepayment  is  equal  to the  Three  Facility
Commitment  Reduction  Fraction TIMES the aggregate  amount of  prepayments  and
commitment  reductions  made  pursuant to  subclauses  (A),  (B) and (C) of this
paragraph,  (B) Company  simultaneously  makes a voluntary  prepayment  of loans
outstanding  under the 1997 Second Amended and Restated  Credit  Agreement in an
amount equal to the Three  Facility  Commitment  Reduction  Fraction (as defined
therein)  TIMES the aggregate  amount of prepayments  and commitment  reductions
made pursuant to subclauses (A), (B) and (C) of this paragraph,  and

                                       1

<PAGE>


(C) Company  simultaneously  makes a voluntary  commitment  reduction  under the
Amended and  Restated  1999 180 Day Credit  Agreement  in an amount equal to the
Three  Facility  Commitment  Reduction  Fraction (as defined  therein) TIMES the
aggregate  amount of  prepayments  and  commitment  reductions  made pursuant to
subclauses  (A),  (B) and (C) of  this  paragraph;  PROVIDED  FURTHER  that  the
prepayments and commitment  reductions set forth in subclauses (B) and (C) above
are applied to reduce  scheduled  principal  payments and commitment  reductions
under the applicable credit agreements in forward chronological order."

                  SECTION 2.        COMPANY'S REPRESENTATIONS AND WARRANTIES

                  In order to induce Banks to enter into this  Amendment  and to
amend the Credit Agreement in the manner provided herein, Company represents and
warrants  to each Bank that the  following  statements  are  true,  correct  and
complete:

                  A.       CORPORATE POWER AND AUTHORITY.  Company has all
requisite  corporate  power and  authority to enter into this  Amendment  and to
carry out the transactions  contemplated by, and perform its obligations  under,
the Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT").

                  B.       AUTHORIZATION OF AGREEMENTS.  The execution and
delivery of this  Amendment and the  performance  of the Amended  Agreement have
been duly authorized by all necessary corporate action on the part of Company.

                  C.       NO CONFLICT.  The execution and delivery by Company
of this Amendment and the performance by Company of the Amended Agreement do not
and  will  not (i)  violate  any of its  Organization  Documents  or any  order,
judgment  or decree  of any court or other  Governmental  Authority  binding  on
Company,  (ii) conflict with, result in a breach of, constitute a default under,
or require the  termination of, any  Contractual  Obligation of Company,  except
where such conflicts,  breaches,  defaults and  terminations,  in the aggregate,
would  not have a  Material  Adverse  Effect,  (iii)  result in or  require  the
creation  or  imposition  of any Lien of any nature  whatsoever  upon any of the
properties  or  assets  of  Company  (other  than  pursuant  to  the  Collateral
Documents)  or (iv)  require any  approval of  stockholders  or any  approval or
consent of any Person under any  Contractual  Obligation of Company except where
the failure to obtain such  approvals and consents  would not, in the aggregate,
have a Material Adverse Effect.

                  D.       GOVERNMENTAL CONSENTS.  The execution and delivery by
Company  of this  Amendment  and  the  performance  by  Company  of the  Amended
Agreement do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by, any Governmental Authority.

                  E.       BINDING OBLIGATION.  This Amendment and the Amended
Agreement  have been duly  executed and delivered by Company and are the legally
valid and  binding  obligations  of  Company,  enforceable  against  Company  in
accordance with their respective terms,  except as enforcement may be limited by
bankruptcy, insolvency,  reorganization,  moratorium or similar laws relating to
or limiting  creditors' rights generally or by equitable  principles relating to
enforceability,  whether  enforcement  is  sought in a  proceeding  at law or in
equity.

                                       2

<PAGE>


                  SECTION 3.        MISCELLANEOUS

                  A.       REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS.

                  (i) On and after the date hereof, each reference in the Credit
         Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
         of like import referring to the Credit Agreement, and each reference in
         the other  Loan  Documents  to the  "Credit  Agreement",  "thereunder",
         "thereof"  or words of like import  referring  to the Credit  Agreement
         shall mean and be a reference to the Amended Agreement.

                  (ii) Except as  specifically  amended by this  Amendment,  the
         Credit  Agreement  and the other Loan  Documents  shall  remain in full
         force and effect and are hereby ratified and confirmed.

                  (iii)  The  execution,   delivery  and   performance  of  this
         Amendment shall not, except as expressly provided herein,  constitute a
         waiver of any provision of, or operate as a waiver of any right,  power
         or remedy of Agent,  Collateral  Agent or any Bank  under,  the  Credit
         Agreement or any of the other Loan Documents.

                  B.       GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY,
AND  CONSTRUED IN  ACCORDANCE  WITH,  THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING  SECTION  5-1401 OF THE GENERAL  OBLIGATIONS  LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

                  C.       COUNTERPARTS;  EFFECTIVENESS. This Amendment may be
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed an original,  but all such counterparts together shall constitute but one
and the same instrument;  signature pages may be detached from multiple separate
counterparts  and attached to a single  counterpart so that all signature  pages
are  physically  attached to the same  document.  This  Amendment  shall  become
effective  upon the  execution of a  counterpart  hereof by Company and Majority
Banks and receipt by Company and Agent of written or telephonic  notification of
such execution and authorization of delivery thereof.


                  [Remainder of page intentionally left blank]


                                       3

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly  executed  and  delivered  by  their  respective  officers  thereunto  duly
authorized as of the date first written above.



                                    LEVI STRAUSS & CO.


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



                                    ABN AMRO BANK N.V.


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


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



                                    AIMCO CDO SERIES 2000-A


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



                                    ALLSTATE LIFE INSURANCE COMPANY


                                    By:____________________________
                                    Name:
                                    Title:



                                    BANCA COMMERCIALE ITALIANA LOS ANGELES
                                    FOREIGN BRANCH


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


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



                                    BANK OF AMERICA, N.A.


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



                                    THE BANK OF NOVA SCOTIA


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



                                    BANK ONE, N.A.


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



                                    BANKERS TRUST COMPANY


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



                                    BNP PARIBAS (formerly BANQUE NATIONALE DE
                                    PARIS)


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


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



                                    CARIPLO - CASSA DI RISPARMIO DELLE PROVINCIE
                                    LOMBARDE SPA


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


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



                                    CITICORP U.S.A. INCORPORATED


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



                                    COMMERZBANK AG
                                    NEW YORK AND GRAND CAYMAN BRANCHES


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


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



                                    DEUTSCHE BANK AKTIENGESELLSCHAFT,
                                    NEW YORK BRANCH AND/OR CAYMAN ISLANDS
                                    BRANCH


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


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



                                    FIRST HAWAIIAN BANK


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



                                    FRANKLIN CLO I LIMITED


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



                                    GOLDMAN SACHS & COMPANY


                                    By:___________________________
                                    Name:
                                    Title:



                                    INDOSUEZ CAPITAL FUNDING IIA LIMITED


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



                                    KBC BANK N.V.


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


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



                                    MELLON BANK, N.A.


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



                                    ML CLO XV PILGRIM AMERICA


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



                                    ML CLO XX PILGRIM AMERICA (CAYMAN) LTD.


                                    By:_____________________________
                                    Name:
                                    Title:



                                    MORGAN GUARANTY TRUST COMPANY OF NEW YORK


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



                                    PIMCO HIGH YIELD FUND


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



                                    SEQUILS-PILGRIM I LTD.


                                    By:____________________________
                                    Name:
                                    Title:



                                    SOCIETE GENERALE NEW YORK BRANCH


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



                                    THE SUMITOMO BANK, LIMITED


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



                                    UNICREDITO ITALIANO S.P.A.


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


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



                                    WACHOVIA BANK N.A.


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



                                    WELLS FARGO BANK, NATIONAL ASSOCIATION


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



                                    BANK OF AMERICA, N.A., as Agent


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



                                    BANK OF AMERICA, N.A., as Collateral Agent


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



ACKNOWLEDGED:


BATTERY STREET ENTERPRISES, INC.

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

LEVI STRAUSS FINANCIAL CENTER
CORPORATION

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

LEVI STRAUSS FUNDING, LLC

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

LEVI STRAUSS GLOBAL FULFILLMENT
SERVICES, INC.

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

LEVI STRAUSS GLOBAL OPERATIONS, INC.

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

LEVI STRAUSS INTERNATIONAL

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

LEVI STRAUSS LATIN AMERICA, INC.

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

LEVI'S ONLY STORES, INC.

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

NF INDUSTRIES, INC.

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


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.56
<SEQUENCE>21
<FILENAME>0021.txt
<DESCRIPTION>THIRD AMENDEMENT TO 1997 SECOND AMENDED AND ......
<TEXT>



                               LEVI STRAUSS & CO.

                                 THIRD AMENDMENT
              TO 1997 SECOND AMENDED AND RESTATED CREDIT AGREEMENT


                  This THIRD  AMENDMENT  TO 1997  SECOND  AMENDED  AND  RESTATED
CREDIT AGREEMENT (this  "AMENDMENT") is dated as of October 13, 2000 and entered
into by and among Levi Strauss & Co., a Delaware  corporation  ("Company");  the
financial  institutions party hereto ("BANKS");  Bank of America,  N.A. as Agent
for Banks  ("Agent");  and Bank of America,  N.A. as Collateral  Agent for Banks
("COLLATERAL  AGENT"),  and is made with  reference  to that certain 1997 Second
Amended and Restated  Credit  Agreement dated as of January 31, 2000, as amended
by First  Amendment to 1997 Second  Amended and Restated  Credit  Agreement  and
Limited  Waiver  dated as of July 31, 2000 and Second  Amendment  to 1997 Second
Amended and Restated  Credit  Agreement and Limited Waiver dated as of September
29, 2000 (the "CREDIT  AGREEMENT"),  by and among  Company;  Banks;  the several
financial  institutions  party thereto as Senior  Managing  Agents;  the several
financial  institutions  party thereto as Managing Agents; the several financial
institutions   party  thereto  as  Co-Agents;   Agent;  and  Collateral   Agent.
Capitalized  terms used herein without  definition  shall have the same meanings
herein as set forth in the Credit Agreement.

                                    RECITALS

                  WHEREAS,   Company  and  Banks  desire  to  amend  the  Credit
Agreement as set forth below.

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
agreements,  provisions and covenants herein contained, the parties hereto agree
as follows:

                  SECTION 1. AMENDMENT TO THE CREDIT AGREEMENT

                  1.1 AMENDMENT TO ARTICLE II: THE CREDITS

                  A. Section 2.8(a) of the Credit Agreement is hereby amended by
adding the following as the final sentence thereof:

                  "Company  may, if so  specified  in the  applicable  notice of
prepayment, request that any prepayment of Loans pursuant to this Section 2.8 be
applied to reduce the principal  amounts  payable and  corresponding  Commitment
reductions under Section 2.10 in forward  chronological order; PROVIDED that (A)
the  amount  of  such  voluntary  prepayment  is  equal  to the  Three  Facility
Commitment  Reduction  Fraction TIMES the aggregate  amount of  prepayments  and
commitment  reductions  made  pursuant to  subclauses  (A),  (B) and (C) of this
paragraph,  (B) Company  simultaneously  makes a voluntary  prepayment  of loans
outstanding  under the Amended and Restated 1997 364 Day Credit  Agreement in an
amount equal to the Three  Facility  Commitment  Reduction  Fraction (as defined
therein)  TIMES the aggregate  amount of prepayments  and commitment  reductions
made pursuant to subclauses (A), (B) and (C) of this paragraph,  and

                                       1

<PAGE>


(C) Company  simultaneously  makes a voluntary  commitment  reduction  under the
Amended and  Restated  1999 180 Day Credit  Agreement  in an amount equal to the
Three  Facility  Commitment  Reduction  Fraction (as defined  therein) TIMES the
aggregate  amount of  prepayments  and  commitment  reductions  made pursuant to
subclauses  (A),  (B) and (C) of  this  paragraph;  PROVIDED  FURTHER  that  the
prepayments and commitment  reductions set forth in subclauses (B) and (C) above
are applied to reduce  scheduled  principal  payments and commitment  reductions
under the applicable credit agreements in forward chronological order."

                  SECTION 2. COMPANY'S REPRESENTATIONS AND WARRANTIES

                  In order to induce Banks to enter into this  Amendment  and to
amend the Credit Agreement in the manner provided herein, Company represents and
warrants  to each Bank that the  following  statements  are  true,  correct  and
complete:

                  A. CORPORATE  POWER AND  AUTHORITY.  Company has all requisite
corporate  power and authority to enter into this Amendment and to carry out the
transactions  contemplated  by, and perform its  obligations  under,  the Credit
Agreement as amended by this Amendment (the "AMENDED AGREEMENT").

                  B. AUTHORIZATION OF AGREEMENTS.  The execution and delivery of
this  Amendment  and the  performance  of the Amended  Agreement  have been duly
authorized by all necessary corporate action on the part of Company.

                  C. NO CONFLICT.  The execution and delivery by Company of this
Amendment  and the  performance  by Company of the Amended  Agreement do not and
will not (i) violate any of its Organization Documents or any order, judgment or
decree of any court or other  Governmental  Authority  binding on Company,  (ii)
conflict with, result in a breach of, constitute a default under, or require the
termination  of,  any  Contractual  Obligation  of  Company,  except  where such
conflicts, breaches, defaults and terminations, in the aggregate, would not have
a Material Adverse Effect, (iii) result in or require the creation or imposition
of any Lien of any nature  whatsoever  upon any of the  properties  or assets of
Company  (other than pursuant to the  Collateral  Documents) or (iv) require any
approval of  stockholders  or any  approval  or consent of any Person  under any
Contractual  Obligation  of Company  except  where the  failure  to obtain  such
approvals  and consents  would not, in the  aggregate,  have a Material  Adverse
Effect.

                  D.  GOVERNMENTAL  CONSENTS.  The  execution  and  delivery  by
Company  of this  Amendment  and  the  performance  by  Company  of the  Amended
Agreement do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by, any Governmental Authority.

                  E.  BINDING   OBLIGATION.   This  Amendment  and  the  Amended
Agreement  have been duly  executed and delivered by Company and are the legally
valid and  binding  obligations  of  Company,  enforceable  against  Company  in
accordance with their respective terms,  except as enforcement may be limited by
bankruptcy, insolvency,  reorganization,  moratorium or similar laws relating to
or limiting  creditors' rights generally or by equitable  principles relating to
enforceability,  whether  enforcement  is  sought in a  proceeding  at law or in
equity.

                                       2

<PAGE>


                  SECTION 3. MISCELLANEOUS

                  A.  REFERENCE  TO AND EFFECT ON THE CREDIT  AGREEMENT  AND THE
OTHER LOAN DOCUMENTS.

                  (i) On and after the date hereof, each reference in the Credit
         Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
         of like import referring to the Credit Agreement, and each reference in
         the other  Loan  Documents  to the  "Credit  Agreement",  "thereunder",
         "thereof"  or words of like import  referring  to the Credit  Agreement
         shall mean and be a reference to the Amended Agreement.

                  (ii) Except as  specifically  amended by this  Amendment,  the
         Credit  Agreement  and the other Loan  Documents  shall  remain in full
         force and effect and are hereby ratified and confirmed.

                  (iii)  The  execution,   delivery  and   performance  of  this
         Amendment shall not, except as expressly provided herein,  constitute a
         waiver of any provision of, or operate as a waiver of any right,  power
         or remedy of Agent,  Collateral  Agent or any Bank  under,  the  Credit
         Agreement or any of the other Loan Documents.

                  B.  GOVERNING  LAW. THIS  AMENDMENT  SHALL BE GOVERNED BY, AND
CONSTRUED  IN  ACCORDANCE  WITH,  THE  INTERNAL  LAWS OF THE  STATE  OF NEW YORK
(INCLUDING  SECTION  5-1401 OF THE GENERAL  OBLIGATIONS  LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

                  C. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed
in any  number of  counterparts  and by  different  parties  hereto in  separate
counterparts,  each of which when so executed and  delivered  shall be deemed an
original,  but all such  counterparts  together shall constitute but one and the
same  instrument;  signature  pages  may  be  detached  from  multiple  separate
counterparts  and attached to a single  counterpart so that all signature  pages
are  physically  attached to the same  document.  This  Amendment  shall  become
effective  upon the  execution of a  counterpart  hereof by Company and Majority
Banks and receipt by Company and Agent of written or telephonic  notification of
such execution and authorization of delivery thereof.


                  [Remainder of page intentionally left blank]


                                       3

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly  executed  and  delivered  by  their  respective  officers  thereunto  duly
authorized as of the date first written above.



                                    LEVI STRAUSS & CO.


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



                                    ABN AMRO BANK N.V.


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


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



                                    AIMCO CDO SERIES 2000-A


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



                                    ARCHIMEDES FUNDING III LTD.


                                    By:___________________________
                                    Name:
                                    Title:



                                    ARCHIMEDES FUNDING LLC


                                    By:___________________________
                                    Name:
                                    Title:



                                    BANCA COMMERCIALE ITALIANA LOS ANGELES
                                    FOREIGN BRANCH


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


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



                                    BANCA MONTE DEI PASCHI DI SIENA SPA


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


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



                                    BANK OF AMERICA, N.A.


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



                                    THE BANK OF NOVA SCOTIA


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



                                    BANK ONE, N.A.


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



                                    BANKERS TRUST COMPANY


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



                                    BNP PARIBAS


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


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



                                    CAPTIVA III FINANCE LTD.


                                    By:____________________________
                                    Name:
                                    Title:



                                    CAPTIVA IV FINANCE LTD.


                                    By:_____________________________
                                    Name:
                                    Title:



                                    CARIPLO - CASSA DI RISPARMIO DELLE PROVINCIE
                                    LOMBARDE SPA


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


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



                                    CIBC INC.


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



                                    CITICORP U.S.A. INCORPORATED


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



                                    COMMERZBANK AG
                                    NEW YORK AND GRAND CAYMAN BRANCHES


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


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



                                    CYPRESS MANAGEMENT PARTNERSHIP


                                    By:_____________________________
                                    Name:
                                    Title:



                                    DEUTSCHE BANK AKTIENGESELLSCHAFT,
                                    NEW YORK BRANCH AND/OR CAYMAN ISLANDS
                                    BRANCH


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


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



                                    FERNWOOD ASSOCIATES L.P.


                                    By:____________________________
                                    Name:
                                    Title:



                                    FIRST HAWAIIAN BANK


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



                                    FLEET NATIONAL BANK (f/k/a BANKBOSTON, N.A.)


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



                                    FRANKLIN FLOATING RATE TRUST


                                    By:____________________________
                                    Name:
                                    Title:



                                    GALAXY CLO 1999-1, LTD.


                                    By:____________________________
                                    Name:
                                    Title:



                                    GOLDMAN SACHS & COMPANY


                                    By:___________________________
                                    Name:
                                    Title:



                                    THE INDUSTRIAL BANK OF JAPAN, LIMITED


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



                                    INDOSUEZ CAPITAL FUNDING III LIMITED,
                                        BY INDOSUEZ CAPITAL AS PORTFOLIO ADVISOR


                                    By:_____________________________
                                    Name:
                                    Title:



                                    INDOSUEZ CAPITAL FUNDING IV L.P.,
                                        BY INDOSUEZ CAPITAL AS PORTFOLIO ADVISOR


                                    By:_____________________________
                                    Name:
                                    Title:



                                    INDOSUEZ CAPITAL FUNDING VI LIMITED


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



                                    KZH SOLEIL LLC


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



                                    MELLON BANK, N.A.


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



                                    NEMEAN CLO, LTD.


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



                                    MORGAN GUARANTY TRUST COMPANY OF NEW YORK


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



                                    COOPERATIEVE CENTRALE RAIFFEISEN-
                                    BOERENLEENBANK B.A., "RABOBANK NEDERLAND",
                                    NEW YORK BRANCH


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


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



                                    SALOMON BROTHERS HOLDING COMPANY INC.


                                    By:______________________________
                                    Name:
                                    Title:



                                    THE SANWA BANK, LIMITED


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



                                    SOCIETE GENERALE NEW YORK BRANCH


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



                                    THE SUMITOMO BANK, LIMITED


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



                                    THE TOKAI BANK LIMITED


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



                                    UBS AG, STAMFORD BRANCH


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



                                    UNICREDITO ITALIANO S.P.A.


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


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



                                    WACHOVIA BANK N.A.


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



                                    BANK OF AMERICA, N.A., as Agent


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



                                    BANK OF AMERICA, N.A., as Collateral Agent


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



ACKNOWLEDGED:


BATTERY STREET ENTERPRISES, INC.

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

LEVI STRAUSS FINANCIAL CENTER
CORPORATION

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

LEVI STRAUSS FUNDING, LLC

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

LEVI STRAUSS GLOBAL FULFILLMENT
SERVICES, INC.

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

LEVI STRAUSS GLOBAL OPERATIONS, INC.

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

LEVI STRAUSS INTERNATIONAL

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

LEVI STRAUSS LATIN AMERICA, INC.

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

LEVI'S ONLY STORES, INC.

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

NF INDUSTRIES, INC.

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


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.57
<SEQUENCE>22
<FILENAME>0022.txt
<DESCRIPTION>CREDIT AGREEMENT
<TEXT>


                                CREDIT AGREEMENT

         CREDIT AGREEMENT dated as of February 1, 2001 among LEVI STRAUSS & CO.,
a Delaware corporation (the "BORROWER"),  the banks,  financial institutions and
other  institutional  lenders  listed on the  signature  pages  hereof under the
caption  "INITIAL  LENDERS"  (the  "INITIAL  LENDERS"),  the banks listed on the
signature pages hereof under the caption  "INITIAL  ISSUING BANKS" (the "INITIAL
ISSUING BANKS"), BANK OF AMERICA,  N.A. ("BANK OF AMERICA"),  as the provider of
Swing Line Advances (as hereinafter  defined) hereunder (the "SWING LINE BANK"),
BANC OF AMERICA SECURITIES LLC ("BAS") and SALOMON SMITH BARNEY INC. ("SSB"), as
co-lead  arrangers and joint book managers  (the  "CO-LEAD  ARRANGERS")  for the
Facilities  (as  hereinafter  defined)  hereunder,  CITICORP  USA,  INC., as the
syndication  agent (the  "SYNDICATION  AGENT"),  THE BANK OF NOVA SCOTIA, as the
documentation agent (the "DOCUMENTATION  AGENT"), and BANK OF AMERICA,  N.A., as
the  administrative  and collateral  agent (together with any successor  thereto
appointed  pursuant to Article VII, the  "ADMINISTRATIVE  AGENT") for the Lender
Parties (as hereinafter defined).

                             PRELIMINARY STATEMENTS

         (i) The Borrower is a party to (a) that certain Bridge Credit Agreement
dated as of January 31, 2000,  as amended by First  Amendment  to Bridge  Credit
Agreement and Limited  Waiver dated as of July 31, 2000 and Second  Amendment to
Bridge Credit  Agreement and Limited  Waiver dated as of September 29, 2000; (b)
that certain  Amended and  Restated  1999 180 Day Credit  Agreement  dated as of
January 31, 2000, as amended by First Amendment to Amended and Restated 1999 180
Day Credit  Agreement  and  Limited  Waiver  dated as of July 31,  2000,  Second
Amendment  to Amended and  Restated  1999 180 Day Credit  Agreement  and Limited
Waiver  dated as of  September  29,  2000 and Third  Amendment  to  Amended  and
Restated 1999 180 Day Credit  Agreement  dated as of October 13, 2000;  (c) that
certain  Amended and Restated 1997 364 Day Credit  Agreement dated as of January
31, 2000,  as amended by First  Amendment  to Amended and Restated  1997 364 Day
Credit Agreement and Limited Waiver dated as of July 31, 2000,  Second Amendment
to Amended and Restated 1997 364 Day Credit  Agreement and Limited  Waiver dated
as of September  29, 2000 and Third  Amendment to Amended and Restated  1997 364
Day Credit  Agreement  dated as of October 13,  2000;  and (d) that certain 1997
Second Amended and Restated  Credit  Agreement  dated as of January 31, 2000, as
amended by First Amendment to 1997 Second Amended and Restated Credit  Agreement
and Limited  Waiver dated as of July 31, 2000,  Second  Amendment to 1997 Second
Amended and Restated  Credit  Agreement and Limited Waiver dated as of September
29,  2000 and  Third  Amendment  to 1997  Second  Amended  and  Restated  Credit
Agreement  dated as of October  13, 2000  (collectively,  the  "EXISTING  CREDIT
AGREEMENTS").

         (ii)  The  Borrower  and the  Initial  Lenders  wish to  refinance  all
obligations of the Borrower under the Existing Credit Agreements.

         NOW,  THEREFORE,  in  consideration  of the  premises and of the mutual
covenants and agreements  contained  herein,  the parties hereto hereby agree as
follows:


<PAGE>


                                   ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

         Section 1.01 Certain  Defined  Terms.  As used in this  Agreement,  the
                      -----------------------
following  terms shall have the following  meanings (such meanings to be equally
applicable to both the singular and the plural forms of the terms defined):

         "ADMINISTRATIVE  AGENT" has the  meaning  specified  in the  recital of
parties to this Agreement.

         "ADMINISTRATIVE   AGENT'S   ACCOUNT"   means   the   account   of   the
Administrative Agent maintained by the Administrative Agent with Bank of America
at its office at 1850  Gateway  Boulevard,  5th Floor,  CA4-706-05-09,  Concord,
California 94520, ABA No. 111-000-012,  Account No. 3750836479,  Reference: Levi
Strauss,  Attention:  Agency Services West, or such other account  maintained by
the Administrative Agent and designated by the Administrative Agent as such in a
written notice to the Borrower and each of the Lender Parties.

         "ADVANCE" means a Tranche A Term Advance,  a Tranche B Term Advance,  a
Revolving Credit Advance, a Swing Line Advance or a Letter of Credit Advance, as
the context may require.

         "AFFILIATE"  means, with respect to any Person,  any other Person that,
directly or  indirectly,  controls,  is controlled by or is under common control
with such Person or is a director  or officer of such  Person.  For  purposes of
this  definition,   the  term  "control"  (including  the  terms  "controlling,"
"controlled  by"  and  "under  common  control  with")  of a  Person  means  the
possession,  direct or indirect,  of the power to vote 10% or more of the Voting
Interests of such Person or to direct or cause the  direction of the  management
and policies of such Person,  whether through the ownership of Voting Interests,
by contract or otherwise.

         "AGENTS" means,  collectively,  the  Administrative  Agent, the Co-Lead
Arrangers,  the Syndication Agent, the Documentation  Agent and each co-agent or
sub-agent  appointed by the  Administrative  Agent from time to time pursuant to
Section 7.01(b).

         "AGGREGATE UNUSED REVOLVING CREDIT COMMITMENTS" means, at any time, (a)
the  aggregate  Revolving  Credit  Commitments  at such time  MINUS (b) the sum,
without  duplication,  of (i) the  aggregate  principal  amount of all Revolving
Credit Advances and Letter of Credit Advances (in respect of Domestic Letters of
Credit)  outstanding at such time,  (ii) the aggregate  Available  Amount of all
Domestic  Letters  of Credit  outstanding  at such  time,  (iii)  the  aggregate
principal  amount of all Swing Line Advances  outstanding at such time, and (iv)
the Foreign  Letter of Credit  Sublimit.  For purposes of this  definition,  any
amount  described in the preceding  sentence  which is denominated in a currency
other than Dollars  shall be valued based on the  applicable  Exchange  Rate for
such currency as of the applicable date of determination.

         "AGREEMENT  VALUE" means,  with respect to each Hedge  Agreement on any
date of  determination,  after  taking  into  account  the effect of any legally
enforceable netting agreement relating to such Hedge Agreement,  an amount equal
to the termination value,  expressed in Dollars,  as determined by the Borrower;
PROVIDED,  HOWEVER,  that in the  event  that  two  Lenders  determine  that the
mark-to-market  value,  expressed  in  Dollars,  for  any  Hedge  Agreement,  as

                                       2

<PAGE>


determined  based  upon  one or  more  mid-market  or  other  readily  available
quotations provided by any recognized dealer in such Hedge Agreement, is greater
than the termination value for such Hedge Agreement  determined by the Borrower,
the Agreement Value of such Hedge  Agreement  shall be the amount  determined by
such  Lenders;  PROVIDED  FURTHER  that any  such  determination  shall  have no
evidentiary  value for purposes of determining the amount owed to the applicable
Hedge Bank.

         "APPLICABLE LENDING OFFICE" means (a) with respect to each Issuing Bank
and the Swing Line Bank,  such Issuing Bank's or the Swing Line Bank's Base Rate
Lending  Office for all purposes of this  Agreement and (b) with respect to each
other Lender Party,  such Lender Party's Base Rate Lending Office in the case of
a Base Rate Advance and such Lender  Party's  Eurodollar  Lending  Office in the
case of a Eurodollar Rate Advance.

         "APPLICABLE  MARGIN"  means (a) at any time  during the period from the
date of this  Agreement  through  July 31, 2001, a rate equal to 2.25% per annum
for Base Rate Advances and 3.50% per annum for Eurodollar  Rate Advances and (b)
at any time and from  time to time  thereafter,  a rate per  annum  equal to the
percentage  set forth below  opposite the  applicable  Performance  Level listed
below at such time:


<TABLE>
<CAPTION>



======================= ========================================== ======================== ========================
     PERFORMANCE                        LEVERAGE                                                EURODOLLAR RATE
        LEVEL                             RATIO                      BASE RATE ADVANCES            ADVANCES
- ----------------------- ------------------------------------------ ------------------------ ------------------------
<S>                     <C>                                                 <C>                      <C>
      I                 less than 2.75:1.00                                 1.25%                    2.50%
- ----------------------- ------------------------------------------ ------------------------ ------------------------
      II                greater  than or equal to  2.75:1.00  but           1.50%                    2.75%
                        less than 3.00:1.00
- ----------------------- ------------------------------------------ ------------------------ ------------------------
      III               greater  than or equal to  3.00:1.00  but           1.75%                    3.00%
                        less than 3.25:1.00
- ----------------------- ------------------------------------------ ------------------------ ------------------------
      IV                greater  than or equal to  3.25:1.00  but           2.00%                    3.25%
                        less than 3.50:1.00
- ----------------------- ------------------------------------------ ------------------------ ------------------------
      V                 greater than or equal to 3.50:1.00                  2.25%                    3.50%
======================= ========================================== ======================== ========================

</TABLE>


For purposes of clause (b) of the immediately preceding sentence, at any date of
determination,  the  Applicable  Margin  for each  Base  Rate  Advance  and each
Eurodollar  Rate Advance shall be determined by reference to the Leverage  Ratio
for the most recently completed Measurement Period. The first Measurement Period
shall be the four consecutive  Fiscal Quarters ending May 27, 2001. For purposes
of determining the applicable Performance Level at any date of determination, no
change in the  Performance  Level shall be effective  until three  Business Days
after the date on which the Administrative Agent receives the Required Financial
Information reflecting such change; PROVIDED,  HOWEVER, that if the Borrower has
not  submitted  to  the  Administrative  Agent  all of  the  Required  Financial
Information  within three Business Days after the date on which such information
is otherwise required under Section 5.03(b) or 5.03(c),  as the case may be, the
Performance  Level shall be deemed to be at  Performance  Level V for so long as
such information has not been submitted.

         "APPROPRIATE  LENDER"  means,  at any  time,  (a) with  respect  to the
Tranche A Term  Facility,  the Tranche B Term Facility or the  Revolving  Credit
Facility,  a Lender that has a

                                       3


<PAGE>


Commitment  with respect to such Facility at such time,  (b) with respect to any
Letter of Credit,  (i) any Issuing Bank and (ii) if the Revolving Credit Lenders
have  made  Letter of Credit  Advances  pursuant  to  Section  2.03(c)  that are
outstanding  at such  time,  each such  Revolving  Credit  Lender,  and (c) with
respect to Swing Line Advances, the Swing Line Bank.

         "APPROVED  FUND" means,  with respect to any Lender that is a fund that
invests  in bank  loans or other  commercial  loans,  any  other  fund that also
invests in such loans and is advised or managed by the same  investment  advisor
as such Lender or by an Affiliate of such investment advisor.

         "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance  entered
into  by  a  Lender  Party  and  an  Eligible  Assignee,  and  accepted  by  the
Administrative  Agent and, if  applicable,  the  Borrower,  in  accordance  with
Section 8.07 and in substantially the form of Exhibit C hereto.

         "AVAILABLE  AMOUNT" of any  Letter of Credit  means,  at any time,  the
maximum  amount  available  to be drawn under such Letter of Credit at such time
(assuming compliance at such time with all conditions to drawing).

         "BANK OF AMERICA"  has the meaning  specified in the recital of parties
to this Agreement.

         "BAS" has the  meaning  specified  in the  recital  of  parties to this
Agreement.

         "BASE RATE" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate PLUS 1/2 of 1% and (b) the rate of interest
in  effect  for  such day as  publicly  announced  from  time to time by Bank of
America as its "prime  rate."  Such rate is a rate set by Bank of America  based
upon  various  factors  including  Bank of America's  costs and desired  return,
general economic conditions and other factors,  and is used as a reference point
for pricing some loans,  which may be priced at, above,  or below such announced
rate.  Any  change in the Base Rate  resulting  from a change in the prime  rate
established  by Bank of America  shall  become  effective on the Business Day on
which such change in the prime rate is announced by Bank of America.

         "BASE RATE ADVANCE" means an Advance that bears interest as provided in
Sections 2.07(a)(i)(A) and 2.07(a)(ii)(A).

         "BASE RATE LENDING  OFFICE"  means,  with respect to each of the Lender
Parties,  the office of such Lender  Party  specified  as its "Base Rate Lending
Office" opposite its name on the signature pages hereof or in the Assignment and
Acceptance  pursuant to which it became a Lender  Party,  as the case may be, or
such other  office of such Lender  Party as such  Lender  Party may from time to
time specify to the Borrower and the Administrative Agent for such purpose.

         "BORROWER" has the meaning  specified in the recital of parties to this
Agreement.

         "BORROWER'S  ACCOUNT"  means the account of the Borrower  maintained by
the Borrower with Bank of America at its office at 1850 Gateway  Boulevard,  5th
Floor, CA4-706-05-09,  Concord,  California 94520, ABA No. 111-000-012,  Account
No.  12335-02255,  Reference:  Levi  Strauss  &  Co.  Secured  Credit  Facility,
Attention:  Treasurer or such other  account of such

                                       4


<PAGE>


Borrower as is agreed from time to time in writing  between the Borrower and the
Administrative Agent.

         "BORROWING"  means  a  Tranche  A  Term  Borrowing,  a  Tranche  B Term
Borrowing,  a  Revolving  Credit  Borrowing,  a Swing Line  Borrowing  or an L/C
Borrowing, as the context may require.

         "BUSINESS  DAY" means a day of the year on which banks are not required
or authorized by law to close in New York, New York or San Francisco, California
and, if the applicable Business Day relates to any Eurodollar Rate Advances,  on
which dealings are carried on in Dollar deposits in the London interbank market.

         "CAPITAL  ASSETS"  means,  with respect to any Person,  all  equipment,
fixed assets and real property or improvements  of such Person,  or replacements
or substitutions  therefor or additions thereto,  that, in accordance with GAAP,
have been or should be reflected as additions to property, plant or equipment on
the  balance  sheet of such  Person or that have a useful  life of more than one
year.

         "CAPITAL  EXPENDITURES"  means,  with  respect  to any  Person  for any
period,  (a) all expenditures  made directly or indirectly by such Person during
such period for Capital Assets (whether paid in cash or other  consideration  or
accrued as a liability and including,  without limitation,  all expenditures for
maintenance  and repairs  which are  required,  in  accordance  with GAAP, to be
capitalized  on the  books of such  Person)  and (b)  solely to the  extent  not
otherwise  included in clause (a) of this  definition,  the aggregate  principal
amount of all Debt  (including,  without  limitation,  Obligations in respect of
Capitalized  Leases)  assumed or incurred  during such period in connection with
any such expenditures for Capital Assets.  For purposes of this definition,  the
purchase price of equipment that is purchased  simultaneously  with the trade-in
of existing  equipment or with  insurance  proceeds shall be included in Capital
Expenditures only to the extent of the gross amount by which such purchase price
exceeds the credit  granted by the seller of such  equipment  for the  equipment
being traded in at such time or the amount of such  insurance  proceeds,  as the
case may be.

         "CAPITAL MARKETS  TRANSACTION" means an issuance or sale of Debt by the
Borrower  through a public  or  private  placement  (other  than Debt  expressly
permitted  to be incurred  or issued  pursuant  to Section  5.02(b)  (other than
Section 5.02(b)(i)(C)).

         "CAPITALIZED LEASE" means any lease with respect to which the lessee is
required to recognize  concurrently  the acquisition of property or an asset and
the incurrence of a liability in accordance with GAAP.

         "CASH  COLLATERAL  ACCOUNT" has the meaning  specified in Section 11 of
the Pledge and Security Agreement.

         "CASH DISTRIBUTIONS"  means, with respect to any Person for any period,
all dividends and other distributions on any of the outstanding Equity Interests
in such Person, all purchases,  redemptions,  retirements,  defeasances or other
acquisitions of any of the outstanding  Equity  Interests in such Person and all
returns of capital to the  stockholders,  partners or members (or the

                                       5


<PAGE>


equivalent  Persons) of such Person,  in each case to the extent paid in cash by
or on behalf of such Person during such period.

         "CASH  EQUIVALENTS"  means,  as  at  any  date  of  determination,  (i)
marketable  securities (a) issued or directly and unconditionally  guaranteed as
to interest and principal by the United  States  government or (b) issued by any
agency of the  United  States  the  obligations  of which are backed by the full
faith and credit of the United  States,  in each case  maturing  within one year
after such date; (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,  in each case maturing within one year after such date
and having, at the time of the acquisition thereof, a rating of at least A- from
S&P or the equivalent thereof from another nationally  recognized rating agency;
(iii)  commercial paper maturing no more than 270 days from the date of creation
thereof and having, at the time of the acquisition thereof, a rating of at least
A-1 from S&P or at least P-1 from Moody's;  (iv) time deposits,  certificates of
deposit or  bankers'  acceptances  maturing  within one year after such date and
issued or accepted by any Lender or by any commercial  bank organized  under the
laws of the United States,  any state thereof or an OECD country having, at such
date,  a rating of at least A- from S&P or the  equivalent  thereof from another
nationally  recognized  rating  agency  (except  as  otherwise  approved  by the
Treasurer  of  the  Borrower)  or  by a  primary  government  securities  dealer
reporting  to the Market  Reports  Division of the Federal  Reserve  Bank of New
York; (v) repurchase agreements with financial  institutions organized under the
laws of the United States,  any state thereof or an OECD country having, at such
date,  a rating of at least A- from S&P or the  equivalent  thereof from another
nationally  recognized  rating  agency  (except  as  otherwise  approved  by the
Treasurer  of the  Borrower)  or with a  primary  government  securities  dealer
reporting  to the Market  Reports  Division of the Federal  Reserve  Bank of New
York; (vi) Dollar denominated  floating rate notes, foreign currency denominated
floating rate notes and foreign  indexed notes, in each case maturing within one
year after  such date and  having,  at the time of the  acquisition  thereof,  a
rating  of at least A or A-1 from S&P or the  equivalent  thereof  from  another
nationally  recognized  rating agency;  (vii) auction rate notes maturing within
one year after such date and having, at the time of the acquisition  thereof,  a
rating  of at least A or A-1 from S&P or the  equivalent  thereof  from  another
nationally  recognized  rating  agency;  (viii)  money  market  preferred  funds
maturing  within  one  year  after  such  date  and  having,  at the time of the
acquisition  thereof, a rating of at least AA from S&P or the equivalent thereof
from another  nationally  recognized rating agency;  and (ix) money market funds
maturing  within  one  year  after  such  date  and  having,  at the time of the
acquisition  thereof, a rating of at least A- from S&P or the equivalent thereof
from another nationally recognized rating agency;  provided such investments are
limited to $25,000,000 for each such fund and  $100,000,000 in the aggregate for
all such funds,  such funds are  open-end  funds with total  assets of more than
$1,000,000,000  and an expressed  goal of maintaining a net asset value of $1.00
per share and such funds limit their investments to the prime credit instruments
allowed in this definition with average weighted maturity of less than 90 days.

         "CLOSING  DATE"  means  the first  date on which all of the  conditions
precedent  to the  Initial  Extension  of Credit  set forth in  Article  III are
satisfied, which date shall occur on or prior to February 1, 2001.

         "CO-LEAD ARRANGERS" has the meaning specified in the recital of parties
to this Agreement.

                                       6


<PAGE>


         "COLLATERAL"  means  all  of  the  "COLLATERAL"   referred  to  in  the
Collateral  Documents  and all of the other  property and assets that are or are
intended under the terms of the  Collateral  Documents to be subject to Liens in
favor of the Administrative Agent for the benefit of the Secured Parties.

         "COLLATERAL  DOCUMENTS"  means,  collectively,  the Pledge and Security
Agreement, the Foreign Pledge Agreements,  the Mortgages, each of the mortgages,
collateral assignments,  security agreements, pledge agreements or other similar
agreements delivered to the Administrative Agent and the Lender Parties pursuant
to Sections 5.01(i) and 5.01(l),  and each of the other agreements,  instruments
or  documents  that  creates  or  purports  to  create  a Lien in  favor  of the
Administrative Agent for the benefit of the Secured Parties.

         "COMMITMENT"  means a  Tranche  A Term  Commitment,  a  Tranche  B Term
Commitment or a Revolving Credit Commitment, as the context may require.

         "COMMITMENT FEE" has the meaning specified in Section 2.08(a).

         "CONFIDENTIAL  INFORMATION"  means information that is furnished to the
Administrative  Agent or any Lender  Party by or on behalf of the  Borrower in a
writing that either is conspicuously marked as confidential or that a reasonable
Person would believe is  confidential  or  proprietary  in nature,  but does not
include any such information that (a) is or becomes  generally  available to the
public or (b) is or becomes  available to the  Administrative  Agent or any such
Lender  Party  from a  source  other  than  the  Borrower  that is  not,  to the
Administrative Agent's or such Lender Party's knowledge,  acting in violation of
a confidentiality agreement with the Borrower;  PROVIDED,  HOWEVER, that neither
the  Administrative  Agent nor any Lender  Party  shall have any  obligation  to
inquire or determine whether such a confidentiality agreement exists.

         "CONSOLIDATED"  refers to the  consolidation  of accounts in accordance
with GAAP.

         "CONSOLIDATED  EBITDA"  means,  for any period,  (a)  Consolidated  Net
Income for such period PLUS (b) the sum of each of the  following  expenses that
have been deducted in the  determination of the Consolidated Net Income for such
period: (i) Consolidated  Interest Expense for such period,  (ii) all income tax
expense (whether federal,  state,  local,  foreign or otherwise) of the Borrower
and its  Subsidiaries  for such period,  (iii) all  depreciation  expense of the
Borrower and its Subsidiaries for such period, (iv) all amortization  expense of
the Borrower and its  Subsidiaries  for such  period,  and (v) all  nonoperating
expense  of the  Borrower  and  its  Subsidiaries  for  such  period  MINUS  all
nonoperating income of the Borrower and its Subsidiaries for such period.

         "CONSOLIDATED  EXCESS CASH FLOW" means,  for any period,  an amount (if
positive)  equal to Consolidated  EBITDA for such period MINUS the sum,  without
duplication,  of the  amounts  for such period of (a)  voluntary  and  scheduled
repayments of Debt (excluding  repayments of Revolving Credit Advances except to
the extent  Revolving Credit  Commitments are permanently  reduced in connection
with  such  prepayments)  by the  Borrower  and its  Subsidiaries,  (b)  Capital
Expenditures (net of any proceeds of any related financings with respect to such
expenditures)  made by the  Borrower  and  its  Subsidiaries,  (c)  Consolidated
Interest Expense and (d) all income

                                       7


<PAGE>


tax  expense  (whether  federal,  state,  local,  foreign or  otherwise)  of the
Borrower and its Subsidiaries.

         "CONSOLIDATED INTEREST EXPENSE" means, for any period, for the Borrower
and its Subsidiaries on a Consolidated  basis, all interest (net of all interest
income),  premium  payments,  fees,  charges and related expenses payable by the
Borrower and its  Subsidiaries  in  connection  with borrowed  money  (including
capitalized  interest)  or in  connection  with the deferred  purchase  price of
assets, in each case to the extent treated as interest in accordance with GAAP.

         "CONSOLIDATED  NET INCOME" means, for any period,  for the Borrower and
its  Subsidiaries  on a  Consolidated  basis,  the net  income  (or loss) of the
Borrower  and its  Subsidiaries  determined  in  accordance  with  GAAP for that
period.

         "CONSOLIDATED NET TANGIBLE ASSETS" means the aggregate amount of assets
(less applicable  reserves and other properly  deductible items) after deducting
therefrom (a) all current  liabilities  (excluding  any  indebtedness  for money
borrowed  having a  maturity  of less than 12  months  from the date of the most
recent  consolidated  balance  sheet of the  Borrower  but which by its terms is
renewable  or  extendable  beyond 12 months  from such date at the option of the
borrower), and (b) all goodwill, trade names, patents, unamortized debt discount
and expense and any other like intangibles,  all as set forth on the most recent
consolidated  balance  sheet of the  Borrower and  computed in  accordance  with
generally accepted accounting principles.

         "CONSTITUTIVE  DOCUMENTS"  means,  with  respect  to  any  Person,  the
certificate  of  incorporation  or  registration   (including,   if  applicable,
certificate  of change of  name),  articles  of  incorporation  or  association,
memorandum of association,  charter, bylaws, certificate of limited partnership,
partnership agreement, trust agreement, joint venture agreement,  certificate of
formation,  articles of organization,  limited  liability  company  operating or
members  agreement,  joint venture agreement or one or more similar  agreements,
instruments  or documents  constituting  the  organization  or formation of such
Person.

         "CONTINGENT   OBLIGATION"  means,  with  respect  to  any  Person,  any
Obligation or  arrangement  of such Person to guarantee or intended to guarantee
any Debt, leases,  dividends or other obligations ("PRIMARY OBLIGATIONS") of any
other  Person  (the  "PRIMARY  OBLIGOR")  in any  manner,  whether  directly  or
indirectly, including, without limitation, (a) the direct or indirect guarantee,
endorsement  (other than for  collection  or deposit in the  ordinary  course of
business),  co-making,  discounting  with recourse or sale with recourse by such
Person  of the  Obligation  of a primary  obligor,  (b) the  Obligation  to make
take-or-pay or similar  payments,  if required,  regardless of nonperformance by
any other party or parties to an agreement or (c) any Obligation of such Person,
whether or not  contingent,  (i) to purchase any such primary  obligation or any
property  constituting direct or indirect security therefor,  (ii) to advance or
supply funds (A) for the purchase or payment of any such primary  obligation  or
(B) to maintain  revolving  credit or equity  capital of the primary  obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property,  assets,  securities or services primarily for the purpose of
assuring the owner of any such primary  obligation of the ability of the primary
obligor to make payment of such primary  obligation or (iv)  otherwise to assure
or hold harmless the holder of such primary  obligation  against loss in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable  amount of the

                                       8


<PAGE>


primary  obligation in respect of which such Contingent  Obligation is made (or,
if less, the maximum amount of such primary obligation for which such Person may
be liable  pursuant to the terms of the instrument  evidencing  such  Contingent
Obligation)  or,  if  not  stated  or  determinable,   the  maximum   reasonably
anticipated  liability in respect  thereof  (assuming such Person is required to
perform thereunder), as determined by such Person in good faith.

         "CONTINUATION",  "CONTINUE", "CONTINUED" and "CONTINUING" each refer to
a  continuation  of a  Eurodollar  Rate  Advance as a  Eurodollar  Rate  Advance
pursuant to Section 2.09.

         "CONVERSION",  "CONVERT",  "CONVERTED" and "CONVERTING" each refer to a
conversion  of Advances of one Type into  Advances of the other Type pursuant to
Section 2.09 or 2.10.

         "DEBT"  means,  with  respect to any Person  (without  duplication  for
purposes of calculating  financial  ratios and compliance with Section  5.02(b))
(a) all  indebtedness of such Person for borrowed money,  (b) all Obligations of
such Person for the deferred  purchase price of property or services (other than
trade payables incurred in the ordinary course of such Person's  business),  (c)
all Obligations of such Person  evidenced by notes,  bonds,  debentures or other
similar  instruments,  or upon which interest payments are customarily made, (d)
all Obligations of such Person created or arising under any conditional  sale or
other title retention agreement with respect to property acquired by such Person
(even  though  the  rights  and  remedies  of the  seller or lender  under  such
agreement  in the event of default are limited to  repossession  or sale of such
property),  (e) all  Obligations  of such  Person  as lessee  under  Capitalized
Leases,  (f) all  Obligations,  contingent  or  otherwise,  of such Person under
acceptance,  letter of credit or similar facilities, (g) all Obligations of such
Person to purchase,  redeem,  retire,  defease or otherwise  make any payment in
respect  of any  Equity  Interests  in such  Person or any  other  Person or any
warrants,  rights or options to acquire such Equity  Interests,  valued,  in the
case of  Redeemable  Preferred  Interests,  at the greater of its  voluntary  or
involuntary  liquidation  preference PLUS accrued and unpaid dividends,  (h) all
Obligations  of such  Person  in  respect  of Hedge  Agreements,  valued  at the
Agreement Value thereof,  (i) all Obligations of such Person under any synthetic
lease,  tax  retention  operating  lease,  off-balance  sheet  loan  or  similar
off-balance sheet financing  classified as an operating lease in accordance with
GAAP,  if such  Obligations  would give rise to a claim against such Person in a
proceeding referred to in Section 6.01(f), (j) all Contingent  Obligations,  and
(k) all  indebtedness and other payment  Obligations  referred to in clauses (a)
through (j) above of another  Person secured by (or for which the holder of such
indebtedness or other payment  Obligations has an existing right,  contingent or
otherwise,  to  be  secured  by)  any  Lien  on  property  (including,   without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such  indebtedness or
other payment Obligations.

         "DEFAULT" means any Event of Default or any event that would constitute
an Event of Default but for the requirement  that notice be given or time elapse
or both.

         "DEFAULTED  ADVANCE"  means,  with  respect to any Lender  Party at any
time, the portion of any Advance required to be made by such Lender Party to the
Borrower  pursuant to Section 2.01 or 2.02 at or prior to such time that has not
been made by such Lender Party or by the Administrative Agent for the account of
such Lender Party pursuant to Section 2.02(e) as of such

                                       9


<PAGE>


time.  In the event that a portion of a Defaulted  Advance  shall be deemed made
pursuant to Section  2.16(a),  the remaining  portion of such Defaulted  Advance
shall be considered a Defaulted Advance originally  required to be made pursuant
to Section  2.01 on the same date as the  Defaulted  Advance  so deemed  made in
part.

         "DEFAULTED AMOUNT" means, with respect to any Lender Party at any time,
any amount required to be paid by such Lender Party to the Administrative  Agent
or any other Lender Party hereunder or under any other Loan Document at or prior
to such  time  that has not  been so paid as of such  time,  including,  without
limitation, any amount required to be paid by such Lender Party to (a) the Swing
Line Bank  pursuant  to Section  2.02(b)  to  purchase a portion of a Swing Line
Advance made by the Swing Line Bank,  (b) any Issuing  Bank  pursuant to Section
2.03(c) to purchase a portion of an L/C Borrowing,  (c) the Administrative Agent
pursuant to Section 2.02(e) to reimburse the Administrative Agent for the amount
of any Advance made by the  Administrative  Agent for the account of such Lender
Party,  (d) any other  Lender  Party  pursuant to Section  2.14 to purchase  any
participation  in  Advances  owing  to  such  other  Lender  Party  and  (e) the
Administrative  Agent or any Issuing Bank  pursuant to Section 7.05 to reimburse
the  Administrative  Agent or such Issuing Bank for such Lender Party's  ratable
share  of  any  amount  required  to be  paid  by  the  Lender  Parties  to  the
Administrative Agent or such Issuing Bank as provided therein. In the event that
a portion  of a  Defaulted  Amount  shall be deemed  paid  pursuant  to  Section
2.16(b),  the remaining  portion of such Defaulted  Amount shall be considered a
Defaulted  Amount  originally  required to be paid  hereunder or under any other
Loan Document on the same date as the Defaulted Amount so deemed paid in part.

         "DEFAULTING  LENDER" means, at any time, any Lender Party that, at such
time, (a) owes a Defaulted  Advance or a Defaulted  Amount or (b) shall take any
action or be the  subject of any action or  proceeding  of a type  described  in
Section 6.01(f).

         "DISCLOSED LITIGATION" has the meaning specified in Section 3.01(d).

         "DISQUALIFIED  STOCK" has the  meaning set forth in that  certain  U.S.
Dollar Indenture dated as of January 18, 2001 between the Borrower and Citibank,
N.A., as trustee,  and that certain Euro Indenture  dated as of January 18, 2001
between the Borrower and Citibank, N.A., as trustee.

         "DOCUMENTATION  AGENT"  has the  meaning  specified  in the  recital of
parties to this Agreement.

         "DOLLARS" and "$" each mean lawful money of the United States.

         "DOMESTIC  LETTERS  OF CREDIT"  has the  meaning  specified  in Section
2.01(e).

         "DOMESTIC  RECEIVABLES"  means all obligations of any obligor  (whether
now  existing  or  hereafter  arising)  under a  contract  for  sale of goods or
services by Domestic Subsidiaries, which includes any obligation of such obligor
(whether now existing or hereafter arising) to pay interest,  finance charges or
amounts  with  respect  thereto,  and,  with  respect  to any  of the  foregoing
receivables  or  obligations,  (a) all of the  interest  of the  Borrower or its
Domestic  Subsidiaries in the goods (including returned goods) the sale of which
gave rise to such receivable or obligation after the passage of title thereto to
any obligor,  (b) all other Liens and

                                       10


<PAGE>


property  subject thereto from time to time purporting to secure payment of such
receivables or obligations, (c) all guaranties, insurance, letters of credit and
other  agreements  or  arrangements  of  whatever  character  from  time to time
supporting or securing payment of any such  receivables or obligations,  (d) all
books  and  records  relating  to the  foregoing,  lockbox  accounts  containing
primarily   proceeds  of  the  foregoing,   and  other  similar  related  assets
customarily transferred (or in which security interests are customarily granted)
to purchasers in  receivables  purchase  transactions  that are treated as sales
under GAAP,  (e) all rights of the  Borrower  or its  Domestic  Subsidiaries  to
refunds on account  of value  added tax in respect of goods sold to an  obligor,
any receivable from whom is or becomes a defaulted receivable,  and (f) proceeds
of or judgments relating to any of the foregoing,  any debts represented thereby
and all rights of action against any Person in connection therewith.

         "DOMESTIC  SUBSIDIARY"  means any  Subsidiary  of the Borrower  that is
incorporated  or  organized  in the  United  States,  any state  thereof  or the
District of Columbia.

         "ELIGIBLE  ASSIGNEE"  means (a) with  respect to the  Revolving  Credit
Facility,  (i) a Revolving Credit Lender;  (ii) a Lender (other than a Revolving
Credit  Lender) or an Affiliate or an Approved Fund of a Lender  approved by the
Issuing Banks and the Swing Line Bank; or (iii) any other Person approved by (A)
the Administrative  Agent, (B) the Issuing Banks and the Swing Line Bank and (C)
so long as no Event of Default has  occurred and is  continuing  at the time the
related  assignment is effected  pursuant to Section 8.07,  the Borrower (in any
case, such approval not to be unreasonably  withheld or delayed and, in the case
of the  Borrower,  such approval to be deemed to have been given if no objection
thereto is received by the Administrative  Agent and the assigning Lender within
five Business Days after the date on which notice of the proposed  assignment is
provided to the Borrower);  (b) with respect to the Tranche A Term Facility, (i)
a Lender;  (ii) an Affiliate or an Approved Fund of a Lender; or (iii) any other
Person approved by (A) the  Administrative  Agent and (B) so long as no Event of
Default has occurred and is  continuing  at the time the related  assignment  is
effected  pursuant to Section 8.07, the Borrower (in either case,  such approval
not to be  unreasonably  withheld or delayed  and, in the case of the  Borrower,
such  approval  to be deemed  to have  been  given if no  objection  thereto  is
received  by the  Administrative  Agent and the  assigning  Lender  within  five
Business  Days  after the date on which  notice of the  proposed  assignment  is
provided to the  Borrower);  and (c) with respect to the Tranche B Term Facility
(i) a Lender;  (ii) an Affiliate or an Approved  Fund of a Lender;  or (iii) any
other Person  approved by the  Administrative  Agent;  PROVIDED,  HOWEVER,  that
neither any Loan Party nor any  Affiliate  of a Loan Party  shall  qualify as an
Eligible Assignee under this definition.

         "ENVIRONMENTAL  ACTION" means any action, suit, demand,  demand letter,
claim,  notice of noncompliance  or violation,  notice of liability or potential
liability,  investigation,  proceeding, consent order or consent agreement under
any Environmental Law, any Environmental Permit or Hazardous Material or arising
from alleged injury or threat to health,  safety or the environment,  including,
without limitation, (a) by any Governmental Authority for enforcement,  cleanup,
removal,  response,  remedial  or  other  actions  or  damages  and  (b)  by any
Governmental   Authority  or  any  other   Person  for  damages,   contribution,
indemnification, cost recovery, compensation or injunctive relief.

                                       11


<PAGE>


         "ENVIRONMENTAL LAW" means any federal, state, local or foreign statute,
law,  ordinance,  rule,  regulation,  code, order, writ,  judgment,  injunction,
decree or judicial  or agency  interpretation,  policy or  guidance  relating to
pollution or protection of the environment, health, safety or natural resources,
including,   without   limitation,   those   relating  to  the  use,   handling,
transportation,  treatment, storage, disposal, release or discharge of Hazardous
Materials.

         "ENVIRONMENTAL  PERMIT"  means  any  permit,  approval,  identification
number, license or other authorization required under any Environmental Law.

         "EQUIPMENT  FINANCING  TRANSACTION" means any financing with any Person
of equipment which will be treated as Debt.

         "EQUITY INTERESTS" means, with respect to any Person, all of the shares
of capital stock of (or other ownership or profit interests in) such Person, all
of the warrants,  options or other rights for the purchase or  acquisition  from
such  Person  of  shares  of  capital  stock of (or  other  ownership  or profit
interests  in)  such  Person,   all  of  the  securities   convertible  into  or
exchangeable  for  shares  of  capital  stock of (or other  ownership  or profit
interests  in) such Person or  warrants,  rights or options for the  purchase or
acquisition from such Person of such shares (or such other  interests),  and all
of the other ownership or profit  interests in such Person  (including,  without
limitation,  partnership,  member or trust interests therein), whether voting or
nonvoting,  and whether or not such shares,  warrants,  options, rights or other
interests are outstanding on any date of determination.

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

         "ERISA   AFFILIATE"  means  any  trade  or  business  (whether  or  not
incorporated)  under  common  control  with the  Borrower  within the meaning of
Section 414(b) or (c) of the Internal  Revenue Code (and Sections 414(m) and (o)
of the Internal Revenue Code for purposes of provisions  relating to Section 412
of the Internal Revenue Code).

         "ERISA EVENT" means (a)(i) the occurrence of a reportable event, within
the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice  requirement  with  respect to such event has been  waived by the PBGC or
(ii) the  requirements  of paragraph  (1) of Section  4043(b) of ERISA  (without
regard to paragraph (2) of such Section) are met with respect to a  contributing
sponsor,  as defined in Section  4001(a)(13)  of ERISA,  of a Plan, and an event
described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
occurs  with  respect  to such  Plan  within  the  following  30  days;  (b) the
application  for a  minimum  funding  waiver  with  respect  to a Plan;  (c) the
provision  by the  administrator  of any Plan of a notice of intent to terminate
such Plan  pursuant to Section  4041(a)(2) of ERISA  (including  any such notice
with respect to a plan amendment  referred to in Section 4041(e) of ERISA);  (d)
the cessation of operations at a facility of the Borrower or any ERISA Affiliate
in the  circumstances  described in Section 4062(e) of ERISA; (e) the partial or
complete  withdrawal  by the  Borrower  or any ERISA  Affiliate  from a Multiple
Employer  Plan during a plan year for which it was a  substantial  employer,  as
defined in Section  4001(a)(2)  of ERISA which would  reasonably  be expected to
result in  liability  to the  Borrower or any of its  Subsidiaries  of more than
$10,000,000;  (f) the  imposition of a Lien under  Section  302(f) of ERISA with
respect to any Plan;  (g) the adoption of

                                       12


<PAGE>


an amendment to a Plan requiring the provision of security to such Plan pursuant
to Section 307 of ERISA;  or (h) the  institution  by the PBGC of proceedings to
terminate a Plan  pursuant to Section 4042 of ERISA,  or the  occurrence  of any
event or condition described in Section 4042 of ERISA, which would reasonably be
expected to constitute  grounds for the  termination of, or the appointment of a
trustee to administer, such Plan.

         "EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D of
the Board of Governors of the Federal Reserve System,  as in effect from time to
time.

         "EURODOLLAR LENDING OFFICE" means, with respect to each of the Lenders,
the office of such Lender specified as its "Eurodollar  Lending Office" opposite
its name on the  signature  pages  hereof or in the  Assignment  and  Acceptance
pursuant to which it became a Lender,  as the case may be (or, if no such office
is specified, its Base Rate Lending Office), or such other office of such Lender
as  such  Lender  may  from  time  to  time  specify  to the  Borrower  and  the
Administrative Agent for such purpose.

         "EURODOLLAR  RATE" means,  for any Interest  Period for all  Eurodollar
Rate Advances comprising part of the same Borrowing,

                  (a) the rate per  annum  equal to the rate  determined  by the
         Administrative Agent to be the offered rate that appears on the page of
         the Telerate screen (or any successor thereto) that displays an average
         British Bankers  Association  Interest  Settlement Rate for deposits in
         Dollars (for delivery on the first day of such Interest  Period) with a
         term equivalent to such Interest Period, determined as of approximately
         11:00 A.M.  (London  time) two Business  Days prior to the first day of
         such Interest Period, or

                  (b) if the rate  referenced  in the preceding  subsection  (a)
         does not appear on such page or  service or such page or service  shall
         cease to be available,  the rate per annum equal to the rate determined
         by the  Administrative  Agent to be the offered rate on such other page
         or other service that displays an average British  Bankers  Association
         Interest  Settlement  Rate for deposits in Dollars (for delivery on the
         first  day of such  Interest  Period)  with a term  equivalent  to such
         Interest  Period,  determined as of  approximately  11:00 A.M.  (London
         time) two Business Days prior to the first day of such Interest Period,
         or

                  (c) if the rates  referenced in the preceding  subsections (a)
         and (b)  are not  available,  the  rate  per  annum  determined  by the
         Administrative  Agent as the rate of  interest  (rounded  upward to the
         next  1/100th of 1%) at which  deposits in Dollars for  delivery on the
         first day of such Interest  Period in same day funds in the approximate
         amount of the Eurodollar  Rate Loan being made,  continued or converted
         by Bank of America and with a term  equivalent to such Interest  Period
         would be offered by Bank of America's  London  Branch to major banks in
         the offshore Dollar market at their request at approximately 11:00 A.M.
         (London time) two Business Days prior to the first day of such Interest
         Period.

                                       13


<PAGE>


         "EURODOLLAR  RATE  ADVANCE"  means an Advance  that bears  interest  as
provided in Sections 2.07(a)(i)(B) and 2.07(a)(ii)(B).

         "EURODOLLAR  RATE RESERVE  PERCENTAGE"  for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing means the reserve
percentage  applicable  two Business  Days before the first day of such Interest
Period under  regulations  issued from time to time by the Board of Governors of
the  Federal  Reserve  System (or any  successor)  for  determining  the maximum
reserve requirement (including, without limitation, any emergency,  supplemental
or other marginal reserve  requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities  or assets  consisting of or
including  Eurocurrency  Liabilities  (or with respect to any other  category of
liabilities  that  includes  deposits by reference to which the interest rate on
Eurodollar  Rate  Advances is  determined)  having a term equal to such Interest
Period.

         "EVENTS OF DEFAULT" has the meaning specified in Section 6.01.

         "EVERGREEN  LETTER OF  CREDIT"  has the  meaning  specified  in Section
2.01(e)(ii).

         "EXCHANGE  ACT" means the  Securities  Exchange Act of 1934, as amended
from  time to time,  and the  regulations  promulgated  and the  rulings  issued
thereunder.

         "EXCHANGE  RATE"  means,  on any date  when an  amount  expressed  in a
currency  other than Dollars is to be  determined  with respect to any Letter of
Credit,  the nominal rate of exchange of the applicable  Issuing Bank in the New
York  foreign  exchange  market for the  purchase by such Issuing Bank (by cable
transfer) of such currency in exchange for Dollars at 12:00 noon (New York time)
two  Business  Days prior to such date,  expressed  as a number of units of such
currency per one Dollar.

         "EXISTING  CREDIT   AGREEMENTS"  has  the  meaning   specified  in  the
Preliminary Statements to this Agreement.

         "EXISTING  LETTERS OF CREDIT"  means those  letters of credit listed on
Schedule 1.01(b) hereto.

         "FACILITY"  means  the  Tranche  A Term  Facility,  the  Tranche B Term
Facility or the Revolving Credit Facility, as the context may require.

         "FEDERAL  FUNDS RATE" means,  for any day, the rate per annum  (rounded
upward to the nearest 1/100 of 1%) equal to the weighted average of the rates on
overnight Federal funds  transactions with members of the Federal Reserve System
arranged  by Federal  funds  brokers on such day,  as  published  by the Federal
Reserve Bank on the Business Day next succeeding such day;  provided that (a) if
such day is not a Business  Day,  the  Federal  Funds Rate for such day shall be
such  rate  on  such  transactions  on the  next  preceding  Business  Day as so
published  on the next  succeeding  Business  Day, and (b) if no such rate is so
published on such next succeeding  Business Day, the Federal Funds Rate for such
day shall be the  average  rate  charged  to Bank of America on such day on such
transactions as determined by the Administrative Agent.

                                       14


<PAGE>


         "FINSERV" means Levi Strauss & Co. Financial Services,  S.A., a Belgium
corporation, and any successors.

         "FISCAL  QUARTER"  means,  with  respect to the  Borrower or any of its
Subsidiaries,  the period  commencing  on the Monday  immediately  following the
fourth  Sunday in November in any Fiscal Year and ending on the fourth Sunday of
the next succeeding  February,  the period commencing on the Monday  immediately
following  the fourth  Sunday in  February  in any Fiscal Year and ending on the
fourth Sunday of the next  succeeding  May, the period  commencing on the Monday
immediately  following the fourth Sunday in May in any Fiscal Year and ending on
the fourth Sunday of the next succeeding  August or the period commencing on the
Monday immediately  following the fourth Sunday in August in any Fiscal Year and
ending on the fourth Sunday of the next succeeding November,  as the context may
require, or, if any such Subsidiary was not in existence on the first day of any
such  period,  the period  commencing  on the date on which such  Subsidiary  is
incorporated,  organized, formed or otherwise created and ending on the last day
of such period.

         "FISCAL  YEAR"  means,  with  respect  to  the  Borrower  or any of its
Subsidiaries,  the period  commencing  on the Monday  immediately  following the
fourth  Sunday in November in any calendar  year and ending on the fourth Sunday
of the next succeeding  November or, if any such Subsidiary was not in existence
on such day in November in any calendar year, the period  commencing on the date
on which such Subsidiary is incorporated, organized, formed or otherwise created
and ending on the fourth Sunday of the next succeeding November.

         "FIXED CHARGE COVERAGE RATIO" means,  for any period,  the ratio of (a)
(i) Consolidated  EBITDA for such period, LESS (ii) the sum of (A) the aggregate
amount of all Capital  Expenditures  made by the Borrower  and its  Subsidiaries
during  such period PLUS (B) all income tax  expense  (whether  federal,  state,
local,  foreign or  otherwise)  of the  Borrower and its  Subsidiaries  for such
period to (b) the sum of (i) Consolidated Interest Expense for such period, (ii)
the  aggregate  principal  amount (or the  equivalent  thereto) of all  Required
Principal  Payments of the  Borrower  and its  Subsidiaries  for such period and
(iii) the aggregate amount of all Cash Distributions made by or on behalf of the
Borrower during such period.

         "FOREIGN  AFFILIATE  ISSUING BANK" means (a) an Affiliate of an Issuing
Bank organized under the laws of a country other than the United States or (b) a
branch of an Issuing  Bank  doing  business  in a country  other than the United
States.

          "FOREIGN  GOVERNMENT  SCHEME OR ARRANGEMENT" has the meaning specified
in Section 4.01(o).

         "FOREIGN  LETTERS  OF  CREDIT"  has the  meaning  specified  in Section
2.01(e).

         "FOREIGN  LETTER  OF CREDIT  SUBLIMIT"  means,  at any time,  an amount
designated by the Borrower on the most recent Foreign Letter of Credit  Sublimit
Notice.  As of the  Closing  Date,  the  Foreign  Letter of Credit  Sublimit  is
$43,000,000.

         "FOREIGN LETTER OF CREDIT SUBLIMIT NOTICE" has the meaning specified in
Section 2.01(e)(i).

                                       15


<PAGE>


         "FOREIGN PLAN" has the meaning specified in Section 4.01(o).

         "FOREIGN  PLEDGE  AGREEMENT"  means each  pledge  agreement  or similar
instrument  governed  by the laws of a country  other  than the  United  States,
executed and delivered by the Borrower or any Material Domestic  Subsidiary that
owns Equity Interests of one or more Pledged Foreign  Subsidiaries  organized in
such country, in form and substance satisfactory to Administrative Agent.

         "FOREIGN RECEIVABLES" means all obligations of any obligor (whether now
existing or hereafter arising) under a contract for sale of goods or services by
Foreign Subsidiaries, which includes any obligation of such obligor (whether now
existing or hereafter arising) to pay interest,  finance charges or amounts with
respect  thereto,  and,  with  respect to any of the  foregoing  receivables  or
obligations,  (a) all of the  interest  of  Foreign  Subsidiaries  in the  goods
(including  returned  goods) the sale of which gave rise to such  receivable  or
obligation  after the  passage of title  thereto to any  obligor,  (b) all other
Liens  and  property  subject  thereto  from time to time  purporting  to secure
payment of such  receivables  or  obligations,  (c) all  guaranties,  insurance,
letters of credit and other  agreements or  arrangements  of whatever  character
from time to time  supporting  or securing  payment of any such  receivables  or
obligations,  (d) all books  and  records  relating  to the  foregoing,  lockbox
accounts  containing  primarily  proceeds of the  foregoing,  and other  similar
related  assets  customarily  transferred  (or in which  security  interests are
customarily granted) to purchasers in receivables purchase transactions that are
treated as sales under GAAP, (e) all rights of Foreign  Subsidiaries  to refunds
on account  of value  added tax in  respect  of goods  sold to an  obligor,  any
receivable from whom is or becomes a defaulted  receivable,  and (f) proceeds of
or judgments relating to any of the foregoing, any debts represented thereby and
all rights of action against any Person in connection therewith.

         "FOREIGN SUBSIDIARY" means any Subsidiary of the Borrower, other than a
Domestic Subsidiary.

         "FUNDED CURRENT  LIABILITY  PERCENTAGE" means "funded current liability
percentage"  within the meaning of Section  412(1)(8)(B) of the Internal Revenue
Code.

         "FUNDED DEBT" of any Person means,  at any date of  determination,  all
Debt of such Person that would (or would be required  to) appear as  liabilities
on a Consolidated balance sheet of such Person.

         "GAAP" has the meaning specified in Section 1.03.

         "GOVERNMENTAL  AUTHORITY"  means any nation or  government,  any state,
province, city, municipal entity or other political subdivision thereof, and any
governmental,  executive,  legislative,  judicial,  administrative or regulatory
agency, department,  authority,  instrumentality,  commission,  board or similar
body, whether federal, state, provincial, territorial, local or foreign.

         "GOVERNMENTAL   AUTHORIZATION"   means  any  authorization,   approval,
consent,  franchise,  license,  covenant, order, ruling, permit,  certification,
exemption, notice, declaration or similar right, undertaking or other action of,
to or by, or any filing,  qualification  or registration  with, any Governmental
Authority.

                                       16


<PAGE>


         "GRANTING LENDER" has the meaning specified in Section 8.07(j).

         "GUARANTEED  OBLIGATIONS" has the meaning specified in Section 1 of the
Subsidiary Guaranty, as the context may require.

         "HAZARDOUS  MATERIALS"  means  (a)  petroleum  or  petroleum  products,
by-products or breakdown products,  radioactive  materials,  asbestos-containing
materials,  polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials  or  substances  designated,  classified  or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.

         "HEDGE  AGREEMENTS"  means (a) any and all interest  rate swaps,  basis
swaps,  credit derivative  transactions,  forward rate  transactions,  commodity
swaps,  commodity options,  forward commodity contracts,  equity or equity index
swaps or  options,  bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward  bond index  transactions,  interest  rate
options,  forward  foreign  exchange  transactions,   cap  transactions,   floor
transactions,  collar transactions,  currency swaps,  cross-currency rate swaps,
currency  options,  spot  contracts  or any other  similar  transactions  or any
combination of any of the foregoing  (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master  agreement,  and (b) any and all  transactions  of any kind,  and the
related  confirmations,  which are  subject to the terms and  conditions  of, or
governed by, any form of master agreement  published by the International  Swaps
and Derivatives  Association,  Inc., the  International  Foreign Exchange Master
Agreement,  or any other master  agreement,  including any such  obligations  or
liabilities under any such agreement.

         "HEDGE BANK" means Bank of America,  Citibank,  N.A.,  The Bank of Nova
Scotia,  Morgan  Guaranty  Trust Company of New York,  Bank One, NA, Fleet Bank,
N.A.  or any of their  respective  Affiliates,  in its  capacity as a party to a
Hedge Agreement.

         "HEDGE BANK HEDGE  AGREEMENT" means any Ordinary Course Hedge Agreement
that is entered  into by and between the  Borrower or FinServ and any Hedge Bank
that is subject to a legally  enforceable netting agreement between the Borrower
or FinServ, as the case may be, and such Hedge Bank.

         "HONOR DATE" has the meaning specified in Section 2.03(c).

         "INDEMNIFIED COSTS" has the meaning specified in Section 7.05(a).

         "INDEMNIFIED PARTY" has the meaning specified in Section 8.04(b).

         "INDENTURES"  means that certain Indenture dated as of November 6, 1996
between the Borrower and  Citibank,  N.A., as trustee,  and that certain  Fiscal
Agency  Agreement  dated as of November 22, 1996 between  Company and  Citibank,
N.A., as fiscal agent.

         "INELIGIBLE  SECURITIES" means securities which may not be underwritten
or dealt in by member banks of the Federal  Reserve  System under  Section 16 of
the Banking Act of 1933 (12 U.S.C. ss. 24, Seventh), as amended.

                                       17


<PAGE>


         "INFORMATION   MEMORANDUM"  means  the  information   memorandum  dated
December 2000 used by the Co-Lead  Arrangers in connection  with the syndication
of the Commitments.

         "INITIAL  EXTENSION  OF  CREDIT"  means,   collectively,   the  initial
Borrowings under one or more of the Facilities,  and/or the initial issuances of
one or more Letters of Credit, made on the Closing Date.

         "INITIAL  ISSUING  BANKS" has the meaning  specified  in the recital of
parties to this Agreement.

         "INITIAL  LENDERS" has the meaning  specified in the recital of parties
to this Agreement.

         "INSUFFICIENCY" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

         "INSURANCE  RECEIPT"  means any cash  received by or paid to or for the
account of any Person as proceeds of insurance  (other than proceeds of business
interruption  insurance to the extent such proceeds constitute  compensation for
lost earnings) and condemnation awards (and payments in lieu thereof); PROVIDED,
HOWEVER,  that so  long as no  Event  of  Default  shall  have  occurred  and be
continuing,  an Insurance  Receipt shall not include cash receipts received from
proceeds of insurance or  condemnation  awards (or payments in lieu  thereof) to
the  extent  that such  proceeds  or awards  (a) in respect of loss or damage to
equipment,  fixed  assets or real  property  are applied (or in respect of which
expenditures were previously incurred) to replace or repair the equipment, fixed
assets or real  property  in respect of which such  proceeds  were  received  in
accordance  with the terms of the Loan  Documents,  or (b) are  received  by any
Person in respect of any third  party claim  against  such Person and applied to
pay (or to  reimburse  such Person for its prior  payment of) such claim and the
costs and expenses of such Person with respect thereto.

         "INTELLECTUAL  PROPERTY"  means all  patents,  trademarks,  tradenames,
copyrights,  technology,  software,  know-how and processes used in or necessary
for  the  conduct  of the  business  of the  Borrower  and its  Subsidiaries  as
currently conducted that are material to the condition (financial or otherwise),
business or operations of the Borrower and its Subsidiaries, taken as a whole.

         "INTEREST  COVERAGE  RATIO"  means,  for any  period,  the ratio of (a)
Consolidated  EBITDA for such period to (b)  Consolidated  Interest  Expense for
such period.

         "INTEREST  PERIOD" means,  for each Eurodollar Rate Advance  comprising
part of the same Borrowing, the period commencing on the date of such Eurodollar
Rate  Advance or the date of the  Conversion  of any Base Rate Advance into such
Eurodollar  Rate Advance,  and ending on the last day of the period  selected by
the Borrower pursuant to the provisions below and,  thereafter,  each subsequent
period commencing on the last day of the immediately  preceding  Interest Period
and ending on the last day of the period  selected by the  Borrower  pursuant to
the provisions  below.  The duration of each such Interest  Period shall be one,
two,  three or six months,  as the  Borrower  may,  upon notice  received by the
Administrative  Agent not later than 9:00 A.M. (San Francisco,  California time)
on the  third  Business  Day prior to the  first  day of such  Interest  Period,
select; PROVIDED, HOWEVER, that:

                                       18


<PAGE>


                  (a) the  Borrower  may not select  any  Interest  Period  with
         respect to any Eurodollar Rate Advance under a Facility that ends after
         any principal  repayment  installment  date for such  Facility  unless,
         after giving effect to such selection,  the aggregate  principal amount
         of Base Rate Advances and of Eurodollar  Rate Advances  having Interest
         Periods that end on or prior to such  principal  repayment  installment
         date  for such  Facility  shall  be at  least  equal  to the  aggregate
         principal  amount of Advances under such Facility due and payable on or
         prior to such date;

                  (b)  whenever  the  last  day of  any  Interest  Period  would
         otherwise  occur on a day other  than a Business  Day,  the last day of
         such Interest  Period shall be extended to occur on the next succeeding
         Business Day;  PROVIDED,  HOWEVER,  that, if such extension would cause
         the last day of such  Interest  Period  to occur in the next  following
         calendar month, the last day of such Interest Period shall occur on the
         immediately preceding Business Day;

                  (c) whenever the first day of any Interest  Period occurs on a
         day of an  initial  calendar  month for which  there is no  numerically
         corresponding  day in the  calendar  month that  succeeds  such initial
         calendar month by the number of months equal to the number of months in
         such  Interest  Period,  such  Interest  Period  shall  end on the last
         Business Day of such succeeding calendar month; and

                  (d) no Interest Period shall extend beyond the Termination
                      Date.

         "INTERNAL  REVENUE  CODE" means the Internal  Revenue Code of 1986,  as
amended  from time to time,  and the  regulations  promulgated  and the  rulings
issued thereunder.

         "INVESTMENT"  means, with respect to any Person, any loan or advance to
such Person,  any purchase or other  acquisition of Equity  Interests in or Debt
of, or the property and assets  comprising a division or business unit or all or
a substantial part of the business of, such Person, any capital  contribution to
such  Person  or  any  other  investment  in  such  Person,  including,  without
limitation,  any  acquisition  by way of a merger or  consolidation  (or similar
transaction)  and any arrangement  pursuant to which the investor incurs Debt of
the types referred to in clause (j) or (k) of the definition of "DEBT" set forth
in this  Section 1.01 in respect of such  Person.  The amount of any  Investment
shall be the original  cost of such  Investment  PLUS the cost of all  additions
thereto,  without any  adjustments  for  increases  or  decreases  in value,  or
write-ups, write downs or write-offs with respect to such Investment (other than
adjustments  for the repayment of, or the refund of capital with respect to, the
original principal amount of any such Investment).

         "IRS"  means  the  Internal  Revenue  Service,   and  any  Governmental
Authority  succeeding  to any of its  principal  functions  under  the  Internal
Revenue Code.

         "ISSUING BANK FOREIGN LETTER OF CREDIT  SUBLIMIT" means, at any date of
determination  and for each Issuing Bank, the amount  designated by the Borrower
on the most recent  Foreign  Letter of Credit  Sublimit  Notice for such Issuing
Bank.  As of the  Closing  Date,  the  Issuing  Bank  Foreign  Letter  of Credit
Sublimits are as follows:

                           -------------------------------- ------------------
                           Bank of America                  $20,000,000
                           -------------------------------- ------------------

                                       19


<PAGE>


                           -------------------------------- ------------------
                           Citibank                         $19,000,000
                           -------------------------------- ------------------
                           -------------------------------- ------------------
                           ABN AMRO                         $4,000,000
                           -------------------------------- ------------------


         "ISSUING BANKS" means,  collectively,  the Initial  Issuing Banks,  the
Foreign  Affiliate  Issuing Banks and any other  commercial bank organized under
the  laws  of  the  United  States  and   designated  by  the  Borrower  to  the
Administrative Agent from time to time.

         "L/C  BORROWING"  means a borrowing  resulting from a drawing under any
Letter  of  Credit  which  has not  been  reimbursed  on the date  when  made or
refinanced as a Revolving Credit Borrowing.

         "L/C CASH COLLATERAL  ACCOUNT" has the meaning  specified in Section 11
of the Pledge and Security Agreement.

         "L/C  RELATED   DOCUMENTS"   has  the  meaning   specified  in  Section
2.03(c)(v).

         "LENDER PARTY" means any Lender, any Issuing Bank or the Swing Line
          Bank.

         "LENDERS" means, collectively, the Initial Lenders and each Person that
becomes a Lender  pursuant to Section 8.07 for so long as such Initial Lender or
Person, as the case may be, shall be a party to this Agreement.

         "LETTERS OF CREDIT" has the meaning specified in Section 2.01(e).

         "LETTER OF CREDIT ADVANCE" means, with respect to each Revolving Credit
Lender,  such Revolving  Credit Lender's  participation  in any L/C Borrowing in
accordance with its Pro Rata Share.

         "LETTER  OF CREDIT  AGREEMENT"  has the  meaning  specified  in Section
2.03(a).

         "LETTER OF CREDIT  SUBLIMIT"  means,  at any time,  an amount  equal to
$250,000,000, as such amount may be reduced at or prior to such time pursuant to
Section 2.05.

         "LEVERAGE RATIO" means, at any date of determination,  the ratio of (a)
all  Funded  Debt of the  Borrower  and  its  Subsidiaries  on such  date to (b)
Consolidated EBITDA for the most recently completed  Measurement Period prior to
such date for which the Required Financial  Information has been delivered under
Section 5.03(b) or (c), as the case may be.

         "LIEN"  means,  with  respect to any  Person,  (a) any  mortgage,  lien
(statutory or other), pledge, hypothecation,  security interest, charge or other
preferential  arrangement  or  encumbrance  of  any  kind  (including,   without
limitation,  any  agreement  to give  any of the  foregoing),  (b)  any  sale of
accounts receivable or chattel paper, or any assignment,  deposit arrangement or
lease intended as, or having the effect of, security, (c) any easement, right of
way or other  encumbrance on title to real property or (d) any other interest or
title of any vendor,  lessor, lender or other secured party to or of such Person
under any conditional sale or other title

                                       20


<PAGE>


retention  agreement  or any  Capitalized  Lease or upon or with  respect to any
property or asset of such  Person  (including,  in the case of Equity  Interests
(other than Equity Interests in the Borrower), voting trust agreements and other
similar arrangements).

         "LOAN  DOCUMENTS"  means,  collectively,   (a)  for  purposes  of  this
Agreement  and the Notes and any  amendment,  supplement  or other  modification
hereof or thereof  and for all other  purposes  other than for  purposes  of the
Subsidiary Guaranty and the Collateral Documents,  (i) this Agreement,  (ii) the
Notes, (iii) the Subsidiary Guaranty, (iv) the Collateral Documents and (v) each
Letter of Credit  Agreement and (b) for purposes of the Subsidiary  Guaranty and
the  Collateral  Documents,  (i) this  Agreement,  (ii)  the  Notes,  (iii)  the
Subsidiary Guaranty,  (iv) the Collateral  Documents,  (v) each Letter of Credit
Agreement  and (vi) each Hedge Bank Hedge  Agreement,  in each case as  amended,
supplemented  or otherwise  modified  hereafter  from time to time in accordance
with the terms thereof and Section 8.01.

         "LOAN  PARTIES"  means,  collectively,  the  Borrower  and  each of the
Material Domestic  Subsidiaries of the Borrower party to the Subsidiary Guaranty
or any of the Collateral Documents.

         "LOS/DOS BUSINESS" means the ownership and operation by the Borrower or
a Subsidiary of the Borrower,  whether  directly or through joint  ventures with
third parties in  partnership,  corporate or other form,  of businesses  engaged
solely in selling  apparel  and  accessories  and  related  products  including,
without  limitation,  selling  through retail stores,  outlet stores,  telephone
sales,  catalog or other mail orders,  and electronic  sales.  LOS/DOS  Business
shall not include any business  engaging in  manufacturing  or in selling and in
manufacturing.

         "LSFCC" means Levi Strauss Financial Center  Corporation,  a California
corporation,  formerly Levi Strauss Credit Corp., a California corporation,  and
any successors.

         "LSFLLC" means Levi Strauss Funding,  LLC, a Delaware limited liability
company, and any successors.

         "MARGIN STOCK" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal  Reserve  System as in effect from time to
time.

         "MATERIAL  ADVERSE  CHANGE"  means any material  adverse  change in the
business, assets, liabilities (actual or contingent),  operations,  performance,
properties,  condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries, taken as a whole.

         "MATERIAL  ADVERSE  EFFECT" means a material  adverse effect on (a) the
business, assets, liabilities (actual or contingent),  operations,  performance,
properties,  condition (financial or otherwise) or prospects of the Borrower and
its  Subsidiaries,  taken  as a  whole,  (b)  the  rights  and  remedies  of the
Administrative  Agent or any Lender  Party  under any Loan  Document  or (c) the
ability of any Loan Party to perform its Obligations  under any Loan Document to
which it is or is to be a party.

         "MATERIAL DOMESTIC  SUBSIDIARY" means any Domestic Subsidiary that is a
Material Subsidiary.

                                       21


<PAGE>


         "MATERIAL FOREIGN  SUBSIDIARY"  means any Foreign  Subsidiary that is a
Material Subsidiary.

         "MATERIAL SUBSIDIARY" means (a) any Subsidiary of the Borrower, (i) the
net book value of which is  $5,000,000  or more or (ii) the annual gross revenue
of which is  $15,000,000  or more and (b) any other  Subsidiary  of the Borrower
designated  by the Borrower to be a "MATERIAL  SUBSIDIARY"  for purposes of this
Agreement.

         "MEASUREMENT  PERIOD"  means,  at any date of  determination,  the most
recently  completed  four  consecutive  Fiscal  Quarters  of the  Borrower on or
immediately prior to such date.

         "MOODY'S" means Moody's Investors Service, Inc.

         "MORTGAGES" has the meaning specified in Section 3.01(a)(iii).

         "MORTGAGE POLICIES" has the meaning specified in Section 3.01(a)(iii).

         "MULTIEMPLOYER  PLAN" means a multiemployer plan (as defined in Section
4001(a)(3) of ERISA) to which any Loan Party or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.

          "MULTIPLE  EMPLOYER PLAN" means a single  employer plan (as defined in
Section  4001(a)(15)  of ERISA) that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than the Loan Parties
and the ERISA  Affiliates or (b) was so  maintained  and in respect of which any
Loan Party or any ERISA Affiliate could reasonably be expected to have liability
under  Section  4064 or 4069 of ERISA in the event such plan has been or were to
be terminated.

         "NET CASH PROCEEDS" means, with respect to any sale, lease, transfer or
other disposition of any property or asset, or the incurrence or issuance of any
Debt,  or the sale or issuance of any Equity  Interests  (including  any capital
contribution) in any Person,  or any Insurance Receipt received by or paid to or
for the account of any Person,  as the case may be, the aggregate amount of cash
received from time to time (whether as initial  consideration or through payment
or disposition of deferred consideration) by or on behalf of such Person for its
own account in connection with any such transaction,  after deducting  therefrom
only (without duplication):

                  (a)   reasonable   and   customary   brokerage    commissions,
         underwriting  fees and discounts,  legal fees,  finder's fees and other
         similar fees and commissions;

                  (b) the  amount of taxes  payable in  connection  with or as a
         result of such transaction; and

                  (c)  in the  case  of  any  sale,  lease,  transfer  or  other
         disposition of any property or asset, the outstanding  principal amount
         of, the  premium or  penalty,  if any,  on, and any  accrued and unpaid
         interest on, any Debt (other than the Debt  outstanding  under the Loan
         Documents) that is secured by a Lien on the property and assets subject
         to such sale,

                                       22


<PAGE>


         lease, transfer or other disposition and is required to be repaid under
         the terms  thereof as a result of such sale,  lease,  transfer or other
         disposition.

in each case to the extent, but only to the extent, that the amounts so deducted
are properly  attributable to such  transaction or to the property or asset that
is the  subject  thereof  and  (i) in the  case of  clauses  (a) and (c) of this
definition,  are  actually  paid at the time of receipt of such cash to a Person
that is not an Affiliate of such Person or any Loan Party or of any Affiliate of
any Loan  Party  and  (ii) in the case of  clause  (b) of this  definition,  are
actually  paid at the time of  receipt  of such cash to a Person  that is not an
Affiliate of such Person or any Loan Party or of any Affiliate of any Loan Party
or, so long as such Person is not otherwise indemnified  therefor,  are reserved
for in accordance  with GAAP at the time of receipt of such cash based upon such
Person's reasonable estimate of such taxes;  PROVIDED,  HOWEVER, that if, at the
time such taxes are  actually  paid or  otherwise  satisfied,  the amount of the
reserve  therefor  exceeds  the amount  paid or  otherwise  satisfied,  then the
Borrower shall reduce the  Commitments  in accordance  with the terms of Section
2.06(b),  and shall prepay the outstanding Advances in accordance with the terms
of Section 2.06(b), in an amount equal to the amount of such excess reserve.

         "NON-BANK  NON-US  LENDER  PARTY" has the meaning  specified in Section
2.13(e).

         "NON-US LENDER PARTY" has the meaning specified in Section 2.13(e).

         "NONRENEWAL NOTICE DATE" has the meaning specified in Section 2.01(e).

         "NOTE"  means  a  Tranche  A Term  Note,  a  Tranche  B Term  Note or a
Revolving Credit Note, as the context may require.

         "NOTICE OF BORROWING" has the meaning specified in Section 2.02(a).

         "NOTICE OF DEFAULT" has the meaning specified in Section 7.03.

         "NOTICE  OF  CONVERSION/CONTINUATION"  has  the  meaning  specified  in
Section 2.09(a).

         "NOTICE OF ISSUANCE" has the meaning specified in Section 2.03(a).

         "OBLIGATION"   means,   with  respect  to  any  Person,   any  payment,
performance or other obligation of such Person of any kind,  including,  without
limitation,  any liability of such Person on any claim, whether or not the right
of any  creditor  to payment  in  respect of such claim is reduced to  judgment,
liquidated,  unliquidated,  fixed, contingent,  matured,  disputed,  undisputed,
legal,  equitable,  secured  or  unsecured,  and  whether  or not such  claim is
discharged,  stayed or  otherwise  affected  by any  proceeding  referred  to in
Section  6.01(f).   Without  limiting  the  generality  of  the  foregoing,  the
Obligations  of the Loan  Parties  under  the  Loan  Documents  include  (a) the
obligation to pay principal,  interest,  Letter of Credit commissions,  charges,
expenses, fees, attorneys' fees and disbursements, indemnities and other amounts
payable by any Loan Party under any Loan Document and (b) the  obligation of any
Loan Party to reimburse any amount in respect of any of the  foregoing  that any
Lender Party, in its sole  discretion,  may elect to pay or advance on behalf of
such Loan Party.

         "OECD" means the Organization for Economic Cooperation and Development.

                                       23


<PAGE>


         "OFFICER"   means,   with  respect  to  the  Borrower  or  any  of  its
Subsidiaries,  a Responsible Officer or any other officer, partner or member (or
Person  performing  similar  functions)  of the Borrower or any such  Subsidiary
responsible for overseeing the administration of, or reviewing  compliance with,
all or any portion of this Agreement or any of the other Loan Documents.

         "OPERATING  LEASE"  means  any  lease  (including  leases  that  may be
terminated  by the lessee at any time) of any property that is not a Capitalized
Lease.

         "ORDINARY  COURSE HEDGE  AGREEMENTS"  means any and all  interest  rate
swaps, basis swaps, credit derivative  transactions,  forward rate transactions,
commodity swaps, commodity options,  forward commodity contracts,  interest rate
options,  forward  foreign  exchange  transactions,   cap  transactions,   floor
transactions,  collar transactions,  currency swaps,  cross-currency rate swaps,
currency  options,  spot  contracts  or any other  similar  transactions  or any
combination of any of the foregoing  (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, in each case that are (or were) entered into by any Person
in the ordinary course of business for the purpose of directly  mitigating risks
associated with liabilities,  commitments, investments, assets, or property held
or reasonably  anticipated by such Person, or changes in the value of securities
issued by such Person and not for  purposes of  speculation  or taking a "market
view" and that do not contain any provision ("walk-away"  provision) exonerating
the  non-defaulting  party from its  obligation to make payments on  outstanding
transactions to the defaulting party.

         "ORIGINAL CURRENCY" has the meaning specified in Section 8.15.

         "OTHER CURRENCY" has the meaning specified in Section 8.15.

         "OTHER TAXES" has the meaning specified in Section 2.13(b).

         "PBGC" means the Pension Benefit Guaranty  Corporation or any successor
thereto.

         "PERMITTED DOMESTIC  RECEIVABLES  TRANSACTION" means any arrangement of
the  Borrower or its Domestic  Subsidiaries  providing  for sales,  transfers or
conveyances of, or granting of security interests in, Domestic  Receivables that
do not provide, directly or indirectly,  for recourse against the seller of such
Domestic  Receivables  (or against any of such seller's  Affiliates) by way of a
guaranty or any other  support  arrangement,  with respect to the amount of such
Domestic  Receivables (based on the financial  condition or circumstances of the
obligor  thereunder),  other than such limited  recourse as is reasonable  given
market standards for receivables purchase transactions that are treated as sales
under  GAAP,  taking  into  account  such  factors as  historical  bad debt loss
experience and obligor concentration levels.

         "PERMITTED  FOREIGN  RECEIVABLES  TRANSACTION" means any arrangement of
Foreign  Subsidiaries  providing  for sales,  transfers  or  conveyances  of, or
granting of security  interests  in,  Foreign  Receivables  that do not provide,
directly  or  indirectly,  for  recourse  against  the  seller  of such  Foreign
Receivables (or against any of such seller's Affiliates) by way of a guaranty or
any other  support  arrangement,  with  respect  to the  amount of such  Foreign
Receivables  (based on the financial  condition or  circumstances of the obligor
thereunder),  other than such  limited  recourse as is  reasonable  given market
standards for receivables purchase  transactions that are treated as

                                       24


<PAGE>


sales under GAAP,  taking into account such factors as historical  bad debt loss
experience and obligor concentration levels.

         "PERMITTED  LIENS"  means each of the  following:  (a) Liens for taxes,
assessments and governmental  charges or levies to the extent not required to be
paid under Section  5.01(b);  (b) Liens  imposed by law, such as  materialmen's,
mechanics',  carriers',  workmen's and repairmen's Liens and other similar Liens
arising in the ordinary course of business securing obligations (other than Debt
for borrowed  money) (i) that are not overdue or (ii) the amount,  applicability
or  validity  of which  are being  contested  in good  faith and by  appropriate
proceedings  diligently  conducted and with respect to which the Borrower or any
of its Subsidiaries,  as the case may be, has established reserves in accordance
with  GAAP;  (c)  pledges  or  deposits  to secure  obligations  under  workers'
compensation laws,  unemployment insurance or similar legislation (other than in
respect of  employee  benefit  plans  subject  to ERISA) or to secure  public or
statutory  obligations;  (d) Liens  securing the  performance  of, or payment in
respect of, bids, tenders, government contracts (other than for the repayment of
borrowed  money),  surety and appeal  bonds and other  obligations  of a similar
nature incurred in the ordinary course of business; (e) any interest or title of
a lessor or sublessor and any  restriction  or encumbrance to which the interest
or title of such  lessor or  sublessor  may be subject  that is  incurred in the
ordinary course of business and, either individually or when aggregated with all
other  Permitted  Liens in  effect  on any date of  determination,  could not be
reasonably  expected to have a Material  Adverse  Effect;  (f) Liens in favor of
customs and revenue authorities arising as a matter of law or pursuant to a bond
to secure payment of customs duties in connection with the importation of goods;
(g) Liens arising out of judgments or awards that do not  constitute an Event of
Default under Section 6.01(g) or 6.01(h) and in respect of which the Borrower or
any of its  Subsidiaries  subject  thereto  shall be  prosecuting  an  appeal or
proceedings  for review in good faith and,  pending such appeal or  proceedings,
shall have secured  within 30 days after the entry thereof a subsisting  stay of
execution  and shall be  maintaining  reserves,  in accordance  with GAAP,  with
respect to any such judgment or award; (h) leases or subleases granted to others
in the ordinary course of business not interfering  with the ordinary conduct of
the  business of the  grantor  thereof;  (i)  easements,  rights of way,  zoning
restrictions  and other  encumbrances  on title to real  property  that were not
incurred  in  connection  with  and do  not  secure  Debt  and  do  not,  either
individually  or in the aggregate,  interfere  with the ordinary  conduct of the
business  of the  Borrower  and its  Subsidiaries,  taken as a whole;  (j) Liens
arising  solely by virtue of any statutory or common law  provision  relating to
banker's  Liens,  rights of set-off or similar rights and remedies as to deposit
accounts  or other  funds  maintained  with a creditor  depository  institution;
provided  that (i) such  deposit  account  is not a  dedicated  cash  collateral
account and is not subject to restrictions against access by the Borrower or any
of  its  Subsidiaries  owning  the  affected  deposit  account  or  other  funds
maintained with a creditor  depository  institution in excess of those set forth
by  regulations  promulgated  by  the  Federal  Reserve  Board  or  any  foreign
regulatory  agency  performing  an  equivalent  function,  and (ii) such deposit
account is not  intended by the Borrower or any of its  Subsidiaries  to provide
collateral to the depository institution; and (k) Liens, assignments and pledges
of rights to receive premiums, interest or loss payments or otherwise arising in
connection  with  worker's   compensation  loss  portfolio   transfer  insurance
transactions  or any insurance or  reinsurance  agreements  pertaining to losses
covered by insurance, and Liens (including, without limitation and to the extent
constituting  Liens,  negative  pledges) in favor of insurers or  reinsurers  on
pledges  or  deposits  by  the  Borrower  or  any

                                       25


<PAGE>


Subsidiary under workmen's  compensation  laws,  unemployment  insurance laws or
similar legislation.

         "PERMITTED  TRANSFEREES" has the meaning  specified in the Stockholders
Agreement  dated as of April 15, 1996 between the Borrower and the  stockholders
of the Borrower  party thereto as in effect as of the Closing Date,  except that
transferees  pursuant  to Section  2.2(a)(x)  thereof  shall not be deemed to be
Permitted Transferees for purposes of this Agreement.

         "PERSON" means an  individual,  partnership,  corporation  (including a
business trust),  limited liability company,  unlimited liability company, joint
stock company, trust, unincorporated association, joint venture or other entity,
or a government or any political subdivision or agency thereof.

         "PLAN" means a Single Employer Plan or a Multiple Employer Plan.

         "PLEDGE AND SECURITY  AGREEMENT"  has the meaning  specified in Section
3.01(a)(i).

         "PLEDGED DEBT" has the meaning  specified in Section 1(e) of the Pledge
and Security Agreement.

         "PLEDGED FOREIGN  SUBSIDIARY"  means a Foreign  Subsidiary no more than
65% of the Equity Interests of which is pledged to Administrative Agent.

         "PLEDGED  INTERESTS"  has the meaning  specified in Section 1(e) of the
Pledge and Security Agreement.

         "PREFERRED  INTERESTS"  means,  with  respect  to  any  Person,  Equity
Interests  issued by such Person that are entitled to a  preference  or priority
over any other Equity  Interests  issued by such Person upon any distribution of
such Person's property and assets, whether by dividend or upon liquidation.

         "PRIMARY  OBLIGATION"  has the meaning  specified in the  definition of
"CONTINGENT OBLIGATION" set forth in this Section 1.01.

         "PRIMARY  OBLIGOR"  has the  meaning  specified  in the  definition  of
"CONTINGENT OBLIGATION" set forth in this Section 1.01.

         "PRINCIPAL  PROPERTY" means any contiguous or proximate  parcel of real
property  owned  by,  or  leased  to,  the  Borrower  or any  of its  Restricted
Subsidiaries,  and any  equipment  located at or  comprising  a part of any such
property,  having a gross  book value  (without  deduction  of any  depreciation
reserves), as of the date of determination,  in excess of 1% of Consolidated Net
Tangible Assets;  PROVIDED,  HOWEVER, that in the event that the Indentures,  or
the   limitations   regarding  Liens  granted  by  the  Borrower  or  Restricted
Subsidiaries contained in the Indentures, are no longer binding on the Borrower,
no property shall be a Principal Property.

         "PRO RATA  SHARE"  of any  amount  means,  with  respect  to any of the
Lenders at any time, the product of (a) a fraction the numerator of which is the
amount  of  such  Lender's   Commitment(s)  under  the  applicable  Facility  or
Facilities  at such time (or,  if the  Commitments

                                       26


<PAGE>


shall have been terminated  pursuant to Section 2.05 or 6.01 at or prior to such
time, such Lender's Commitment(s) under the applicable Facility or Facilities as
in effect immediately prior to such termination) and the denominator of which is
the  aggregate  amount of such  Facility or  Facilities at such time (or, if the
Commitments  shall have been  terminated  pursuant to Section 2.05 or 6.01 at or
prior  to  such  time,  the  applicable  Facility  or  Facilities  as in  effect
immediately prior to such termination) MULTIPLIED BY (b) such amount.

         "REAL ESTATE  FINANCING  TRANSACTIONS"  means any arrangement  with any
Person  pursuant to which the  Borrower or any of its  Subsidiaries  incurs Debt
secured by a Lien on real  property of the  Borrower or any of its  Subsidiaries
and related personal property.

         "RECEIVABLES   TRANSFER  AGREEMENTS"  means  that  certain  Receivables
Purchase  and Sale  Agreement  dated as of January 28, 2000 among the  Borrower,
LSFCC,  Levi Strauss Funding Corp. and LSFLLC and that certain Third Amended and
Fully Restated  Receivables  Purchase and Sale  Agreement  between LSFCC and the
Borrower effective January 28, 2000.

         "REDEEMABLE" means, with respect to any Equity Interest,  Debt or other
right or Obligation, any such Equity Interest, Debt or other right or Obligation
that (a) the issuer has undertaken to redeem at a fixed or determinable  date or
dates,  whether  by  operation  of a  sinking  fund or  otherwise,  or upon  the
occurrence  of a condition not solely within the control of the issuer or (b) is
redeemable at the option of the holder.

         "REDUCTION AMOUNT" has the meaning specified in Section 2.06(b)(vi).

         "REGISTER" has the meaning specified in Section 8.07(d).

         "REGULATION  U" means  Regulation  U of the Board of  Governors  of the
Federal Reserve System, as in effect from time to time.

         "REQUIRED  FINANCIAL  INFORMATION" means, at any date of determination,
the Consolidated  financial statements of the Borrower and its Subsidiaries most
recently  delivered  to the  Administrative  Agent and the Lender  Parties on or
prior to such date  pursuant  to, and  satisfying  all of the  requirements  of,
Section  5.03(b)  or  5.03(c)  and  accompanied  by the  certificates  and other
information required to be delivered therewith.

         "REQUIRED  LENDERS" means,  (a) at any time when the Commitments are in
effect,  Lenders holding at least a majority in interest of the aggregate of the
Tranche A Term  Commitments,  the Tranche B Term  Commitments  and the Revolving
Credit Commitments at such time and (b) at any time after the termination of the
Commitments,  Lenders owed at least a majority in interest of the sum of (i) the
aggregate principal amount of the Advances outstanding at such time and (ii) the
aggregate  Available  Amount of all Letters of Credit  outstanding at such time;
PROVIDED, HOWEVER, that if any Lender shall be a Defaulting Lender at such time,
there shall be excluded from the  determination of Required Lenders at such time
(A) the  Commitments  of  such  Lender  at  such  time or (B) the sum of (1) the
aggregate principal amount of the Advances owing to such Lender (in its capacity
as a Lender) and  outstanding  at such time and (2) such Lender's Pro Rata Share
of the aggregate  Available Amount of all Letters of Credit  outstanding at such
time,  as the  case may be.  For  purposes  of this  definition,  the  aggregate
principal  amount of Swing  Line  Advances  owing to the Swing Line Bank and the
Available  Amount of each Letter of Credit

                                       27


<PAGE>


shall be  considered  to be owed to the  Revolving  Credit  Lenders  ratably  in
accordance with their respective Revolving Credit Commitments.

         "REQUIRED PRINCIPAL PAYMENTS" means, with respect to any Person for any
period, the sum of all regularly  scheduled principal payments or redemptions of
outstanding Funded Debt made during such period.

         "REQUIREMENTS  OF LAW" means,  with  respect to any  Person,  all laws,
constitutions,  statutes,  treaties,  ordinances,  rules  and  regulations,  all
orders, writs, decrees, injunctions,  judgments,  determinations or awards of an
arbitrator,  a court or any other Governmental  Authority,  and all Governmental
Authorizations,  binding  upon or  applicable  to such  Person  or to any of its
properties, assets or businesses.

         "RESPONSIBLE OFFICER" means, with respect to the Borrower or any of its
Subsidiaries,  the chief executive officer,  the president,  the chief financial
officer,  the  principal  accounting  officer,  the  treasurer or any  assistant
treasurer (or the equivalent of any of the foregoing).

         "RESTRICTED SUBSIDIARY" means any Subsidiary of the Borrower which owns
or leases a Principal Property;  PROVIDED,  HOWEVER,  that in the event that the
Indentures,  or the  limitations  regarding  Liens  granted  by or on the Equity
Interests or Debt of Restricted Subsidiaries contained in the Indentures, are no
longer  binding  on the  Borrower,  no  Subsidiary  of the  Borrower  shall be a
Restricted Subsidiary.

         "REVOLVING  CREDIT  ADVANCE"  has  the  meaning  specified  in  Section
2.01(c).

         "REVOLVING   CREDIT   BORROWING"   means  a  borrowing   consisting  of
simultaneous  Revolving  Credit  Advances of the same Type made by the Revolving
Credit Lenders.

         "REVOLVING  CREDIT  COMMITMENT"  means,  with respect to any  Revolving
Credit Lender at any time, the amount set forth  opposite such Revolving  Credit
Lender's name on Schedule  1.01(a)  hereto under the caption  "REVOLVING  CREDIT
COMMITMENT"  or, if such  Revolving  Credit  Lender has entered into one or more
Assignments  and  Acceptances,  the amount set forth for such  Revolving  Credit
Lender in the  Register  maintained  by the  Administrative  Agent  pursuant  to
Section 8.07(d) as such Revolving Credit Lender's "REVOLVING CREDIT COMMITMENT",
as such amount may be reduced at or prior to such time  pursuant to Section 2.05
or 2.06.

         "REVOLVING CREDIT FACILITY" means, at any time, the aggregate amount of
the Revolving Credit Lenders' Revolving Credit Commitments at such time.

         "REVOLVING  CREDIT  LENDER"  means,  at any time, any Lender that has a
Revolving Credit Commitment at such time.

         "REVOLVING CREDIT NOTE" means a promissory note of the Borrower payable
to the  order of any  Revolving  Credit  Lender,  in  substantially  the form of
Exhibit A-3 hereto,  evidencing  the aggregate  indebtedness  of the Borrower to
such Revolving  Credit Lender  resulting from the Revolving Credit Advances made
by such Revolving Credit Lender.

                                       28


<PAGE>


        "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies,
Inc.

         "SECURED  OBLIGATIONS"  has the meaning  specified  in Section 2 of the
Pledge and Security Agreement.

         "SECURED PARTIES" means, collectively,  the Agents, the Lender Parties,
and the Hedge Banks.

         "SENIOR SECURED  LEVERAGE  RATIO" means, at any date of  determination,
the  ratio  of (a)  all  Senior  Secured  Funded  Debt of the  Borrower  and its
Subsidiaries  on such  date to (b)  Consolidated  EBITDA  for the most  recently
completed Measurement Period prior to such date for which the Required Financial
Information has been delivered under Section 5.03(b) or (c), as the case may be.

         "SENIOR  SECURED  FUNDED  DEBT"  of any  Person  means,  at any date of
determination,  all secured Debt of such Person that would (or would be required
to) appear as liabilities on a consolidated balance sheet of such Person that is
not  subordinated  in  right  of  payment  to the  Obligations  under  the  Loan
Documents.

         "SINGLE  EMPLOYER  PLAN"  means a single  employer  plan (as defined in
Section  4001(a)(15)  of ERISA) that (a) is maintained for employees of any Loan
Party or any ERISA  Affiliate  and no Person other than the Loan Parties and the
ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party
or any ERISA  Affiliate  could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.

         "SPC" has the meaning specified in Section 8.07(j).

         "SOLVENT" and "SOLVENCY"  mean,  with respect to any Person on any date
of  determination,  that on such date (a) the fair value of the property of such
Person is  greater  than the total  amount of  liabilities,  including,  without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the  assets of such  Person is not less  than the  amount  that will be
required  to pay the  probable  liability  of such  Person  on its debts as they
become  absolute and  matured,  (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay such debts and liabilities as they mature and (d) such Person is not engaged
in  business  or a  transaction,  and is not about to engage  in  business  or a
transaction,  for which such Person's  property would constitute an unreasonably
small  capital.  The  amount  of  contingent  liabilities  at any time  shall be
computed  as the amount  that,  in the light of all the facts and  circumstances
existing at such time,  represents the amount that can reasonably be expected to
become an actual or matured liability.

         "SSB" has the  meaning  specified  in the  recital  of  parties to this
Agreement.

         "STANDBY LETTER OF CREDIT" means any Letter of Credit issued hereunder,
other than a Trade Letter of Credit.

         "SUBSIDIARY GUARANTY" has the meaning specified in Section 3.01(a)(ii).

                                       29


<PAGE>


         "SUBSIDIARY" of any Person means any  corporation,  partnership,  joint
venture, limited liability company, unlimited liability company, trust or estate
of which (or in which) more than 50% of (a) the issued and outstanding shares of
capital stock having  ordinary  voting power to elect a majority of the board of
directors of such corporation (irrespective of whether at the time capital stock
of any other  class or classes of such  corporation  shall or might have  voting
power upon the occurrence of any  contingency),  (b) the interest in the capital
or profits of such  partnership,  joint venture,  limited  liability  company or
unlimited  liability  company or (c) the  beneficial  interest  in such trust or
estate,  is at the time  directly  or  indirectly  owned or  controlled  by such
Person,  by such Person and one or more of its other  Subsidiaries  or by one or
more of such Person's other Subsidiaries.

         "SWING  LINE  ADVANCE"  means an  advance  made by the Swing  Line Bank
pursuant to Section 2.01(d).

         "SWING LINE BANK" means Bank of America.

         "SWING LINE  BORROWING"  means a borrowing  consisting  of a Swing Line
Advance made by the Swing Line Bank.

         "SWING LINE NOTE" means a promissory  note of the  Borrower  payable to
the order of the Swing  Line Bank,  in  substantially  the form of  Exhibit  A-4
hereto,  evidencing the aggregate indebtedness of the Borrower to the Swing Line
Bank resulting from the Swing Line Advances made by the Swing Line Bank.

         "SWING  LINE  SUBLIMIT"   means,  at  any  time,  an  amount  equal  to
$50,000,000,  as such amount may be reduced at or prior to such time pursuant to
Section 2.05.

         "SYNDICATION AGENT" has the meaning specified in the recital of parties
to this Agreement.

         "TAXES" has the meaning specified in Section 2.13(a).

         "TERMINATION DATE" means the earlier of (a) August 29, 2003 and (b) the
date of  termination in whole of the Tranche A Term  Commitments,  the Tranche B
Term Commitments and the Revolving Credit  Commitments  pursuant to Section 2.05
or 6.01.

         "TRADE  LETTER OF  CREDIT"  means any  Letter of Credit  that is issued
hereunder  for the benefit of a supplier of  inventory to the Borrower or any of
its Subsidiaries to effect payment for such inventory, the conditions to drawing
under which include the presentation to the Issuing Bank that issued such Letter
of Credit of shipping documents, invoices and related documents.

         "TRANCHE A TERM ADVANCE" has the meaning specified in Section 2.01(a).

         "TRANCHE A TERM BORROWING" means a borrowing consisting of simultaneous
Tranche A Term Advances of the same Type made by the Tranche A Term Lenders.

         "TRANCHE A TERM COMMITMENT"  means,  with respect to any Tranche A Term
Lender at any time, the amount set forth opposite such Lender's name on Schedule
1.01(a) hereto under the caption  "TRANCHE A TERM COMMITMENT" or, if such Lender
has entered into one or more

                                       30


<PAGE>


Assignments  and  Acceptances,  the  amount  set  forth  for such  Lender in the
Register  maintained by the Administrative  Agent pursuant to Section 8.07(d) as
such Tranche A Term Lender's "TRANCHE A TERM COMMITMENT",  as such amount may be
reduced at or prior to such time pursuant to Section 2.05 or 6.01.

         "TRANCHE A TERM FACILITY"  means, at any time, the aggregate  Tranche A
Term Commitments of all Tranche A Term Lenders at such time.

         "TRANCHE A TERM  LENDER"  means,  at any time,  any  Lender  that has a
Tranche A Term Commitment at such time.

         "TRANCHE A TERM NOTE" means a promissory  note of the Borrower  payable
to the order of any Tranche A Term Lender,  in substantially the form of Exhibit
A-1 hereto,  evidencing the  indebtedness of the Borrower to such Tranche A Term
Lender  resulting  from the Tranche A Term  Advance  made by such Tranche A Term
Lender.

         "TRANCHE B TERM ADVANCE" has the meaning specified in Section 2.01(b).

         "TRANCHE B TERM BORROWING" means a borrowing consisting of simultaneous
Tranche B Term Advances of the same Type made by the Tranche B Term Lenders.

         "TRANCHE B TERM COMMITMENT"  means,  with respect to any Tranche B Term
Lender at any time, the amount set forth opposite such Lender's name on Schedule
1.01(a) hereto under the caption  "TRANCHE B TERM COMMITMENT" or, if such Lender
has entered into one or more Assignments and  Acceptances,  the amount set forth
for such Lender in the Register maintained by the Administrative  Agent pursuant
to Section 8.07(d) as such Tranche B Term Lender's  "TRANCHE B TERM COMMITMENT",
as such amount may be reduced at or prior to such time  pursuant to Section 2.05
or 6.01.

         "TRANCHE B TERM FACILITY"  means, at any time, the aggregate  Tranche B
Term Commitments of all Tranche B Term Lenders at such time.

         "TRANCHE B TERM  LENDER"  means,  at any time,  any  Lender  that has a
Tranche B Term Commitment at such time.

         "TRANCHE B TERM NOTE" means a promissory  note of the Borrower  payable
to the order of any Tranche B Term Lender,  in substantially the form of Exhibit
A-2 hereto,  evidencing the  indebtedness of the Borrower to such Tranche B Term
Lender  resulting  from the Tranche B Term  Advance  made by such Tranche B Term
Lender.

         "TYPE" refers to the distinction  between  Advances bearing interest at
the Base Rate and Advances bearing interest at the Eurodollar Rate.

         "UNPLEDGED FOREIGN SUBSIDIARIES" means Foreign Subsidiaries none of the
Equity Interests of which is pledged to Administrative Agent.

         "UNREIMBURSED AMOUNT" has the meaning specified in Section 2.03(c).

                                       31


<PAGE>


         "UNUSED  REVOLVING  CREDIT  COMMITMENTS"  means,  with  respect  to any
Revolving  Credit  Lender  at any  time,  (a)  such  Revolving  Credit  Lender's
Revolving Credit Commitment at such time MINUS (b) the sum, without duplication,
of (i) the  aggregate  principal  amount of all  Revolving  Credit  Advances and
Letter of Credit  Advances  (in respect of Domestic  Letters of Credit)  made by
such  Revolving  Credit Lender (in its capacity as a Lender) and  outstanding at
such time,  (ii) such Revolving  Credit Lender's Pro Rata Share of the aggregate
Available Amount of all Domestic Letters of Credit outstanding at such time,
(iii) in the case of the Swing Line Bank, the aggregate principal amount of all
Swing Line Advances  outstanding at such time, and (iv) such Revolving  Credit
Lender's Pro Rata Share of the Foreign  Letter of Credit Sublimit. For  purposes
of this definition,  any amount described in the preceding sentence which is
denominated in a  currency  other  than  Dollars  shall be  valued  based on the
applicable Exchange Rate for such currency as of the applicable date of
determination.

         "VOTING   INTERESTS"   means  shares  of  capital  stock  issued  by  a
corporation,  or equivalent Equity Interests in any other Person, the holders of
which are ordinarily, in the absence of contingencies,  entitled to vote for the
election of directors (or persons  performing similar functions) of such Person,
even if the  right so to vote  has been  suspended  by the  happening  of such a
contingency.

         "VOTING TRUST AGREEMENT" means the Voting Trust Agreement  entered into
as of April 15, 1996 by and among Robert D. Haas;  Peter E. Haas,  Sr.; Peter E.
Haas, Jr.; and F. Warren Hellman as the Voting Trustees and the  stockholders of
the Borrower (as successor to LSAI Holding Corp.) who are parties thereto.

         "WELFARE  PLAN"  means a welfare  plan (as  defined in Section  3(1) of
ERISA) that is maintained for employees of any Loan Party or in respect of which
any Loan Party could reasonably be expected to have liability.

         "WITHDRAWAL  LIABILITY" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.

         Section  1.02   Computation   of  Time  Periods;   OTHER   DEFINITIONAL
                         -------------------------------
PROVISIONS.  In this  Agreement  in the  computation  of  periods of time from a
specified  date to a later  specified  date,  the word  "from"  means  "from and
including"  and the  words  "to"  and  "until"  each  mean  "to but  excluding".
References in the Loan Documents to any agreement or contract "as amended" shall
mean and be a reference to such  agreement  or contract as amended,  amended and
restated,  supplemented  or otherwise  modified  from time to time in accordance
with its terms.  Section  headings  herein and in the other Loan  Documents  are
included  for   convenience   of  reference   only  and  shall  not  affect  the
interpretation of this Agreement or any Loan Document.

         Section 1.03 Accounting  Terms.  All accounting  terms not specifically
                      -----------------
defined  herein  shall  be  construed  in  accordance  with  generally  accepted
accounting  principles  consistent  with those applied in the preparation of the
Consolidated  financial statements of the Borrower and its Subsidiaries referred
to in Section 4.01(g) ("GAAP").

         Section  1.04 Change in  Accounting  Principles.  If any change in GAAP
                       ---------------------------------
occurs or takes  effect after the Closing Date which would result in a change in
any quantity  reported to

                                       32


<PAGE>


the Lenders  hereunder  which  provides the basis for any covenant,  performance
obligation or standard of measurement used in this Agreement, the parties hereto
agree to enter into  negotiations  in order to amend such covenant,  performance
obligation  or standard  of  performance  so as to reflect  such change with the
result  that  the  criteria  for  evaluating   compliance  with  such  covenant,
performance  obligation or standard of  performance  shall be the same after the
change as if the change had not been made.  Until the  parties  hereto  agree to
such  amendment,  all  covenants,   performance  obligations  and  standards  of
performance shall be calculated without giving effect to the change in GAAP.

                                   ARTICLE II
                        AMOUNTS AND TERMS OF THE ADVANCES
                            AND THE LETTERS OF CREDIT

         Section 2.01 The Advances and the Letters of Credit.
                      --------------------------------------

         (a) The Tranche a Term Advances.  Each Tranche A Term Lender  severally
             ---------------------------
agrees,  on the terms and  conditions  hereinafter  set forth,  to make a single
advance (a "TRANCHE A TERM  ADVANCE")  in Dollars to the Borrower on the Closing
Date in an amount not to exceed the Tranche A Term  Commitment of such Tranche A
Term Lender at such time. The Tranche A Term Borrowing  shall consist of Tranche
A Term Advances made  simultaneously by the Tranche A Term Lenders in accordance
with their  respective Pro Rata Shares of the Tranche A Term  Facility.  Amounts
borrowed under this Section 2.01(a) and repaid or prepaid may not be reborrowed.

         (b) The Tranche B Term Advances.  Each Tranche B Term Lender  severally
             ---------------------------
agrees,  on the terms and  conditions  hereinafter  set forth,  to make a single
advance (a "TRANCHE B TERM  ADVANCE")  in Dollars to the Borrower on the Closing
Date in an amount not to exceed the Tranche B Term  Commitment of such Tranche B
Term Lender at such time. The Tranche B Term Borrowing  shall consist of Tranche
B Term Advances made  simultaneously by the Tranche B Term Lenders in accordance
with their  respective Pro Rata Shares of the Tranche B Term  Facility.  Amounts
borrowed under this Section 2.01(b) and repaid or prepaid may not be reborrowed.

         (c)  The  Revolving  Credit  Advances.  Each  Revolving  Credit  Lender
              --------------------------------
severally  agrees,  on the terms and conditions  hereinafter  set forth, to make
advances  (each a "REVOLVING  CREDIT  ADVANCE") in Dollars to the Borrower  from
time to time on any  Business  Day during the period from the date hereof  until
the  Termination  Date,  in each case in an  amount  not to  exceed  the  Unused
Revolving  Credit  Commitment of such Revolving Credit Lender at such time. Each
Revolving  Credit Borrowing shall be in an aggregate amount of $10,000,000 or an
integral  multiple of $1,000,000 in excess  thereof  (other than a Borrowing the
proceeds of which  shall be used  solely to repay or prepay in full  outstanding
Swing Line Advances or outstanding  L/C  Borrowings)  or, if less, the amount of
the Aggregate Unused  Revolving Credit  Commitments at such time. Each Revolving
Credit Borrowing shall consist of Revolving Credit Advances made  simultaneously
by the Revolving  Credit  Lenders in accordance  with their  respective Pro Rata
Shares of the Revolving  Credit  Facility.  Within the limits of each  Revolving
Credit Lender's Unused Revolving Credit  Commitment in effect from time to time,
the Borrower may borrow

                                       33


<PAGE>


under this  Section  2.01(c),  prepay  pursuant to Section  2.06(a) and reborrow
under this Section 2.01(c).

         (d) The Swing Line  Advances.  The  Borrower may request the Swing Line
             ------------------------
Bank to make,  and the Swing Line Bank may, if in its sole  discretion it elects
to do so, make, on the terms and conditions  hereinafter  set forth,  Swing Line
Advances to the Borrower from time to time on any Business Day during the period
from the date hereof until the Termination  Date (i) in an aggregate  amount not
to exceed the Swing Line Sublimit at any time  outstanding and (ii) in an amount
for each such Swing Line Borrowing not to exceed the Aggregate  Unused Revolving
Credit  Commitments of the Revolving  Credit Lenders at such time. No Swing Line
Advance shall be used for the purpose of funding the payment of principal of any
other Swing Line  Advance.  Each Swing Line  Borrowing  shall be in an amount of
$1,000,000  or an integral  multiple of $500,000 in excess  thereof.  Within the
limits of the first sentence of this Section 2.01(d),  so long as the Swing Line
Bank, in its sole discretion,  elects to make Swing Line Advances,  the Borrower
may borrow  under this Section  2.01(d),  repay  pursuant to Section  2.04(d) or
prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(d).

         (e) Letters of Credit.
             -----------------

                  (i) Each Issuing Bank severally  agrees,  in reliance upon the
agreements  of the  Lenders  set  forth in  Section  2.03 and on the  terms  and
conditions  hereinafter  set forth,  to (A) issue  letters of credit  ("DOMESTIC
LETTERS OF  CREDIT")  for the account of the  Borrower  from time to time on any
Business  Day during the period  from the date  hereof  until 60 days before the
scheduled  Termination  Date in an aggregate  Available  Amount for all Domestic
Letters of Credit not to exceed the lesser of (1) the Letter of Credit  Sublimit
at such time MINUS the  Foreign  Letter of Credit  Sublimit at such time and (2)
the Aggregate Unused Revolving Credit Commitments at such time and (B) issue, or
cause their  respective  Foreign  Affiliate  Issuing Banks to issue,  letters of
credit that constitute Trade Letters of Credit ("FOREIGN LETTERS OF CREDIT" and,
together with Domestic  Letters of Credit,  "LETTERS OF CREDIT") for the account
of the  Borrower  from time to time during the period from the date hereof until
60 days before the scheduled  Termination Date in an aggregate  Available Amount
for all Foreign  Letters of Credit issued by such Issuing Bank and Affiliates of
such  Issuing  Bank not to exceed  the  Issuing  Bank  Foreign  Letter of Credit
Sublimit for such Issuing Bank.  The Borrower shall have the right to change the
Foreign Letter of Credit  Sublimit and the Issuing Bank Foreign Letter of Credit
Sublimits  by  delivering  to the  Administrative  Agent a notice (the  "FOREIGN
LETTER OF CREDIT  SUBLIMIT  NOTICE")  on the first  Business  Day of any  Fiscal
Quarter.  No Trade Letter of Credit shall have an expiration date later than 180
days  after the  issuance  thereof.  No Standby  Letter of Credit  shall have an
expiration date (including all rights of the Borrower or the beneficiary of such
Standby Letter of Credit to require  renewal) later than one year after the date
of issuance  thereof,  but any such Standby Letter of Credit may by its terms be
renewable  annually  on the  terms  set  forth in  clause  (ii) of this  Section
2.03(e). If any Letter of Credit remains outstanding after the Termination Date,
the Borrower shall, not later than the Termination Date, deposit an amount equal
to the aggregate  Available Amount of all Letters of Credit  outstanding at such
time in the L/C Cash  Collateral  Account.  Within  the  limits of the Letter of
Credit  Sublimit,  and subject to the limits referred to above, the Borrower may
request  the  issuance of Letters of Credit  under this  Section  2.01(e)(i)  to
replace  Letters of Credit that have expired or been drawn upon and  reimbursed.
All  Existing

                                       34


<PAGE>


Letters of Credit shall be deemed to have been issued pursuant hereto,  and from
and after the  Closing  Date shall be subject to and  governed  by the terms and
conditions hereof.

                  (ii) If the Borrower so requests in any  applicable  Letter of
Credit  Agreement,  the Issuing Bank may, in its sole and  absolute  discretion,
agree to issue a Letter of Credit that has automatic  renewal  provisions (each,
an "EVERGREEN  LETTER OF CREDIT");  provided that any such  Evergreen  Letter of
Credit must permit the Issuing Bank to prevent any such renewal at least once in
each twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the  beneficiary  thereof not later than a day
(the  "NONRENEWAL  NOTICE DATE") in each such  twelve-month  period to be agreed
upon at the time such Letter of Credit is issued.  Unless otherwise  directed by
the Issuing Bank, the Borrower shall not be required to make a specific  request
to the Issuing Bank for any such renewal. Once an Evergreen Letter of Credit has
been  issued,  the  Lenders  shall be  deemed  to have  authorized  (but may not
require)  the Issuing Bank to permit the renewal of such Letter of Credit at any
time  to a date  not  later  than  the day  that  is  seven  days  prior  to the
Termination  Date  (or if such day is not a  Business  Day,  the next  preceding
Business  Day);  PROVIDED,  HOWEVER,  that the Issuing Bank shall not permit any
such  renewal if (A) the Issuing Bank would have no  obligation  at such time to
issue such Letter of Credit in its renewed form under the terms  hereof,  or (B)
it has  received  notice in writing on or before the  Business  Day  immediately
preceding the Nonrenewal Notice Date (1) from the Administrative  Agent that the
Required  Lenders  have  elected  not to  permit  such  renewal  or (2) from the
Administrative  Agent,  any  Lender  or the  Borrower  that  one or  more of the
applicable   conditions  specified  in  Section  3.02  is  not  then  satisfied.
Notwithstanding  anything to the  contrary  contained  herein,  the Issuing Bank
shall have no obligation to permit the renewal of any Evergreen Letter of Credit
at any time.

                  (iii) No Issuing Bank shall be required to issue any Letter of
Credit if:

                        (A) any order,  judgment  or decree of any  Governmental
         Authority  or  arbitrator  shall by its  terms  purport  to  enjoin  or
         restrain the Issuing  Bank from  issuing such Letter of Credit,  or any
         Requirements  of Law  applicable  to the Issuing Bank or any request or
         directive   (whether   or  not  having  the  force  of  law)  from  any
         Governmental  Authority with  jurisdiction  over the Issuing Bank shall
         prohibit,  or request that the Issuing Bank refrain from,  the issuance
         of letters of credit  generally or such Letter of Credit in  particular
         or shall  impose upon the Issuing  Bank with  respect to such Letter of
         Credit any restriction,  reserve or capital  requirement (for which the
         Issuing Bank is not otherwise  compensated  hereunder) not in effect on
         the  Closing   Date,   or  shall  impose  upon  the  Issuing  Bank  any
         unreimbursed  loss,  cost or expense  which was not  applicable  on the
         Closing Date and which the Issuing Bank in good faith deems material to
         it;

                        (B) the issuance of such Letter of Credit would  violate
         one or more generally applicable policies of the Issuing Bank; or

                        (C) in the  judgment  of the Issuing  Bank,  the foreign
         currency in which such Letter of Credit is requested to be  denominated
         is not readily and freely available.

                  (iv)   Applicability   of  ISP98  and  UCP.  Unless  otherwise
expressly agreed by the Issuing Bank and the Borrower when a Letter of Credit is
issued  (including  any such

                                       35


<PAGE>


agreement  applicable  to an Existing  Letter of  Credit),  (i) the rules of the
"International   Standby   Practices   1998"   published  by  the  Institute  of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance)  shall apply to each  Standby  Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary  Credits,
as most recently published by the International  Chamber of Commerce (the "ICC")
at the time of issuance  (including the ICC decision published by the Commission
on Banking Technique and Practice on April 6, 1998 regarding the European single
currency (euro)) shall apply to each Trade Letter of Credit.

         Section 2.02 Making the Advances.
                      -------------------

         (a)  Except as  otherwise  provided  in Section  2.02(b) or 2.03,  each
Borrowing  (other than an L/C Borrowing or a Swing Line Borrowing) shall be made
on notice,  given not later than 9:00 A.M. (San Francisco,  California  time) on
the third  Business Day prior to the date of the proposed  Borrowing in the case
of a Borrowing  comprised of Eurodollar Rate Advances,  or on the first Business
Day  prior  to the date of the  proposed  Borrowing  in the case of a  Borrowing
comprised of Base Rate Advances,  by the Borrower to the  Administrative  Agent,
which shall give prompt notice  thereof to each  Appropriate  Lender by telex or
telecopier.  Each notice of a Borrowing  (a "NOTICE OF  BORROWING")  shall be by
telephone,  confirmed  immediately  in writing,  or by telex or  telecopier,  in
substantially  the form of  Exhibit  B-1  hereto,  shall be duly  executed  by a
Responsible  Officer  of the  Borrower,  and  shall  specify  therein:  (i)  the
requested  date of such  Borrowing  (which  shall be a Business  Day);  (ii) the
Facility under which such  Borrowing is requested to be made;  (iii) the Type of
Advances  requested to comprise such  Borrowing;  (iv) the  requested  aggregate
amount  of such  Borrowing;  and (v) in the  case of a  Borrowing  comprised  of
Eurodollar Rate Advances,  the requested duration of the initial Interest Period
for each such Advance.  Each  Appropriate  Lender shall,  before 11:00 A.M. (San
Francisco,  California  time) on the date of such Borrowing,  make available for
the account of its Applicable Lending Office to the Administrative  Agent at the
Administrative  Agent's Account, in same day funds, such Lender's Pro Rata Share
of such Borrowing.  After the  Administrative  Agent's receipt of such funds and
upon  fulfillment  of the  applicable  conditions  set forth in Article III, the
Administrative Agent will make such funds available to the Borrower by crediting
the Borrower's Account;  provided,  HOWEVER,  that, in the case of any Revolving
Credit Borrowing,  the  Administrative  Agent shall first make a portion of such
funds equal to the aggregate principal amount of any Swing Line Advances made by
the Swing  Line Bank and any  Letter of Credit  Advances  made by any  Revolving
Credit Lender and  outstanding on the date of such Revolving  Credit  Borrowing,
PLUS accrued and unpaid  interest  thereon to and as of such date,  available to
the Swing Line Bank and such  Revolving  Credit  Lenders for  repayment  of such
Swing Line Advances and Letter of Credit Advances.

         (b) (i) Each Swing Line  Borrowing  shall be made on notice,  given not
later  than  11:00  A.M.  (San  Francisco,  California  time) on the date of the
proposed  Swing Line  Borrowing,  by the Borrower to the Swing Line Bank and the
Administrative Agent. Each Notice of Borrowing shall be by telephone,  confirmed
immediately in writing,  or by telex or telecopier,  shall be duly executed by a
Responsible  Officer  of the  Borrower,  and  shall  specify  therein:  (A)  the
requested  date of such  Borrowing  (which  shall be a  Business  Day);  (B) the
requested  amount of such  Borrowing;  and (C) the  requested  maturity  of such
Borrowing  (which  maturity  shall be no later  than  the  14th  day  after  the
requested date of such Borrowing).  If, in its sole discretion it

                                       36


<PAGE>


elects to make the requested Swing Line Borrowing, the Swing Line Bank will make
the amount thereof available for the account of its Applicable Lending Office to
the  Administrative  Agent at the  Administrative  Agent's Account,  in same day
funds.  After  the  Administrative  Agent's  receipt  of  such  funds  and  upon
fulfillment  of  the  applicable  conditions  set  forth  in  Article  III,  the
Administrative Agent will make such funds available to the Borrower by crediting
the  Borrower's  Account.  Immediately  upon  the  making  of  each  Swing  Line
Borrowing,  each  Revolving  Credit  Lender  shall  be  deemed  to,  and  hereby
irrevocably and  unconditionally  agrees to, purchase from the Swing Line Bank a
participation  in such Swing Line Borrowing in an amount equal to the product of
such  Revolving  Credit  Lender's  Pro Rata Share TIMES the amount of such Swing
Line Borrowing.

             (ii) Upon demand by the Swing Line Bank, with a copy of such demand
to the  Administrative  Agent  (which shall give prompt  notice  thereof to each
Revolving  Credit Lender),  each Revolving Credit Lender shall purchase from the
Swing  Line  Bank,  and the Swing  Line Bank  shall sell and assign to each such
Revolving  Credit Lender,  such Revolving Credit Lender's Pro Rata Share of such
outstanding  Swing  Line  Borrowing  as of the date of such  demand,  by  making
available for the account of its Applicable Lending Office to the Administrative
Agent at the  Administrative  Agent's  Account for the account of the Swing Line
Bank,  in same day  funds,  an amount in Dollars  equal to such Pro Rata  Share.
Promptly after receipt of such funds,  the  Administrative  Agent shall transfer
such  funds to the  Swing  Line  Bank at its  Applicable  Lending  Office.  Each
Revolving  Credit  Lender  hereby  agrees to  purchase  its Pro Rata Share of an
outstanding  Swing  Line  Borrowing  on (A) the  Business  Day on  which  demand
therefor  is made by the Swing  Line  Bank so long as  notice of such  demand is
given  not  later  than  12:00  Noon (San  Francisco,  California  time) on such
Business Day or (B) the first Business Day next succeeding such demand if notice
of such demand is given after such time. If and to the extent that any Revolving
Credit Lender shall not have so made its Pro Rata Share of any applicable  Swing
Line  Borrowing  available to the  Administrative  Agent in accordance  with the
foregoing provisions of this Section  2.02(b)(ii),  such Revolving Credit Lender
hereby agrees to pay to the Administrative  Agent forthwith on demand the amount
of its Pro Rata Share,  together  with interest  thereon,  for each day from the
date of demand by the Swing  Line Bank  therefor  until the date such  amount is
paid to the  Administrative  Agent, at the Federal Funds Rate. If such Revolving
Credit Lender shall pay to the  Administrative  Agent the amount of its Pro Rata
Share for the account of the Swing Line Bank on any Business Day, such amount so
paid in respect of principal shall constitute a Revolving Credit Advance made by
such  Revolving  Credit  Lender on such  Business  Day for all  purposes of this
Agreement,  and the outstanding  principal amount of the Swing Line Advance made
by the Swing Line Bank shall be reduced by such amount on such Business Day.

             (iii) The  Obligation of each  Revolving  Credit Lender to purchase
its Pro Rata Share of each  outstanding  Swing Line Borrowing upon demand by the
Swing Line Bank therefor  pursuant to clause (ii) of this Section  2.02(b) shall
be  absolute,  unconditional  and  irrevocable,  and shall be made  strictly  in
accordance  with the  terms of clause  (ii) of this  Section  2.02(b)  under all
circumstances, including, without limitation, the following circumstances:

                  (A)  any  lack  of  validity  or  enforceability  of any  Loan
         Document or any other agreement or instrument relating thereto;

                                       37


<PAGE>


                  (B) the  existence  of any  claim,  set-off,  defense or other
         right that such  Revolving  Credit  Lender may have at any time against
         the Swing Line  Bank,  the  Borrower  or any other  Person,  whether in
         connection with the transactions  contemplated by the Loan Documents or
         any unrelated transaction;

                  (C) the occurrence and  continuance of any Default or Event of
         Default; or

                  (D) any other circumstances or happening  whatsoever,  whether
         or not similar to any of the foregoing.

         (c)  Anything in  subsection  (a) of this  Section 2.02 to the contrary
notwithstanding,  the Borrower may not select  Eurodollar  Rate Advances for the
initial  Borrowing of Tranche B Term  Advances  hereunder  and no Tranche B Term
Advance may be made as a Eurodollar Rate Advance and no Tranche B Term Loan Base
Rate Advance may be converted into a Eurodollar Rate Advance until the tenth day
after the Closing Date. In addition,  Advances may not be outstanding as part of
more than 24 separate Borrowings.

         (d) Each Notice of Borrowing  shall be  irrevocable  and binding on the
Borrower.  In the case of any  Borrowing  that the related  Notice of  Borrowing
specifies is to be comprised of Eurodollar  Rate  Advances,  the Borrower  shall
indemnify each Appropriate  Lender against any loss, cost or expense incurred by
such Lender if for any reason a Borrowing  of any  Eurodollar  Rate Advance does
not  occur on the date  specified  therefor  in such  Notice of  Borrowing  or a
Conversion to or Continuation of any Eurodollar Rate Advance does not occur on a
date  specified  therefor  in  a  Notice  of  Conversion/Continuation  therefor,
including,  without limitation,  any loss, cost or expense incurred by reason of
the  liquidation  or  reemployment  of deposits or other funds  acquired by such
Lender to fund the Advance to be made by such  Lender as part of such  Borrowing
when such Advance, as a result of such failure, is not made on such date.

         (e) Unless the Administrative  Agent shall have received notice from an
Appropriate  Lender prior to the date of any  Borrowing  under a Facility  under
which such Lender has a Commitment  that such Lender will not make  available to
the  Administrative  Agent such Lender's Pro Rata Share of such  Borrowing,  the
Administrative Agent may assume that such Lender has made the amount of such Pro
Rata Share available to the  Administrative  Agent on the date of such Borrowing
in accordance  with  subsection  (a) or (b) of this Section 2.02, as applicable,
and the  Administrative  Agent  may,  in  reliance  upon such  assumption,  make
available to the  Borrower on such date a  corresponding  amount.  If and to the
extent that such Lender shall not have so made the amount of such Pro Rata Share
available to the  Administrative  Agent, such Lender and the Borrower  severally
agree to repay or to pay to the  Administrative  Agent  forthwith on demand such
corresponding amount, together with interest thereon, for each day from the date
such  amount is made  available  to the  Borrower  until the date such amount is
repaid or paid to the Administrative  Agent, at (i) in the case of the Borrower,
the  interest  rate  applicable  at such time  under  Section  2.07 to  Advances
comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds
Rate. If such Lender shall pay to the  Administrative  Agent such  corresponding
amount,  such amount so paid shall  constitute such Lender's  Advance as part of
such Borrowing for all purposes under this Agreement.

                                       38


<PAGE>


         (f) The  failure of any  Lender to make the  Advance to be made by it
as part of any Borrowing  shall not relieve any other Lender of its  obligation,
if any,  hereunder  to make its  Advance on the date of such  Borrowing,  but no
Lender  shall be  responsible  for the  failure of any other  Lender to make the
Advance to be made by such other Lender on the date of any Borrowing.

         Section 2.03 Issuance of and Drawings and  Reimbursement  Under Letters
                      ----------------------------------------------------------
of Credit.
- ---------

         (a) Request for Issuance.
             --------------------

             (i) Each  Domestic  Letter of Credit  shall be issued upon  notice,
given not later than 1:00 P.M. (San Francisco,  California time) on the Business
Day prior to the date of the proposed issuance of such Domestic Letter of Credit
(or such later day as the applicable  Issuing Bank in its sole discretion  shall
agree),  by  the  Borrower  to  any  Issuing  Bank,  which  shall  give  to  the
Administrative  Agent and each Revolving  Credit Lender prompt notice thereof by
telex or telecopier. Each notice of issuance of a Letter of Credit (a "NOTICE OF
ISSUANCE") shall be by telephone,  confirmed immediately in writing, or by telex
or telecopier,  shall be duly executed by a Responsible Officer of the Borrower,
and shall specify therein:  (A) the requested date of such issuance (which shall
be a Business Day); (B) the requested  Available  Amount of such Domestic Letter
of Credit;  (C) the  requested  expiration  date of such Letter of Credit (which
shall comply with the requirements of Section 2.01(e)); (D) the name and address
of the proposed  beneficiary of such Letter of Credit; (E) the currency in which
such  Domestic  Letter of Credit is  requested  to be  denominated;  and (F) the
proposed form of such Domestic  Letter of Credit,  and shall be  accompanied  by
such  application  and  agreement for letters of credit as such Issuing Bank may
specify to the  Borrower  for use in  connection  with such  requested  Domestic
Letter of Credit (a "LETTER OF CREDIT AGREEMENT"). If the requested form of such
Domestic  Letter  of  Credit  is  acceptable  to such  Issuing  Bank in its sole
discretion,   such  Issuing  Bank  will,  upon  fulfillment  of  the  applicable
conditions set forth in Article III, make such Letter of Credit available to the
Borrower at its office  referred to in Section 8.02 or as otherwise  agreed with
the Borrower in connection with the issuance of such Letter of Credit. If and to
the extent that the provisions of any Letter of Credit  Agreement shall conflict
with this Agreement, the provisions of this Agreement shall govern.

             (ii) Each Foreign  Letter of Credit  shall be issued in  accordance
with the usual
and  customary  business  practices  of the  Issuing  Bank or Foreign  Affiliate
Issuing Bank issuing such Foreign Letter of Credit.

             (iii) Immediately upon the issuance of each Letter of Credit,  each
Revolving  Credit  Lender  shall  be  deemed  to,  and  hereby  irrevocably  and
unconditionally  agrees to,  purchase from the Issuing Bank a  participation  in
such  Letter of Credit in an amount  equal to the product of such  Lender's  Pro
Rata Share TIMES the amount of such Letter of Credit.

         (b) Procedure for Issuance.
             ----------------------

             (i) Promptly after receipt of any Notice of Issuance for a Domestic
Letter of Credit,  the Issuing Bank will confirm with the  Administrative  Agent
(by telephone or in writing)

                                       39


<PAGE>


that the  Administrative  Agent has  received a copy of such  Notice of Issuance
from the Borrower and, if not, the Issuing Bank will provide the  Administrative
Agent with a copy thereof. Upon receipt by the Issuing Bank of confirmation from
the  Administrative  Agent that the requested issuance or amendment is permitted
in accordance with the terms hereof,  then,  subject to the terms and conditions
hereof,  the Issuing Bank shall, on the requested date,  issue a Domestic Letter
of  Credit  for the  account  of the  Borrower  or  enter  into  the  applicable
amendment,  as the case may be,  in each  case in  accordance  with the  Issuing
Bank's usual and customary business practices.

             (ii) Promptly  after its delivery of any Domestic  Letter of Credit
or any amendment to a Domestic Letter of Credit to an advising bank with respect
thereto or to the beneficiary thereof, the Issuing Bank will also deliver to the
Borrower and the Administrative  Agent a true and complete copy of such Domestic
Letter of Credit or amendment.

         (c) Drawing and Reimbursement.
             -------------------------

             (i) Upon any drawing  under any Letter of Credit,  the Issuing Bank
shall notify the Borrower and the Administrative  Agent thereof.  Not later than
11:00 A.M. (San  Francisco,  California  time) on the date of any payment by the
Issuing Bank under a Letter of Credit  (each such date,  an "HONOR  DATE"),  the
Borrower shall reimburse the Issuing Bank through the Administrative Agent in an
amount equal to the amount of such drawing in Dollars (which amount, in the case
of a payment under a Letter of Credit which is  denominated  in a currency other
than Dollars, shall be calculated by reference to the applicable Exchange Rate).
If the  Borrower  fails to so  reimburse  the  Issuing  Bank by such  time,  the
Administrative  Agent shall promptly notify each Revolving  Credit Lender of the
Honor Date, the amount of the unreimbursed drawing (the "UNREIMBURSED  AMOUNT"),
and such Lender's Pro Rata Share thereof.  In such event,  the Borrower shall be
deemed to have  requested  a  Revolving  Credit  Advance  of Base Rate  Loans in
Dollars (which  amount,  in the case of a payment under a Letter of Credit which
is  denominated  in a  currency  other  than  Dollars,  shall be  calculated  by
reference to the applicable  Exchange Rate) to be disbursed on the Honor Date in
an amount equal to the  Unreimbursed  Amount,  without regard to the minimum and
multiples  specified in Section  2.01(c) for the  principal  amount of Base Rate
Loans,  but  subject  to the amount of the  Aggregate  Unused  Revolving  Credit
Commitments  and the  conditions  set  forth in  Section  3.02  (other  than the
delivery of a Notice of Borrowing).  Any notice given by the Issuing Bank or the
Administrative  Agent  pursuant  to this  Section  2.03(c)(i)  may be  given  by
telephone if immediately confirmed in writing; provided that the lack of such an
immediate  confirmation shall not affect the conclusiveness or binding effect of
such notice.

             (ii) Each Revolving  Credit Lender  (including the Revolving Credit
Lender  acting as  Issuing  Bank)  shall  upon any  notice  pursuant  to Section
2.03(c)(i) make funds available to the  Administrative  Agent in Dollars for the
account of the Issuing Bank at the  Administrative  Agent's Account in an amount
equal to its Pro Rata Share of the Unreimbursed  Amount not later than 1:00 P.M.
(San Francisco, California time) on the Business Day specified in such notice by
the  Administrative  Agent,  whereupon,  subject  to the  provisions  of Section
2.03(c)(iii),  each Revolving  Credit Lender that so makes funds available shall
be  deemed to have made a  Revolving  Credit  Advance  to the  Borrower  in such
amount.  The  Administrative  Agent  shall  remit the funds so  received  to the
Issuing Bank.

                                       40


<PAGE>


             (iii) With  respect to any  Unreimbursed  Amount  that is not fully
refinanced by a Revolving  Credit  Advance  because the  conditions set forth in
Section 3.02 cannot be satisfied or for any other reason,  the Borrower shall be
deemed to have  incurred from the Issuing Bank an L/C Borrowing in the amount of
the Unreimbursed Amount that is not so refinanced,  which L/C Borrowing shall be
due and payable on demand  (together with interest) and shall bear interest at a
rate per  annum  equal at all  times to 2% per  annum  above  the rate per annum
required  to be paid on  Eurodollar  Rate  Advances  pursuant  to clause  (i) of
Section  2.07(a).  In such event,  each Lender's  payment to the  Administrative
Agent for the account of the Issuing Bank pursuant to Section  2.03(c)(ii) shall
be deemed  payment in respect of its  participation  in such L/C  Borrowing  and
shall constitute a Letter of Credit Advance from such Revolving Credit Lender in
satisfaction of its participation obligation under this Section 2.03.

             (iv) Until each Revolving  Credit Lender funds its Revolving Credit
Advance  or  Letter  of Credit  Advance  pursuant  to this  Section  2.03(c)  to
reimburse  the  Issuing  Bank for any amount  drawn  under any Letter of Credit,
interest  in respect of such  Lender's  Pro Rata Share of such  amount  shall be
solely for the account of the Issuing Bank.

             (v)  The  Obligation  of  each  Revolving  Credit  Lender  to  make
Revolving  Loans or Letter of Credit  Advances  upon demand by any Issuing  Bank
therefor  pursuant  to clause (i) of this  Section  2.03(c)  shall be  absolute,
unconditional and irrevocable, and shall be made strictly in accordance with the
terms of clause (i) of this Section 2.03(c) under all circumstances,  including,
without limitation, the following circumstances:

                  (A)  any  lack  of  validity  or  enforceability  of any  Loan
         Document,  any Letter of Credit Agreement,  any Letter of Credit or any
         other agreement or instrument relating thereto (collectively,  the "L/C
         RELATED Documents");

                  (B) the  existence  of any  claim,  set-off,  defense or other
         right that such  Revolving  Credit  Lender may have at any time against
         any  beneficiary or any transferee of a Letter of Credit (or any Person
         for whom any such  beneficiary  or any such  transferee may be acting),
         any  Issuing  Bank,  the  Borrower  or any  other  Person,  whether  in
         connection  with  the  transactions  contemplated  by the  L/C  Related
         Documents or any unrelated transaction;

                  (C) the occurrence and  continuance of any Default or Event of
         Default; or

                  (D) any other circumstance or happening whatsoever, whether or
         not similar to any of the foregoing.

         (d)  Failure  to Make  Letter of Credit  Advances.  The  failure of any
              --------------------------------------------
Revolving Credit Lender to make the Letter of Credit Advance to be made by it on
the date  specified  in Section  2.03(c)  shall not relieve any other  Revolving
Credit Lender of its  obligation  hereunder to make its Letter of Credit Advance
on such date,  but no  Revolving  Credit  Lender  shall be  responsible  for the
failure  of any  other  Revolving  Credit  Lender  to make the  Letter of Credit
Advance to be made by such other Revolving Credit Lender on such date.

                                       41


<PAGE>


         Section 2.04 Repayment of Advances
                      ---------------------

         (a)  Tranche  a  Term  Advances.   The  Borrower  shall  repay  to  the
              --------------------------
Administrative  Agent for the ratable  account of the Tranche A Term Lenders the
aggregate  principal  amount of all Tranche A Term Advances  outstanding  on the
following  dates in the respective  amounts set forth opposite such dates (which
amounts  shall be  reduced  as a result of the  application  of  prepayments  in
accordance with the order of priority set forth in Sections 2.05 and 2.06):

<TABLE>
<CAPTION>


           DATE                       AMOUNT
           ----                       ------

<S>                                  <C>
August 23, 2001                      $10,000,000
November 21, 2001                     10,000,000
February 21, 2002                     10,000,000
May 23, 2002                          10,000,000
August 22, 2002                       10,000,000
November 20, 2002                     12,500,000
February 20, 2003                     12,500,000
May 22, 2003                          12,500,000
August 29, 2003                       12,500,000


</TABLE>

; PROVIDED,  HOWEVER,  that the final  principal  repayment  installment  of the
Tranche A Term Advances shall be repaid on the Termination Date and in any event
shall be in an amount equal to the aggregate  principal  amount of all Tranche A
Term Advances outstanding on such date.

         (b)  Tranche  B  Term  Advances.   The  Borrower  shall  repay  to  the
              --------------------------
Administrative  Agent for the ratable  account of the Tranche B Term Lenders the
aggregate  principal  amount of all Tranche B Term Advances  outstanding  on the
following  dates in the respective  amounts set forth opposite such dates (which
amounts  shall be  reduced  as a result of the  application  of  prepayments  in
accordance with the order of priority set forth in Sections 2.05 and 2.06):


<TABLE>
<CAPTION>

           DATE                       AMOUNT
           ----                       ------

<S>                                  <C>
August 23, 2001                      $10,000,000
November 21, 2001                     10,000,000
February 21, 2002                     10,000,000
May 23, 2002                          10,000,000
August 22, 2002                       10,000,000
November 20, 2002                     10,000,000
February 20, 2003                     10,000,000
May 22, 2003                          90,000,000
August 29, 2003                       90,000,000

</TABLE>

; PROVIDED,  HOWEVER,  that the final  principal  repayment  installment  of the
Tranche B Term Advances shall be repaid on the Termination Date and in any event
shall be in an amount equal to the aggregate  principal  amount of all Tranche B
Term Advances outstanding on such date.

                                       42


<PAGE>


         (c)  Revolving  Credit  Advances.  The  Borrower  shall  repay  to  the
              ---------------------------
Administrative  Agent for the ratable account of the Revolving Credit Lenders on
the  Termination  Date the aggregate  principal  amount of all Revolving  Credit
Advances outstanding on such date.

         (d) Swing Line Advances. The Borrower shall repay to the Administrative
             -------------------
Agent for the account of the Swing Line Bank on the earlier of (i) the  maturity
date for each Swing Line Advance (as specified in the applicable Notice of Swing
Line Borrowing) and (ii) the Termination Date the principal amount of each Swing
Line Advance made by the Swing Line Bank outstanding on such date.

         (e) Letter of Credit  Advances.  The  Obligations  of the  Borrower  to
             --------------------------
reimburse  the Issuing Bank for each drawing  under each Letter of Credit and to
repay each Letter of Credit  Advance and each  drawing  under a Letter of Credit
that is refinanced by Revolving Credit Advances shall be absolute, unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement,  such Letter of Credit  Agreement or other  agreement  or  instrument
under  all  circumstances,   including,   without   limitation,   the  following
circumstances:

             (i) any  lack of  validity  or  enforceability  of any L/C  Related
Document;

             (ii) any change in the time,  manner or place of payment  of, or in
any other term of, all or any of the  Obligations  of the Borrower in respect of
any L/C Related  Document or any other  amendment or waiver of or any consent to
departure from all or any of the L/C Related Documents;

             (iii) the existence of any claim,  set-off,  defense or other right
that the Borrower may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any Person for whom any such  beneficiary  or any such
transferee  may be acting),  any Issuing  Bank or any other  Person,  whether in
connection with the  transactions  contemplated by the L/C Related  Documents or
any unrelated transaction;

             (iv) any statement or any other document  presented  under a Letter
of Credit  proving to be forged,  fraudulent,  invalid  or  insufficient  in any
respect or any statement therein being untrue or inaccurate in any respect;

             (v)  payment by any  Issuing  Bank in good faith  under a Letter of
Credit against presentation of a draft,  certificate or other document that does
not strictly comply with the terms of such Letter of Credit;

             (vi) any exchange,  release or  nonperfection  of any Collateral or
other  collateral,  or any  release  or  amendment  or waiver of or  consent  to
departure from the Subsidiary Guaranty or any other guarantee, for all or any of
the Obligations of the Borrower in respect of the L/C Related Documents; or

             (vii) any other  circumstance or happening  whatsoever,  whether or
not similar to any of the foregoing,  including,  without limitation,  any other
circumstance  that  might  otherwise  constitute  a defense  available  to, or a
discharge of, the Borrower or a guarantor.

                                       43


<PAGE>


         Section   2.05   Termination   or   Reduction   of   the   Commitments.
                          -----------------------------------------------------

         (a)  Optional.  The Borrower may,  upon at least three  Business  Days'
              --------
notice to the  Administrative  Agent,  terminate  in whole or reduce in part the
Aggregate Unused  Revolving Credit  Commitments;  PROVIDED,  HOWEVER,  that each
partial  reduction  of  such  Facility  shall  be  in  an  aggregate  amount  of
$25,000,000 or an integral multiple of $5,000,000 in excess thereof or, if less,
the aggregate amount of such Facility.

         (b) Mandatory.
             ---------

             (i) The Tranche A Term  Facility  and the  Tranche B Term  Facility
shall be  automatically  and  permanently  reduced  from  time to time upon each
repayment or prepayment of the outstanding  Tranche A Term Advances or Tranche B
Term Advances, as the case may be, by an amount equal to the amount by which (A)
the  Tranche A Term  Facility  or Tranche B Term  Facility,  as the case may be,
immediately prior to such reduction  exceeds (B) the aggregate  principal amount
of all Tranche A Term Advances or Tranche B Term  Advances,  as the case may be,
outstanding at such time.

             (ii) The  Revolving  Credit  Facility  shall be  automatically  and
permanently  reduced on each date on which the  prepayment  of Revolving  Credit
Advances  outstanding  thereunder  is  required  to be made  pursuant to Section
2.06(b)(i) by an amount equal to the applicable Reduction Amount.

             (iii) The  Letter of Credit  Sublimit  shall be  automatically  and
permanently  reduced  on the  date of each  reduction  in the  Revolving  Credit
Facility by an amount  equal to the  amount,  if any, by which (A) the Letter of
Credit  Sublimit on such date exceeds (B) the Revolving  Credit Facility on such
date, after giving effect to such reduction of the Revolving Credit Facility.

         (c)  Application  of Commitment  Reductions.  Upon each  reduction of a
              --------------------------------------
Facility  pursuant to this Section  2.05,  the  Commitment  of each  Appropriate
Lender under such  Facility  shall be reduced by such Lender's Pro Rata Share of
the amount by which such Facility is reduced.

         Section 2.06 Prepayments.
                      -----------

         (a) Optional. The Borrower may, upon at least one Business Day's notice
             --------
in the case of Base Rate Advances and three Business Days' notice in the case of
Eurodollar Rate Advances,  in each case to the Administrative  Agent stating the
proposed  date and aggregate  principal  amount of the  prepayment,  and if such
notice is given the Borrower shall, prepay the aggregate principal amount of the
Advances  comprising part of the same Borrowing and outstanding on such date, in
whole or ratably in part;  PROVIDED,  HOWEVER,  that (i) each partial prepayment
shall be in an aggregate principal amount of $10,000,000 or an integral multiple
of $1,000,000 in excess thereof and (ii) if any such  prepayment of a Eurodollar
Rate  Advance is made on a date other  than the last day of an  Interest  Period
therefor,  the  Borrower  shall  also pay any  amounts  owing in respect of such
Eurodollar  Rate Advance  pursuant to Section  2.11(d).  The Borrower may on any
Business Day prepay  Swing Line  Advances in an  aggregate  principal  amount of
$1,000,000  or  an  integral  multiple  of  $500,000  in  excess  thereof.  Each
prepayment  pursuant  to

                                       44


<PAGE>


this  subsection  (a), other than any prepayment of Revolving  Credit  Advances,
shall be  applied  to prepay  the  Tranche A Term  Advances  and  Tranche B Term
Advances  on a pro rata basis (in  accordance  with the  respective  outstanding
principal  amounts thereof) and to reduce the principal  repayment  installments
thereof in order of maturity.

         (b) Mandatory.
             ---------

             (i) The  Borrower  shall (A) on the date of receipt of the Net Cash
Proceeds  by the  Borrower  or any of its  Subsidiaries  from the  sale,  lease,
transfer or other  disposition  of any property or assets of the Borrower or any
of its Subsidiaries (other than any property or assets expressly permitted to be
sold, leased, transferred or otherwise disposed of pursuant to clause (i), (ii),
(iii),  (iv), (ix), (x), (xii),  (xiii) or (xiv) of Section 5.02(e) and property
or assets to the extent that the  aggregate  value of such  property  and assets
disposed of in any single transaction or related series of transactions does not
exceed  $500,000),  (B) no later than five days following the receipt of the Net
Cash  Proceeds by the  Borrower or any of its  Subsidiaries  from any  Equipment
Financing Transaction, Permitted Foreign Receivables Transaction, or Real Estate
Financing  Transaction,  (C) on the date of receipt of the Net Cash  Proceeds by
the Borrower or any of its Subsidiaries from any Permitted Domestic  Receivables
Transaction,  and (D) on the date of  receipt  of the Net Cash  Proceeds  by the
Borrower or any of its  Subsidiaries  from any Insurance  Receipt received by or
paid to or for the  account of the  Borrower or any of its  Subsidiaries  (other
than the Net Cash  Proceeds of any  Insurance  Receipt  with respect to property
subject  to  an  Equipment  Financing  Transaction,   a  Real  Estate  Financing
Transaction or a Lien permitted under Section 5.02(a)(iv)),  prepay an aggregate
principal amount of the Advances comprising part of the same Borrowings equal to
100% of the  amount  of such Net Cash  Proceeds.  Each  prepayment  of  Advances
pursuant  to this  clause  (i) shall be  applied  to prepay  the  Tranche A Term
Advances  and the  Tranche B Term  Advances  and  reduce  the  Revolving  Credit
Facility  on a pro rata  basis;  PROVIDED,  HOWEVER,  that  notwithstanding  the
foregoing  provisions  of this clause (i) and Section  2.06(b)(vi),  in no event
shall the Revolving  Credit Facility be reduced  pursuant to this clause (i), to
less than  $500,000,000,  and any amounts that otherwise would have been applied
to  reduce  the  Revolving  Credit  Facility  shall be  applied  to the  further
prepayment  of the  Tranche A Term  Loans and the  Tranche B Term Loans on a pro
rata  basis.  Each  prepayment  of Tranche A Term  Advances  and  Tranche B Term
Advances  pursuant to this  clause (i) shall be applied to reduce the  principal
repayment installments thereof in inverse order of maturity.

             (ii)  The  Borrower  shall,  no  later  than  three  Business  Days
following  the receipt of the Net Cash  Proceeds  by the  Borrower or any of its
Subsidiaries  from (A) the  incurrence or issuance by the Borrower or any of its
Subsidiaries of any Debt (other than Debt expressly  permitted to be incurred or
issued  pursuant to Section 5.02(b) (other than Section  5.02(b)(i)(C))  and (B)
the  issuance or sale by the Borrower or any of its  Subsidiaries  of any Equity
Interests  therein,  prepay an aggregate  principal amount of the Tranche A Term
Advances  and Tranche B Term  Advances  comprising  part of the same  Borrowings
equal to 100% of the  amount  of such  Net Cash  Proceeds.  Each  prepayment  of
Tranche A Term Advances and Tranche B Term Advances pursuant to this clause (ii)
shall be  applied  to prepay  the  Tranche A Term  Advances  and  Tranche B Term
Advances  on a pro rata basis (in  accordance  with the  respective  outstanding
principal  amounts thereof) and to reduce the principal  repayment  installments
thereof in inverse order of maturity. In the event that there are no outstanding

                                       45


<PAGE>


Tranche A Term Advances or Tranche B Term Advances on the date of receipt of any
such Net Cash Proceeds, no prepayment shall be required.

             (iii) The Borrower  shall,  on the tenth day  following the date on
which the Borrower delivers to the  Administrative  Agent the Required Financial
Information for any Fiscal Year pursuant to Section 5.03(b), commencing with the
Fiscal Year ending November 25, 2001,  prepay an aggregate  principal  amount of
Tranche A Term Advances and Tranche B Term  Advances  equal to 50% of the amount
of Consolidated Excess Cash Flow for such Fiscal Year; PROVIDED,  HOWEVER,  that
the sum of (A) the mandatory  prepayments required to be made under this Section
2.06(b)(iii)  for Fiscal Years 2001 and 2002, (B) the repayments  required to be
made under  Sections  2.04(a)  and (b) during  such  Fiscal  Years,  and (C) any
payments made under  Sections  2.06(a) and  2.06(b)(v)  during such Fiscal Years
shall not exceed  $200,000,000  during any such Fiscal Year.  Each prepayment of
Tranche A Term  Advances  and  Tranche B Term  Advances  pursuant to this clause
(iii) shall be applied to prepay the Tranche A Term  Advances and Tranche B Term
Advances  on a pro rata basis (in  accordance  with the  respective  outstanding
principal  amounts thereof) and to reduce the principal  repayment  installments
thereof in inverse order of maturity. In the event that there are no outstanding
Tranche A Term Advances or Tranche B Term Advances on the date of receipt of any
such Net Cash Proceeds, no prepayment shall be required.

             (iv)  Notwithstanding  the foregoing,  in the case of any mandatory
prepayment  of the Tranche B Term  Advances  pursuant to clause  (i)(B),  clause
(i)(C) or clause (ii) of this Section 2.06(b), the Tranche B Term Lenders shall,
so long as there are  outstanding  Tranche A Term  Advances,  have the option to
waive the  right to  receive  the  amount of such  mandatory  prepayment  of the
Tranche B Term Advances.  In the event that there are no  outstanding  Tranche A
Term  Advances  on the date of any  mandatory  prepayment,  the  Tranche  B Term
Lenders shall have no option to waive the right to receive such prepayment. Upon
the receipt of any such mandatory  prepayment,  the  Administrative  Agent shall
notify each  Tranche B Term Lender of such  receipt.  In the event any Tranche B
Term Lender  desires to waive such Tranche B Term Lender's right to receive such
mandatory   prepayment,   such  Tranche  B  Term  Lender  shall  so  advise  the
Administrative Agent in writing no later than the close of business on the third
Business Day following receipt of such notice from the Administrative Agent and,
within  five  Business  Days of the  receipt  by  Administrative  Agent  of such
mandatory  prepayment,  the  Administrative  Agent  shall  apply the amount that
otherwise  would have been  applied  to  mandatorily  prepay the  Tranche B Term
Advances  of all Tranche B Term  Lenders  waiving  their  right to receive  such
mandatory prepayment to the further prepayment of the Tranche A Term Advances to
the extent any are then outstanding.

             (v) The Borrower  shall,  on each Business Day, prepay an aggregate
principal  amount of the Revolving  Credit Advances  comprising part of the same
Borrowings,  the Letter of Credit Advances and the Swing Line Advances,  and, if
applicable,  deposit an amount into the L/C Cash Collateral Account equal to the
amount  by  which  (A) the  sum of (1) the  aggregate  principal  amount  of all
Revolving  Credit  Advances,  Letter of Credit  Advances and Swing Line Advances
outstanding on such Business Day and (2) the aggregate  Available  Amount of all
Letters of Credit  outstanding  on such  Business Day exceeds (B) the  Revolving
Credit  Facility on such  Business  Day (after  giving  effect to any  permanent
reduction  thereof  pursuant  to  Section  2.05  on such  Business  Day) on such
Business Day.

                                       46


<PAGE>


             (vi)  Prepayments of the Revolving Credit Facility made pursuant to
clause (i) or (v) of this  Section  2.06(b),  first,  shall be applied to prepay
Letter of Credit  Advances  outstanding  at such time  until all such  Letter of
Credit Advances are paid in full, second,  shall be applied to prepay Swing Line
Advances outstanding at such time until all such Swing Line Advances are paid in
full,  third,  shall be applied to prepay Revolving  Credit Advances  comprising
part of the  same  Borrowings  and  outstanding  at such  time  until  all  such
Revolving  Credit  Advances are paid in full and, fourth shall be deposited into
the L/C Cash  Collateral  Account to cash  collateralize  100% of the  Available
Amount of all Letters of Credit  outstanding  at such time;  and, in the case of
prepayments of the Revolving Credit Facility  required pursuant to clause (i) of
this Section 2.06(b), the amount remaining, if any, after the prepayment in full
of all Advances outstanding at such time and the 100% cash  collateralization of
the aggregate Available Amount of all Letters of Credit outstanding at such time
(the  sum  of  such  prepayment  amounts,  cash  collateralization  amounts  and
remaining amount being, collectively, the "REDUCTION AMOUNT") may be retained by
the Borrower for use in the ordinary  course of its business,  and the Revolving
Credit Facility shall be automatically  and permanently  reduced as set forth in
Section  2.05(b)(iii).  Upon the drawing of any Letter of Credit for which funds
are on deposit in the L/C Cash Collateral  Account,  such funds shall be applied
(without  any further  action by or notice to or from the  Borrower or any other
Loan Party) to reimburse the  applicable  Issuing Bank or the  Revolving  Credit
Lenders, as applicable.

         (c) Prepayments to Include Accrued Interest, Etc. All prepayments under
             --------------------------------------------
this Section 2.06 shall be made together with (i) accrued and unpaid interest to
the date of such  prepayment on the principal  amount so prepaid and (ii) in the
case of any such  prepayment  of a Eurodollar  Rate Advance on a date other than
the last day of an Interest  Period  therefor,  any amounts  owing in respect of
such Eurodollar Rate Advance pursuant to Section 2.11(d).

         Section 2.07 Interest.
                      --------

         (a) Scheduled  Interest.  The Borrower shall pay interest on the unpaid
             -------------------
principal  amount of each  Advance  owing to each Lender  Party from the date of
such Advance until such principal amount shall be paid in full, at the following
rates per annum:

             (i) Revolving Credit Advances and Tranche A Term Advances.

                  (A) Base Rate Advances. During such periods as such Advance is
         a Base Rate Advance,  a rate per annum equal at all times to the sum of
         (A) the Base  Rate in effect  from time to time and (B) the  Applicable
         Margin for such Advance in effect from time to time, payable in arrears
         quarterly  on the  fifth  Business  Day  after  the end of each  Fiscal
         Quarter  during  such  periods  and on the date such Base Rate  Advance
         shall be Converted or paid in full.

                  (B)  Eurodollar  Rate  Advances.  During such  periods as such
         Advance is a  Eurodollar  Rate  Advance,  a rate per annum equal at all
         times  during each  Interest  Period for such Advance to the sum of (A)
         the Eurodollar  Rate for such Advance for such Interest  Period and (B)
         the  Applicable  Margin for such  Advance in effect  from time to time,
         payable in arrears on the last day of such Interest Period and, if such
         Interest  Period has a duration of more than three months,  on each day
         that occurs  during such  Interest

                                       47


<PAGE>


Period every three months from the first day of such Interest  Period and on the
date such Eurodollar Rate Advance shall be Converted or paid in full.

             (ii) Tranche B Term Advances.

                  (A) Base Rate Advances. During such periods as such Advance is
         a Base Rate Advance,  a rate per annum equal at all times to the sum of
         the Base Rate in effect from time to time and 2.00%, payable in arrears
         quarterly  on the  fifth  Business  Day  after  the end of each  Fiscal
         Quarter  during  such  periods  and on the date such Base Rate  Advance
         shall be Converted or paid in full.

                  (B)  Eurodollar  Rate  Advances.  During such  periods as such
         Advance is a  Eurodollar  Rate  Advance,  a rate per annum equal at all
         times  during each  Interest  Period for such Advance to the sum of the
         Eurodollar  Rate and 3.25%,  payable in arrears on the last day of such
         Interest  Period  and, if such  Interest  Period has a duration of more
         than three months,  on each day that occurs during such Interest Period
         every three  months from the first day of such  Interest  Period and on
         the date such  Eurodollar  Rate  Advance  shall be Converted or paid in
         full.

             (iii) Swing Line Advances. During such periods as such Advance is a
Swing Line  Advance,  a rate per annum at all times  equal to the rate quoted by
Swing Line Bank,  payable in arrears on the date such Swing Line Advance is paid
in full.

         (b) Default Interest. Upon the occurrence and during the continuance of
             ----------------
an Event of Default, the Borrower shall pay interest on (i) the unpaid principal
amount of each  Advance  owing to each Lender  Party,  payable in arrears on the
dates  referred  to in  clause  (i),  (ii)  or  (iii)  of  Section  2.07(a),  as
applicable,  and on  demand,  at a rate per  annum  equal at all times to 2% per
annum above the rate per annum  required to be paid on such Advance  pursuant to
clause (i), (ii) or (iii) of Section  2.07(a),  as  applicable,  and (ii) to the
fullest extent  permitted by applicable law, the amount of any interest,  fee or
other amount  payable  under this  Agreement  or any other Loan  Document to any
Agent or any Lender  Party that is not paid when due,  from the date such amount
shall be due until such amount shall be paid in full,  payable in arrears on the
date such amount shall be paid in full and on demand,  at a rate per annum equal
at all times to 2% per annum above the rate per annum  required  to be paid,  in
the case of interest,  on the Type of Advance on which such interest has accrued
pursuant to clause (i), (ii) or (iii) of Section 2.07(a), as applicable, and, in
all other  cases,  on Base Rate  Advances  pursuant  to  clause  (i) of  Section
2.07(a).

         (c) Notice of  Interest  Rate.  Promptly  after  receipt of a Notice of
             -------------------------
Borrowing  pursuant  to Section  2.02(a),  the  Administrative  Agent shall give
notice to the Borrower and each  Appropriate  Lender of the applicable  interest
rate determined by the  Administrative  Agent for purposes of clause (i) or (ii)
of Section 2.07(a), as applicable.

         Section 2.08 Fees.
                      ----

         (a) Commitment Fee. The Borrower shall pay to the Administrative  Agent
             --------------
for  the  account  of  the  Revolving  Credit  Lenders  a  commitment  fee  (the
"COMMITMENT  FEE"),  from the date hereof in the case of each Initial Lender and
from the effective date  specified in the

                                       48


<PAGE>


Assignment  and  Acceptance  pursuant to which it became a Lender in the case of
each other Lender until, in each case, the Termination Date,  payable in arrears
quarterly  on the  fifth  Business  Day after  the end of each  Fiscal  Quarter,
commencing  February 25, 2001, and on the Termination Date, at the rate of 0.50%
per annum on the sum of the average daily Unused Revolving Credit  Commitment of
each Revolving Credit Lender; PROVIDED, HOWEVER, that any Commitment Fee accrued
with respect to any of the Commitments of a Defaulting  Lender during the period
prior to the time such Lender became a Defaulting Lender and unpaid at such time
shall  not be  payable  by the  Borrower  so  long  as such  Lender  shall  be a
Defaulting  Lender except to the extent that such Commitment Fee shall otherwise
have been due and  payable  by the  Borrower  prior to such time;  and  PROVIDED
FURTHER  that no  Commitment  Fee shall  accrue on any of the  Commitments  of a
Defaulting Lender so long as such Lender shall be a Defaulting Lender.

         (b) Domestic Letter of Credit Fees, Etc.
             ------------------------------------

             (i) The  Borrower  shall  pay to the  Administrative  Agent for the
account  of each  Revolving  Credit  Lender a  commission,  payable  in  arrears
quarterly on the fifth Business Day after the end of each Fiscal Quarter, and on
the  earliest  to  occur  of  the  full  drawing,  expiration,   termination  or
cancellation of any such Domestic Letter of Credit and on the Termination  Date,
on such Revolving  Credit Lender's Pro Rata Share of the average daily aggregate
Available Amount of all Domestic Letters of Credit outstanding from time to time
during such Fiscal Quarter at the Applicable Margin for Eurodollar Rate Advances
under  the  Revolving  Credit  Facility.  Upon the  occurrence  and  during  the
continuance  of an Event of  Default,  the amount of  commission  payable by the
Borrower under this clause (b)(i) shall be increased by 2% per annum.

             (ii) The  Borrower  shall  pay to each  Issuing  Bank,  for its own
account,  (A) an issuance fee for each Domestic  Letter of Credit issued by such
Issuing  Bank  (other  than  Existing  Letters of Credit) in an amount  equal to
0.125% of the Available  Amount of such Domestic Letter of Credit on the date of
issuance of such Domestic  Letter of Credit,  payable on such date, and (B) such
other customary documentary and processing charges and other fees and charges in
connection with the issuance or administration of each Domestic Letter of Credit
as the Borrower and such Issuing Bank shall agree.

             (iii) For purposes of  calculating  any fees payable  under clauses
(i) and (ii) of this Section 2.08(b), any amount described in such clauses which
is  denominated  in a currency  other than Dollars  shall be valued based on the
applicable  Exchange  Rate  for  such  currency  as of the  applicable  date  of
determination.

         (c)  Foreign  Letter  of Credit  Fees.  The  Borrower  shall pay to the
              --------------------------------
Administrative  Agent for the  account of each  Revolving  Credit  Lender a fee,
payable in arrears  quarterly  on the fifth  Business  Day after the end of each
Fiscal  Quarter,  equal to the Foreign Letter of Credit Sublimit for such Fiscal
Quarter  MULTIPLIED by 50% of the Applicable Margin for Eurodollar Rate Advances
under  the  Revolving  Credit  Facility.  Upon the  occurrence  and  during  the
continuance  of an  Event of  Default,  the  amount  of the fee  payable  by the
Borrower under this clause (c) shall be increased by 2% per annum.

                                       49


<PAGE>


         (d) Agent's Fees.  The Borrower shall pay to the  Administrative  Agent
             ------------
for the account of the  Administrative  Agent such fees as may from time to time
be agreed between the Borrower and the Administrative Agent.

         Section 2.09 Conversion and Continuation of Advances.
                      ---------------------------------------

         (a)  Optional.  The Borrower may on any Business Day, upon notice given
              --------
to the Administrative Agent not later than 9:00 A.M. (San Francisco,  California
time)  time  on the  third  Business  Day  prior  to the  date  of the  proposed
Conversion or  Continuation,  and subject to the provisions of Sections 2.07 and
2.10, Convert all or any portion of the Advances of one Type comprising the same
Borrowing  equal to at least  $10,000,000  into  Advances  of the other  Type or
Continue all or any portion of the Eurodollar Rate Advances  comprising the same
Borrowing equal to at least  $10,000,000 as Eurodollar Rate Advances;  PROVIDED,
HOWEVER, that:

             (i) any  Conversion  of  Eurodollar  Rate  Advances  into Base Rate
Advances  shall  be made  only on the last day of an  Interest  Period  for such
Eurodollar Rate Advances;

             (ii) any  Conversion  of Base Rate Advances  into  Eurodollar  Rate
Advances  shall be made only if no Event of Default  shall have  occurred and be
continuing;

             (iii) no Conversion  of any Advances  shall result in more separate
Borrowings than permitted under Section 2.02(c); and

             (iv)  each  Conversion  of  Advances  comprising  part of the  same
Borrowing  under any  Facility  shall be made among the  Appropriate  Lenders in
accordance with their respective Pro Rata Shares of such Borrowing.

Each notice of a Conversion/Continuation (a "NOTICE OF CONVERSION/CONTINUATION")
shall be delivered by telephone,  confirmed  immediately in writing, or by telex
or telecopier,  in substantially  the form of Exhibit B-2 hereto,  shall be duly
executed  by a  Responsible  Officer  of the  Borrower,  and  shall,  within the
restrictions set forth in the immediately preceding sentence, specify therein:

                  (A) the  requested  date of such  Conversion  or  Continuation
         (which shall be a Business Day);

                  (B) the Advances requested to be Converted or Continued; and

                  (C) if such  Conversion  is into  Eurodollar  Rate Advances or
         Eurodollar Rate Advances are to be Continued, the requested duration of
         the  Interest  Period  for such  Eurodollar  Rate  Advances;  PROVIDED,
         HOWEVER, that in the event the Borrower fails to select the duration of
         the Interest Period for any Conversion into Eurodollar Rate Advances or
         the Continuation of any Eurodollar Rate Advances, the Borrower shall be
         deemed to have requested an Interest Period of one month.

The  Administrative  Agent  shall give each of the  Appropriate  Lenders  prompt
notice of each  Notice of  Conversion/Continuation  received  by it, by telex or
telecopier.  Each Notice of  Conversion/Continuation  shall be  irrevocable  and
binding on the Borrower.  In the event the

                                       50


<PAGE>


Borrower fails to deliver a Notice of Conversion/Continuation on or prior to the
third Business Day prior to the last day of an Interest  Period for a Eurodollar
Rate  Advance,  the  Borrower  shall  be  deemed  to have  requested  that  such
Eurodollar  Rate  Advance be  Continued  as a  Eurodollar  Rate  Advance with an
Interest Period of one month.

         (b) Mandatory.
             ---------

             (i) In the event that the amount of any outstanding Eurodollar Rate
Advance  shall be less than  $10,000,000,  such  Eurodollar  Rate  Advance  will
automatically,  on the last day of the then existing  Interest Period  therefor,
Convert into a Base Rate Advance.

             (ii) Upon the occurrence and during the continuance of any Event of
Default, (A) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(B) the  obligation of the Lenders to make,  Continue or Convert  Advances into,
Eurodollar Rate Advances shall be suspended. .

         Section 2.10 Increased Costs, Etc.
                      --------------------

         (a)  If,  after  the  date  hereof,  the  adoption  of  any  applicable
Requirement of Law, or any change in any  applicable  Requirement of Law, or any
change in the  interpretation  or  administration  thereof  by any  Governmental
Authority,  central bank or comparable agency charged with the interpretation or
administration  thereof,  or compliance by any Lender (or its Applicable Lending
Office) with any request or  directive  (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency:

             (i) shall subject such Lender (or its Applicable Lending Office) to
any tax, duty, or other charge with respect to any Eurodollar Rate Advances, any
of its Notes, or its obligation to make any Eurodollar Rate Advances,  or change
the basis of taxation of any amounts  payable to such Lender (or its  Applicable
Lending  Office)  under  this  Agreement  or any of its Notes in  respect of any
Eurodollar  Rate Advances  (other than,  for purposes of this Section 2.10,  any
such  increased  costs  resulting  from (A)  Taxes or Other  Taxes  (as to which
Section 2.13 shall govern),  and (B) changes in the basis of taxation of overall
net income or overall  gross  income by the  United  States or the  jurisdiction
under  the laws of which  such  Lender  Party has its  principal  office or such
Applicable Lending Office);

             (ii) shall impose, modify, or deem applicable any reserve,  special
deposit, assessment, or similar requirement (other than any change by way of the
imposition  of or increase in reserve  requirements  included in the  Eurodollar
Rate Reserve  Percentage)  relating to any  extensions of credit or other assets
of, or any deposits with or other liabilities or commitments of, such Lender (or
its  Applicable  Lending  Office),  including  the  Commitments  of such  Lender
hereunder; or

             (iii)  shall  impose  on such  Lender  (or its  Applicable  Lending
Office) or on the United States market for certificates of deposit or the London
interbank market any other condition affecting this Agreement or its Note or any
of such extensions of credit or liabilities or commitments;

                                       51


<PAGE>


and the result of any of the  foregoing  is to increase  the cost to such Lender
(or its Applicable Lending Office) of making, Converting into or maintaining any
Eurodollar  Rate  Advances or to reduce any sum received or  receivable  by such
Lender (or its Applicable  Lending Office) under this Agreement or its Note with
respect to any  Eurodollar  Rate  Advances,  then the Borrower shall pay to such
Lender on demand such amount or amounts as will  compensate such Lender for such
increased cost or reduction.  Each Lender shall promptly notify the Borrower and
the Administrative Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Lender to compensation pursuant to this
Section 2.10(a) and will designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of, such  compensation
and will not, in the judgment of such Lender,  be otherwise  disadvantageous  to
it. Any Lender claiming compensation under this Section 2.10(a) shall furnish to
the  Borrower  and  the  Administrative  Agent a  statement  setting  forth  the
additional  amount  or  amounts  to be  paid to it  hereunder,  which  shall  be
conclusive and binding,  absent manifest error. In determining such amount, such
Lender may use any reasonable  averaging and attribution  methods. If any Lender
requests  compensation by the Borrower under this Section 2.10(a),  the Borrower
may, by notice to such Lender (with a copy to the Administrative Agent), suspend
the obligation of such Lender to make or Convert Eurodollar Rate Advances, or to
Convert Base Rate Advances into  Eurodollar  Rate  Advances,  until the event or
condition  giving rise to such request ceases to be in effect (in which case the
provisions  of  Section  2.10(e)  shall  be  applicable);   PROVIDED  that  such
suspension shall not affect the right of such Lender to receive the compensation
so requested.

         (b) If,  after the date  hereof,  any  Lender  shall  have  determined
that  the  adoption  of any  applicable  Requirement  of Law  regarding  capital
adequacy  or any  change  therein  or in the  interpretation  or  administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration  thereof,  or any request or directive
regarding  capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency, has or would have the
effect  of  reducing  the rate of return on the  capital  of such  Lender or any
corporation   controlling   such  Lender  as  a  consequence  of  such  Lender's
obligations  hereunder  to  a  level  below  that  which  such  Lender  or  such
corporation  could  have  achieved  but for such  adoption,  change,  request or
directive  (taking  into  consideration  its  policies  with  respect to capital
adequacy),  then from time to time upon  demand the  Borrower  shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction. Each Lender shall promptly notify the Borrower and the Administrative
Agent of any event of which it has knowledge,  occurring  after the date hereof,
which will entitle such Lender to compensation  pursuant to this Section 2.10(b)
and will designate a different  Applicable  Lending  Office if such  designation
will avoid the need for,  or reduce the amount of,  such  compensation  and will
not, in the judgment of such Lender,  be  otherwise  disadvantageous  to it. Any
Lender  claiming  compensation  under this Section  2.10(b) shall furnish to the
Borrower and the  Administrative  Agent a statement setting forth the additional
amount or amounts to be paid to it  hereunder,  which  shall be  conclusive  and
binding,  absent manifest error. In determining such amount, such Lender may use
any reasonable averaging and attribution methods.

(c) If, on or prior to the first day of any Interest  Period for any  Eurodollar
Rate  Advance  under  either the  Tranche A Term  Facility,  the  Tranche B Term
Facility or the Revolving Credit Facility, Lenders owed or holding not less than
a  majority  in  interest  of the

                                       52


<PAGE>


aggregate  principal amount of all Advances  outstanding  under such Facility at
any time  notify  the  Administrative  Agent  that the  Eurodollar  Rate for any
Interest  Period for such Advances will not  adequately  and fairly  reflect the
cost to the  Appropriate  Lenders of funding their  Eurodollar Rate Advances for
such Interest  Period,  the  Administrative  Agent shall  promptly so notify the
Borrower and the  Appropriate  Lenders,  whereupon (i) each such Eurodollar Rate
Advance  under such  Facility  will  automatically,  on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the
obligation  of the  Appropriate  Lenders to make, or to Convert  Advances  into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrower  (promptly  following  notice from the Appropriate  Lenders)
that such Lenders have determined that the circumstances causing such suspension
no longer exist.

         (d) Notwithstanding any other provision of this Agreement, in the event
that it becomes  unlawful  for any Lender or its  Applicable  Lending  Office to
make,  maintain,  or fund Eurodollar Rate Advances  hereunder,  then such Lender
shall promptly notify the Borrower thereof and such Lender's  obligation to make
Eurodollar  Rate Advances and to Convert Base Rate Advances into Eurodollar Rate
Advances  shall be  suspended  until such time as such  Lender  may again  make,
maintain and fund  Eurodollar  Rate  Advances (in which case the  provisions  of
Section 2.10(e) shall be applicable).

         (e) If the  obligation of any Lender to make a Eurodollar  Rate Advance
or to  Convert  Base  Rate  Advances  into  Eurodollar  Rate  Advances  shall be
suspended  pursuant to any other  provision of this Section 2.10,  such Lender's
suspended  Eurodollar Rate Advances shall be  automatically  Converted into Base
Rate Advances on the last day(s) of the then current Interest Period(s) therefor
(or, in the case of a Conversion  required by Section  2.10(d),  on such earlier
date  as  such  Lender  may  specify  to  the  Borrower   with  a  copy  to  the
Administrative Agent) and, unless and until such Lender gives notice as provided
below that the  circumstances  specified in such other provision of this Section
2.10 that gave rise to such Conversion no longer exist:

             (i) to the extent  that such  Lender's  suspended  Eurodollar  Rate
Advances have been so Converted,  all payments and prepayments of principal that
would otherwise be applied to such Lender's  suspended  Eurodollar Rate Advances
shall be applied instead to its Base Rate Advances; and

             (ii) all Eurodollar  Rate Advances that would  otherwise be made or
Converted by such Lender shall be made instead as (or shall remain as) Base Rate
Advances.

If such Lender gives notice to the Borrower  (with a copy to the  Administrative
Agent) that the circumstances otherwise specified in this Section 2.10 that gave
rise to the suspension of the making of Eurodollar  Rate Advances by such Lender
no longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when  Eurodollar Rate Advances by other Lenders with
Commitments  under the same  Facility are  outstanding,  such Lender's Base Rate
Advances  shall be  automatically  Converted,  on the  first  day(s) of the next
succeeding Interest Period(s) therefor,  to the extent necessary into Eurodollar
Rate Advances.

                                       53


<PAGE>


         Section 2.11 Payments and Computations
                      -------------------------

         (a) The Borrower shall make each payment hereunder and under the Notes,
irrespective  of any right of  counterclaim,  deduction  or  set-off  (except as
otherwise  provided in Section 2.16),  not later than 11:00 A.M. (San Francisco,
California time) on the day when due in Dollars to the  Administrative  Agent at
the Administrative Agent's Account in immediately available funds, with payments
received by the  Administrative  Agent after such time being deemed to have been
received on the next  succeeding  Business  Day. The  Administrative  Agent will
promptly  thereafter  cause like funds to be distributed  (i) if such payment by
the Borrower is in respect of principal,  interest, commitment fees or any other
Obligation  then payable  hereunder  and under the Notes to more than one Lender
Party,  to such Lender Parties for the accounts of their  respective  Applicable
Lending  Offices in  accordance  with their  respective  Pro Rata  Shares of the
amounts of such  respective  Obligations  payable to such Lender Parties at such
time and (ii) if such  payment by the  Borrower is in respect of any  Obligation
then payable  hereunder solely to one Lender Party, to such Lender Party for the
account  of its  Applicable  Lending  Office,  in  each  case to be  applied  in
accordance  with  the  terms  of  this  Agreement.  Upon  its  acceptance  of an
Assignment and Acceptance and recording of the information  contained therein in
the Register  pursuant to Section 8.07(d),  from and after the effective date of
such Assignment and Acceptance, the Administrative Agent shall make all payments
hereunder and under the Notes in respect of the interest assigned thereby to the
Lender  Party  assignee  thereunder,  and the  parties  to such  Assignment  and
Acceptance  shall make all appropriate  adjustments in such payments for periods
prior to such effective date directly between themselves.

         (b) The Borrower hereby authorizes  Administrative  Agent to charge its
accounts with the  Administrative  Agent in order to cause timely  payment to be
made to the Administrative Agent of all principal,  interest,  fees and expenses
due hereunder  (subject to sufficient  funds being available in its accounts for
that purpose) unless the  Administrative  Agent receives written notice from the
Borrower withdrawing such authorization at least five Business Days prior to the
date of any scheduled payment.

         (c) All  computations  of interest  (other than in respect of Base Rate
Advances  calculated on the basis of Bank of America's  "prime rate"),  fees and
Letter of Credit  commissions shall be made by the  Administrative  Agent on the
basis of a year of 360 days and all  computations of interest in respect of Base
Rate Advances  calculated on the basis of Bank of America's  prime rate shall be
made by the Administrative Agent on the basis of a year of 365/366 days, in each
case for the actual  number of days  (including  the first day but excluding the
last day) occurring in the period for which such  interest,  fees or commissions
are payable. Each determination by the Administrative Agent of an interest rate,
fee or commission  hereunder  shall be conclusive  and binding for all purposes,
absent manifest error.

         (d) If any payment of principal  of, or Conversion  of, any  Eurodollar
Rate  Advance is made by the  Borrower to or for the  account of a Lender  Party
other than on the last day of the Interest Period for such Advance,  as a result
of a payment or  Conversion  pursuant to Section  2.06,  2.09(b)(i)  or 2.10(d),
acceleration  of the  maturity of the Notes  pursuant to Section 6.01 or for any
other reason,  or if the Borrower  fails to make any payment or prepayment of an
Advance  for which a notice of  prepayment  has been given or that is  otherwise
required  to be  made,  whether  pursuant  to  Section  2.04,  2.06  or  6.01 or
otherwise,  the Borrower shall, upon

                                       54


<PAGE>


demand by such Lender  Party  (with a copy of such demand to the  Administrative
Agent), pay to the Administrative Agent for the account of such Lender Party any
amounts  required to  compensate  such Lender Party for any  additional  losses,
costs or expenses  that it may  reasonably  incur as a result of such payment or
Conversion  or such  failure  to pay or prepay,  as the case may be,  including,
without  limitation,  any  loss,  cost or  expense  incurred  by  reason  of the
liquidation  or  reemployment  of deposits or other funds acquired by any Lender
Party to fund or maintain such Advance. Any Lender Party claiming  reimbursement
or  compensation  pursuant to this Section 2.11(d) shall deliver to the Borrower
(with a copy  to the  Administrative  Agent)  a  certificate  setting  forth  in
reasonable  detail the amount  payable to the Lender  Party  hereunder  and such
certificate  shall be  conclusive  and binding on the Borrower in the absence of
manifest  error.  Each  certificate  submitted  under this Section may not claim
reimbursement  or  compensation  for a period  earlier than 60 days prior to the
date of such certificate  unless  interpretation of the law or regulation or the
guideline  or request in  question  is  retroactive  in effect in which case the
certificate can cover such retroactive period.

         (e) Whenever  any payment  hereunder or under the Notes shall be stated
to be due on a day other than a Business  Day, such payment shall be made on the
next  succeeding  Business Day, and such extension of time shall in such case be
included in the  computation of payment of interest or Commitment Fees or Letter
of Credit commissions or fees, as the case may be; PROVIDED,  HOWEVER,  that, if
such  extension  would cause  payment of interest on or principal of  Eurodollar
Rate Advances to be made in the next  succeeding  calendar  month,  such payment
shall be made on the immediately preceding Business Day.

         (f) Unless the Administrative Agent shall have received notice from the
Borrower  prior to the date on which  any  payment  is due to any  Lender  Party
hereunder   that  the  Borrower  will  not  make  such  payment  in  full,   the
Administrative  Agent may assume that the Borrower has made such payment in full
to the Administrative  Agent on such date and the  Administrative  Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender Party
on such due date an amount  equal to the  amount due such  Lender  Party on such
date.  If and to the extent the Borrower  shall not have so made such payment in
full to the  Administrative  Agent,  each such  Lender  Party shall repay to the
Administrative  Agent forthwith on demand such amount distributed to such Lender
Party, together with interest thereon, for each day from the date such amount is
distributed  to such Lender  Party until the date such Lender  Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.

         (g) Whenever  any payment  received by the  Administrative  Agent under
this Agreement or any of the other Loan Documents is insufficient to pay in full
all  amounts due and  payable to the Agents and the Lender  Parties  under or in
respect of this Agreement and the other Loan Documents on any date, such payment
shall be distributed by the  Administrative  Agent and applied by the Agents and
the Lender Parties in the following order of priority:

             (i)  first,  to the  payment  of all of the  fees,  indemnification
payments,  costs and expenses that are due and payable to the Agents  (solely in
their respective capacities as Agents) under or in respect of this Agreement and
the other  Loan  Documents  on such  date,  ratably  based  upon the  respective
aggregate amounts of all such fees, indemnification payments, costs and expenses
owing to the Agents on such date;

                                       55


<PAGE>


             (ii)  second,  to the  payment of all of the fees,  indemnification
payments,  costs and expenses  that are due and payable to the Issuing Banks and
the Swing Line Bank (solely in their respective  capacities as such) under or in
respect of this  Agreement  and the other Loan  Documents on such date,  ratably
based upon the respective  aggregate  amounts of all such fees,  indemnification
payments,  costs and expenses owing to the Issuing Banks and the Swing Line Bank
on such date;

             (iii) third, to the payment of all of the indemnification payments,
costs and expenses  that are due and payable to the Lenders  under  Section 8.04
hereof,  Section 7 of the  Subsidiary  Guaranty,  Section  18 of the  Pledge and
Security Agreement and any similar section of any of the other Loan Documents on
such date,  ratably  based  upon the  respective  aggregate  amounts of all such
indemnification payments, costs and expenses owing to the Lenders on such date;

             (iv) fourth,  to the payment of all of the amounts that are due and
payable to the  Administrative  Agent and the Lender Parties under Sections 2.10
and 2.13  hereof on such  date,  ratably  based  upon the  respective  aggregate
amounts thereof owing to the Administrative Agent and the Lender Parties on such
date;

             (v)  fifth,  to the  payment  of all of the  fees  that are due and
payable to the Lenders  under Section  2.08(a) on such date,  ratably based upon
the respective aggregate Commitments of the Lenders under the Facilities on such
date;

             (vi)  sixth,  to the  payment  of all of  the  accrued  and  unpaid
interest  on the  Obligations  of the  Borrower  under or in respect of the Loan
Documents  that is due and  payable to the  Administrative  Agent and the Lender
Parties under Section  2.07(b) on such date,  ratably based upon the  respective
aggregate amounts of all such interest owing to the Administrative Agent and the
Lender Parties on such date;

             (vii)  seventh,  to the  payment of all of the  accrued  and unpaid
interest on the Advances that is due and payable to the Administrative Agent and
the Lender  Parties under Section  2.07(a) on such date,  ratably based upon the
respective  aggregate  amounts of all such interest owing to the  Administrative
Agent and the Lender Parties on such date;

             (viii) eighth, to the payment of the principal amount of all of the
outstanding Advances that is due and payable to the Administrative Agent and the
Lender Parties on such date, ratably based upon the respective aggregate amounts
of all such principal owing to the  Administrative  Agent and the Lender Parties
on such date; and

             (ix)  ninth,  to the payment of all other  Obligations  of the Loan
Parties owing under or in respect of the Loan Documents that are due and payable
to the Administrative  Agent and the other Secured Parties on such date, ratably
based upon the respective aggregate amounts of all such Obligations owing to the
Administrative Agent and the other Secured Parties on such date.

If the Administrative Agent receives funds for application to the Obligations of
the Loan Parties under or in respect of the Loan Documents  under  circumstances
for which the Loan  Documents  do not  specify the  Advances or the  Facility to
which, or the manner in which, such funds are to

                                       56


<PAGE>


be applied,  the Administrative  Agent may, but shall not be obligated to, elect
to distribute  such funds to each of the Lender Parties in accordance  with such
Lender Party's Pro Rata Share of the sum of (A) the aggregate  principal  amount
of all Advances  outstanding at such time and (b) the aggregate Available Amount
of all Letters of Credit outstanding at such time, in repayment or prepayment of
such of the outstanding  Advances or other Obligations then owing to such Lender
Party,  and,  in the case of the  Tranche  A Term  Facility  and  Tranche B Term
Facility,  for application to such principal repayment  installments thereof, as
the Administrative Agent shall direct.

         Section 2.12 Evidence of Debt.
                      ----------------

         (a) The  Obligations  shall be  evidenced  by one or more  accounts  or
records  maintained  by  each  Lender  and by the  Administrative  Agent  in the
ordinary  course  of  business.  The  accounts  or  records  maintained  by  the
Administrative  Agent and each Lender shall be conclusive  absent manifest error
of the amount of the Advances and other credit extensions made by the Lenders to
the Borrower and the interest and payments thereon.  Any failure so to record or
any  error in doing  so shall  not,  however,  limit  or  otherwise  affect  the
obligation of the Borrower hereunder to pay any amount owing with respect to the
Obligations.  In the event of any  conflict  between  the  accounts  and records
maintained  by any Lender and the  accounts  and  records of the  Administrative
Agent in respect of such matters,  the accounts and records of such Lender shall
control.  Upon the request of any Lender made through the Administrative  Agent,
such Lender's  Advances may be evidenced by a Revolving Credit Note, a Tranche A
Term  Note,  Tranche B Term Note  and/or a Swing Line Note,  as  applicable,  in
addition to such  accounts or records.  Each Lender may attach  schedules to its
Note(s) and endorse thereon the date, Type (if applicable),  amount and maturity
of the applicable Advances and payments with respect thereto.

         (b) In addition to the accounts and records  referred to in  subsection
(a), each Lender and the Administrative  Agent shall maintain in accordance with
its usual  practice  accounts or records  evidencing  the purchases and sales by
such Lender of participations  in Letters of Credit and Swing Line Advances.  In
the event of any conflict  between the accounts  and records  maintained  by the
Administrative  Agent and the  accounts  and records of any Lender in respect of
such  matters,  the  accounts  and  records of the  Administrative  Agent  shall
control.

         Section 2.13 Taxes.
                      ------

         (a) Any and all  payments by the  Borrower to or for the account of any
Lender Party or any Agent  hereunder or under any other Loan  Document  shall be
made, in accordance with Section 2.11 or the applicable provisions of such other
Loan Document,  if any, free and clear of and without  deduction for any and all
present or future taxes, levies, imposts,  deductions,  charges or withholdings,
and all liabilities with respect thereto,  excluding, in the case of each Lender
Party and each  Agent,  taxes that are  imposed on its overall net income by the
United  States  and taxes  that are  imposed  on its  overall  net  income  (and
franchise  taxes imposed in lieu  thereof) by the state or foreign  jurisdiction
under the laws of which such Lender Party or such Agent,  as the case may be, is
organized or any political  subdivision thereof, and, in the case of each Lender
Party,  taxes that are imposed on its overall  net income (and  franchise  taxes
imposed in lieu thereof) by the state or foreign  jurisdiction  of either of its
Applicable  Lending  Offices  or any  political  subdivision  thereof  (all such
nonexcluded  taxes,  levies,  imposts,  deductions,  charges,

                                       57


<PAGE>


withholdings and liabilities in respect of payments hereunder or under the Notes
being,  collectively,   "TAXES").  If  the  Borrower  shall  be  required  under
applicable Requirements of Law to deduct any Taxes from or in respect of any sum
payable  hereunder  or under any other Loan  Document to any Lender Party or any
Agent,  (i) the sum payable by the  Borrower  shall be increased as necessary so
that after the  Borrower  and the  Administrative  Agent have made all  required
deductions  (including  deductions  applicable to additional  sums payable under
this Section 2.13) such Lender Party or such Agent, as the case may be, receives
an amount equal to the sum it would have  received had no such  deductions  been
made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay
the  full  amount  deducted  to  the  relevant   taxation   authority  or  other
Governmental  Authority in accordance  with  applicable  Requirements of Law and
(iv) within 30 days after the date of any payment of Taxes,  the Borrower  shall
furnish to the Administrative Agent, at its address referred to in Section 8.02,
the original or a certified copy of a receipt evidencing payment thereof, to the
extent  such a receipt is issued  therefor,  or other  written  proof of payment
thereof that is reasonably satisfactory to the Administrative Agent.

         (b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes and any other excise, property or similar taxes, charges or
levies  that  arise  from any  payment  made  hereunder  or under any other Loan
Document or from the execution,  delivery of, or otherwise with respect to, this
Agreement or any other Loan Document (collectively, "OTHER TAXES").

         (c) The Borrower  agrees to indemnify  each Lender Party and each Agent
for the full amount of Taxes and Other Taxes (including, without limitation, the
full  amount of Taxes and Other  Taxes of any kind  imposed or  asserted  by any
jurisdiction  on amounts  payable under this Section 2.13) imposed on or paid by
such  Lender  Party  or  such  Agent,  as the  case  may be,  and any  liability
(including penalties, additions to tax, interest and expenses) arising therefrom
or with respect thereto. Amounts payable by the Borrower under the indemnity set
forth in this subsection (c) shall be paid within 30 days from the date on which
the  applicable  Lender  or  Agent,  as the case may be,  makes  written  demand
therefor.

         (d) In the case of any  payment  hereunder  or  under  any  other  Loan
Document by or on behalf of the  Borrower  through an account or branch  outside
the United States,  or on behalf of the Borrower by a payor that is not a United
States person,  if the Borrower  determines that no Taxes are payable in respect
thereof,  the Borrower shall furnish,  or shall cause such payor to furnish,  to
the Administrative Agent, at its address referred to in Section 8.02, an opinion
of counsel reasonably  acceptable to the Administrative  Agent stating that such
payment  is  exempt  from  Taxes.  For  purposes  of  this  subsection  (d)  and
subsections  (e) and (f) of this Section  2.13,  the terms  "UNITED  STATES" and
"UNITED STATES PERSON" shall have the meanings  specified in Section 7701 of the
Internal Revenue Code.

         (e) Each  Lender  Party  organized  under  the  laws of a  jurisdiction
outside the United States (each "NON-US LENDER PARTY") shall, on or prior to the
date of its execution and delivery of this Agreement in the case of each Initial
Lender or each Initial  Issuing Bank, as the case may be, and on or prior to the
date of the  Assignment  and  Acceptance  pursuant  to which it becomes a Lender
Party in the case of each other Lender Party,  and from time to time  thereafter
as reasonably  requested in writing by the Borrower (but only so long thereafter
as such Non-US Lender Party remains lawfully able to do so), provide each of the
Administrative Agent and the

                                       58


<PAGE>


Borrower with two original  Internal  Revenue  Service forms W-8BEN or W-8ECI as
appropriate,  or any successor or other form prescribed by the Internal  Revenue
Service,  certifying  that such  Lender  Party is exempt  from or  entitled to a
reduced  rate of United  States  withholding  tax on  payments  pursuant to this
Agreement or any other Loan Document.  If a Non-US Lender Party has certified in
writing  to the  Administrative  Agent  that it is not a "bank"  (as  defined in
Section  881(c)(3)(A) of the Internal  Revenue Code) (a "NON-BANK  NON-US LENDER
PARTY"),  such Non-Bank  Non-US Lender Party shall instead  provide two original
Internal Revenue Service forms W-8BEN, together with a certificate  representing
that such  Non-Bank  Non-US  Lender  Party is not (i) a "bank" for  purposes  of
Section  881(c) of the Internal  Revenue Code,  (ii) a  ten-percent  shareholder
(within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the
Borrower  or (iii) a  controlled  foreign  corporation  related to the  Borrower
(within the meaning of Section  864(d)(4)  of the  Internal  Revenue  Code),  to
certify  that  such  non-Bank  Non-US  Lender  Party is a  foreign  corporation,
partnership, estate or trust.

         (f) Each Non-US Lender  Party,  to the extent it does not act or ceases
to act for its own account  with  respect to any portion of any sums  payable to
such Lender Party  hereunder or under any other Loan Document  (for example,  by
virtue  of  selling  a  participation),  shall,  on or  prior to the date of its
execution and delivery of this  Agreement in the case of each Initial  Lender or
each Initial  Issuing  Bank,  as the case may be, on or prior to the date of the
Assignment  and  Acceptance  pursuant to which it becomes a Lender  Party in the
case of each other  Lender  Party,  or on such date when any such  Lender  Party
ceases to act for its own account  with  respect to any portion of any such sums
payable,  and from time to time thereafter as reasonably requested in writing by
the Borrower (but only so long thereafter as such Lender Party remains  lawfully
able to do so), provide each of the  Administrative  Agent and the Borrower with
(i) two original  copies of the forms or  statements  required to be provided by
such Non-US Lender Party under  subsection (e) of this Section 2.13 to establish
the portion of any such sums  payable  with  respect to which such Lender  Party
acts for its own  account,  and (ii) two  original  copies of  Internal  Revenue
Service  form  W-8IMY  (or any  successor  forms)  properly  completed  and duly
executed by such Lender  Party,  together  with any  information,  if any,  such
Lender Party chooses to transmit with such form,  and any other  certificate  or
statement  of  exemption  required  under  the  Internal  Revenue  Code  or  the
regulations issued thereunder, to establish that such Lender Party is not acting
for its own account  with  respect to a portion of any such sums payable to such
Lender Party.

         (g) If any form or document  referred to in subsections  (e) and (f) of
this Section 2.13 requires the disclosure of information, other than information
necessary to compute the tax payable and information required on the date hereof
by Internal  Revenue  Service form W-8BEN (and, in the case of a Non-Bank Non-US
Lender  Party,  the related  certificate  described  in  subsection  (e) of this
Section 2.13),  W-8ECI, or W-8IMY, that the Lender Party reasonably considers to
be confidential,  the Lender Party shall give notice thereof to the Borrower and
shall not be  obligated  to include in such form or document  such  confidential
information.

         (h)  If the  forms  provided  by a  Non-US  Lender  Party  pursuant  to
subsection  (e) of this Section 2.13 at the time such Lender Party first becomes
a party to this Agreement indicate a United States interest withholding tax rate
in excess of zero,  withholding  tax at such rate shall be  considered  excluded
from Taxes unless and until such Lender Party  provides  the  appropriate

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forms certifying that a lesser rate applies,  whereupon  withholding tax at such
lesser rate only shall be considered excluded from Taxes for periods governed by
such forms.

         (i) For any  period  with  respect to which a Non-US  Lender  Party has
failed to provide the Borrower with the appropriate  form,  certificate or other
document  described in subsections (e) and (f) of this Section 2.13 or, pursuant
to  subsection  (g) of this  Section  2.13,  has not  included  any  information
required to be  disclosed on any such  appropriate  form,  certificate  or other
document  information  (other  than if such  failure  is due to a change  in the
applicable Requirements of Law, or in the interpretation or application thereof,
occurring  after  the  date on  which  a form,  certificate  or  other  document
originally  was  required to be provided or if such form,  certificate  or other
document  otherwise is not required under  subsection (e) or (f) of this Section
2.13),   such  Non-US  Lender  Party  shall  not  be  entitled  to  payments  or
indemnification  under  subsection  (a),  (b) or (c) of this  Section  2.13 with
respect  to Taxes  imposed  by the  United  States by  reason  of such  failure;
PROVIDED,  HOWEVER,  that should a Non-US  Lender Party become  subject to Taxes
because of its failure to deliver a form, certificate or other document required
hereunder  or to disclose any  information  required to be disclosed on any such
form,  certificate or other document, the Borrower shall take such steps as such
Non-US Lender Party shall reasonably  request to assist such Non-US Lender Party
in recovering such Taxes.

         (j) The right to payments or indemnification under subsections (a), (b)
or (c) of this  Section  2.13 shall not apply to the extent Taxes or Other Taxes
relate to a portion of any sums payable to a Non-US  Lender  Party  hereunder or
under any other Loan  Document  with  respect to which such Non-US  Lender Party
does not act for its own account.

         (k) Each of the Lender Parties hereby agrees that,  upon the occurrence
of any circumstances  entitling such Lender Party to additional amounts pursuant
to this Section 2.13, such Lender Party shall use reasonable efforts (consistent
with its internal policy and legal and regulatory  restrictions)  to designate a
different  Applicable  Lending Office if the making of such a change would avoid
the need for,  or reduce the amount of,  any such  additional  amounts  that may
thereafter  accrue and would not,  in the  reasonable  judgment  of such  Lender
Party, be otherwise disadvantageous to such Lender Party.

         Section 2.14 Sharing of Payments, Etc. If any Lender Party shall obtain
                      ------------------------
at any time any payment (whether voluntary, involuntary, through the exercise of
any right of setoff, or otherwise) (a) on account of Obligations due and payable
to such Lender  Party under or in respect of this  Agreement or any of the other
Loan  Documents at such time in excess of its ratable  share  (according  to the
proportion of (i) the amount of such  Obligations due and payable to such Lender
Party at such time (other than pursuant to Section 2.10,  2.13, 8.04 or 8.07) to
(ii) the  aggregate  amount of the  Obligations  due and  payable  to all Lender
Parties at such time) of payments on account of the  Obligations due and payable
to all Lender  Parties under or in respect of this  Agreement and the other Loan
Documents at such time obtained by all the Lender Parties at such time or (b) on
account of  Obligations  owing (but not due and  payable) to such  Lender  Party
under or in respect of this Agreement or any of the other Loan Documents at such
time in excess of its ratable  share  (according  to the  proportion  of (i) the
amount of such  Obligations  owing to such Lender Party at such time (other than
pursuant to Section 2.10,  2.13,  8.04 or 8.07) to (ii) the aggregate  amount of
the  Obligations  owing (but not due and payable) to all Lender Parties under or
in respect of this Agreement and the other Loan Documents at such

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<PAGE>

time) of payments on account of the Obligations  owing (but not due and payable)
to all Lender  Parties under or in respect of this  Agreement and the other Loan
Documents at such time obtained by all of the Lender Parties at such time,  such
Lender  Party  shall  forthwith  purchase  from the other  Lender  Parties  such
interests or participating interests in the Obligations due and payable or owing
to them,  as the case may be, as shall be  necessary  to cause  such  purchasing
Lender Party to share the excess  payment  ratably with each of them;  PROVIDED,
HOWEVER,  that  if all or any  portion  of such  excess  payment  is  thereafter
recovered  from such  purchasing  Lender  Party,  such  purchase from each other
Lender Party shall be  rescinded  and such other Lender Party shall repay to the
purchasing  Lender Party the purchase price to the extent of such Lender Party's
ratable  share  (according to the  proportion of (A) the purchase  price paid to
such  Lender  Party  to (B) the  aggregate  purchase  price  paid to all  Lender
Parties) of such recovery,  together with an amount equal to such Lender Party's
ratable  share  (according  to the  proportion  of (1) the  amount of such other
Lender Party's required  repayment to (2) the total amount so recovered from the
purchasing  Lender Party) of any interest or other amount paid or payable by the
purchasing  Lender Party in respect of the total amount so  recovered;  PROVIDED
FURTHER that, so long as the Obligations under the Loan Documents shall not have
been accelerated, any excess payment received by any Appropriate Lender shall be
shared on a pro rata basis only with other  Appropriate  Lenders.  The  Borrower
hereby agrees that any Lender Party so  purchasing an interest or  participating
interest  from another  Lender  Party  pursuant to this Section 2.13 may, to the
fullest  extent  permitted  under  applicable  law,  exercise  all its rights of
payment  (including  the right of setoff)  with  respect to such an  interest or
participating  interest,  as the case may be, as fully as if such  Lender  Party
were the direct  creditor  of the  Borrower in the amount of such an interest or
participating interest.

         Section  2.15     USE OF PROCEEDS.  The  proceeds of the  Advances and
                           ---------------
issuances of Letters of Credit shall be available (and the Borrower  agrees that
it shall use such  proceeds and Letters of Credit)  solely to refinance  certain
Debt of the Borrower and its Subsidiaries outstanding on the date of the Initial
Extension of Credit and for the  Borrower's  working  capital and other  general
corporate purposes.

         Section 2.16      DEFAULTING LENDERS.
                           ------------------

         (a)     In the  event  that,  at any one  time,  (i) any  Lender  Party
shall be a Defaulting Lender,  (ii) such Defaulting Lender shall owe a Defaulted
Advance to the  Borrower  and (iii) the  Borrower  shall be required to make any
payment hereunder or under any other Loan Document to or for the account of such
Defaulting  Lender,  then the Borrower may, so long as no Default shall occur or
be  continuing  at such time and to the fullest  extent  permitted by applicable
law, set off and  otherwise  apply the  Obligation  of the Borrower to make such
payment to or for the account of such  Defaulting  Lender against the obligation
of such Defaulting Lender to make such Defaulted Advance.  In the event that, on
any date,  the Borrower  shall so set off and otherwise  apply its obligation to
make any such payment against the obligation of such  Defaulting  Lender to make
any such  Defaulted  Advance on or prior to such date, the amount so set off and
otherwise  applied by the  Borrower  shall  constitute  for all purposes of this
Agreement and the other Loan Documents an Advance by such Defaulting Lender made
on the date of such setoff under the Facility  pursuant to which such  Defaulted
Advance was originally required to have been made pursuant to Section 2.01. Such
Advance shall be a Base Rate Advance and shall be  considered,  for all purposes
of this Agreement, to comprise part of the Borrowing in

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<PAGE>

connection  with which such Defaulted  Advance was  originally  required to have
been made pursuant to Section 2.01,  even if the other Advances  comprising such
Borrowing  shall be Eurodollar  Rate Advances on the date such Advance is deemed
to be made  pursuant to this  subsection  (a).  The  Borrower  shall  notify the
Administrative  Agent at any time the  Borrower  exercises  its right of set-off
pursuant to this  subsection (a) and shall set forth in such notice (A) the name
of the Defaulting  Lender and the Defaulted  Advance required to be made by such
Defaulting Lender and (B) the amount set off and otherwise applied in respect of
such  Defaulted  Advance  pursuant to this  subsection  (a). Any portion of such
payment  otherwise  required to be made by the Borrower to or for the account of
such Defaulting Lender which is paid by the Borrower, after giving effect to the
amount set off and otherwise applied by the Borrower pursuant to this subsection
(a), shall be applied by the Administrative Agent as specified in subsection (b)
or (c) of this Section 2.16.

         (b)     In the  event  that,  at any one  time,  (i) any  Lender  Party
shall be a Defaulting Lender,  (ii) such Defaulting Lender shall owe a Defaulted
Amount to the Administrative  Agent or any of the other Lender Parties and (iii)
the Borrower  shall make any payment  hereunder or under any other Loan Document
to the Administrative  Agent for the account of such Defaulting Lender, then the
Administrative  Agent  may,  on its  behalf or on behalf  of such  other  Lender
Parties and to the fullest  extent  permitted by applicable  law,  apply at such
time the amount so paid by the Borrower to or for the account of such Defaulting
Lender to the payment of each such  Defaulted  Amount to the extent  required to
pay such Defaulted Amount. In the event that the  Administrative  Agent shall so
apply any such amount to the payment of any such  Defaulted  Amount on any date,
the amount so applied  by the  Administrative  Agent  shall  constitute  for all
purposes of this Agreement and the other Loan Documents payment, to such extent,
of such  Defaulted  Amount  on such  date.  Any such  amount so  applied  by the
Administrative   Agent  shall  be  retained  by  the  Administrative   Agent  or
distributed by the Administrative Agent to such other Lender Parties, ratably in
accordance  with the respective  portions of such Defaulted  Amounts  payable at
such time to the Administrative  Agent and such other Lender Parties and, if the
amount of such payment made by the Borrower  shall at such time be  insufficient
to pay all Defaulted Amounts owing at such time to the Administrative  Agent and
the other Lender Parties, in the following order of priority:

                 (i)       first, to the Administrative Agent for any Defaulted
Amount then owing to the Administrative Agent;

                 (ii)      second,  to the  Issuing  Banks and the Swing Line
Bank for any Defaulted  Amount then owing to them, in their  capacities as such,
ratably in accordance with such respective  Defaulted Amounts then owing to such
Issuing Banks and the Swing Line Bank; and

                 (iii)     third, to any other Lender Parties for any Defaulted
Amounts then owing to such other Lender Parties, ratably in accordance with such
respective Defaulted Amounts then owing to such other Lender Parties.

Any  portion  of such  amount  paid by the  Borrower  for  the  account  of such
Defaulting  Lender  remaining,  after giving effect to the amount applied by the
Administrative  Agent pursuant to this  subsection  (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.16.

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<PAGE>

         (c)     In the  event  that,  at any one  time,  (i) any  Lender  Party
shall be a  Defaulting  Lender,  (ii)  such  Defaulting  Lender  shall not owe a
Defaulted   Advance  or  a  Defaulted   Amount  and  (iii)  the  Borrower,   the
Administrative  Agent or any other  Lender  Party  shall be  required  to pay or
distribute  any amount  hereunder or under any other Loan Document to or for the
account of such Defaulting Lender,  then the Borrower or such other Lender Party
shall  pay  such  amount  to  the  Administrative   Agent  to  be  held  by  the
Administrative  Agent,  to the fullest  extent  permitted by applicable  law, in
escrow or the  Administrative  Agent shall,  to the fullest extent  permitted by
applicable law, hold in escrow such amount  otherwise held by it. Any funds held
by the  Administrative  Agent in  escrow  under  this  subsection  (c)  shall be
deposited by the Administrative Agent in an account with Bank of America, in the
name and under the  control  of the  Administrative  Agent,  but  subject to the
provisions  of this  subsection  (c).  The  terms  applicable  to such  account,
including  the rate of interest  payable with  respect to the credit  balance of
such  account  from  time to time,  shall be Bank of  America's  standard  terms
applicable to escrow accounts  maintained with it. Any interest credited to such
account  from time to time shall be held by the  Administrative  Agent in escrow
under, and applied by the  Administrative  Agent from time to time in accordance
with the provisions of, this subsection (c). The Administrative  Agent shall, to
the fullest  extent  permitted  by  applicable  law,  apply all funds so held in
escrow from time to time to the extent  necessary to make any Advances  required
to be made by such  Defaulting  Lender  and to pay any  amount  payable  by such
Defaulting   Lender  hereunder  and  under  the  other  Loan  Documents  to  the
Administrative  Agent or any other Lender  Party,  as and when such  Advances or
amounts  are  required  to be made or paid and,  if the amount so held in escrow
shall at any time be  insufficient to make and pay all such Advances and amounts
required to be made or paid at such time, in the following order of priority:

                 (i)       first, to the  Administrative  Agent for any amount
then due and payable by such Defaulting  Lender to the Administrative Agent
hereunder;

                 (ii)      second,  to the Issuing Banks and the Swing Line Bank
for any amounts then due and payable to them hereunder,  in their  capacities as
such, by such  Defaulting  Lender,  ratably in accordance with such amounts then
due and payable to such Issuing Bank and the Swing Line Bank; and

                 (iii)     third,  to any other Lender Parties for any amount
then due and  payable by such  Defaulting  Lender to such other  Lender  Parties
hereunder,  ratably in  accordance  with such  respective  amounts  then due and
payable to such other Lender Parties; and

                 (iv) fourth, to the  Borrower for any Advance then  required to
be made by such  Defaulting  Lender  pursuant to a Commitment of such Defaulting
Lender.

In the event that any Lender Party that is a  Defaulting  Lender  shall,  at any
time,  cease to be a  Defaulting  Lender,  any funds held by the  Administrative
Agent in  escrow  at such  time  with  respect  to such  Lender  Party  shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender  Party to the  Obligations  owing to such Lender Party at such time under
this  Agreement  and the other Loan  Documents  ratably in  accordance  with the
respective amounts of such Obligations outstanding at such time.

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<PAGE>

         (d)     The rights and remedies against a Defaulting  Lender under this
Section 2.15 are in addition to other rights and remedies  that the Borrower may
have against such  Defaulting  Lender with respect to any Defaulted  Advance and
that the  Administrative  Agent  or any  Lender  Party  may  have  against  such
Defaulting Lender with respect to any Defaulted Amount.

                                  ARTICLE III
                            CONDITIONS OF LENDING AND
                         ISSUANCES OF LETTERS OF CREDIT


         Section  3.01     CONDITIONS PRECEDENT TO INITIAL EXTENSION OF CREDIT.
                           ---------------------------------------------------
The obligation of each Lender to make an Advance or of any Issuing Bank to issue
a Letter of Credit on the occasion of the Initial  Extension of Credit hereunder
is subject to the satisfaction of the following  conditions  precedent before or
concurrently with the Initial Extension of Credit:

         (a)     The  Administrative  Agent  shall have  received on or before
the day of the Initial  Extension of Credit the  following,  each dated such day
(unless otherwise specified),  in form and substance reasonably  satisfactory to
the Lender Parties  (unless  otherwise  specified) and (except for the Notes) in
sufficient copies for each Lender Party:

                 (i)       A pledge and  security  agreement,  in  substantially
the form of Exhibit D hereto  (together with each other  security  agreement and
security agreement  supplement  delivered  pursuant to Section 5.01(i),  in each
case as amended,  the "PLEDGE AND SECURITY  AGREEMENT"),  duly  executed by each
Loan Party, together with:

                           (A) certificates representing the Pledged In- terests
                 referred  to  therein   accompanied  by  undated  stock  powers
                 executed in blank and  instruments  evidencing the Pledged Debt
                 indorsed in blank,

                           (B)  duly   executed   copies  of  proper   financing
                 statements   for   filing   in  all   jurisdictions   that  the
                 Administrative  Agent may deem  necessary or desirable in order
                 to perfect and protect the first  priority  Liens created under
                 the Pledge and  Security  Agreement,  covering  the  Collateral
                 described in the Pledge and Security Agreement,

                           (C) completed  requests for information,  dated on or
                 before the date of the Initial Extension of Credit, listing all
                 effective  financing  statements  filed  in  the  jurisdictions
                 referred  to in clause  (B) above  that name any Loan  Party as
                 debtor,   together   with   copies  of  such  other   financing
                 statements,

                           (D) duly executed cover sheets or other  documents or
                 instruments  required to be filed with the United States Patent
                 and Trademark Office,

                           (E)   evidence  of  the   completion   of  all  other
                 recordings  and  filings  of or with  respect to the Pledge and
                 Security  Agreement  that  the  Administrative  Agent  may deem
                 necessary  or  desirable  in order to perfect  and  protect the
                 Liens created thereby, and

                           (F)   evidence   that  all  other   action  that  the
                 Administrative  Agent may deem  necessary or desirable in order
                 to perfect and protect the first  priority  Liens created under

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<PAGE>

                 the Pledge and Security  Agreement  has been taken  (including,
                 without limitation, receipt of duly executed payoff letters and
                 UCC-3 termination statements).

                 (ii)      A guaranty,  in  substantially  the form of Exhibit E
hereto  (together  with each other  guaranty and guaranty  supplement  delivered
pursuant  to  Section  5.01(i),  in  each  case  as  amended,   the  "SUBSIDIARY
GUARANTY"), duly executed by each Material Domestic Subsidiary.

                 (iii)     Deeds of trust,  trust deeds and mortgages,  in sub-
stantially  the form of Exhibit F hereto and covering the  properties  listed on
Schedule 3.01(a) hereto (the "MORTGAGES"), duly executed by the appropriate Loan
Party, together with:

                           (A) evidence that  counterparts of the Mortgages have
                 been  duly  recorded  on or  before  the  day  of  the  Initial
                 Extension of Credit in all filing or recording offices that the
                 Administrative  Agent may deem  necessary or desirable in order
                 to create a valid  first and  subsisting  Lien on the  property
                 described therein in favor of the Administrative  Agent for the
                 benefit  of  the  Secured  Parties  and  that  all  filing  and
                 recording taxes and fees have been paid,

                           (B)  fully  paid  American  Land  Title   Association
                 Lender's  Extended  Coverage  title  insurance   policies  (the
                 "MORTGAGE  POLICIES") in form and substance,  with endorsements
                 and in amount acceptable to the Administrative  Agent,  issued,
                 coinsured  and  reinsured by title  insurers  acceptable to the
                 Administrative  Agent, insuring the Mortgages to be valid first
                 and subsisting Liens on the property  described  therein,  free
                 and clear of all material defects  (including,  but not limited
                 to,  mechanics' and  materialmen's  Liens) and encumbrances and
                 providing  for  such  other  affirmative  insurance  (including
                 endorsements  for future  advances under the Loan Documents and
                 for mechanics' and  materialmen's  Liens) and such  coinsurance
                 and direct access reinsurance as the  Administrative  Agent may
                 deem necessary or desirable,

                           (C) such consents and agreements of lessors and other
                 third   parties,   and  such   estoppel   letters   and   other
                 confirmations,  as the Administrative  Agent may deem necessary
                 or desirable, and

                           (D)   evidence   that  all  other   action  that  the
                 Administrative  Agent may deem  necessary or desirable in order
                 to create  valid  first and  subsisting  Liens on the  property
                 described in the Mortgages has been taken.

                 (iv)      Certified  copies of the resolutions of the Board of
Directors of each Loan Party  approving  each Loan Document to which it is or is
to be a party,  and of all documents  evidencing  other  necessary  Governmental
Authorizations  and other necessary  corporate  actions or third party approvals
and consents, if any, with respect to each Loan Document to which it is or is to
be a party.

                 (v)       A copy of a certificate  of the Secretary of State of
the jurisdiction of incorporation of each Loan Party,  dated reasonably near the
date of the Initial Extension of Credit, certifying (A) as to a true and correct
copy of the charter (or comparable

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<PAGE>

Constitutive  Document) of such Loan Party and each amendment thereto on file in
such Secretary's office and (B) that (1) such amendments are the only amendments
to such Loan  Party's  (or  comparable  Constitutive  Document)  on file in such
Secretary's office, (2) such Loan Party has paid all franchise taxes to the date
of such  certificate  and (C) such Loan Party is duly  incorporated  and in good
standing or presently subsisting under the laws of the state of the jurisdiction
of its incorporation.

                 (vi)      A copy of a certificate of the Secretary of State of
each  jurisdiction  in which each Loan Party is qualified to do business,  dated
reasonably near the date of the Initial  Extension of Credit,  stating that such
Loan Party is duly  qualified and in good standing as a foreign  corporation  in
such state and has filed all annual reports  required to be filed to the date of
such certificate.

                 (vii)     A certificate or certificates of each Loan Party,
signed on  behalf  of such Loan  Party by its  President,  a Vice  President  or
Treasurer and its Secretary or any  Assistant  Secretary,  dated the date of the
Initial  Extension  of  Credit  (the  statements  made in which  certificate  or
certificates  shall be true on and as of the date of the  Initial  Extension  of
Credit),  certifying as to (A) the absence of any  amendments to the charter (or
comparable  Constitutive  Document)  of such  Loan  Party  since the date of the
Secretary of State's certificate  referred to in Section 3.01(a)(v),  (B) a true
and correct  copy of the bylaws (or  comparable  Constitutive  Document) of such
Loan  Party as in  effect on the date on which the  resolutions  referred  to in
Section  3.01(a)(iv)  were  adopted and on the date of the Initial  Extension of
Credit,  (C) the due  incorporation and good standing or valid existence of such
Loan Party as a corporation  organized under the laws of the jurisdiction of its
incorporation,  and  the  absence  of any  proceeding  for  the  dissolution  or
liquidation  of such  Loan  Party,  (D) the  truth  of the  representations  and
warranties  contained in the Loan Documents as though made on and as of the date
of the Initial  Extension  of Credit and (E) the absence of any event  occurring
and  continuing,  or  resulting  from the  Initial  Extension  of  Credit,  that
constitutes a Default.

                 (viii)    A  certificate  of the  Secretary or an Assistant
Secretary of each Loan Party  certifying  the names and true  signatures  of the
officers of such Loan Party authorized to sign each Loan Document to which it is
or is to be a party  and the  other  documents  to be  delivered  hereunder  and
thereunder.

                 (ix)      Such financial,  business and other  information
regarding each Loan Party and its  Subsidiaries as the Lender Parties shall have
requested, including, without limitation,  information as to possible contingent
liabilities,  tax  matters,  environmental  matters,  obligations  under  Plans,
Multiemployer  Plans and Welfare  Plans,  collective  bargaining  agreements and
other  arrangements  with employees,  audited annual financial  statements dated
November 29, 1998,  November 28, 1999 and November 26, 2000, pro forma financial
statements  as to the  Borrower  and  forecasts  prepared by  management  of the
Borrower,  in form and substance  satisfactory to the Lender Parties, of balance
sheets  and  income  statements  on a monthly  basis for the first  Fiscal  Year
following the day of the Initial  Extension of Credit and on an annual basis for
each Fiscal Year thereafter until the Termination Date.

                 (x)       Evidence of insurance naming the Administrative Agent
as  additional  insured  and loss  payee  with such  responsible  and  reputable
insurance  companies or  associations,  and in such  amounts and  covering  such
risks, as is satisfactory to the Lender Parties, including,  without limitation,
business interruption insurance.

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<PAGE>

                 (xi)      A Notice of Borrowing or Notice of Issuance, as
applicable, relating to the Initial Extension of Credit.

                 (xii)     Favorable opinions of Wachtell, Lipton, Rosen & Katz,
special  counsel  for the Loan  Parties,  Albert F.  Moreno,  Esq.,  Senior Vice
President  and General  Counsel of the  Borrower,  and Legal  Strategies  Group,
special  intellectual  property  counsel to the Borrower,  in form and substance
reasonably satisfactory to the Lender Parties.

                 (xiii)    A  favorable  opinion of  O'Melveny & Myers LLP,
special counsel to the Lender Parties, in form and substance satisfactory to the
Lender Parties.

         (b)     The Lender Parties shall be satisfied  that all  obligations of
the Borrower and its Subsidiaries under the Existing Credit Agreements have been
prepaid, redeemed or defeased in full or otherwise satisfied and extinguished.

         (c)     There shall have occurred no Material Adverse Change since
November 28, 1999.

         (d)     There shall exist no action, suit,  investigation,  litigation
or  proceeding  affecting any Loan Party or any of its  Subsidiaries  pending or
threatened  before any  Governmental  Authority or arbitrator  that (i) would be
reasonably  likely to have a Material  Adverse  Effect  other  than the  matters
described  on Schedule  4.01(f)  hereto  (the  "DISCLOSED  LITIGATION")  or (ii)
purports to affect the legality, validity or enforceability of any Loan Document
and there  shall  have been no change in the status or  financial  effect on any
Loan Party or any of its  Subsidiaries of the Disclosed  Litigation which change
would be reasonably likely to have a Material Adverse Effect.

         (e)     All Governmental  Authorizations  and all third party consents
and approvals  necessary in connection  with the Loan Documents  shall have been
obtained  and  shall  remain  in  effect;  and no  Requirements  of Law shall be
applicable in the reasonable  judgment of the Lender Parties,  in each case that
restrains,  prevents  or imposes  materially  adverse  conditions  upon the Loan
Documents or the rights of the Loan Parties or their  Subsidiaries to create any
Lien on, any properties now owned or hereafter acquired by any of them.

         (f)     The Lender Parties shall have completed a due diligence inves-
tigation  of the  Borrower  and its  Subsidiaries  in scope,  and with  results,
satisfactory to the Lender Parties, and nothing shall have come to the attention
of the Lender Parties during the course of such due diligence  investigation  to
lead  them  to  believe  that  the  Information  Memorandum  was or  has  become
misleading,  incorrect or  incomplete  in any  material  respect,  and,  without
limiting the  generality of the  foregoing,  the Lender  Parties shall have been
given such access to the management,  records,  books of account,  contracts and
properties of the Borrower and its Subsidiaries as they shall have requested.

         (g)     The Lender Parties shall have received a trademark valuation
from Ernst & Young LLP.

         (h)     The  Borrower  shall have paid all accrued fees of the Agents
and the Lender  Parties and all accrued  expenses of the Agents  (including  the
accrued  fees and  expenses  of  counsel to the  Administrative  Agent and local
counsel to the Lender Parties).

                                       67

<PAGE>

         Section 3.02      CONDITIONS  PRECEDENT TO EACH  BORROWING AND ISSUANCE
                           -----------------------------------------------------
AND RENEWAL.  The obligation of each  Appropriate  Lender to make an Advance
- -----------
(other  than a Letter  of  Credit  Advance  made by a  Revolving  Credit  Lender
pursuant to Section  2.03(c) and a Revolving  Credit Advance made by a Revolving
Credit  Lender  pursuant to Section  2.02(b)) on the occasion of each  Borrowing
(including  the initial  Borrowing),  and the obligation of each Issuing Bank to
issue a Letter of Credit  (including the initial  issuance) or renew a Letter of
Credit and the right of the Borrower to request a Swing Line  Advance,  shall be
subject to the further  conditions  precedent that on the date of such Borrowing
or issuance or renewal:

         (a)     the following  statements shall be true and the  Administrative
Agent shall have  received for the account of such Lender or such Issuing Bank a
certificate signed by a duly  authorized  officer  of the  Borrower,  dated the
date of such Borrowing or issuance or renewal, stating that:

                 (i)       the  representations  and  warranties  contained  in
each Loan  Document are correct on and as of such date,  before and after giving
effect to such  Borrowing or issuance or renewal and to the  application  of the
proceeds  therefrom,  as though made on and as of such date  (except (A) for any
such  representations  or warranties  that, by their terms,  refer to a specific
date other than the date of such Borrowing or issuance or renewal, in which case
as of such specific date and (B) if any Required Financial  Information has been
delivered to the Administrative  Agent and the Lender Parties on or prior to the
date of such Borrowing or issuance or renewal,  that the Consolidated  financial
statements of the Borrower and its  Subsidiaries  referred to in Section 4.01(g)
shall be  deemed at any time and from time to time  after  the  Closing  Date to
refer  to  the  Consolidated  financial  statements  of  the  Borrower  and  its
Subsidiaries comprising part of the Required Financial Information most recently
delivered  to the  Administrative  Agent  and the  Lender  Parties  pursuant  to
Sections  5.03(b)  and  5.03(c),  respectively,  on or prior to the date of such
Borrowing, issuance or renewal); and

                 (ii)      no Default has occurred and is  continuing,  or would
result from such Borrowing or issuance or renewal or from the application of the
proceeds therefrom; and

         (b)     the Administrative Agent shall have received such other appro-
vals, opinions or documents as any Appropriate Lender through the Administrative
Agent may reasonably request.

         Section 3.03      DETERMINATIONS  UNDER  SECTION 3.01.  For purposes of
                           -----------------------------------
determining  compliance  with the  conditions  specified in Section  3.01,  each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or  satisfactory to the Lender Parties unless an
officer  of  the   Administrative   Agent   responsible  for  the   transactions
contemplated  by the Loan Documents  shall have received notice from such Lender
Party prior to the Initial  Extension of Credit specifying its objection thereto
and, if the Initial  Extension of Credit  consists of a  Borrowing,  such Lender
Party  shall not have made  available  to the  Administrative  Agent such Lender
Party's ratable portion of such Borrowing.

                                       68

<PAGE>

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES


         Section 4.01      REPRESENTATIONS  AND  WARRANTIES  OF THE  BORROWER.
                           --------------------------------------------------
The  Borrower  represents  and  warrants  as follows:

         (a)     ORGANIZATION  AND POWERS. Each Loan Party is a corporation duly
                 ------------------------
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction of its  incorporation,  (ii) is duly qualified and in good standing
as a foreign  corporation in each other  jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so qualify or be
licensed  except  where the  failure to so qualify or be  licensed  would not be
reasonably  likely to have a Material Adverse Effect and (iii) has all requisite
corporate power and authority (including,  without limitation,  all Governmental
Authorizations)  to own or lease and operate its  properties and to carry on its
business as now conducted and as proposed to be conducted.

         (b)     SUBSIDIARIES.  Set  forth on  Schedule  4.01(b)  hereto is a
                 ------------
complete and accurate list of all Subsidiaries of each Loan Party as of the date
hereof,   showing  (as  to  each  such   Subsidiary)  the  jurisdiction  of  its
incorporation  and the  percentage  of each such class of its  Equity  Interests
owned (directly or indirectly) by such Loan Party. All of the outstanding Equity
Interests in each Loan Party's  Subsidiaries have been validly issued, are fully
paid and non-assessable and, except as set forth on Schedule 4.01(b) hereto, are
owned by such Loan  Party or one or more of its  Subsidiaries  free and clear of
all Liens, except those created under the Collateral Documents.

         (c)     NO CONFLICTS. The execution,  delivery and performance by each
                 ------------
Loan Party of each Loan  Document  to which it is or is to be a party are within
such Loan Party's corporate  powers,  have been duly authorized by all necessary
corporate  action,  and do not (i)  contravene  such Loan  Party's  Constitutive
Documents,  (ii) violate any  Requirements  of Law, (iii) except as set forth on
Schedule 4.01(c) hereto, conflict with or result in the breach of, or constitute
a default or require any payment to be made under, any contract, loan agreement,
indenture,  mortgage,  deed of trust,  lease or other  instrument  binding on or
affecting any Loan Party,  any of its Subsidiaries or any of their properties or
(iv) except for the Liens created under the Loan Documents, result in or require
the  creation  or  imposition  of any Lien  upon or with  respect  to any of the
properties of any Loan Party or any of its Subsidiaries. No Loan Party or any of
its Subsidiaries is in violation of any such Requirements of Law or in breach of
any such contract, loan agreement,  indenture, mortgage, deed of trust, lease or
other instrument, the violation or breach of which would be reasonably likely to
have a Material Adverse Effect.

         (d)     GOVERNMENTAL  AUTHORIZATIONS.  No Governmental  Authorization,
                 ----------------------------
and no other  authorization  or approval or other action by, and no notice to or
filing with, any Governmental Authority or any other third party is required for
(i) the due execution, delivery,  recordation, filing or performance by any Loan
Party of any Loan Document to which it is or is to be a party, (ii) the grant by
any Loan Party of the Liens granted by it pursuant to the Collateral  Documents,
(iii) the  perfection or  maintenance  of the Liens created under the Collateral
Documents  (including the first priority nature thereof) or (iv) the exercise by
any Agent or any Lender  Party of its  rights  under the Loan  Documents  or the
remedies  in respect of the  Collateral  pursuant to the  Collateral  Documents,
except for filings or  recordings  contemplated  by Section  4.01(l) and actions
that may be required  following  the Closing Date as a result of a change in law
and except

                                       69

<PAGE>

as may be required, in connection with the disposition of any Pledged Interests,
by laws generally affecting the offering and sale of securities.

         (e)     BINDING  OBLIGATION.  This  Agreement has been, and each other
                 -------------------
Loan  Document  when  delivered  hereunder  will have been,  duly  executed  and
delivered by each Loan Party party  thereto.  This  Agreement is, and each other
Loan Document when  delivered  hereunder  will be, the legal,  valid and binding
obligation of each Loan Party party thereto, enforceable against such Loan Party
in accordance with its terms.

         (f)     LITIGATION.  There  is  no  action,  suit,  investigation,
                 ----------
litigation  or proceeding  affecting any Loan Party or any of its  Subsidiaries,
including  any   Environmental   Action,   pending  or  threatened   before  any
Governmental Authority or arbitrator that (i) would be reasonably likely to have
a Material Adverse Effect (other than the Disclosed Litigation) or (ii) would be
reasonably likely to affect the legality, validity or enforceability of any Loan
Document,  and there has been no  adverse  change in the  status,  or  financial
effect on any Loan Party or any of its Subsidiaries, of the Disclosed Litigation
from that described on Schedule 4.01(f) hereto, which change would be reasonably
likely to have a Material Adverse Effect.

         (g)     FINANCIAL  CONDITION.  The Consolidated and consolidating
                 --------------------
balance sheets of the Borrower and its  Subsidiaries as at November 28, 1999 and
November 26, 2000, and the related Consolidated and consolidating  statements of
income  and  Consolidated  statement  of  cash  flows  of the  Borrower  and its
Subsidiaries  for the Fiscal Year then ended,  accompanied,  with respect to the
Consolidated  financial  statements  only, by an  unqualified  opinion of Arthur
Andersen, independent public accountants, copies of which have been furnished to
each Lender Party,  fairly present the Consolidated and consolidating  financial
condition  of the  Borrower  and  its  Subsidiaries  as at  such  dates  and the
Consolidated  and  consolidating  results of  operations of the Borrower and its
Subsidiaries  for the periods ended on such dates,  all in accordance  with GAAP
applied on a consistent  basis,  and since November 28, 1999,  there has been no
Material Adverse Change.

         (h)     PROJECTIONS.  The Consolidated  forecasted  balance sheets and
                 -----------
statements  of income of the  Borrower  and its  Subsidiaries  delivered  to the
Lender  Parties  pursuant to Section  3.01(a)(ix)  or 5.03 or  contained  in the
Information  Memorandum  were  prepared  in  good  faith  on  the  basis  of the
assumptions  stated  therein,  which  assumptions  were  fair  in  light  of the
conditions existing at the time of delivery of such forecasts,  and represented,
at the time of delivery,  the Borrower's  best estimate of its future  financial
performance.

         (i)     USE OF  PROCEEDS.  The  Borrower is not engaged in the business
                 ----------------
of extending  credit for the purpose of purchasing or carrying Margin Stock, and
no proceeds  of any Advance or drawings  under any Letter of Credit will be used
to  purchase  or carry any  Margin  Stock or to extend  credit to others for the
purpose of purchasing or carrying any Margin Stock.

         (j)     GOVERNMENTAL REGULATION.  Neither any Loan Party nor any of its
                 -----------------------
Subsidiaries  is an  "investment  company",  or an  "affiliated  person"  of, or
"promoter" or "principal  underwriter"  for, an  "investment  company",  as such
terms are defined in the Investment Company Act of 1940, as amended. Neither any
Loan Party nor any of its Subsidiaries is a "holding company",  or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or

                                       70

<PAGE>

of a "subsidiary  company" of a "holding company",  as such terms are defined in
the Public Utility Holding  Company Act of 1935, as amended.  Neither the making
of any Advances,  nor the issuance of any Letters of Credit, nor the application
of the proceeds or repayment  thereof by the Borrower,  nor the  consummation of
the other transactions contemplated by the Loan Documents and Related Documents,
will violate any  provision of any such Act or any rule,  regulation or order of
the Securities and Exchange Commission thereunder applicable to a Loan Party or
any of its Subsidiaries.

         (k)     MATERIALLY  ADVERSE  AGREEMENTS.  Neither  any  Loan  Party nor
                 -------------------------------
any of its Subsidiaries is a party to any indenture, loan or credit agreement or
any lease or other  agreement  or  instrument  or  subject  to any  Constitutive
Documents or corporate  restrictions  that would be reasonably  likely to have a
Material Adverse Effect.

         (l)     COLLATERAL.  Except for the filings and other actions  required
                 ----------
by Sections  5.01(j) and  5.01(l),  all filings and other  actions  necessary or
desirable to perfect and protect the security interest in the Collateral created
under  the  Collateral  Documents  have  been duly made or taken and are in full
force  and  effect,  and  the  Collateral  Documents  create  in  favor  of  the
Administrative  Agent  for the  benefit  of the  Secured  Parties  a valid  and,
together with such filings and other actions,  perfected first priority security
interest in the Collateral, securing the payment of the Secured Obligations. The
Loan  Parties are the legal and  beneficial  owners of the  Collateral  free and
clear of any Lien,  except  for the Liens  created or  permitted  under the Loan
Documents.

         (m)     SOLVENCY.  Each Loan Party is, individually and together with
                 --------
its Subsidiaries, Solvent.

         (n)     ERISA COMPLIANCE.  Except as specifically disclosed in Schedule
                 ----------------
4.01(n) hereto:

                 (i)       And  except as would not have a  Material  Adverse
Effect,  each Plan is in compliance in all material respects with the applicable
provisions of ERISA,  the Internal  Revenue Code and other federal or state law.
Each Plan which is  intended to qualify  under  Section  401(a) of the  Internal
Revenue Code has received a favorable  determination  letter from the IRS and to
the best knowledge of any Loan Party, nothing has occurred which would cause the
loss of such qualification.  The Borrower and each ERISA Affiliate have made all
required  contributions  to any Plan  subject  to  Section  412 of the  Internal
Revenue Code,  and no  application  for a funding  waiver or an extension of any
amortization  period  pursuant to Section 412 of the  Internal  Revenue Code has
been made with respect to any Plan.

                 (ii)      There  are no  pending  or,  to the  best  knowledge
of any Loan Party,  threatened  claims,  actions or  lawsuits,  or action by any
Governmental  Authority,  with  respect to any Plan which has  resulted or could
reasonably be expected to result in a Material Adverse Effect. There has been no
prohibited  transaction or violation of the fiduciary  responsibility rules with
respect to any Plan which has resulted or could reasonably be expected to result
in a Material Adverse Effect.

                 (iii)  (a) No  ERISA  Event that  requires  notice  to be given
to the PBGC has occurred or is reasonably  expected to occur;  (b) no Plan has a
Funded  Current  Liability

                                       71

<PAGE>

Percentage of less than 90% as of the most recent  valuation  date;  (c) neither
the Borrower nor any ERISA  Affiliate  has incurred,  or  reasonably  expects to
incur,  any  liability  under Title IV of ERISA with  respect to any Plan (other
than  premiums due and not  delinquent  under  Section  4007 of ERISA);  and (d)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur,  any liability  (and no event has occurred  which,  with the giving of
notice  under  Section  4219 of ERISA,  would  result in such  liability)  under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan.

         (o)     FOREIGN  EMPLOYEE  BENEFIT PLANS.  With respect to each retire-
                 --------------------------------
ment plan or arrangement  mandated by a government  other than the United States
(a "FOREIGN GOVERNMENT SCHEME OR ARRANGEMENT") and with respect to each employee
benefit plan maintained or contributed to by any Loan Party or any Subsidiary of
any Loan Party that is not subject to United States law (a "FOREIGN PLAN"), each
Foreign Plan is in compliance with the applicable  Foreign  Government Scheme or
Arrangement and neither the Borrower nor any of its Subsidiaries has incurred or
reasonably expects to incur any liability under any Foreign Government Scheme or
Arrangement, which noncompliance or liability would be reasonably likely to have
a Material Adverse Effect.

         (p)     ENVIRONMENTAL  MATTERS. The operations and properties of each
                 ----------------------
Loan  Party  and  each of its  Subsidiaries  comply  in all  respects  with  all
applicable  Environmental  Laws and  Environmental  Permits  except  where  such
noncompliance  could not have a Material  Adverse Effect,  and no  circumstances
exist that would be reasonably  likely to (A) form the basis of an Environmental
Action  against  any  Loan  Party  or any of its  Subsidiaries  or any of  their
properties  that  could  have a  Material  Adverse  Effect or (B) cause any such
property  to be subject to any  restrictions  on  ownership,  occupancy,  use or
transferability  under any  Environmental Law that could have a Material Adverse
Effect.

         (q)     TAXES.  (i) Neither any Loan Party nor any of its Subsidiaries
                 -----
is party to any tax sharing agreement.

                 (ii)      Each  Loan  Party  and  each  of  its  Subsidiaries
and Affiliates has filed, has caused to be filed or has been included in all tax
returns (federal,  state, local and foreign) required to be filed and, except as
permitted  by  Section  5.01(b),  has paid all taxes  shown  thereon  to be due,
together with applicable interest and penalties.

                 (iii)     No issues have been raised by taxing authorities that
in the aggregate would be reasonably likely to have a Material Adverse Effect.

         (r)     LABOR MATTERS.  Neither the business nor the properties of any
                 -------------
Loan  Party or any of its  Subsidiaries  are  affected  by any fire,  explosion,
accident,  strike,  lockout  or  other  labor  dispute,  drought,  storm,  hail,
earthquake,  embargo,  act of  God or of the  public  enemy  or  other  casualty
(whether or not covered by insurance) that would be reasonably  likely to have a
Material Adverse Effect.

         (s)     COMPLIANCE  WITH  LAW.  Each of the  Borrower  and its  Subsi-
                 ---------------------
diaries  is in  compliance  with all  Requirements  of Law  applicable  to their
properties,  assets and business where the failure to so comply would (as to all
such failures to comply in the aggregate) have a

                                       72

<PAGE>

Material  Adverse  Effect.  There  are no  proceedings  pending  or, to the best
knowledge of any Loan Party,  threatened in writing,  to terminate or modify any
license,  permit or other  approval  issued  by a  Governmental  Authority,  the
termination or  modification  of which (in the aggregate as to all such matters)
would have a Material Adverse Effect.

         (t)     INTELLECTUAL PROPERTY. The Borrower and its Subsidiaries own,
                 ---------------------
or possess the right to use, all trademarks,  trade names, copyrights,  patents,
patent rights, franchises, licenses and other intangible assets that are used in
the conduct of their  respective  businesses as now  operated,  and none of such
items,  to the  best  knowledge  of any Loan  Party,  conflicts  with the  valid
trademark,  trade name, copyright,  patent, patent right, franchise,  license or
other intangible asset of any other Person, except to the extent such failure to
own or  possess  or such  conflict  would  not be  reasonably  likely  to have a
Material Adverse Effect.

         (u)     INSURANCE.  The properties of the Borrower and its Subsidiaries
                 ---------
are insured  with  financially  sound and  reputable  insurance  companies,  not
Affiliates of the Borrower,  or with Majestic  Insurance  International  Ltd., a
wholly-owned  Subsidiary of the Borrower, in such amounts, with such deductibles
and  covering  such risks as are  customarily  carried by  companies  engaged in
similar  businesses  and  owning  similar  properties  in  localities  where the
Borrower and its Subsidiaries  operate.  From and after the date that is 30 days
following the Closing Date, property,  general liability,  business interruption
and automobile  insurance policies shall name the  Administrative  Agent for the
benefit  of the  Secured  Parties as an  additional  insured  thereunder  as its
interests  may appear  and, in the case of  property  insurance,  contain a loss
payable  subsection or  endorsement,  satisfactory  in form and substance to the
Administrative  Agent,  that names the  Administrative  Agent for the benefit of
Lenders as the loss payee  thereunder  for any covered  loss with respect to the
Collateral,  as  appropriate.  Insurance  policies  provide for at least 30 days
prior written notice to the Administrative Agent of any material modification or
cancellation of such policy.

         (v)     CONDUCT OF BUSINESS. The Borrower and its Subsidiaries, consi-
                 -------------------
dered  together,  are engaged only in  businesses  related or  incidental to the
manufacture and sale of clothing and accessories and the LOS/DOS Business.

         (w)     EXISTING  DEBT.  Set forth on  Schedule  4.01(w)  hereto is a
                 --------------
complete and accurate list of all Debt of the Borrower and its  Subsidiaries for
borrowed money that, after prepayment of all obligations of the Borrower and its
Subsidiaries under the Existing Credit Agreements, is outstanding as of the date
hereof, showing the obligor and the principal amount outstanding thereunder.

         (x)     LIENS.  Set forth on Schedule 4.01(x) hereto is a complete and
                 -----
accurate list of all Liens and negative  pledges to which,  after  prepayment of
all obligations of the Borrower and its  Subsidiaries  under the Existing Credit
Agreements,  property or assets of any Loan Party or any of its Subsidiaries are
subject  as of the date  hereof,  other  than  Liens  permitted  under  Sections
5.02(a)(ii)-(xii)    and   negative    pledges    permitted    under    Sections
5.02(l)(ii)-(vii),  showing the lienholder thereof,  the principal amount of the
obligations  secured  thereby  and the  property or assets of such Loan Party or
such Subsidiary subject thereto.

                                       73

<PAGE>

         (y)     REAL  PROPERTY.  Set forth on  Schedule  4.01(y)  hereto is a
                 --------------
complete  and  accurate  list of all real  property  owned or leased by any Loan
Party or any of its  Subsidiaries  in the United  States as of the date  hereof,
showing the street address, county or other relevant jurisdiction, state, record
owner  and book and  estimated  fair  value  thereof.  Each  Loan  Party or such
Subsidiary  has good,  marketable  and  insurable fee simple title to such owned
real  property,  free and  clear of all  Liens,  other  than  Liens  created  or
permitted by the Loan Documents. Each such lease is the legal, valid and binding
obligation of the lessor  thereof,  enforceable  in  accordance  with its terms,
except as may be limited by bankruptcy, insolvency,  reorganization,  moratorium
or similar laws  relating to or affecting  creditors'  rights  generally  and by
general principles of equity.

         (z)     RESTRICTED  SUBSIDIARIES.  Set forth on Schedule  4.01(z)
                 ------------------------
hereto is a complete and  accurate  list of all Restricted Subsidiaries on the
date hereof.

         (aa)    ORGANIZATIONAL  STRUCTURE. Set forth on Schedule 4.01(aa) here-
                 -------------------------
to is the  organizational  structure of the Borrower and its Subsidiaries on the
date hereof.

         (bb)    MATERIAL SUBSIDIARIES.  Set forth on Schedule 4.01(bb) hereto
                 ---------------------
is a complete and accurate list of all Material  Subsidiaries.  As of the end of
the Fiscal Year ended  November 28, 2000,  the aggregate  gross  revenues of the
Subsidiaries of the Borrower not  constituting  Material  Subsidiaries  for such
Fiscal  Year  were not  more  than 5% of the  aggregate  gross  revenues  of the
Borrower and its Subsidiaries on a Consolidated basis for such Fiscal Year.

         (cc)    INVESTMENTS.  Set forth on  Schedule  4.01(cc)  hereto is a
                 -----------
complete and accurate list of all  Investments  held by any Loan Party or any of
its Subsidiaries as of the date hereof,  other than Investments  permitted under
Sections 5.02(f)(ii)-(xiv),  showing the amount, obligor or issuer and maturity,
if any, thereof.

         (dd)    INTELLECTUAL PROPERTY. Set forth on Schedule 4.01(dd) hereto is
                 ---------------------
a complete and accurate list of all patents,  trademarks,  trade names,  service
marks and copyrights, and all applications therefor and licenses thereof, of any
Loan  Party  or any of its  Subsidiaries  as of the  date  hereof,  showing  the
jurisdiction  in  which  registered,   the  registration  number,  the  date  of
registration and the expiration date.

         (ee)    DISCLOSURE.  No  representation  or warranty of any Loan Party
                 ----------
contained in this  Agreement or any other document  (other than  representations
and warranties with respect to the  Consolidated  forecasted  balance sheets and
statements  of income of the  Borrower  and its  Subsidiaries  delivered  to the
Lender  Parties  pursuant to Section  3.01(a)(ix)  or 5.03 or  contained  in the
Information   Memorandum),   certificate  or  written  statement   furnished  to
Administrative  Agent or any Lender by any Loan Party for use in connection with
any  transactions  contemplated  by this  Agreement,  including the  Information
Memorandum,  contains or will contain any untrue statement of a material fact or
omits to state or will omit to state a  material  fact  known to such Loan Party
necessary in order to make the statements  contained herein or therein, in light
of the circumstances under which they were made, not misleading.

                                       74

<PAGE>

                                   ARTICLE V
                            COVENANTS OF THE BORROWER


         Section  5.01     AFFIRMATIVE  COVENANTS.  So  long  as any  Advance or
                           ----------------------
any other  Obligation  of any Loan Party under any Loan  Document  shall  remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Borrower will:

         (a)     COMPLIANCE WITH LAWS,  ETC.  Comply,  and cause each of its
                 --------------------------
Subsidiaries to comply with all applicable  Requirements of Law, such compliance
to  include,   without   limitation,   compliance  with  ERISA,  all  applicable
Environmental  Laws and Environmental  Permits and the Racketeer  Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970, except
where the failure to comply would not  reasonably be expected to have a Material
Adverse Effect.

         (b)     PAYMENT OF TAXES, ETC. Pay and discharge, and cause each of its
                 ---------------------
Subsidiaries to pay and discharge,  before the same shall become delinquent, (i)
all taxes,  assessments  and  governmental  charges or levies imposed upon it or
upon its property (other than taxes,  assessments and other governmental charges
not exceeding  $5,000,000 in the  aggregate) and (ii) all lawful claims that, if
unpaid, might by law become a Lien upon its property;  PROVIDED,  HOWEVER,  that
neither the  Borrower  nor any of its  Subsidiaries  shall be required to pay or
discharge any such tax,  assessment,  charge or claim that is being contested in
good faith and by proper  proceedings and as to which  appropriate  reserves are
being maintained,  unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.

         (c)     MAINTENANCE OF INSURANCE.  Maintain,  and cause each of its
                 ------------------------
Subsidiaries to maintain,  through  self-insurance or with financially sound and
reputable  insurers,  insurance  with respect to its properties and business and
the properties and business of the Borrower and its Subsidiaries against loss or
damage of the kinds  customarily  insured against by corporations of established
reputation engaged in the same or similar businesses and similarly situated,  of
such  types  and in  such  amounts  as are  customarily  carried  under  similar
circumstances by such other  corporations,  if the failure to do so would (as to
all such failures in the aggregate) have a Material  Adverse  Effect.  Property,
general liability, business interruption and automobile insurance policies shall
(i) name the  Administrative  Agent for the benefit of the Secured Parties as an
additional  insured  thereunder  with respect to all Collateral as its interests
may appear and, (ii) in the case of property  insurance,  contain a loss payable
subsection  or   endorsement,   satisfactory   in  form  and  substance  to  the
Administrative Agent, that names the Administrative Agent for the benefit of the
Secured  Parties as the loss payee  thereunder for any covered loss with respect
to all Collateral, as appropriate. Insurance policies shall provide for at least
30 days  prior  written  notice  to the  Administrative  Agent  of any  material
modification or cancellation of such policy.

         (d)     PRESERVATION OF CORPORATE EXISTENCE,  ETC. Preserve and main-
                 -----------------------------------------
tain,  and  cause  each  of its  Subsidiaries  to  preserve  and  maintain,  its
existence,  legal  structure,  legal name,  rights  (charter and  statutory) and
franchises and its  Governmental  Authorizations;  PROVIDED,  HOWEVER,  that the
Borrower  and  its  Subsidiaries  may  consummate  any  merger,   consolidation,
liquidation,

                                       75

<PAGE>

wind up or dissolution permitted under Section 5.02(d) and PROVIDED FURTHER that
neither the Borrower nor any of its  Subsidiaries  shall be required to preserve
any right, permit, license, approval,  privilege or franchise if the Borrower or
such  Subsidiary  shall  determine  that the  preservation  thereof is no longer
desirable in the conduct of the business of the Borrower or such Subsidiary,  as
the case may be, and that the loss  thereof  would not be  reasonably  likely to
have a Material Adverse Effect.

         (e)     VISITATION  RIGHTS.  At any  reasonable  time  and  from  time
                 ------------------
to time on  reasonable  notice,  permit  any of the  Agents or any of the Lender
Parties, or any agents or representatives thereof, to examine and make copies of
and abstracts from the records and books of account of, and visit the properties
of,  the  Borrower  and any of its  Subsidiaries,  and to discuss  the  affairs,
finances and accounts of the  Borrower and any of its  Subsidiaries  with any of
their  officers  or  directors  and  with  their  independent  certified  public
accountants. Following the occurrence and during the continuation of an Event of
Default,  the  expenses of any Lender  Party  incurred  pursuant to this Section
5.01(e) shall be for the account of the Borrower.

         (f)     KEEPING OF BOOKS.  Keep, and cause each of its Subsidiaries to
                 ----------------
keep,  proper  books of record and  account,  in which full and correct  entries
shall be made of all financial  transactions  and the assets and business of the
Borrower  and  each  such  Subsidiary  in  accordance  with  generally  accepted
accounting principles in effect from time to time.

         (g)     MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and
                 ------------------------------
cause each of its  Subsidiaries to maintain and preserve,  all of its properties
that are used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.

         (h)     TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of its
                 ----------------------------
Subsidiaries to conduct,  all  transactions  otherwise  permitted under the Loan
Documents with any of their Affiliates on terms that are fair and reasonable and
no less favorable to the Borrower or such  Subsidiary  than it would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.

         (i)     COVENANT TO GUARANTEE OBLIGATIONS AND GIVE SECURITY. Upon (x)
                 ---------------------------------------------------
the request of the Administrative  Agent following the occurrence and during the
continuance of a Default,  (y) the formation or acquisition of any new direct or
indirect Material  Domestic  Subsidiary by any Loan Party or (z) the acquisition
of any  property by any Loan Party,  and such  property,  in the judgment of the
Administrative Agent, shall not already be subject to a perfected first priority
security  interest in favor of the  Administrative  Agent for the benefit of the
Secured  Parties,  then  the  Borrower  shall,  in each  case at the  Borrower's
expense:

                 (i)       in  connection  with the  formation or  acquisition
of a  Material  Domestic  Subsidiary,  within 30 days after  such  formation  or
acquisition, cause each such Material Domestic Subsidiary, and cause each direct
and indirect parent of such Material Domestic  Subsidiary (if it has not already
done so), to duly execute and deliver to the Administrative  Agent a guaranty or
guaranty  supplement,  in form and substance  satisfactory to the Administrative
Agent,   guaranteeing  the  other  Loan  Parties'  obligations  under  the  Loan
Documents,

                                       76

<PAGE>

                 (ii)      within 30 days after such request,  formation or
acquisition,  duly execute and deliver,  and cause each such  Material  Domestic
Subsidiary  and each  direct  and  indirect  parent  of such  Material  Domestic
Subsidiary  (if it has not already done so) to duly execute and deliver,  to the
Administrative  Agent mortgages,  pledges,  assignments,  security agreements or
security  agreement  supplements,  as  specified  by and in form  and  substance
reasonably satisfactory to the Administrative Agent, securing payment of all the
Obligations of the applicable Loan Party, such Subsidiary or such parent, as the
case  may be,  under  the  Loan  Documents  and  constituting  Liens on all such
properties,

                 (iii)     within 30 days after such request,  formation or
acquisition, take, and cause such Material Domestic Subsidiary or such parent to
take,  whatever  action  (including,   without  limitation,   the  recording  of
mortgages,  the filing of Uniform  Commercial  Code  financing  statements,  the
giving of notices  and the  endorsement  of notices on title  documents)  may be
necessary or advisable in the opinion of the Administrative Agent to vest in the
Administrative  Agent  (or in any  representative  of the  Administrative  Agent
designated by it) valid and subsisting  Liens on the properties  purported to be
subject to the mortgages, pledges, assignments, security agreements and security
agreement  supplements  delivered pursuant to this Section 5.01(i),  enforceable
against all third parties in accordance with their terms,

                 (iv)      within 60 days after such request, formation or
acquisition,  deliver  to the  Administrative  Agent,  upon the  request  of the
Administrative  Agent  in its sole  discretion,  a  signed  copy of a  favorable
opinion (in form and substance  reasonably  satisfactory  to the  Administrative
Agent),  addressed to the Administrative Agent and the other Secured Parties, of
counsel for the Loan Parties  acceptable to the  Administrative  Agent as to the
matters  contained in clauses (i), (ii) and (iii) above, as to such  guaranties,
guaranty supplements,  mortgages, pledges, assignments,  security agreements and
security  agreement  supplements being legal,  valid and binding  obligations of
each Loan Party thereto  enforceable in accordance  with their terms,  as to the
matters  contained  in  clause  (iii)  above,  as to such  recordings,  filings,
notices,  endorsements  and other  actions  being  sufficient  to  create  valid
perfected  Liens  on  such  properties,  and as to  such  other  matters  as the
Administrative Agent may reasonably request,

                 (v)       as promptly as  practicable  after such request,
formation  or  acquisition,   deliver,   upon  the  reasonable  request  of  the
Administrative Agent, to the Administrative Agent with respect to each parcel of
real  property  owned or held by the entity that is the subject of such request,
formation or acquisition title reports, surveys and engineering, soils and other
reports, and environmental assessment reports, each in scope, form and substance
satisfactory to the Administrative Agent, PROVIDED,  HOWEVER, that to the extent
that any Loan  Party or any of its  Material  Domestic  Subsidiaries  shall have
otherwise  received  any of the  foregoing  items  with  respect  to  such  real
property,  such items shall, promptly after the receipt thereof, be delivered to
the Administrative Agent,

                 (vi)      upon the  occurrence  and during the  continuance  of
an Event of Default,  promptly  cause to be deposited any and all cash dividends
paid or payable to it or any of its  Subsidiaries  from any of its  Subsidiaries
from time to time into the Cash  Collateral  Account,  and with  respect  to all
other  dividends paid or payable to it or any of its  Subsidiaries  from time to
time, promptly execute and deliver, or cause such Subsidiary to promptly execute
and  deliver,  as the case may be, any and all further  instruments  and take or
cause such  Subsidiary to take, as the

                                       77

<PAGE>

case  may be,  all  such  other  action  as the  Administrative  Agent  may deem
necessary or  desirable in order to obtain and maintain  from and after the time
such  dividend  is paid or  payable a  perfected,  first  priority  Lien on such
dividends, and

                 (vii)     at any time and from time to time,  promptly  execute
and deliver  any and all further  instruments  and  documents  and take all such
other  reasonable  action  as the  Administrative  Agent may deem  necessary  or
desirable in obtaining the full benefits of, or in perfecting and preserving the
Liens  of,  such  guaranties,   mortgages,  pledges,  assignments  and  security
agreements,

PROVIDED,  HOWEVER,  neither the Borrower nor any of its  Subsidiaries  shall be
required to grant Liens on any  Principal  Property,  the Equity  Interests of a
Restricted Subsidiary or any Debt of or issued by a Restricted Subsidiary,

         (j)     FOREIGN  PLEDGED  COLLATERAL.  The  Borrower  shall  use  its
                 ----------------------------
commercially  reasonable  efforts to take or cause to be taken all such actions,
execute and deliver or cause to be executed and delivered  all such  agreements,
documents  and  instruments  and make or cause to be made all such  filings  and
recordings that may be necessary or, in the opinion of the Administrative Agent,
desirable  in order to  create  in favor of the  Administrative  Agent,  for the
benefit of Secured Parties,  a valid and perfected  security  interest in 65% of
the  Equity  Interests  owned by the  Borrower  or any other  Loan  Party of all
Material  Foreign  Subsidiaries  (other than the Equity  Interests of Restricted
Subsidiaries);  PROVIDED,  HOWEVER, that no action shall be required to be taken
with respect to the Equity Interests of any Material Foreign Subsidiary pursuant
to this subsection in the event that the Borrower and the  Administrative  Agent
agree in good faith that the pledge of such Equity  Interests  would result in a
significant  tax  liability to the Borrower or is  restricted by the laws of the
jurisdiction under which such Material Foreign Subsidiary is organized.

         (k)     ADDITIONAL  MATERIAL  SUBSIDIARIES.  In the event that, as of
                 ----------------------------------
the end of any Fiscal Quarter,  the aggregate gross revenues of the Subsidiaries
of the Borrower  not  constituting  Material  Subsidiaries  for the  four-Fiscal
Quarter  period then ended were more than 5% of the aggregate  gross revenues of
the Borrower and its Subsidiaries on a Consolidated  basis for such period,  the
Borrower  shall   designate  one  or  more  of  its   Subsidiaries  as  Material
Subsidiaries  for purposes of this Agreement and shall take all action  required
by Sections 5.01(i) and 5.01(j) with respect to such Subsidiary.

         (l)     POST CLOSING ACTIONS. The Borrower shall, within 180 days after
                 --------------------
the Closing Date,

                 (i)       deliver to the  Administrative  Agent  evidence  that
all action that the  Administrative  Agent may deem  necessary  or  desirable in
order to perfect and protect the first priority Lien of the Administrative Agent
for  the  benefit  of the  Secured  Parties  in  all  foreign  registrations  of
Intellectual  Property in Australia,  Canada,  France,  Germany,  Italy,  Japan,
Mexico,  Netherlands  Antilles,  Spain,  and the United  Kingdom has been taken;
provided  that taking such action does not result in the granting of a trademark
registration, patent, copyright registration or application therefor in the name
of the Administrative Agent or the Secured Parties;

                                       78

<PAGE>

                 (ii)      deliver  to  the  Administrative Agent a  certificate
of each Foreign  Subsidiary,  signed on behalf of such Foreign Subsidiary by its
President or a Vice  President  and its  Secretary or any  Assistant  Secretary,
dated the date of the Initial  Extension of Credit (the statements made in which
certificate  shall be true on and as of the  date of the  Initial  Extension  of
Credit),  certifying as to a true and correct copy of the Constitutive  Document
of such Foreign  Subsidiary and a copy of an  intercompany  promissory note duly
executed by each Foreign  Subsidiary (other than any Restricted  Subsidiary) and
duly endorsed to the Administrative Agent;

                 (iii)     deliver to the  Administrative  Agent such landlord
and bailee waiver and consent  agreements as may be reasonably  requested by the
Administrative Agent;

                 (iv)      deliver to the  Administrative Agent executed control
agreements with respect to all deposit,  savings,  investment and other accounts
maintained by the Borrower or any of its Material Domestic Subsidiaries; and

                 (v)       at the request of any Hedge Bank  delivered to the
Borrower  within 30 days  after the  Closing  Date,  enter  into  amendments  to
existing master  agreements for Hedge Bank Hedge Agreements with such Hedge Bank
(A)  providing  that the  obligations  of the  Borrower  and FinServ  under such
agreements are secured by the Collateral  Documents until the payment in full of
all  Obligations  under this Agreement and the other Loan Documents  (other than
the Hedge Bank Hedge Agreements),  the cancellation or expiration of all Letters
of Credit and the  termination  of the  Commitments  and (B)  setting  forth the
arrangements  to be made  between the  parties at such time with  respect to the
providing of other collateral, if any.

         (m)     FURTHER ASSURANCES.
                 ------------------

                 (i)       Promptly  upon  request  by any  Agent, or any Lender
Party  through  the  Administrative  Agent,  correct,  and  cause  each  of  its
Subsidiaries  promptly  to  correct,  any  material  defect or error that may be
discovered in any Loan Document or in the execution,  acknowledgment,  filing or
recordation thereof, and

                 (ii)      Promptly  upon  request by any  Agent,  or any Lender
Party through the  Administrative  Agent,  do,  execute,  acknowledge,  deliver,
record,  re-record,  file,  re-file,  register and  re-register any and all such
further acts, deeds, conveyances, pledge agreements,  mortgages, deeds of trust,
trust  deeds,  assignments,  financing  statements  and  continuations  thereof,
termination  statements,   notices  of  assignment,   transfers,   certificates,
assurances and other  instruments as any Agent,  or any Lender Party through the
Administrative  Agent, may reasonably  require from time to time in order to (A)
carry  out more  effectively  the  purposes  of the Loan  Documents,  (B) to the
fullest extent  permitted by applicable law,  subject any Loan Party's or any of
its Subsidiaries'  properties,  assets,  rights or interests to the Liens now or
hereafter intended to be covered by any of the Collateral Documents, (C) perfect
and maintain the validity,  effectiveness  and priority of any of the Collateral
Documents and any of the Liens intended to be created thereunder and (D) assure,
convey, grant, assign, transfer,  preserve, protect and confirm more effectively
unto the Secured  Parties the rights granted or now or hereafter  intended to be
granted  to the  Secured  Parties  under  any Loan  Document  or under any

                                       79

<PAGE>

other instrument executed in connection with any Loan Document to which any Loan
Party or any of its  Subsidiaries is or is to be a party,  and cause each of its
Subsidiaries to do so.

         (n)      TRANSFER OF  RECEIVABLES.  LSFCC shall sell to LSFLLC all
                 ------------------------
accounts  receivable   purchased  by  it  from  the  Borrower  immediately  upon
consummation of such purchase.

         (o)     LIEN SEARCHES.  If requested by the Administrative Agent,
                 -------------
promptly  following  receipt  of the  acknowledgment  copy of any UCC  financing
statements  filed in any applicable  jurisdiction by or on behalf of the Secured
Parties,  deliver to the Administrative Agent completed requests for information
listing such financing  statement and all other effective  financing  statements
filed in such  jurisdiction  that name any Loan Party as debtor,  together  with
copies of such other financing statements.

         (p)     CASH COLLATERAL ACCOUNTS.  Maintain, and cause each of its
                 ------------------------
Material Domestic Subsidiaries to maintain,  the Cash Collateral Account and the
L/C Cash  Collateral  Account  with Bank of America or another  commercial  bank
located in the United States which has accepted the  assignment of such accounts
to the  Administrative  Agent for the benefit of the Secured Parties pursuant to
the  Pledge  and  Security  Agreement.  From and after the date that is 180 days
after the Closing Date, no Loan Party shall maintain any investment  property or
Deposit  Account with any  financial  institution  unless such  institution  has
executed a control  agreement in form and substance  reasonably  satisfactory to
the Administrative Agent.

         Section 5.02      NEGATIVE COVENANTS.  So long as any Advance or any
                           ------------------
other  Obligation of any Loan Party under any Loan Document shall remain unpaid,
any Letter of Credit  shall be  outstanding  or any Lender  Party shall have any
Commitment hereunder, the Borrower will not, at any time:

         (a)     LIENS, ETC. Create,  incur,  assume or suffer to exist, or per-
                 ----------
mit any of its  Subsidiaries to create,  incur,  assume or suffer to exist,  any
Lien on or with respect to any of its  properties of any  character  (including,
without limitation,  accounts) whether now owned or hereafter acquired,  or sign
or file or suffer to exist, or permit any of its Subsidiaries to sign or file or
suffer to exist,  under  the  Uniform  Commercial  Code of any  jurisdiction,  a
financing  statement  that  names the  Borrower  or any of its  Subsidiaries  as
debtor, or sign or suffer to exist, or permit any of its Subsidiaries to sign or
suffer to exist, any security agreement authorizing any secured party thereunder
to file such financing statement, except:

                 (i)       Liens existing on the date hereof and described on
Schedule 4.01(x) hereto;

                 (ii)      Liens created under the Loan Documents;

                 (iii)     Permitted Liens;

                 (iv)      purchase money Liens upon or in real property or per-
sonal  property  acquired  or held by the  Borrower  or any of its  Subsidiaries
(other  than LSFCC or LSFCCC) in the  ordinary  course of business to secure the
purchase  price of such  property  or to secure  Debt  incurred  solely  for the
purpose of financing the  acquisition  or improvement of any such property to be
subject to such Liens,  or Liens  existing  on any such  property at the time of
acquisition

                                       80

<PAGE>

(other than any such Liens created in  contemplation of such acquisition that do
not secure the purchase price),  or extensions,  renewals or replacements of any
of the foregoing for the same or a lesser  amount;  PROVIDED,  HOWEVER,  that no
such Lien shall  extend to or cover any property  other than the property  being
acquired or improved, and no such extension, renewal or replacement shall extend
to or cover any property  not  theretofore  subject to the Lien being  extended,
renewed or replaced; and provided further that the aggregate principal amount of
the Debt  secured by Liens  permitted  by this  clause (iv) shall not exceed the
amount permitted under Section 5.02(b)(iii)(C) at any time outstanding;

                 (v)       Liens arising in connection with Capitalized  Leases
permitted under Section  5.02(b)(i)(B);  provided that no such Lien shall extend
to or cover any  Collateral  or assets  other  than the  assets  subject to such
Capitalized Leases;

                 (vi)      Liens  attaching  to  ownership  interests  in joint
ventures  (whether  in  partnership,  corporate  or other  form)  engaged in the
LOS/DOS  Business or attaching to  intellectual  property rights relating to the
LOS/DOS Business;

                 (vii)     Liens created in  connection  with (A)  Equipment
Financing Transactions permitted under Section 5.02(b)(iii)(H),  (B) Real Estate
Financing  Transactions permitted under Section  5.02(b)(iii)(G),  (C) Permitted
Foreign   Receivables    Purchase    Transactions    permitted   under   Section
5.02(b)(iii)(F)  and (D) Permitted Domestic  Receivables  Purchase  Transactions
permitted under Section  5.02(b)(iii)(J);  PROVIDED,  HOWEVER, that no such Lien
shall  extend to or cover  property  other  than the  property  subject  to such
Equipment Financing Transaction,  Real Estate Financing  Transaction,  Permitted
Foreign  Receivables  Purchase  Transaction  or Permitted  Domestic  Receivables
Purchase Transaction;

                 (viii)    Liens  created  pursuant to  applications  or  reim-
bursement agreements  pertaining to documentary letters of credit which encumber
documents and other property relating to such documentary  letters of credit and
the products and proceeds thereof;

                 (ix)      Liens on cash,  Cash  Equivalents  or other  assets
deposited  in a margin  account  securing  Ordinary  Course  Hedging  Agreements
permitted under Section 5.02(b)(iii)(D);

                 (x)       Liens on property that is the subject of a repurchase
agreement  entered into in the ordinary  course of business and permitted  under
Section 5.02(f)(iv);

                 (xi)      Liens on property of Foreign  Subsidiaries  securing
Debt outstanding in an aggregate  principal amount not to exceed  $25,000,000 at
any time; and

                 (xii)    other Liens securing Debt outstanding in an aggregate
principal  amount not to exceed  $10,000,000 at any time.

         (b)     DEBT.  Create,  incur,  assume or suffer to exist,  or permit
                 ----
any of its  Subsidiaries  to create, incur, assume or suffer to exist, any Debt,
except:

                 (i)      in the case of the Borrower,

                                       81

<PAGE>

                           (A) Debt owed to a Material  Domestic  Subsidiary  of
                 the Borrower,  which Debt (x) shall constitute Pledged Debt and
                 (y)  shall  be  evidenced  by  promissory  notes  in  form  and
                 substance  satisfactory to the  Administrative  Agent, shall be
                 subordinated  in right of payment to the payment in full of the
                 Obligations  and such  promissory  notes  shall be  pledged  as
                 security for the  Obligations  of the holder  thereof under the
                 Loan Documents to which such holder is a party and delivered to
                 the  Administrative  Agent  pursuant to the terms of the Pledge
                 and Security Agreement;

                           (B) Capitalized Leases not to exceed in the aggregate
                 $25,000,000 at any time outstanding; and

                           (C) Debt of the Borrower  issued in a Capital Markets
                 Transaction  provided such Debt is unsecured and such Debt does
                 not have a stated maturity date or required  principal payments
                 earlier than the  Termination  Date and the Borrower  makes the
                 prepayment required pursuant to Section 2.06(b);

                 (ii)      in the case of any Subsidiary of the Borrower (other
than LSFCC or LSFLLC),

                           (A)  Debt  owed  to  the  Borrower  or to a  Material
                 Domestic  Subsidiary of the Borrower (other than Debt owed by a
                 Restricted Subsidiary), which Debt (x) shall constitute Pledged
                 Debt and (y) shall, except in the case of redeemable  preferred
                 stock,  be evidenced by promissory  notes in form and substance
                 satisfactory to the Administrative Agent, shall be subordinated
                 in  right  of  payment  in full of the  Obligations,  and  such
                 promissory   notes  shall  be  pledged  as  security   for  the
                 Obligations  of the holder  thereof under the Loan Documents to
                 which   such   holder   is  a  party  and   delivered   to  the
                 Administrative  Agent  pursuant  to the terms of the Pledge and
                 Security Agreement;

                           (B) Debt owed to a Pledged  Foreign  Subsidiary  by a
                 Pledged Foreign Subsidiary; and

                           (C) Debt owed to an Unpledged Foreign Subsidiary by a
                 Pledged Foreign Subsidiary or an Unpledged Foreign Subsidiary;

                 (iii)     in the case of the Borrower and its Subsidiaries
(other than LSFCC or LSFLLC),

                           (A)  Debt  of  the  Borrower  and  its   Subsidiaries
                 outstanding on the Closing Date and listed on Schedule  4.01(w)
                 hereto  and any  refinancing  of the  industrial  revenue  bond
                 obligations listed on Schedule 4.01(w) hereto provided there is
                 no  increase  in  the  aggregate   principal   amount  of  such
                 obligations;

                           (B) Debt under the Loan Documents;

                           (C)  Debt  secured  by  Liens  permitted  by  Section
                 5.02(a)(iv)  not to exceed in the aggregate  $50,000,000 at any
                 time outstanding;

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<PAGE>

                           (D) Debt of the  Borrower  and  FinServ in respect of
                 Ordinary  Course Hedge  Agreements and consistent  with prudent
                 business practice,  provided that the aggregate Agreement Value
                 of all such Ordinary  Course Hedge  Agreements  under which the
                 Borrower  or  FinServ  would be  required  to make a payment on
                 termination thereof do not exceed in the aggregate  $75,000,000
                 (net of the value of cash,  Cash  Equivalents  or other  assets
                 deposited  in a  margin  account  in  connection  with any such
                 Ordinary  Course  Hedge  Agreements  and the face amount of any
                 letter of  credit  issued  with  respect  to any such  Ordinary
                 Course Hedge Agreements) at any time outstanding;

                           (E) Debt of the Borrower and its Subsidiaries  (other
                 than LSFCC or  LSFLLC)  to  FinServ  and Debt of FinServ to the
                 Borrower  and its  other  Subsidiaries  (other  than  LSFCC  or
                 LSFLLC) in the ordinary course of business;

                           (F)  Debt  of  Foreign  Subsidiaries  in the  form of
                 Permitted Foreign Receivables Purchase  Transactions,  provided
                 the Borrower and its Subsidiaries make the prepayment  required
                 pursuant to Section 2.06(b);

                           (G) Debt of the Borrower and its  Subsidiaries in the
                 form  of  Real  Estate  Financing  Transactions,  provided  the
                 principal  amount  of all Debt  permitted  under  this  Section
                 5.02(b)(iii)(G) and Section 5.02(b)(iii)(H) (including all such
                 Debt  existing  on the  Closing  Date and  listed  on  Schedule
                 4.01(w)  hereto) does not exceed in the aggregate  $175,000,000
                 at any time  outstanding and the Borrower and its  Subsidiaries
                 make the prepayment required pursuant to Section 2.06(b);

                           (H) Debt of the Borrower and its  Subsidiaries in the
                 form  of  Equipment   Financing   Transactions,   provided  the
                 principal  amount  of all Debt  permitted  under  this  Section
                 5.02(b)(iii)(H) and Section 5.02(b)(iii)(G) (including all such
                 Debt  existing  on the  Closing  Date and  listed  on  Schedule
                 4.01(w)  hereto) does not exceed in the aggregate  $175,000,000
                 at any time  outstanding and the Borrower and its  Subsidiaries
                 make the prepayment required pursuant to Section 2.06(b);

                           (I) Ordinary  Course Hedging  Agreements  between the
                 Borrower or FinServ and FinServ and the other  Subsidiaries  of
                 the  Borrower  (other  than LSFCC or  LSFLLC)  in the  ordinary
                 course of business;

                           (J) Debt of the Borrower and its  Subsidiaries in the
                 form of Permitted Domestic Receivables Purchase Transactions in
                 form   and   substance    reasonably    satisfactory   to   the
                 Administrative   Agent,   provided   the   Borrower   and   its
                 Subsidiaries  make the prepayment  required pursuant to Section
                 2.06(b);

                           (K) Debt of the  Borrower to any of its  Subsidiaries
                 and Debt of any of its  Subsidiaries  to the Borrower or any of
                 its other  Subsidiaries  outstanding  on the  Closing  Date and
                 listed on Schedule 4.01(w) hereto;

                           (L)  Debt   between  the  Borrower  and  any  of  its
                 Subsidiaries  or between any of its  Subsidiaries  arising from
                 purchases of inventory or raw materials in the ordinary  course
                 of business;

                                       83

<PAGE>

                           (M) Debt arising from the honoring of a check,  draft
                 or similar instrument against insufficient funds;

                           (N) Debt of the  Borrower to any of its  Subsidiaries
                 and Debt of any of its  Subsidiaries  to the Borrower or any of
                 its  other  Subsidiaries;  PROVIDED,  HOWEVER,  that  the  sum,
                 without  duplication,  of (i) the aggregate principal amount of
                 all such  Debt  incurred  after the date  hereof  PLUS (ii) the
                 aggregate  Investments  permitted  by Section  5.02(f)(x)  PLUS
                 (iii)  the   aggregate   dispositions   permitted   by  Section
                 5.02(e)(x) shall not exceed $50,000,000 in the aggregate during
                 Fiscal Year 2001,  $100,000,000 in the aggregate  during Fiscal
                 Years 2001 and 2002, taken as a single period,  or $150,000,000
                 in the aggregate during Fiscal Years 2001, 2002 and 2003, taken
                 as a single period;

                           (O) Debt of the  Borrower to any of its  Subsidiaries
                 and Debt of any of its  Subsidiaries  to the Borrower or any of
                 its  other   Subsidiaries   incurred  in   connection   with  a
                 disposition permitted under Section 5.02(e)(xii);

                           (P) Debt of the  Borrower  or any  Subsidiary  of the
                 Borrower  to the  Borrower  or any  of its  other  Subsidiaries
                 incurred in  connection  with a Permitted  Foreign  Receivables
                 Purchase Transaction permitted under Section 5.02(b)(iii)(F) in
                 an amount not to exceed the proceeds thereof; and

                           (Q) other Debt (without  duplication) of the Borrower
                 and  its  Subsidiaries   not  exceeding   $150,000,000  in  the
                 aggregate at any time.

         (c)     CHANGE IN NATURE OF  BUSINESS.  Engage  in, or suffer or permit
                 -----------------------------
any of its  Subsidiaries to engage in, any business not related or incidental to
the manufacture and sale of clothing and accessories.  The LOS/DOS Business is a
business that is related or incidental to the  manufacture  and sale of clothing
within the meaning of the preceding  sentence.  The Borrower shall not suffer or
permit  LSFLLC to engage in any business  other than the  purchase,  holding and
securitization  of accounts  receivable  and shall not suffer or permit LSFCC to
engage in any business other than the purchase,  sale to LSFLLC and servicing of
accounts  receivable  generated  by the  Borrower,  the  processing  of accounts
payable of the Borrower and its Subsidiaries,  procurement  support services for
the Borrower and its  Subsidiaries  and other  accounting  and general  customer
relationship functions.

         (d)     MERGERS,  ETC.  Merge  into or  consolidate with any  Person or
                 -------------
permit any Person to merge  into it, or permit any of its Subsidiaries to do so,
except that:

                 (i)       any Domestic  Subsidiary of the Borrower may merge
into or  consolidate  with any other  Domestic  Subsidiary of the Borrower or be
liquidated,  wound-up or dissolved or all or any part of its business,  property
or assets may be conveyed, sold, leased, transferred or otherwise disposed of to
any other Domestic Subsidiary of the Borrower, provided that, in the case of any
such merger or consolidation,  the Person formed by such merger or consolidation
shall be a Domestic  Subsidiary of the Borrower,  provided  further that, in the
case of any such merger or consolidation to which a Material Domestic Subsidiary
is a party, the Person formed by such merger or consolidation shall be or become
a Material Domestic Subsidiary;

                                       84

<PAGE>

                 (ii)      any Pledged Foreign Subsidiary may merge into or con-
solidate with any other Pledged Foreign Subsidiary or be liquidated, wound-up or
dissolved  or  all or any  part  of its  business,  property  or  assets  may be
conveyed,  sold,  leased,  transferred or otherwise disposed of to the Borrower,
any Material Domestic Subsidiary or any other Pledged Foreign Subsidiary; and

                 (iii)     any Unpledged  Foreign  Subsidiary may merge into or
consolidate with any other Unpledged  Foreign  Subsidiary or any Pledged Foreign
Subsidiary,  or be  liquidated,  wound-up or dissolved or all or any part of its
business,  property or assets may be  conveyed,  sold,  leased,  transferred  or
otherwise  disposed of to any other Unpledged Foreign  Subsidiary or any Pledged
Foreign  Subsidiary,   provided  that,  in  the  case  of  any  such  merger  or
consolidation  between a Pledged  Foreign  Subsidiary  and an Unpledged  Foreign
Subsidiary, the Person formed by such merger or consolidation shall be a Pledged
Foreign Subsidiary.

         (e)     SALES,  ETC.,  OF  ASSETS.  Sell,  lease,  transfer  or  other-
                 -------------------------
wise dispose of, or permit any of its Subsidiaries to sell,  lease,  transfer or
otherwise  dispose  of,  any  assets,  or grant  any  option  or other  right to
purchase, lease or otherwise acquire any assets, except:

                 (i)       purchases or sales of inventory in the ordinary
course of its business;

                 (ii)      dispositions of obsolete or worn out property,
whether now owned or hereafter  acquired,  in the ordinary course of business;

                 (iii)     dispositions  of  inventory  by the  Borrower  or any
of  Subsidiaries  to the  Borrower or any of its  Subsidiaries  in arm's  length
transactions in the ordinary course of business;

                 (iv)      dispositions of accounts receivable from the Borrower
to LSFCC and from LSFCC to LSFLLC;

                 (v)       dispositions  of  Foreign   Receivables   pursuant to
Permitted  Foreign  Receivables  Purchase  Transactions  permitted under Section
5.02(b)(iii)(F)  provided the Borrower and its Subsidiaries make the prepayments
required pursuant to Section 2.06(b);

                 (vi)      dispositions  of equipment  pursuant to Equipment
Financing  Transactions  permitted  under Section  5.02(b)(iii)(H)  provided the
Borrower and its Subsidiaries make the prepayments  required pursuant to Section
2.06(b);

                 (vii)     dispositions  of  real  property   pursuant  to  Real
Estate Financing Transactions permitted under Section  5.02(b)(iii)(G)  provided
the Borrower and its  Subsidiaries  make the  prepayments  required  pursuant to
Section 2.06(b);

                 (viii)    dispositions  of Domestic  Receivables  pursuant to
Permitted Domestic  Receivables  Purchase  Transactions  permitted under Section
5.02(b)(iii)(J)  provided the Borrower and its Subsidiaries make the prepayments
required pursuant to Section 2.06(b);

                 (ix)      licenses of Intellectual Property in the ordinary
course of business;

                                       85

<PAGE>

                 (x)       dispositions  by the Borrower to any of its  Subsidi-
aries of property other than accounts  receivable and inventory and dispositions
by any of its  Subsidiaries to the Borrower or any of its other  Subsidiaries of
property other than accounts  receivable  and inventory;  provided that the sum,
without  duplication,  of  (i)  the  fair  market  value  of  the  assets  sold,
transferred,  licensed or otherwise  disposed of after the date hereof PLUS (ii)
the aggregate principal amount of Debt permitted by Section 5.02(b)(iii)(N) PLUS
(iii) the aggregate Investments permitted by Section 5.02(f)(x) shall not exceed
$50,000,000  in the  aggregate  during  Fiscal  Year 2001,  $100,000,000  in the
aggregate  during  Fiscal  Years  2001 and 2002,  taken as a single  period,  or
$150,000,000 in the aggregate  during Fiscal Years 2001, 2002 and 2003, taken as
a single period;

                 (xi)      other  dispositions by the Borrower and its  Subsi-
diaries of property  other than  accounts  receivable;  provided that (i) at the
time of any  disposition,  no Event of Default  shall exist or shall result from
such disposition;  (ii) the consideration received for such disposition shall be
in an  amount  at least  equal  to the fair  market  value of the  assets  sold,
transferred,  licensed  or  otherwise  disposed  of;  (iii) at least  75% of the
consideration  received for such  disposition  shall be cash;  (iv) the non-cash
consideration  received for all such  dispositions  in the  aggregate  shall not
exceed $30,000,000 at any time outstanding;  (v) the aggregate fair market value
of all assets so sold,  transferred,  licensed or  otherwise  disposed of by the
Borrower and its Subsidiaries  shall not exceed  $50,000,000 in any Fiscal Year;
and  (vi) the  Borrower  and its  Subsidiaries  make  the  prepayments  required
pursuant to Section 2.06(b);

                 (xii)     dispositions of the Equity Interests of Material
Domestic  Subsidiaries  to the  Borrower  and  wholly  owned  Material  Domestic
Subsidiaries;   dispositions   of  the  Equity   Interests  of  Pledged  Foreign
Subsidiaries to the Borrower,  Material Domestic  Subsidiaries and other Pledged
Foreign  Subsidiaries;  and  dispositions  of the Equity  Interests of Unpledged
Foreign Subsidiaries to the Borrower or any of its other Subsidiaries;

                 (xiii)    dispositions of accounts  receivable to collection
agencies provided the aggregate face amount of all such accounts receivable does
not exceed $5,000,000; and

                 (xiv)     dispositions of accounts receivable of Foreign Subsi-
diaries, provided the aggregate face amount of all such accounts receivable does
not exceed $25,000,000.

         (f)     INVESTMENTS  IN OTHER  PERSONS.  Make or hold,  or permit  any
                 ------------------------------
of its  Subsidiaries  to make or hold,  any Investment in any Person, except:

                 (i)       Investments existing on the date hereof and described
on Schedule 4.01(cc) hereto;

                 (ii)      equity  Investments by the Borrower and its  Subsi-
diaries in their  Subsidiaries  outstanding  on the date hereof and described on
Schedule 4.01(cc) hereto;

                 (iii)     advances to officers,  directors  and employees of
the Borrower or any of its  Subsidiaries for travel,  entertainment,  relocation
and analogous ordinary business purposes;

                 (iv)      Investments by the Borrower and its Subsidiaries in
cash and Cash Equivalents;

                                       86

<PAGE>

                 (v)       Investments   consisting  of  intercompany  Debt
permitted   under   Section   5.02(b)(i)(A),    5.02(b)(ii),    5.02(b)(iii)(E),
5.02(b)(iii)(I),      5.02(b)(iii)(K),     5.02(b)(iii)(L),     5.02(b)(iii)(N),
5.02(b)(iii)(O) or 5.02(b)(iii)(P);

                 (vi)      extensions  of  credit to  customers  or  suppliers
of the Borrower or any of its  Subsidiaries  in the ordinary  course of business
and any Investments received in satisfaction or partial satisfaction thereof;

                 (vii)     Investments  by the  Borrower in any  Material Domes-
tic  Subsidiary  and  Investments  of any Material  Domestic  Subsidiary  in the
Borrower or any other Material Domestic Subsidiary;

                 (viii)    Investments by Pledged Foreign Subsidiaries in other
Pledged Foreign Subsidiaries;

                 (ix)      Investments by Unpledged Foreign  Subsidiaries in
other Unpledged Foreign  Subsidiaries or Pledged Foreign Subsidiaries;

                 (x)       Investments by the Borrower in any of its Subsidi-
aries and  Investments of any of its  Subsidiaries in the Borrower or any of its
other  Subsidiaries;  provided that the sum,  without  duplication,  of (i) such
Investments made after the date hereof PLUS (ii) the aggregate  principal amount
of  Debt  permitted  by  Section   5.02(b)(iii)(N)   PLUS  (iii)  the  aggregate
dispositions permitted by Section 5.02(e)(x) shall not exceed $50,000,000 in the
aggregate  during Fiscal Year 2001,  $100,000,000 in the aggregate during Fiscal
Years 2001 and 2002, taken as a single period,  or $150,000,000 in the aggregate
during  Fiscal Years 2001,  2002 and 2003,  taken as a single  period;  PROVIDED
FURTHER that  Investments in  Subsidiaries  of the Borrower that are not Solvent
immediately  prior  to the  making  of any  such  Investment  shall  not  exceed
$10,000,000 in the aggregate in any Fiscal Year;

                 (xi)      Investments by the Borrower in any of its  Subsidi-
aries and  Investments of any of its  Subsidiaries in the Borrower or any of its
other Subsidiaries made in connection with a disposition permitted under Section
5.02(e)(xii);

                 (xii)     Investments  by the Borrower in  Subsidiaries  formed
in  connection  with  Permitted  Domestic  Receivables   Purchase   Transactions
permitted under Section 5.02(b)(iii)(J);

                 (xiii)    Investments  by any Subsidiary of the Borrower in the
Borrower or any of its other  Subsidiaries  made in connection  with a Permitted
Foreign Receivables Purchase Transaction permitted under Section 5.02(b)(iii)(F)
in an amount not to exceed the proceeds thereof; and

                 (xiv)     other  Investments  by the Borrower  and its  Subsi-
diaries not  otherwise  permitted  under this  Section  5.02(f) in an  aggregate
amount not to exceed $35,000,000.

         (g)     RESTRICTED PAYMENTS. Declare or pay any dividends, purchase,
                 -------------------
redeem,  retire,  defease  or  otherwise  acquire  for value  any of its  Equity
Interests now or hereafter outstanding,  return any capital to its stockholders,
partners  or members  (or the  equivalent  Persons  thereof)  as such,  make any
distribution  of assets,  Equity  Interests,  obligations  or  securities to its

                                       87

<PAGE>

stockholders,  partners or members (or the equivalent  Persons thereof) as such,
or permit any of its  Subsidiaries to do any of the foregoing,  or permit any of
its Subsidiaries to purchase,  redeem,  retire, defease or otherwise acquire for
value any Equity  Interests in the Borrower,  except that, so long as no Default
shall have occurred and be continuing at the time of any action  described below
or would result therefrom:

                 (i)       the  Borrower may declare and pay  dividends  and
distributions  payable only in common stock (other than  Disqualified  Stock) of
the Borrower; and

                 (ii)      any  Subsidiary of the Borrower may (A) declare and
pay cash  dividends  and  dividends  and  distributions  payable in common stock
(other than  Disqualified  Stock) of such  Subsidiary  to the  Borrower  and (B)
declare and pay cash dividends and dividends and distributions payable in common
stock (other than  Disqualified  Stock) of such  Subsidiary to any Subsidiary of
the Borrower of which it is a Subsidiary;  provided that any dividends paid by a
Subsidiary of the Borrower  which is not a  wholly-owned  Subsidiary are paid to
all  stockholders  thereof on a pro rata basis or on a basis that results in the
receipt by the Borrower or a Subsidiary that is the parent of that Subsidiary of
dividends or  distributions of greater value than it would receive on a pro rata
basis.

         (h)     LEASE OBLIGATIONS.  Create,  incur, assume or suffer to exist,
                 -----------------
or permit any of its Subsidiaries to create,  incur,  assume or suffer to exist,
any  obligations  as  lessee  (i) for  the  rental  or hire of real or  personal
property in connection  with any sale and leaseback  transaction  other than (A)
Capitalized  Leases  permitted  under  Section  5.02(b)(i)(B),  (B) Real  Estate
Financing Transactions permitted under Section 5.02(b)(iii)(G) and (C) Equipment
Financing Transactions permitted under Section 5.02(b)(iii)(H),  or (ii) for the
rental or hire of other real or personal  property  of any kind under  leases or
agreements  to lease  (excluding  Capitalized  Leases)  other than (A) leases in
existence  on the  Closing  Date and (B) leases  entered  into or assumed by the
Borrower  or any  Subsidiary  after the date  hereof in the  ordinary  course of
business.

         (i)     AMENDMENTS OF  CONSTITUTIVE  DOCUMENTS.  Amend,  or permit any
                 --------------------------------------
of its Subsidiaries to amend, any of its Constitutive Documents if the effect of
such amendment would be materially adverse to the Borrower or to the Lenders.

         (j)     ACCOUNTING  CHANGES.  Make or permit,  or permit any of its
                 -------------------
Subsidiaries to make or permit,  any change in its Fiscal Year.

         (k)     PREPAYMENTS,  ETC., OF DEBT. Prepay, redeem, purchase,  defease
                 ---------------------------
or otherwise  satisfy prior to the scheduled  maturity thereof in any manner, or
make any payment in violation of any  subordination  terms of, any Debt,  except
(i) the  prepayment  of the  Advances  in  accordance  with  the  terms  of this
Agreement and the  prepayment of Debt payable to the Borrower,  (ii) the payment
of Debt as  contemplated  by the  definitions  of Net Cash  Proceeds,  (iii) the
contemporaneous exchange of Debt, in an aggregate principal amount not to exceed
$50,000,000,   outstanding  under  the  Indentures,  that  certain  U.S.  Dollar
Indenture dated as of January 18, 2001 between the Borrower and Citibank,  N.A.,
as trustee,  or that certain Euro Indenture dated as of January 18, 2001 between
the Borrower and Citibank,  N.A., as trustee, for Debt issued in connection with
a Capital Markets Transaction  permitted under Section  5.02(b)(i)(C),  (iv) the
prepayment  of secured Debt provided  there are no  outstanding  Advances

                                       88

<PAGE>

after giving effect to such prepayment, and (v) the close out of Ordinary Course
Hedge Agreements.

         (l)     NEGATIVE  PLEDGE.  Enter  into or suffer to exist,  or permit
                 ----------------
any of its  Subsidiaries  to  enter  into or  suffer  to  exist,  any  agreement
prohibiting or  conditioning  the creation or assumption of any Lien upon any of
its property or assets except:

                 (i)      those  existing  on property  of the  Borrower and its
Subsidiaries  on the  Closing  Date and listed on Schedule 4.01(x) hereto;

                 (ii)      those in favor of the Secured Parties;

                 (iii)     those in connection  with any purchase money Debt
permitted under Section  5.02(b)(iii)(C) solely to the extent that the agreement
or instrument governing such Debt prohibits a Lien on the property acquired with
the proceeds of such Debt;

                 (iv)      those in connection  with any  Capitalized  Lease
permitted under Section 5.02(b)(i)(B) solely to the extent that such Capitalized
Lease prohibits a Lien on the property subject thereto;

                 (v)       negative  pledges on accounts  receivable  of Foreign
Subsidiaries  and the associated  assets of Foreign  Subsidiaries  in connection
with Permitted Foreign Receivable Purchase Transactions  permitted under Section
5.02(b)(iii)(F),   negative   pledges  on   accounts   receivable   of  Domestic
Subsidiaries and associated  assets of Domestic  Subsidiaries in connection with
Permitted Domestic  Receivables  Purchase  Transactions  permitted under Section
5.02(b)(iii)(J), negative pledges on the property subject to Equipment Financing
Transactions  permitted under Section  5.02(b)(iii)(H) and Real Estate Financing
Transactions permitted under Section 5.02(b)(iii)(G) and negative pledges on the
property  of Foreign  Subsidiaries  subject  to Liens  permitted  under  Section
5.02(a)(xi);

                 (vi)      negative pledges on Intellectual Property licensed
from third parties; and

                 (vii)     negative  pledges  with  respect  to  property of the
Borrower and its Subsidiaries contained in documentation for any Capital Markets
Transaction  provided such negative  pledges (A) expressly permit Liens in favor
of  Administrative  Agent on all assets of the Borrower and its Subsidiaries and
Liens on equipment subject to Equipment  Financing  Transactions,  real property
subject to Real Estate Financing  Transactions,  accounts  receivable subject to
Permitted  Domestic  Receivables  Purchase  Transactions  and Permitted  Foreign
Receivables  Purchase  Transactions  and  property  subject  to any  other  Lien
permitted  under Section  5.02(a) and (B) do not require the Debt issued in such
Capital Markets Transactions to be secured by such permitted Liens.

         (m)     CAPITAL  EXPENDITURES.  Make, or permit any of its Subsidiaries
                 ---------------------
to make,  any Capital  Expenditures  that would cause the  aggregate of all such
Capital  Expenditures  made by the Borrower and its  Subsidiaries  in any Fiscal
Year to exceed $75,000,000.

                                       89

<PAGE>

         (n)     RESTRICTED  SUBSIDIARIES.  Permit any of its  Subsidiaries
                 ------------------------
existing as of the Closing Date to become a Restricted Subsidiary, other than as
a result of a change in Consolidated Net Tangible Assets.

         (o)     PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.  Directly or
                 -------------------------------------------
indirectly,  enter into or suffer to exist, or permit any of its Subsidiaries to
enter into or suffer to exist, any agreement or arrangement limiting the ability
of any of its Subsidiaries to declare or pay dividends or other distributions in
respect of its Equity  Interests or repay or prepay any Debt owed to, make loans
or advances  to, or otherwise  transfer  assets to or invest in, the Borrower or
any  Subsidiary  of  the  Borrower  (whether  through  a  covenant   restricting
dividends,  loans,  asset  transfers  or  investments,  a financial  covenant or
otherwise),  except (i) the Loan  Documents,  (ii)  restrictions on Subsidiaries
formed in connection with Permitted Foreign  Receivables  Purchase  Transactions
permitted  under  Section  5.02(b)(iii)(F)  and Permitted  Domestic  Receivables
Purchase  Transactions  permitted  under  Section  5.02(b)(iii)(J)  contained in
documentation for such  Transactions,  (iii)  restrictions on the declaration or
payment or other  distributions in respect of such Equity Interests contained in
documentation  for any  Capital  Markets  Transaction  permitted  under  Section
5.02(b)(i)(C)  provided such  restrictions do not prohibit any actions expressly
permitted hereunder, (iv) restrictions on the foregoing (other than restrictions
of the type set forth in clause (iii)),  if any,  contained in documentation for
any Capital Markets Transaction permitted under Section  5.02(b)(i)(C)  provided
that any such restrictions shall be deemed to be included herein as if set forth
in this Agreement,  and (v) restrictions on the transfer of the property subject
to Equipment  Financing  Transactions  permitted under Section  5.02(b)(iii)(H),
Real Estate Financing Transactions  permitted under Section  5.02(b)(iii)(G) and
dispositions of accounts receivable permitted under Section 5.02(e)(xiv).

         (p)     AMENDMENTS OF DOCUMENTS RELATING TO DEBT AND RECEIVABLES. Amend
                 --------------------------------------------------------
or otherwise  change the terms of any Debt, or make any payment  consistent with
an  amendment  thereof or change  thereto,  if the effect of such  amendment  or
change is to increase the interest rate on such Debt,  change (to earlier dates)
any dates upon which  payments of principal or interest are due thereon,  change
any event of default or condition  to an event of default  with respect  thereto
(other  than to  eliminate  or make less  onerous  any such  event or default or
increase any grace period related thereto), change the redemption, prepayment or
defeasance  provisions thereof, or change any collateral therefor (other than to
release such collateral), or if the effect of such amendment or change, together
with all other  amendments  or  changes  made,  is to  increase  materially  the
obligations of the obligor  thereunder or to confer any additional rights on the
holders  of such Debt (or a trustee  or other  representative  on their  behalf)
which  would be  materially  adverse  to the  Borrower  or to the  Lenders.  The
Borrower  shall  not amend or  otherwise  change  the  terms of the  Receivables
Transfer  Agreements  other than (i) amendments to extend the term thereof or to
preserve the arm's length nature of the purchase and sale  effected  thereby and
(ii) amendments in connection  with a Permitted  Domestic  Receivables  Purchase
Transaction  provided  the  effect of such  amendment  would  not be  materially
adverse to the Borrower or to the Lenders.

         (q)     USE OF PROCEEDS.
                 ---------------

                 (i)       Use any portion of the proceeds of the Advances,
directly or indirectly,  (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance Debt of the Borrower or

                                       90

<PAGE>

others  incurred to purchase or carry Margin  Stock,  (iii) to extend credit for
the purpose of purchasing  or carrying any Margin Stock,  or (iv) to acquire any
security in any transaction that is subject to Sections 13 or 14 of the Exchange
Act.

                 (ii)      Use any portion of the proceeds of the  Advances,
directly or indirectly,  (i) knowingly to purchase  Ineligible  Securities  from
either Co-Lead Arranger during any period in which such Co-Lead Arranger makes a
market in such  Ineligible  Securities,  (ii)  knowingly to purchase  during the
underwriting or placement period  Ineligible  Securities  being  underwritten or
privately  placed by  either  Co-Lead  Arranger,  or (iii) to make  payments  of
principal or interest on Ineligible Securities  underwritten or privately placed
by either  Co-Lead  Arranger and issued by or for the benefit of the Borrower or
any  Affiliate  of  the  Borrower.   Each  Co-Lead   Arranger  is  a  registered
broker-dealer  and  permitted  to  underwrite  and  deal in  certain  Ineligible
Securities.

         Section  5.03     REPORTING  REQUIREMENTS.  So long  as any  Advance or
                           -----------------------
any other  Obligation  of any Loan Party under any Loan  Document  shall  remain
unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have
any Commitment hereunder, the Borrower will furnish to the Agents and the Lender
Parties:

         (a)     DEFAULT  NOTICE.  As soon as possible and in any event within
                 ---------------
two days after an Officer of the Borrower obtains  knowledge of a Default or any
event,  development or occurrence  reasonably  likely to have a Material Adverse
Effect  continuing on the date of such  statement,  a statement of a Responsible
Officer of the  Borrower  setting  forth  details of such Default and the action
that the Borrower has taken and proposes to take with respect thereto.

         (b)     ANNUAL  FINANCIALS.  As soon as  available  and in any event
                 ------------------
within 90 days after the end of each  Fiscal  Year,  a copy of the annual  audit
report for such year for the Borrower and its  Subsidiaries,  including  therein
Consolidated  and   consolidating   balance  sheets  of  the  Borrower  and  its
Subsidiaries  as  of  the  end  of  such  Fiscal  Year  and   Consolidated   and
consolidating statements of income and a Consolidated statement of cash flows of
the Borrower and its Subsidiaries for such Fiscal Year, in each case accompanied
by an opinion with respect to the Consolidated  statements reasonably acceptable
to  the  Required  Lenders  of  Arthur  Andersen  or  other  independent  public
accountants of recognized standing acceptable to the Required Lenders,  together
with (i) a certificate of such  accounting  firm to the Lender  Parties  stating
that in the course of the regular  audit of the business of the Borrower and its
Subsidiaries,  which audit was conducted by such  accounting  firm in accordance
with generally accepted auditing standards, such accounting firm has obtained no
knowledge that a Default has occurred and is  continuing,  or if, in the opinion
of such accounting  firm, a Default has occurred and is continuing,  a statement
as to the nature thereof, (ii) a schedule in form reasonably satisfactory to the
Administrative   Agent  of  the   computations   used  by  such  accountants  in
determining,  as of the end of such Fiscal Year,  compliance  with the covenants
contained in Section 5.04, provided that in the event of any change in GAAP used
in the  preparation  of such  financial  statements,  the  Borrower  shall  also
provide,  if necessary for the  determination of compliance with Section 5.04, a
statement of  reconciliation  conforming  such financial  statements to GAAP and
(iii) a certificate of a Responsible  Officer of the Borrower,  in substantially
the form of  Exhibit G hereto,  stating  that no  Default  has  occurred  and is
continuing  or, if a Default has occurred and is  continuing,  a statement as to
the nature  thereof and the action that the  Borrower  has taken and proposes to
take with respect thereto.

                                       91

<PAGE>

         (c)     QUARTERLY  FINANCIALS.  As soon as available and in any event
                 ---------------------
within 45 days after the end of each of the first three Fiscal  Quarters of each
Fiscal Year,  Consolidated and consolidating  balance sheets of the Borrower and
its  Subsidiaries  as of the end of such  Fiscal  Quarter and  Consolidated  and
consolidating statements of income and a Consolidated statement of cash flows of
the Borrower and its  Subsidiaries  for the period  commencing at the end of the
previous  Fiscal  Quarter  and ending  with the end of such  Fiscal  Quarter and
Consolidated and consolidating statements of income and a Consolidated statement
of cash flows of the Borrower and its Subsidiaries for the period  commencing at
the end of the  previous  Fiscal  Year and  ending  with the end of such  Fiscal
Quarter,  setting  forth in each  case in  comparative  form  the  corresponding
figures for the  corresponding  date or period of the preceding Fiscal Year, all
in  reasonable  detail and duly  certified  (subject  to normal  year-end  audit
adjustments) by a Responsible Officer of the Borrower as having been prepared in
accordance  with  GAAP,  together  with (i) a  certificate  of said  Responsible
Officer, in substantially the form of Exhibit G hereto,  stating that no Default
has occurred and is continuing  or, if a Default has occurred and is continuing,
a statement as to the nature  thereof and the action that the Borrower has taken
and  proposes  to  take  with  respect  thereto  and  (ii) a  schedule  in  form
satisfactory  to the  Administrative  Agent  of  the  computations  used  by the
Borrower in determining compliance with the covenants contained in Section 5.04,
provided that in the event of any change in GAAP used in the preparation of such
financial  statements,  the Borrower  shall also  provide,  if necessary for the
determination  of compliance  with Section  5.04, a statement of  reconciliation
conforming such financial statements to GAAP.

         (d)     MONTHLY  FINANCIALS.  As soon as  available  and in any event
                 -------------------
within 30 days after the end of each fiscal month, a Consolidated  balance sheet
of  the  Borrower  and  its  Subsidiaries  as of  the  end  of  such  month  and
Consolidated  statements of income and a Consolidated statement of cash flows of
the Borrower and its  Subsidiaries  for the period  commencing at the end of the
previous month and ending with the end of such month and Consolidated statements
of income and a  Consolidated  statement  of cash flows of the  Borrower and its
Subsidiaries  for the period  commencing at the end of the previous  Fiscal Year
and  ending  with  the end of such  month,  all in  reasonable  detail  and duly
certified by a Responsible Officer of the Borrower.

         (e)     ANNUAL  FORECASTS.  As soon as  available  and in any event no
                 -----------------
later than 60 days after the end of each  Fiscal  Year,  forecasts  prepared  by
management of the Borrower, in form satisfactory to the Administrative Agent, of
Consolidated  balance  sheets  and income  statements  of the  Borrower  and its
Subsidiaries  on a monthly basis for the Fiscal Year  following such Fiscal Year
and on an annual  basis for each Fiscal Year  thereafter  until the  Termination
Date.

         (f)     LITIGATION.  Promptly after the commencement thereof, notice of
                 ----------
all  actions,  suits,  investigations,  litigation  and  proceedings  before any
Governmental  Authority or  arbitrator,  affecting  any Loan Party or any of its
Subsidiaries  of the type described in Section  4.01(f),  and promptly after the
occurrence thereof,  notice of any adverse change in the status or the financial
effect on any Loan Party or any of its Subsidiaries of the Disclosed  Litigation
from that described on Schedule 4.01(f) hereto.

         (g)     SECURITIES REPORTS. Promptly after the sending or filing there-
                 ------------------
of, copies of all proxy  statements,  financial  statements and reports that any
Loan Party or any of its Subsidiaries  sends to its stockholders,  and copies of
all regular, periodic and special reports, and all

                                       92

<PAGE>

registration  statements,  that any Loan Party or any of its Subsidiaries  files
with the Securities and Exchange  Commission or any governmental  authority that
may be substituted therefor, or with any national securities exchange.

         (h)     CREDITOR  REPORTS.  Promptly  after the  furnishing  thereof,
                 -----------------
copies of any statement or report  furnished to any holder of Debt securities of
any  Loan  Party  or of any of its  Subsidiaries  pursuant  to the  terms of the
Indentures or any  indenture,  loan or credit or similar  agreement  executed in
connection with a Capital Markets  Transaction and not otherwise  required to be
furnished  to the Lender  Parties  pursuant to any other  clause of this Section
5.03.

         (i)     AGREEMENT  NOTICES.  Promptly upon receipt  thereof,  copies of
                 -------------------
all notices,  requests and other documents  received by any Loan Party or any of
its Subsidiaries under or pursuant to any instrument,  indenture, loan or credit
or similar  agreement  regarding or related to any breach or default by any Loan
Party thereto or any other event that could  materially  impair the value of the
interests or the rights of any Loan Party or otherwise  have a Material  Adverse
Effect and copies of any amendment,  modification  or waiver of any provision of
any instrument, indenture, loan or credit or similar agreement and, from time to
time upon request by the  Administrative  Agent,  such  information  and reports
regarding  such  instruments,   indentures  and  loan  and  credit  and  similar
agreements as the Administrative Agent may reasonably request.

         (j)     ERISA.  promptly  upon any  Officer of the  Borrower  becoming
                 -----
aware of its  occurrence,  notice of any of the following  events  affecting the
Borrower  or any ERISA  Affiliate  (but in no event more than 10 days after such
event),  and such Officer  shall also deliver to  Administrative  Agent and each
Lender a copy of any  notice  with  respect  to such  event that is filed with a
Governmental  Authority and any notice delivered by a Governmental  Authority to
the Borrower or any ERISA Affiliate with respect to such event:

                 (i)       an ERISA Event;

                 (ii)      a decrease in the Funded  Current  Liability  Percen-
tage  for any Plan at the end of any fiscal quarter to less than 90%; or

                 (iii)     any significant change in the status of any item dis-
closed on Schedule 4.01(n) hereto.

         (k)     INSURANCE.  As soon as available  and in any event within 60
                 ---------
days after the end of each Fiscal Year, a report  summarizing any changes in the
insurance coverage  maintained for the Borrower and its Subsidiaries during such
Fiscal Year and containing  such  additional  information  as any Agent,  or any
Lender Party through the Administrative Agent, may reasonably specify.

         (l)     NEW SUBSIDIARIES. No later than 60 days after the end of each
                 ----------------
Fiscal Year, a list of all  Subsidiaries  of each Loan Party showing (as to each
such Subsidiary) the jurisdiction of its incorporation,  the number of shares of
each class of its Equity Interests  authorized and the number  outstanding,  and
the  percentage of each such class of its Equity  Interests  owned  (directly or
indirectly)  by such  Loan  Party  and  the  number  of  shares  covered  by all
outstanding  options,  warrants,  rights of  conversion  or purchase and similar
rights.

                                       93

<PAGE>

         (m)     FOREIGN INTELLECTUAL  PROPERTY.  No later than 60 days after
                 ------------------------------
the end of each Fiscal Year, a list of the ten countries  (other than the United
States) in which the highest  percentage of the aggregate  gross revenues of the
Borrower and its Subsidiaries on a Consolidated  basis for such Fiscal Year were
generated.

         (n)     MATERIAL  SUBSIDIARIES.  No later than 60 days after the end of
                 ----------------------
each Fiscal Year, a list of all Material  Subsidiaries and the percentage of the
aggregate gross revenues of the Borrower and its  Subsidiaries on a Consolidated
basis for such Fiscal Year contributed by each such Material Subsidiary.

         (o)     OTHER INFORMATION. Such other information respecting the busi-
                 -----------------
ness, condition (financial or otherwise), operations, performance, properties or
prospects  of any Loan Party or any of its  Subsidiaries  as any  Agent,  or any
Lender Party through the Administrative  Agent, may from time to time reasonably
request.

         Section 5.04      FINANCIAL COVENANTS. So long as any Advance or any
                           -------------------
other  Obligation of any Loan Party under any Loan Document shall remain unpaid,
any Letter of Credit  shall be  outstanding  or any Lender  Party shall have any
Commitment hereunder, the Borrower will:

         (a)      LEVERAGE  RATIO.  Maintain  at all times a Leverage  Ratio of
                  ---------------
not more than the amount set forth below for each Business Day occurring in the
periods set forth below:

         -----------------------------------------------------
                   PERIOD                       RATIO
         -----------------------------------------------------
         Closing - 11/24/01                   4.25:1.00
         -----------------------------------------------------
         11/25/01 - 05/25/02                  4.00:1.00
         -----------------------------------------------------
         05/26/02 - 11/23/02                  3.75:1.00
         -----------------------------------------------------
         11/24/02 - 05/24/03                  3.25:1.00
         -----------------------------------------------------
         05/25/03 - 08/29/03                  3.00:1.00
         -----------------------------------------------------

         (b)     SENIOR SECURED  LEVERAGE  RATIO. Maintain at all times a Senior
                 -------------------------------
Secured Leverage Ratio of not more than the amount set forth below for each
Business   Day  occurring in the periods set forth below:

         ------------------------------------------------------
                 PERIOD RATIO
         ------------------------------------------------------
            Closing - 11/24/01                    2.50:1.00
         ------------------------------------------------------
            11/25/01 - 05/25/02                   2.25:1.00
         ------------------------------------------------------
            05/26/02 - 11/23/02                   2.00:1.00
         ------------------------------------------------------
            11/24/02 - 05/24/03                   1.75:1.00
         ------------------------------------------------------
            05/25/03 - 08/29/03                   1.50:1.00
         ------------------------------------------------------

         (c)     FIXED CHARGE  COVERAGE  RATIO.  Maintain at the end of each
                 -----------------------------
Fiscal  Quarter of the Borrower a Fixed Charge Coverage Ratio of not less than
1.00 to 1.00 for each Measurement Period.

                                       94

<PAGE>

         (d)     INTEREST  COVERAGE  RATIO.  Maintain  at the  end of each
                 -------------------------
Fiscal  Quarter  of the  Borrower  an  Interest Coverage Ratio of not less than
the amount set forth below for each Measurement Period ending during the periods
set forth below:

         ------------------------------------------------------
                   MEASUREMENT
                 PERIOD ENDING IN                RATIO
         ------------------------------------------------------
         Closing - 11/24/01                    2.00:1.00
         ------------------------------------------------------
         11/25/01 - 05/25/02                   2.00:1.00
         ------------------------------------------------------
         05/26/02 - 11/23/02                   2.25:1.00
         ------------------------------------------------------
         11/24/02 - 05/24/03                   2.50:1.00
         ------------------------------------------------------
         05/25/03 - 08/29/03                   2.75:1.00
         ------------------------------------------------------

                                   ARTICLE VI
                                EVENTS OF DEFAULT


         Section 6.01      EVENTS OF  DEFAULT.  If any of the  following  events
                           ------------------
("EVENTS OF  DEFAULT")  shall occur and be continuing:

         (a) (i) the  Borrower  shall fail to pay any  principal  of any Advance
when the same shall become due and payable,  whether by scheduled maturity or at
a date fixed for prepayment or by acceleration, demand or otherwise, or (ii) the
Borrower shall fail to pay any interest on any Advance or any fee owing under or
in respect  of this  Agreement,  or any Loan Party  shall fail to make any other
payment under or in respect of any Loan Document,  whether by scheduled maturity
or at a date  fixed for  payment or  prepayment  or by  acceleration,  demand or
otherwise,  in each case under this clause (ii) within three Business Days after
the same becomes due and payable; or

         (b) any representation or warranty made by any Loan Party under or in
connection  with any Loan  Document  shall prove to have been  incorrect  in any
material respect when made or deemed made; or

         (c) (i) the  Borrower  shall fail to perform or observe  any term,
covenant or agreement  contained in Section 2.14, 5.01(c),  5.01(d),  5.01(n) or
5.01(p), 5.02, 5.03 or 5.04; or

         (d) any Loan  Party  shall fail to perform  or  observe  any term,
covenant or agreement  contained in any of the Loan  Documents on its part to be
performed or observed that is not otherwise  referred to in this Section 6.01 if
such failure shall remain  unremedied  for at least 30 days after the earlier of
the date on which (i) an Officer of any of the Loan Parties  first becomes aware
of such failure and (ii)  written  notice  thereof  shall have been given to the
Borrower by the Administrative Agent or any of the Lenders Parties; or

         (e)  (i)  any  Loan  Party  or any of its  Subsidiaries  shall  fail
to pay any principal of, premium or interest on, or any other amount payable in
respect of, one or more items of Debt of the Loan Parties and their Subsidiaries
(excluding  Debt  outstanding  hereunder)  that is  outstanding  in an aggregate
principal amount (or, in the case of any Hedge Agreement,  that has an Agreement
Value) of at least $25,000,000 when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such

                                       95

<PAGE>

failure shall continue after the applicable grace period,  if any,  specified in
the agreements or instruments relating to all such Debt; or (ii) any other event
shall  occur or  condition  shall  exist  under the  agreements  or  instruments
relating to one or more items of Debt of the Loan Parties and their Subsidiaries
(excluding Debt  outstanding  hereunder) that is outstanding (or under which one
or more Persons have a commitment  to extend  credit) in an aggregate  principal
amount (or, in the case of any Hedge Agreement,  that has an Agreement Value) of
at least $25,000,000, and such other event or condition shall continue after the
applicable  grace  period,   if  any,   specified  in  all  such  agreements  or
instruments,  if the effect of such event or condition is to  accelerate,  or to
permit the  acceleration of, the maturity of such Debt or otherwise to cause, or
to permit the holder thereof to cause, such Debt to mature; or (iii) one or more
items  of Debt of the  Loan  Parties  and  their  Subsidiaries  (excluding  Debt
outstanding  hereunder)  that is outstanding (or under which one or more Persons
have a commitment to extend credit) in an aggregate principal amount (or, in the
case  of  any  Hedge  Agreement,  that  has  an  Agreement  Value)  of at  least
$25,000,000 shall be declared to be due and payable or required to be prepaid or
redeemed  (other  than  by a  regularly  scheduled  or  required  prepayment  or
redemption or as contemplated by the definition of Net Cash Proceeds), purchased
or defeased, or an offer to prepay, redeem,  purchase or defease such Debt shall
be required to be made, in each case prior to the stated maturity thereof; or

         (f)     the Borrower or any Material Subsidiary shall generally not pay
its debts as such debts  become due, or shall admit in writing its  inability to
pay its debts generally,  or shall make a general  assignment for the benefit of
creditors;  or any proceeding  shall be instituted by or against the Borrower or
any Material  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 receiver, trustee, or other
similar  official for it or for any substantial part of its property and, in the
case of any such  proceeding  instituted  against it (but not  instituted by it)
that is being diligently  contested by it in good faith,  either such proceeding
shall remain  undismissed or unstayed for a period of at least 60 days or any of
the actions sought in such proceeding (including,  without limitation, the entry
of an order for relief  against,  or the  appointment  of a  receiver,  trustee,
custodian  or other  similar  official  for, it or any  substantial  part of its
property)  shall  occur;  or any  event  or  action  analogous  to or  having  a
substantially  similar effect to any of the events or actions set forth above in
this Section 6.01(f) (other than a solvent reorganization) shall occur under the
Requirements  of Law of  any  jurisdiction  applicable  to the  Borrower  or any
Material  Subsidiary;  or the Borrower or any Material Subsidiary shall take any
corporate,  partnership,  limited  liability  company or other similar action to
authorize any of the actions set forth above in this Section 6.01(f); or

         (g)     one or more  judgments  or  orders  for the  payment  of money
in excess of $10,000,000 in the aggregate shall be rendered against the Borrower
or any of its Material  Subsidiaries and shall remain unsatisfied and either (i)
enforcement  proceedings shall have been commenced by any creditor upon any such
judgment  or order or (ii) there  shall be any period of at least 30 days during
which a stay of  enforcement  of any such  judgment  or  order,  by  reason of a
pending appeal or otherwise, shall not be in effect; PROVIDED, HOWEVER, that any
such  judgment  or order  shall not give rise to an Event of Default  under this
Section  6.01(g) if and for so long as (A) the amount of such  judgment or order
is covered by a valid and binding policy of insurance

                                       96

<PAGE>

between the defendant and the insurer, which shall be rated at least "A" by A.M.
Best  Company,  covering  full  payment  thereof  and (B) such  insurer has been
notified,  and has not denied the claim made for payment,  of the amount of such
judgment or order; or

         (h)     one or more nonmonetary judgments or orders (including, without
limitation, writs or warrants of attachment,  garnishment,  execution, distraint
or  similar  process)  shall be  rendered  against  the  Borrower  or any of its
Material  Subsidiaries  that,  either  individually  or in the aggregate,  could
reasonably be expected to have a Material Adverse Effect, and there shall be any
period  of at  least  30 days  during  which a stay of  enforcement  of any such
judgment or order,  by reason of a pending appeal or otherwise,  shall not be in
effect; or

         (i)     any  provision  of any Loan  Document  after  delivery  thereof
pursuant  to Section  3.01,  5.01(i),  5.01(j)  or 5.01(l)  shall for any reason
(other than pursuant to the terms  thereof)  cease to be valid and binding on or
enforceable  against any Loan Party intended to be a party thereto,  or any such
Loan Party shall so state in writing; or

         (j)     any Collateral  Document after  delivery  thereof  pursuant to
Section  3.01,  5.01(i),  5.01(j) or 5.01(l)  shall for any reason  (other  than
pursuant  to the terms  thereof)  cease to create a valid  and  perfected  first
priority Lien on the Collateral purported to be covered thereby; or

         (k)     any Plan maintained by the Borrower or any of its ERISA Affili-
ates shall be  terminated  within the  meaning of Title IV of ERISA or a trustee
shall be appointed by an appropriate  United States district court to administer
any Plan, or the PBGC (or any successor thereto) shall institute  proceedings to
terminate any Plan or to appoint a trustee to administer any Plan,  and, in each
case,  the  Borrower's  or any such ERISA  Affiliate's  liability  (after giving
effect to the tax  consequences  thereof) as of the date thereof to the PBGC (or
any successor  thereto) for unfunded  guaranteed vested benefits under such Plan
or the Borrower's  obligations to contribute to any Plan in order to voluntarily
terminate  such  Plan  exceed  $20,000,000  (or in  the  case  of a  termination
involving  the  Borrower  or any  of  its  ERISA  Affiliates  as a  "substantial
employer" (as defined in Section 4001(a)(2) of ERISA) the withdrawing employer's
proportionate share of such liability shall exceed such amount); or

         (l)     the  Borrower  or  any  of  its  ERISA   Affiliates as employer
under a Multiemployer Plan shall have made a complete or partial withdrawal from
such  Multiemployer  Plan and the plan sponsor of such  Multiemployer Plan shall
have  notified  such  withdrawing  employer  that such  employer  has incurred a
Withdrawal Liability in an amount exceeding $20,000,000; or

         (m)    (i) Any Person or two or more  Persons  (other than  Permitted
Transferees) acting in concert shall acquire beneficial  ownership,  directly or
indirectly,  of Equity  Interests of the  Borrower or Voting Trust  Certificates
issued under the Voting Trust Agreement (or other  securities  convertible  into
such  securities)  representing  30% or more of the combined voting power of all
Equity Interests of the Borrower  entitled to vote (or would be entitled to vote
in the absence of the Voting  Trust  Agreement)  in the  election  of  directors
(except that the  provisions  of this  subsection  (i) shall not apply to Voting
Trustees serving in their capacities as such under the Voting Trust  Agreement);
or (ii) during any period of up to 24 consecutive  months,  commencing after the
Closing  Date,  individuals  who at the  beginning  of such 24 month period were
directors of the Borrower shall cease for any reason to constitute a majority of
the Board of Directors of

                                       97

<PAGE>

the Borrower unless the persons replacing such individuals were nominated by the
Board of Directors of the Borrower,  by Permitted  Transferees  or by any of the
Voting  Trustees;  or (iii) the occurrence of any "CHANGE IN CONTROL" as defined
in any  indenture  or other  agreement  executed  in  connection  with a Capital
Markets Transaction;

then, and in any such event, the Administrative  Agent (i) shall at the request,
or may with the consent,  of the Required  Lenders,  by notice to the  Borrower,
declare the  Commitments  of each Lender Party and the obligation of each Lender
Party to make  Advances  (other  than  Letter of Credit  Advances by a Revolving
Credit Lender  pursuant to Section  2.03(c) and the  obligations  of each Lender
Party to purchase its Pro Rata Share of outstanding Swing Line Advances pursuant
to Section  2.02(b)) and of each  Issuing Bank to issue  Letters of Credit to be
terminated,  whereupon the same shall forthwith terminate, and (ii) shall at the
request, or may with the consent, of the Required Lenders,  (A) by notice to the
Borrower,  declare the Notes, all interest thereon and all other amounts payable
under  this  Agreement  and the other Loan  Documents  to be  forthwith  due and
payable, whereupon the Obligations, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further  notice of any kind,  all of which are  hereby  expressly  waived by the
Borrower  and (B) by  notice  to each  party  required  under  the  terms of any
agreement in support of which a Standby Letter of Credit is issued, request that
all  Obligations  under  such  agreement  be  declared  to be due  and  payable;
PROVIDED,  HOWEVER,  that in the event of an actual or deemed  entry of an order
for relief with respect to the Borrower under the Federal  Bankruptcy  Code, (1)
the  Commitments of each Lender Party and the obligation of each Lender Party to
make Advances (other than Letter of Credit Advances by a Revolving Credit Lender
pursuant to Section 2.03(c) and the obligations of each Lender Party to purchase
its Pro Rata  Share of  outstanding  Swing  Line  Advances  pursuant  to Section
2.02(b)) and each Issuing Bank to issue Letters of Credit shall automatically be
terminated  and (2) the Notes,  all such  interest  and all such  amounts  shall
automatically  become  and be due  and  payable,  without  presentment,  demand,
protest or any notice of any kind, all of which are hereby  expressly  waived by
the Borrower.

         Section  6.02     ACTIONS IN RESPECT OF THE LETTERS OF CREDIT UPON
                           ------------------------------------------------
DEFAULT.  If any Event of Default shall have occurred and be continuing, the
- -------
Administrative  Agent  may,  or shall at the  request of the  Required  Lenders,
irrespective  of whether it is taking any of the  actions  described  in Section
6.01 or  otherwise,  make demand upon the Borrower to, and  forthwith  upon such
demand  the  Borrower  will,  pay to the  Administrative  Agent on behalf of the
Lender Parties in same day funds at the Administrative Agent's office designated
in such demand, for deposit in the L/C Cash Collateral  Account, an amount equal
to the aggregate Available Amount of all Letters of Credit then outstanding.  If
at any time the  Administrative  Agent determines that any funds held in the L/C
Cash  Collateral  Account are subject to any right or claim of any Person  other
than the  Administrative  Agent and the Secured Parties or that the total amount
of such  funds is less than the  aggregate  Available  Amount of all  Letters of
Credit, the Borrower will,  forthwith upon demand by the  Administrative  Agent,
pay to the Administrative Agent, as additional funds to be deposited and held in
the L/C Cash  Collateral  Account,  an  amount  equal to the  excess of (a) such
aggregate Available Amount over (b) the total amount of funds, if any, then held
in the L/C Cash Collateral Account that the  Administrative  Agent determines to
be free and clear of any such right and claim. Upon the drawing of any Letter of
Credit for which funds are on deposit in the L/C Cash Collateral  Account,  such
funds  shall be  applied,  to the extent

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permitted under  applicable  law, to reimburse the relevant  Issuing Bank or the
Revolving Credit Lenders, as applicable.

                                  ARTICLE VII
                                   THE AGENTS


Section 7.01      APPOINTMENT, POWERS AND IMMUNITY.
                  --------------------------------

         (a)     Each Lender Party (in its  capacities  as a Lender,  the Swing
Line Bank (if  applicable),  an Issuing Bank (if  applicable),  and on behalf of
itself  and its  Affiliates  as  potential  Hedge  Banks)  hereby  appoints  and
authorizes the Administrative Agent to act as its agent under this Agreement and
the other Loan  Documents  with such powers and  discretion as are  specifically
delegated to the  Administrative  Agent by the terms of this  Agreement  and the
other  Loan  Documents,  together  with  such  other  powers  as are  reasonably
incidental  thereto.  The  Administrative  Agent  (which  term  as  used in this
sentence  and in Section  7.05(a) and the first  sentence of Section  7.06 shall
include its  Affiliates  and its own and its  Affiliates'  officers,  directors,
employees, and agents): (i) shall not have any duties or responsibilities except
those  expressly  set forth in this  Agreement  and  shall  not be a trustee  or
fiduciary  for any Lender  Party;  (ii) shall not be  responsible  to the Lender
Parties for any recital, statement, representation, or warranty (whether written
or oral) made in or in connection  with any Loan Document or any  certificate or
other document referred to or provided for in, or received by any of them under,
any Loan  Document,  or for the  value,  validity,  effectiveness,  genuineness,
enforceability,  or  sufficiency  of, or the  perfection or priority of any Lien
created  or  purported  to be  created  under or in  connection  with,  any Loan
Document,  or any other document  referred to or provided for therein or for any
failure by any Loan Party or any other Person to perform any of its  obligations
thereunder;  (iii) shall not be  responsible  for or have any duty to ascertain,
inquire  into,  or verify the  performance  or  observance  of any  covenants or
agreements by any Loan Party or the  satisfaction of any condition or to inspect
the property  (including  the books and records) of any Loan Party or any of its
Subsidiaries  or  Affiliates;  (iv) shall not be required to initiate or conduct
any litigation or collection  proceedings under any Loan Document; and (v) shall
not be  responsible  for any action taken or omitted to be taken by it or any of
its directors,  officers,  agents or employees  under or in connection  with any
Loan  Document,  except  for  its or  their  own  gross  negligence  or  willful
misconduct.

         (b)     The Administrative Agent shall also act as the "COLLATERAL
AGENT"  under  the  Loan  Documents,  and  each of the  Lender  Parties  (in its
capacities as a Lender, the Swing Line Bank (if applicable), an Issuing Bank (if
applicable)  and a potential  Hedge Bank)  hereby  appoints and  authorizes  the
Administrative  Agent to act as the agent of such Lender  Party for  purposes of
acquiring,  holding and enforcing any and all Liens on Collateral granted by any
of the Loan Parties to secure any of the Secured Obligations, together with such
powers and discretion as are reasonably  incidental thereto.  The Administrative
Agent may from time to time in its  discretion  appoint any of the other  Lender
Parties or any of the  Affiliates  of a Lender  Party to act as its  co-agent or
sub-agent or its  attorney-in-fact  for any purpose,  including  for purposes of
holding or enforcing any Lien on the Collateral (or any portion thereof) granted
under  the  Collateral  Documents  or of  exercising  any  rights  and  remedies
thereunder at the direction of the Administrative  Agent, and the Administrative
Agent shall not be  responsible  for the  negligence  or  misconduct of any such
co-agents, sub-agents or attorneys-in-fact selected by it with

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reasonable care. In this connection,  the  Administrative  Agent, as "collateral
agent", and such co-agents,  sub-agents and attorneys-in-fact  shall be entitled
to the  benefits  of all  provisions  of this  Article VII  (including,  without
limitation,   Section   7.05,   as  though  such   co-agents,   sub-agents   and
attorneys-in-fact  were the  "collateral  agent" under the Loan Documents) as if
set forth in full herein with respect thereto.

         (c)     The Co-Lead  Arrangers  shall not have any powers or discretion
under  this  Agreement  or any of the other  Loan  Documents  other  than  those
bestowed  upon  it  as a  co-agent  or  sub-agent  from  time  to  time  by  the
Administrative  Agent  pursuant to subsection (b) of this Section 7.01, and each
of the  Lender  Parties  hereby  acknowledges  that (i) it has not relied on the
Co-Lead  Arrangers in deciding whether to enter into this Agreement or in taking
or not taking any action  under the  Agreement  and (ii) the  Co-Lead  Arrangers
shall not have any  liability  under  this  Agreement  or any of the other  Loan
Documents.

         (d)     Neither the  Documentation  Agent nor the  Syndication  Agent
shall have any right, power, obligation, liability, responsibility or duty under
this Agreement other than those applicable to all Lenders as such.

         Section 7.02      RELIANCE BY AGENT.  The  Administrative  Agent shall
                           -----------------
be entitled to rely upon any  certification,  notice,  instrument,  writing,  or
other communication (including,  without limitation, any thereof by telephone or
telecopy) believed by it to be genuine and correct and to have been signed, sent
or made by or on behalf of the proper  Person or  Persons,  and upon  advice and
statements of legal counsel (including counsel for any Loan Party),  independent
accountants,  and  other  experts  selected  by the  Administrative  Agent.  The
Administrative  Agent may deem and  treat  the  payee of any Note as the  holder
thereof  for all  purposes  hereof  unless  and until the  Administrative  Agent
receives and accepts an Assignment  and Acceptance  executed in accordance  with
Section 8.07. As to any matters not  expressly  provided for by this  Agreement,
the  Administrative  Agent shall not be required to exercise any  discretion  or
take any action,  but shall be  required  to act or to refrain  from acting (and
shall be fully  protected  in so  acting or  refraining  from  acting)  upon the
instructions of the Required Lenders,  and such instructions shall be binding on
all of the Lender Parties;  PROVIDED,  HOWEVER,  that the  Administrative  Agent
shall not be required to take any action that exposes the  Administrative  Agent
to personal  liability  or that is contrary to any Loan  Document or  applicable
Requirements of Law or unless it shall first be indemnified to its  satisfaction
by the Lender  Parties  against any and all  liability  and expense which may be
incurred by it by reason of taking any such action.

         Section  7.03     DEFAULTS.  The  Administrative  Agent shall not be
                           --------
deemed to have  knowledge or notice of the  occurrence  of a Default or Event of
Default  (other  than an Event of  Default  under  Section  6.01(a))  unless the
Administrative  Agent has  received  written  notice from a Lender  Party or the
Borrower  specifying  such  Default or Event of Default  and  stating  that such
notice is a "NOTICE  OF  DEFAULT".  In the event that the  Administrative  Agent
receives such a notice of the  occurrence of a Default or Event of Default,  the
Administrative Agent shall give prompt notice thereof to the Lender Parties. The
Administrative  Agent  shall  (subject  to Section  7.02) take such  action with
respect to such Default or Event of Default as shall  reasonably  be directed by
the Required Lenders;  provided that, unless and until the Administrative  Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such

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action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem  advisable in the best  interest of the Lender
Parties.

         Section  7.04     BANK  OF  AMERICA,  BAS  AND  AFFILIATES.  With
                           ----------------------------------------
respect to its Commitments, the Advances made by it and the Note or Notes issued
to it, Bank of America (and any successor acting as the Administrative Agent) in
its capacity as a Lender Party  hereunder  shall have the same rights and powers
under the Loan  Documents as any other Lender Party and may exercise the same as
though it were not acting as the  Administrative  Agent or an Issuing Bank;  and
the term "LENDER PARTY" or "LENDER PARTIES" shall,  unless  otherwise  expressly
indicated,  include Bank of America in its individual capacity.  Bank of America
(and any successor acting as the Administrative Agent), BAS and their respective
affiliates may (without  having to account  therefor to any Lender Party) accept
deposits from,  lend money to, make  investments  in,  provide  services to, and
generally engage in any kind of lending,  trust, or other business with any Loan
Party or any of its  Subsidiaries  or  Affiliates as if it were not acting as an
Agent or an Issuing Bank,  and Bank of America (and any successor  acting as the
Administrative  Agent), BAS and their respective  affiliates may accept fees and
other  consideration  from  any  Loan  Party  or  any  of  its  Subsidiaries  or
Affiliates,  or any Person that may do business  with or own  securities  of any
Loan Party or any such Subsidiary or Affiliate,  for services in connection with
this Agreement or otherwise without having to account for the same to the Lender
Parties.

         Section 7.05      INDEMNIFICATION.
                           ---------------

         (a)     The Lenders  severally agree to indemnify the  Administrative
Agent (to the extent not promptly  reimbursed  under Section  8.04,  but without
limiting  the  obligations  of the  Borrower  under  such  Section)  ratably  in
accordance  with  their  respective  Commitments,  for any and all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses  (including  attorneys'  fees), or disbursements of any kind and nature
whatsoever  that  may  be  imposed  on,  incurred  by or  asserted  against  the
Administrative  Agent in any way relating to or arising out of any Loan Document
or the transactions  contemplated  thereby or any action taken or omitted by the
Administrative  Agent under any Loan Document  (collectively,  the  "INDEMNIFIED
COSTS"); provided that no Lender shall be liable for any of the foregoing to the
extent they arise from the gross negligence or willful  misconduct of the Person
to be  indemnified.  In the  case of any  claim,  investigation,  litigation  or
proceeding  for  which  indemnity  under  this  Section  7.05(a)  applies,  such
indemnity  shall apply whether or not such claim,  investigation,  litigation or
proceeding is brought by the Administrative  Agent, any of the other Agents, any
of the Lender  Parties or a third party.  Without  limitation of the  foregoing,
each Lender severally agrees to reimburse the Administrative Agent promptly upon
demand for its ratable  share of any costs or expenses  payable by the  Borrower
under Section 8.04, to the extent that the Administrative  Agent is not promptly
reimbursed for such costs and expenses (including,  without limitation, fees and
expenses  of  counsel)  by the  Borrower.  In  the  case  of any  investigation,
litigation or proceeding giving rise to any Indemnified Costs, this Section 7.05
applies whether any such  investigation,  litigation or proceeding is brought by
any  Lender  Party or any other  Person.  The  failure  of any  Lender  Party to
reimburse the Administrative Agent promptly upon demand for its ratable share of
any amount required to be paid by the Lender Party to the  Administrative  Agent
as provided  herein shall not relieve any other  Lender Party of its  obligation
hereunder to reimburse  the  Administrative  Agent for its ratable share of such
amount,  but no Lender Party shall be  responsible  for the failure of any other
Lender Party to

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reimburse the  Administrative  Agent for such other Lender Party's ratable share
of such amount.  Without prejudice to the survival of any other agreement of any
Lender Party  hereunder,  the agreement and obligations of each Lender contained
in this Section 7.05(a) shall survive the payment in full of principal, interest
and all other amounts payable hereunder and under the other Loan Documents.

         (b)     The Revolving Credit Lenders  severally agree to indemnify each
Issuing Bank (to the extent not promptly  reimbursed  under  Section  8.04,  but
without  limiting the  obligations  of the Borrower under such Section) for such
Revolving   Credit  Lender's  Pro  Rata  Share  of  any  and  all   liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or disbursements  of any kind or nature  whatsoever that may be imposed
on, incurred by, or asserted against such Issuing Bank in any way relating to or
arising out of the Loan Documents or the  transactions  contemplated  thereby or
any  action  taken or  omitted by such  Issuing  Bank under the Loan  Documents;
PROVIDED,  HOWEVER,  that no  Revolving  Credit  Lender  shall be liable for any
portion of such liabilities,  obligations,  losses, damages, penalties, actions,
judgments,  suits, costs, expenses or disbursements  resulting from such Issuing
Bank's  gross  negligence  or  willful  misconduct.  In the  case of any  claim,
investigation,  litigation or proceeding for which  indemnity under this Section
7.05(b)  applies,  such  indemnity  shall  apply  whether  or  not  such  claim,
investigation,  litigation or proceeding is brought by any Issuing Bank,  any of
the other Lender Parties or a third party.  Without limitation of the foregoing,
each  Revolving  Credit Lender  severally  agrees to reimburse such Issuing Bank
promptly  upon  demand  for  its  Pro  Rata  Share  of any  costs  and  expenses
(including,  without  limitation,  fees and expenses of counsel)  payable by the
Borrower  under  Section  8.04,  to the  extent  that such  Issuing  Bank is not
promptly reimbursed for such costs and expenses by the Borrower.  The failure of
any Revolving  Credit Lender to reimburse such Issuing Bank promptly upon demand
for its Pro Rata Share of any amount required to be paid by the Revolving Credit
Lenders to such  Issuing  Bank as  provided  herein  shall not relieve any other
Revolving  Credit Lender of its  obligation  hereunder to reimburse such Issuing
Bank for its Pro Rata Share of such amount, but no Revolving Credit Lender shall
be responsible for the failure of any other Revolving Credit Lender to reimburse
such Issuing  Bank for such other  Revolving  Credit  Lender's Pro Rata Share of
such amount.  Without  prejudice  to the survival of any other  agreement of any
Revolving  Credit  Lender  hereunder,  the  agreement  and  obligations  of each
Revolving  Credit  Lender  contained in this Section  7.05(b)  shall survive the
payment in full of principal,  interest and all other amounts payable  hereunder
and under the other Loan Documents.

         Section 7.06      NON-RELIANCE ON AGENT AND OTHER LENDER PARTIES.  Each
                           ----------------------------------------------
Lender Party agrees that it has, independently and without reliance on any Agent
or any other Lender Party, and based on such documents and information as it has
deemed  appropriate,  made its own credit analysis of the Loan Parties and their
Subsidiaries  and  decision  to  enter  into  this  Agreement  and that it will,
independently and without reliance upon any Agent or any other Lender Party, and
based on such  documents and  information  as it shall deem  appropriate  at the
time,  continue to make its own analysis  and  decisions in taking or not taking
action  under  the Loan  Documents.  Except  for  notices,  reports,  and  other
documents  and  information  expressly  required to be  furnished  to the Lender
Parties by the Administrative  Agent hereunder,  the Administrative  Agent shall
not have any duty or  responsibility to provide any Lender Party with any credit
or other information concerning the affairs, financial condition, or business of

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any Loan Party or any of its  Subsidiaries  or Affiliates that may come into the
possession of the Administrative Agent or any of its affiliates.

         Section 7.07      RESIGNATION OF ADMINISTRATIVE  AGENT. The Adminis-
trative  Agent may resign at any time  (effective  as set forth below) by giving
notice  thereof  to  the  Lender  Parties  and  the  Borrower.   Upon  any  such
resignation,  the Required  Lenders  shall have the right to appoint a successor
Administrative Agent which such successor Administrative Agent shall, so long as
no Event of Default has occurred and is continuing,  be approved by the Borrower
(such  approval not to be  unreasonably  withheld or delayed and to be deemed to
have been given if no  objection  thereto is  received by the  Required  Lenders
within  five  Business  Days  after  the date on which  notice  of the  proposed
appointment is provided to the Borrower).  If no successor Agent shall have been
so appointed by the Required  Lenders and shall have accepted  such  appointment
within 30 days after the  retiring  Administrative  Agent's  giving of notice of
resignation, then the retiring Administrative Agent may, on behalf of the Lender
Parties,  appoint a successor  Administrative  Agent which shall be a commercial
bank  organized  under the laws of the United  States or any state  thereof  and
having combined capital and surplus of at least $500,000,000.  If within 45 days
after written notice is given of the retiring Administrative Agent's resignation
under  this  Section  7.07 no  successor  Administrative  Agent  shall have been
appointed and shall have accepted  such  appointment,  then on such 45th day (a)
the retiring Administrative Agent's resignation shall become effective,  (b) the
retiring  Administrative Agent shall thereupon be discharged from its duties and
obligations  under  the  Loan  Documents  and (c)  the  Required  Lenders  shall
thereafter  perform all duties and  obligations  of the retiring  Administrative
Agent under the Loan Documents until such time, if any, as the Required  Lenders
appoint a successor Administrative Agent as provided above in this Section 7.07.
Upon the acceptance of any  appointment as  Administrative  Agent hereunder by a
successor  and upon the  execution  and filing or  recording  of such  financing
statements,  or amendments  thereto,  and such  amendments or supplements to the
Mortgages,  and such  other  instruments  or  notices,  as may be  necessary  or
desirable,  or as the  Required  Lenders may  request,  in order to continue the
perfection  of the Liens  granted or purported  to be granted by the  Collateral
Documents,  such successor  Administrative  Agent shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent,  and the retiring  Administrative  Agent shall be discharged
from its duties and  obligations  under the Loan  Documents.  After any retiring
Agent's  resignation  hereunder as Administrative  Agent, the provisions of this
Article  VII shall  continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent.

                                  ARTICLE VIII
                                  MISCELLANEOUS


         Section 8.01      AMENDMENTS,  ETC. No amendment or waiver of any  pro-
                           ----------------
vision of this Agreement,  the Notes or any other Loan Document,  nor consent to
any  departure  by any of the Loan  Parties  therefrom,  shall  in any  event be
effective unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to in writing) by the Required Lenders, and then
such waiver or consent shall be effective only in the specific  instance and for
the specific purpose for which given; PROVIDED,  HOWEVER, that (a) no amendment,
waiver or  consent  shall,  unless in  writing  and  signed by all of the Lender
Parties  (other  than any  Lender  Party  that is, at such  time,  a  Defaulting
Lender),  do any of the following at any time:  (i) waive

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any of the  conditions  specified in Section 3.01 or, in the case of the Initial
Extension  of Credit,  Section  3.02;  (ii)  change the number of Lenders or the
percentage of the Commitments or the aggregate  outstanding  principal amount of
Advances or the  aggregate  Available  Amount of  outstanding  Letters of Credit
that, in each case,  shall be required for the Lender  Parties or any of them to
take any action hereunder or thereunder;  (iii) release all or substantially all
of the value of the guarantees of the Material Domestic  Subsidiaries  under the
Subsidiary   Guaranty  (other  than,  in  the  case  of  any  Material  Domestic
Subsidiary,  to the extent  permitted  under the  Subsidiaries  Guaranty);  (iv)
release all or substantially  all of the Collateral in any transaction or series
of related transactions (other than to the extent permitted under the Pledge and
Security  Agreement);  or (v) amend  Section 2.14 or this Section  8.01;  (b) no
amendment, waiver or consent shall, unless in writing and signed by the Required
Lenders  and each  Lender  (other  than any  Lender  that is,  at such  time,  a
Defaulting  Lender) that has a Commitment under, or is owed any amounts under or
in respect of, the Tranche A Term  Facility,  the Tranche B Term Facility or the
Revolving  Credit Facility if such Lender is directly and adversely  affected by
such amendment,  waiver or consent: (i) increase the Commitments of such Lender;
(ii) reduce the  principal  of, or stated rate of interest on, the Notes held by
such Lender or any fees or other amounts payable hereunder to such Lender; (iii)
postpone any date scheduled for any payment of principal of, or interest on, the
Notes pursuant to Section 2.04 or 2.07 or any date fixed for any payment of fees
hereunder or any Guaranteed  Obligations payable under the Subsidiary  Guaranty;
or (iv) change the order of application  of any reduction in the  Commitments or
any prepayment of Advances  between the Tranche A Term Facility or the Tranche B
Term  Facility  from  the  application  thereof  set  forth  in  the  applicable
provisions  of Section  2.05(b) or  2.06(b),  respectively,  in any manner  that
materially and adversely  affects the Lenders under such Tranche A Term Facility
or  Tranche  B Term  Facility,  as the case may be,  or  require  the  permanent
reduction of the Revolving  Credit Facility at any time when all or a portion of
the Tranche A Term  Facility or Tranche B Term Facility  remains in effect;  and
(c) the consent of any Lender Party shall not be required for any amendment that
increases the Revolving  Credit  Commitments by  $250,000,000  in the event such
increase  does not  increase  the  Commitments  of such Lender  Party;  PROVIDED
FURTHER that no amendment, waiver or consent shall, unless in writing and signed
by the Swing Line Bank or each Issuing  Bank, as the case may be, in addition to
the Lenders required above to take such action, affect the rights or obligations
of the Swing Line Bank or of the Issuing  Banks,  as the case may be, under this
Agreement;  and PROVIDED  FURTHER that no  amendment,  waiver or consent  shall,
unless in writing  and signed by the  Administrative  Agent in  addition  to the
Lenders  required above to take such action,  affect the rights or duties of the
Administrative  Agent  under  this  Agreement  and  the  other  Loan  Documents.
Notwithstanding  any of the foregoing  provisions of this Section 8.01,  none of
the defined  terms set forth in Section 1.01 shall be amended,  supplemented  or
otherwise  modified  in any manner  that would  change the  meaning,  purpose or
effect of this  Section  8.01 or any  section  referred  to herein  unless  such
amendment,  supplement or modification is agreed to in writing by the number and
percentage  of  Lenders  (and the Swing  Line Bank,  each  Issuing  Bank and the
Administrative  Agent, if applicable)  otherwise  required to amend such section
under the terms of this Section 8.01.

         Section 8.02      NOTICES,  ETC. All notices and other  communications
                           -------------
provided for hereunder shall be in writing (including  telegraphic,  telecopy or
telex communication) and mailed, telegraphed,  telecopied, telexed or delivered,
if to the Borrower,  at its address at 1155 Battery  Street,  San Francisco,  CA
94111,  Attention:  Treasurer;  if to any Initial Lender, the

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Swing Line Bank or each Initial  Issuing Bank,  at its Base Rate Lending  Office
specified  opposite its name on Schedule 1.01(a) hereto;  if to any other Lender
Party,  at  its  Base  Rate  Lending  Office  specified  in the  Assignment  and
Acceptance  pursuant  to  which  it  became  a  Lender  Party;  and  if  to  the
Administrative Agent, at its address at Bank of America, N.A. Attention:  Credit
Services,  1850  Gateway  Boulevard,  CA  4-706-05-09,  Concord,  CA 94520,  for
borrowings, conversions,  continuations and payment notices and Bank of America,
N.A.  Attention:  Agency  Management,  1455 Market Street,  CA 5-701-12-09,  San
Francisco,  CA 94103, for all other notices;  or, as to any party, at such other
address as shall be  designated  by such party in a written  notice to the other
parties.  All  such  notices  and  other  communications   shall,  when  mailed,
telegraphed,  telecopied or telexed,  be effective  when deposited in the mails,
delivered to the telegraph  company,  transmitted  by telecopier or confirmed by
telex answerback,  respectively,  except that notices and  communications to any
Agent  pursuant to Article II, III or VII shall not be effective  until received
by such Agent.  Delivery by telecopier of an executed counterpart of a signature
page to any amendment or waiver of any provision of this  Agreement or the Notes
or of any  Exhibit  hereto  to be  executed  and  delivered  hereunder  shall be
effective as delivery of an original executed counterpart thereof.

         Section 8.03      NO WAIVER;  REMEDIES. No failure on the part of any
Lender Party or any Agent to  exercise,  and no delay in  exercising,  any right
hereunder or under any Note or any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or  further  exercise  thereof or the  exercise  of any other  right.  The
remedies  herein  provided  are  cumulative  and not  exclusive  of any remedies
provided by law.

         Section 8.04      COSTS AND EXPENSES.
                           ------------------

         (a)     The Borrower  agrees to pay on demand (i) all reasonable  costs
and  expenses of each Agent in  connection  with the  syndication,  preparation,
execution,  delivery,  administration,  modification  and  amendment  of, or any
consent  or waiver  under,  the Loan  Documents  and the other  documents  to be
delivered  thereunder  (including,  without  limitation,  (A) all due diligence,
collateral   review,   syndication,   transportation,   computer,   duplication,
appraisal, audit, insurance,  consultant,  search, filing and recording fees and
expenses and (B) the reasonable fees and expenses of counsel for each Agent with
respect  thereto,  with  respect  to  advising  such  Agent as to its rights and
responsibilities,  or the  perfection,  protection or  preservation of rights or
interests,  under the Loan Documents, with respect to negotiations with any Loan
Party  or with  other  creditors  of any Loan  Party or any of its  Subsidiaries
arising out of any Default or any events or circumstances  that may give rise to
a Default and with respect to presenting claims in or otherwise participating in
or monitoring any bankruptcy,  insolvency or other similar proceeding  involving
creditors' rights generally and any proceeding  ancillary  thereto) and (ii) all
costs and  expenses of each Agent and each Lender Party in  connection  with the
enforcement  of the Loan  Documents  and the  other  documents  to be  delivered
thereunder,  whether  in any  action,  suit or  litigation,  or any  bankruptcy,
insolvency or other similar  proceeding  affecting  creditors'  rights generally
(including,  without limitation, the reasonable fees and expenses of counsel for
the Administrative Agent and each Lender Party with respect thereto).

         (b)     The Borrower  agrees to  indemnify,  defend and save and hold
harmless each Agent,  each Lender Party and each of their  affiliates  and their
respective  officers,  directors,

                                      105

<PAGE>

employees,  agents and advisors (each, an "INDEMNIFIED PARTY") from and against,
and shall pay on demand, any and all claims,  damages,  losses,  liabilities and
expenses  (including,  without  limitation,  reasonable  fees  and  expenses  of
counsel) that may be incurred by or asserted or awarded  against any Indemnified
Party,  in each  case  arising  out of or in  connection  with or by  reason  of
(including, without limitation, in connection with any investigation, litigation
or  proceeding or  preparation  of a defense in  connection  therewith)  (i) the
Facilities,  the actual or proposed  use of the  proceeds of the Advances or the
Letters of Credit, the Loan Documents,  or any of the transactions  contemplated
thereby,  or (ii) the actual or alleged  presence of Hazardous  Materials on any
property  of any Loan  Party  or any of its  Subsidiaries  or any  Environmental
Action relating in any way to any Loan Party or any of its Subsidiaries,  except
to the extent  such  claim,  damage,  loss,  liability  or expense is found in a
final,  non-appealable  judgment by a court of  competent  jurisdiction  to have
resulted from such Indemnified  Party's gross negligence or willful  misconduct.
In the case of an  investigation,  litigation  or other  proceeding to which the
indemnity in this Section  8.04(b)  applies,  such indemnity  shall be effective
whether or not such  investigation,  litigation  or proceeding is brought by any
Loan Party, its directors,  shareholders or creditors or an Indemnified Party or
any other  Person,  whether or not any  Indemnified  Party is  otherwise a party
thereto and whether or not the  Transaction  is  consummated.  The Borrower also
agrees not to assert any claim  against  any Agent,  any Lender  Party or any of
their Affiliates,  or any of their respective  officers,  directors,  employees,
agents  and  advisors,  on any  theory  of  liability,  for  special,  indirect,
consequential  or punitive  damages arising out of or otherwise  relating to the
Facilities,  the actual or proposed  use of the  proceeds of the Advances or the
Letters of Credit,  the Loan Documents or any of the  transactions  contemplated
thereby.

         (c)     If any Loan Party fails to pay when due any costs, expenses or
other  amounts  payable  by it  under  any  Loan  Document,  including,  without
limitation,  fees and  expenses of counsel and  indemnities,  such amount may be
paid on behalf  of such Loan  Party by the  Administrative  Agent or any  Lender
Party, in its sole discretion.

         (d)     Without  prejudice to the survival of any other  agreement of
any Loan Party  hereunder or under any other Loan  Document,  the agreements and
obligations of the Borrower contained in Sections 2.10 and 2.13 and this Section
8.04 shall  survive the  payment in full of  principal,  interest  and all other
amounts payable hereunder and under any of the other Loan Documents.

         Section  8.05     RIGHT  OF  SET-OFF.  Upon  (a)  the  occurrence  and
                           ------------------
during the continuance of any Event of Default and (b) the making of the request
or the  granting of the  consent  specified  by Section  6.01 to  authorize  the
Administrative  Agent to declare the Obligations due and payable pursuant to the
provisions of Section  6.01,  each Agent and each Lender Party and each of their
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent  permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand,  provisional or final) at any time
held and other  indebtedness at any time owing by such Agent,  such Lender Party
or such  Affiliate to or for the credit or the account of the  Borrower  against
any and all of the  Obligations of the Borrower now or hereafter  existing under
the Loan  Documents,  irrespective  of whether  such Agent or such Lender  Party
shall  have  made any  demand  under  this  Agreement  or such Note or Notes and
although such  Obligations  may be  unmatured.  Each Agent and each Lender Party
agrees  promptly to notify the Borrower after any such set-off and  application;
PROVIDED, HOWEVER, that

                                      106

<PAGE>

the failure to give such notice  shall not affect the  validity of such  set-off
and  application.  The  rights  of each  Agent and each  Lender  Party and their
respective  Affiliates  under this  Section are in addition to other  rights and
remedies  (including,  without  limitation,  other rights of set-off)  that such
Agent, such Lender Party and their respective Affiliates may have.

         Section 8.06      BINDING EFFECT. This Agreement shall become effective
                           --------------
when it  shall  have  been  executed  by the  Borrower  and each  Agent  and the
Administrative  Agent shall have been notified by each Initial Lender, the Swing
Line Bank and each Initial Issuing Bank that such Initial Lender, the Swing Line
Bank or such  Initial  Issuing  Bank has  executed  it and  thereafter  shall be
binding  upon and inure to the  benefit  of the  Borrower,  each  Agent and each
Lender  Party and their  respective  successors  and  assigns,  except  that the
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Lender Parties.

         Section 8.07      ASSIGNMENTS AND PARTICIPATIONS.
                           ------------------------------

         (a)     Each Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Agreement (including, without
limitation,  all or a portion of its  Commitment  or  Commitments,  the Advances
owing to it and the Note or Notes held by it); PROVIDED,  HOWEVER, that (i) each
such  assignment  shall be of a uniform,  and not a varying,  percentage  of all
rights  and  obligations  under and in respect  of any or all  Facilities,  (ii)
except in the case of an assignment to a Person that,  immediately prior to such
assignment,  was a Lender, an Affiliate of any Lender or an Approved Fund of any
Lender or an assignment of all of a Lender's rights and  obligations  under this
Agreement,  the  aggregate  amount of the  Commitments  being  assigned  to such
Eligible Assignee pursuant to such assignment  (determined as of the date of the
Assignment and Acceptance with respect to such assignment)  shall in no event be
less  than,  in the case of an  assignment  of all or a  portion  of a  Lender's
Revolving  Credit  Commitment,  $5,000,000  (or such  lesser  amount as shall be
approved by the  Administrative  Agent and, so long as no Event of Default shall
have  occurred  and be  continuing  at the  time  of the  effectiveness  of such
assignment,  the  Borrower) or, in the case of an assignment of all or a portion
of  a  Lender's  Tranche  A  Term  Commitment  or  Tranche  B  Term  Commitment,
$1,000,000,  (iii) each such  assignment to an Approved Fund of any Lender shall
in no event be less than  $1,000,000,  (iv) each such assignment  shall be to an
Eligible Assignee, and (v) the parties to each such assignment shall execute and
deliver to the  Administrative  Agent,  for its  acceptance and recording in the
Register, an Assignment and Acceptance,  together with any Note or Notes subject
to such assignment and a processing and recordation fee of $3,000.

         (b)     Upon such execution,  delivery, acceptance and recording, from
and after the effective date specified in such  Assignment and  Acceptance,  (i)
the assignee  thereunder  shall be a party hereto and, to the extent that rights
and  obligations  hereunder have been assigned to it pursuant to such Assignment
and Acceptance,  have the rights and obligations of a Lender  hereunder and (ii)
the Lender assignor  thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such  Assignment and  Acceptance,
relinquish its rights (other than its rights under Sections 2.10,  2.13 and 8.04
to the extent any claim  thereunder  relates to an event  arising  prior to such
assignment) and be released from its  obligations  under this Agreement (and, in
the case of an Assignment and Acceptance  covering all of the remaining  portion
of an assigning  Lender's  rights and  obligations  under this  Agreement,  such
Lender shall

                                      107

<PAGE>

cease to be a party hereto).  If the assignee is not incorporated under the laws
of the United  States or a state  thereof,  it shall deliver to the Borrower and
the  Administrative  Agent  certification  as to  exemption  from  deduction  or
withholding of Taxes in accordance with Section 2.13.

         (c)     By executing and delivering an Assignment and Acceptance,  each
Lender Party  assignor  thereunder and each assignee  thereunder  confirm to and
agree with each other and the other parties  thereto and hereto as follows:  (i)
other than as provided in such Assignment and Acceptance,  such assigning Lender
Party makes no  representation  or warranty and assumes no  responsibility  with
respect  to  any  statements,  warranties  or  representations  made  in  or  in
connection  with  any  Loan  Document  or  the  execution,  legality,  validity,
enforceability,  genuineness,  sufficiency  or value  of, or the  perfection  or
priority of any Lien created or purported to be created  under or in  connection
with, any Loan Document or any other instrument or document  furnished  pursuant
thereto;  (ii) such assigning Lender Party makes no  representation  or warranty
and assumes no  responsibility  with respect to the  financial  condition of any
Loan  Party or the  performance  or  observance  by any Loan Party of any of its
obligations  under  any  Loan  Document  or any  other  instrument  or  document
furnished pursuant thereto;  (iii) such assignee confirms that it has received a
copy of this  Agreement,  together with copies of such documents and information
as it has deemed  appropriate  to make its own credit  analysis  and decision to
enter  into  such   Assignment   and   Acceptance;   (iv)  such  assignee  will,
independently  and without reliance upon any Agent,  such assigning Lender Party
or any other  Lender Party and based on such  documents  and  information  as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this  Agreement;  (v) such  assignee  confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes each
Agent to take such action as agent on its behalf and to exercise such powers and
discretion  under the Loan Documents as are delegated to such Agent by the terms
hereof and thereof,  together with such powers and  discretion as are reasonably
incidental  thereto;  and (vii) such  assignee  agrees  that it will  perform in
accordance  with their  terms all of the  obligations  that by the terms of this
Agreement are required to be performed by it as a Lender or Issuing Bank, as the
case may be.

         (d)     The  Administrative  Agent,  acting  for  this  purpose  (but
only for this  purpose)  as the agent of the  Borrower,  shall  maintain  at its
address  referred to in Section 8.02 a copy of each  Assignment  and  Acceptance
delivered to and accepted by it and a register for the  recordation of the names
and addresses of the Lender Parties and the  Commitment  under each Facility of,
and principal  amount of the Advances  owing under each Facility to, each Lender
Party from time to time (the  "REGISTER").  The entries in the Register shall be
conclusive  and  binding  for  all  purposes,  absent  manifest  error,  and the
Borrower,  the Agents and the Lender  Parties shall treat each Person whose name
is recorded in the Register as a Lender Party hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Agent or any  Lender  Party at any  reasonable  time and from  time to time upon
reasonable prior notice.

         (e)     Upon its receipt of an Assignment  and  Acceptance  executed by
an  assigning  Lender  Party and an  assignee,  together  with any Note or Notes
subject to such assignment,  the Administrative  Agent shall, if such Assignment
and Acceptance has been completed and is in substantially  the form of Exhibit C
hereto,  (i) accept such Assignment and Acceptance,  (ii) record the information
contained  therein in the Register and (iii) give prompt  notice  thereof to the
Borrower.  In the case of any assignment by a Lender, if so requested,  promptly
after its

                                      108

<PAGE>

receipt of such notice,  the  Borrower,  at its own expense,  shall  execute and
deliver to the  Administrative  Agent in exchange  for the  surrendered  Note or
Notes a new Note to the order of such  Eligible  Assignee in an amount  equal to
the Commitment assumed by it under each Facility pursuant to such Assignment and
Acceptance  and, if any  assigning  Lender has retained a  Commitment  hereunder
under  such  Facility,  a new Note to the order of such  assigning  Lender in an
amount equal to the Commitment retained by it hereunder.  Such new Note or Notes
shall be in an  aggregate  principal  amount  equal to the  aggregate  principal
amount of such surrendered  Note or Notes,  shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially  the form
of Exhibit A-1, A-2 or A-3 hereto, as the case may be.

         (f)     Each Lender Party may sell participations to one or more Per-
sons  (other  than any Loan  Party or any of its  Affiliates)  in or to all or a
portion  of its  rights,  obligations  or  rights  and  obligations  under  this
Agreement (including,  without limitation,  all or a portion of its Commitments,
the Advances  owing to it and the Note or Notes (if any) held by it);  PROVIDED,
HOWEVER,   that  (i)  such  Lender  Party's  obligations  under  this  Agreement
(including,  without limitation,  its Commitments) shall remain unchanged,  (ii)
such Lender Party shall remain solely  responsible  to the other parties  hereto
for the  performance of such  obligations,  (iii) such Lender Party shall remain
the  holder  of any  such  Note for all  purposes  of this  Agreement,  (iv) the
Borrower,  the Agents and the other Lender Parties shall continue to deal solely
and  directly  with such Lender  Party in  connection  with such Lender  Party's
rights  and  obligations  under this  Agreement,  (v) the  participant  shall be
entitled to the benefit of the yield protection provisions contained in Sections
2.10,  2.13 and 8.04(c) and the right of set-off  contained  in Section 8.05 and
(vi) no participant under any such participation shall have any right to approve
any amendment or waiver of any provision of any Loan Document, or any consent to
any  departure  by any Loan  Party  therefrom,  except to the  extent  that such
amendment,  waiver or consent  would reduce the  principal of, or stated rate of
interest on, the Notes or any fees or other amounts payable  hereunder,  in each
case to the extent  subject to such  participation,  postpone any date scheduled
for any payment of principal  of, or interest on, the Notes  pursuant to Section
2.04  or  2.07 or any  date  fixed  for any  payment  of fees  hereunder  or any
Guaranteed  Obligations payable under the Subsidiary  Guaranty,  in each case to
the extent subject to such participation, or release all or substantially all of
the Collateral.

         (g)     Any Lender Party may, in connection with any assignment or par-
ticipation  or proposed  assignment  or  participation  pursuant to this Section
8.07,   disclose  to  the  assignee  or  participant  or  proposed  assignee  or
participant  any information  relating to the Borrower  furnished to such Lender
Party by or on behalf of the Borrower;  PROVIDED,  HOWEVER,  that,  prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve  the  confidentiality  of any  Confidential  Information
received by it from such Lender Party.

         (h)     Notwithstanding any other provision set forth in this Agreement
any  Lender  Party  may at any time  create a  security  interest  in all or any
portion of its rights under this Agreement (including,  without limitation,  the
Advances  owing to it and the Note or Notes held by it) in favor of any  Federal
Reserve Bank in  accordance  with  Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank. No such assignment shall release the assigning Lender from its obligations
hereunder.

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<PAGE>

         (i)     Notwithstanding  anything to the contrary contained herein, any
Lender that is a fund that invests in bank loans may create a security  interest
in all or any portion of the Advances  owing to it and the Note or Notes held by
it to the trustee for holders of obligations owed, or securities issued, by such
fund as security for such obligations or securities,  provided,  that unless and
until  such  trustee  actually  becomes  a Lender in  compliance  with the other
provisions of this Section  8.07,  (i) no such pledge shall release the pledging
Lender  from any of its  obligations  under  the Loan  Documents  and (ii)  such
trustee  shall not be entitled to exercise  any of the rights of a Lender  under
the Loan Documents even though such trustee may have acquired  ownership  rights
with respect to the pledged interest through foreclosure or otherwise.

         (j)     Notwithstanding  anything to the contrary contained herein, any
Lender  Party (a  "GRANTING  LENDER")  may  grant to a special  purpose  funding
vehicle  identified as such in writing from time to time by the Granting  Lender
to the  Administrative  Agent and the  Borrower (an "SPC") the option to provide
all or any part of any Advance  that such  Granting  Lender  would  otherwise be
obligated to make pursuant to this  Agreement,  provided that (i) nothing herein
shall constitute a commitment by any SPC to fund any Advance, and (ii) if an SPC
elects not to exercise such option or otherwise fails to make all or any part of
such  Advance,  the  Granting  Lender  shall be  obligated  to make such Advance
pursuant to the terms hereof. The making of an Advance by an SPC hereunder shall
utilize the  Commitment  of the Granting  Lender to the same extent,  and as if,
such Advance were made by such Granting Lender.  Each party hereto hereby agrees
that (i) no SPC shall be liable for any indemnity or similar payment  obligation
under this Agreement for which a Lender Party would be liable, (ii) no SPC shall
be entitled to the  benefits of Sections  2.10 and 2.13 (or any other  increased
costs protection  provision) and (iii) the Granting Bank shall for all purposes,
including,  without  limitation,  the approval of any amendment or waiver of any
provision of any Loan Document,  remain the Lender Party of record hereunder. In
furtherance of the foregoing,  each party hereto hereby agrees (which  agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the  payment  in full of all  outstanding  commercial
paper or other senior Debt of any SPC, it will not  institute  against,  or join
any   other   Person  in   instituting   against,   such  SPC  any   bankruptcy,
reorganization,  arrangement,  insolvency,  or liquidation  proceeding under the
laws of the United States or any state thereof.  Notwithstanding anything to the
contrary  contained  in this  Agreement,  any SPC may (i) with  notice  to,  but
without prior consent of, the Borrower and the Administrative Agent and with the
payment of a processing  fee of $500,  assign all or any portion of its interest
in any Advance to the Granting Lender and (ii) disclose on a confidential  basis
any  non-public  information  relating  to its funding of Advances to any rating
agency, commercial paper dealer or provider of any surety or guarantee or credit
or liquidity  enhancement  to such SPC. This  subsection  (k) may not be amended
without the prior written  consent of each Granting  Lender,  all or any part of
whose Advances are being funded by the SPC at the time of such amendment.

         Section 8.08      EXECUTION IN  COUNTERPARTS.  This Agreement may be
                           --------------------------
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed shall be deemed to be an
original  and all of which  taken  together  shall  constitute  one and the same
agreement. Delivery by telecopier of an executed counterpart of a signature page
to this  Agreement  shall be  effective  as  delivery  of an  original  executed
counterpart of this Agreement.

                                      110

<PAGE>

         Section 8.09      NO LIABILITY OF THE ISSUING BANKS.  The Borrower
                           ---------------------------------
assumes all risks of the acts or omissions of any  beneficiary  or transferee of
any Letter of Credit with  respect to its use of such Letter of Credit.  Neither
any  Issuing  Bank nor any of its  officers  or  directors  shall be  liable  or
responsible  for:  (a) the use that may be made of any  Letter  of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith;  (b)
the validity,  sufficiency or genuineness  of documents,  or of any  endorsement
thereon,  even if  such  documents  should  prove  to be in any or all  respects
invalid,  insufficient,  fraudulent or forged;  (c) payment by such Issuing Bank
against  presentation of documents that do not comply with the terms of a Letter
of Credit,  including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances  whatsoever in
making or failing to make  payment  under any Letter of Credit,  except that the
Borrower  shall have a claim  against such Issuing  Bank,  and such Issuing Bank
shall  be  liable  to  the  Borrower,  to the  extent  of any  direct,  but  not
consequential,  damages  suffered by the Borrower that the Borrower  proves were
caused by (i) such Issuing  Bank's  willful  misconduct  or gross  negligence as
determined  in  a  final,  non-appealable  judgment  by  a  court  of  competent
jurisdiction  in determining  whether  documents  presented  under any Letter of
Credit comply with the terms of the Letter of Credit or (ii) such Issuing Bank's
willful  failure  to make  lawful  payment  under a Letter of  Credit  after the
presentation to it of a draft and certificates strictly complying with the terms
and conditions of the Letter of Credit.  In furtherance and not in limitation of
the foregoing,  such Issuing Bank may accept documents that appear on their face
to be in order, without responsibility for further investigation,  regardless of
any notice or information to the contrary.

         Section  8.10     CONFIDENTIALITY.  Neither  any Agent nor any Lender
                           ---------------
Party shall  disclose any  Confidential  Information  to any Person  without the
consent of the Borrower,  other than (a) to such Agent's or such Lender  Party's
Affiliates and their officers,  directors,  employees,  agents and advisors,  to
other  Lender  Parties  and to  actual or  prospective  Eligible  Assignees  and
participants, and then only on a confidential basis, (b) as required by any law,
rule or  regulation  or judicial  process,  (c) as  requested or required by any
state,  federal  or  foreign  authority  or  examiner  (including  the  National
Association  of  Insurance   Commissioners   or  any  similar   organization  or
quasi-regulatory  authority)  regulating  such Lender  Party,  (d) to any rating
agency when required by it, provided that,  prior to any such  disclosure,  such
rating  agency  shall   undertake  to  preserve  the   confidentiality   of  any
Confidential  Information  relating to the Loan Parties received by it from such
Lender Party,  (e) in connection with any litigation or proceeding to which such
Agent or such Lender Party or any of its Affiliates  may be a party,  (f) to the
extent reasonably required,  in connection with the exercise of any remedy under
this Agreement or any other Loan Document, (g) as provided in Section 8.07(h) or
(h) to any  direct  or  indirect  contractual  counterparty  in swap  agreements
relating  to this  Agreement  or such  contractual  counterparty's  professional
advisor (so long as such  contractual  counterparty or  professional  advisor to
such  contractual  counterparty  agrees  to be bound by the  provisions  of this
Section 8.10).

         Section  8.11     RELEASE OF  COLLATERAL.  Upon the sale,  lease,
                           ----------------------
transfer  or other  disposition  of any  item of  Collateral  of any Loan  Party
(including,  without limitation, as a result of the sale, in accordance with the
terms of the Loan  Documents,  of the Loan Party that owns such  Collateral)  in
accordance with the terms of the Loan Documents,  the Administrative Agent will,
at the Borrower's expense, execute and deliver to such Loan Party such documents
as such Loan Party may  reasonably  request to evidence the release of such item
of  Collateral  from the

                                      111

<PAGE>

assignment  and security  interest  granted  under the  Collateral  Documents in
accordance with the terms of the Loan Documents.

         Section 8.12      JURISDICTION, ETC.
                           ------------------

         (a)     Each of the parties hereto hereby irrevocably and uncondi-
tionally submits, for itself and its property, to the nonexclusive  jurisdiction
of any New York State court or federal court of the United States sitting in New
York City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this  Agreement or any of the other Loan Documents
to which it is a party, or for  recognition or enforcement of any judgment,  and
each of the parties hereto hereby  irrevocably and  unconditionally  agrees that
all  claims  in  respect  of any such  action  or  proceeding  may be heard  and
determined in any such New York State court or, to the fullest extent  permitted
by law, in such Federal  court.  Each of the parties  hereto agrees that a final
judgment  in any  such  action  or  proceeding  shall be  conclusive  and may be
enforced in other  jurisdictions  by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any party
may otherwise have to bring any action or proceeding  relating to this Agreement
or any of the other Loan Documents in the courts of any jurisdiction.

         (b)     Each of the parties hereto  irrevocably and  unconditionally
waives,  to the  fullest  extent  it may  legally  and  effectively  do so,  any
objection  that it may now or hereafter have to the laying of venue of any suit,
action or proceeding  arising out of or relating to this Agreement or any of the
other  Loan  Documents  to which it is a party in any New York  State or federal
court.  Each of the parties  hereto hereby  irrevocably  waives,  to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

         Section 8.13      GOVERNING  LAW. This Agreement and the Notes shall be
                           --------------
governed by, and construed in accordance with, the internal laws of the State of
New York (including  Section 5-1401 of the General  Obligations Law of the State
of New York) without regard to conflicts of laws  principles  that would require
application of another law.

         Section  8.14     WAIVER OF JURY  TRIAL.  Each of the  Borrower,  the
                           ---------------------
Agents and the Lender Parties  irrevocably  waives all right to trial by jury in
any action,  proceeding  or  counterclaim  (whether  based on contract,  tort or
otherwise)  arising  out  of or  relating  to any of  the  Loan  Documents,  the
Advances,  the Letters of Credit or the actions of any Agent or any Lender Party
in the negotiation, administration, performance or enforcement thereof.

         Section 8.15      JUDGMENT CURRENCY.
                           -----------------

         (a)     If, for the purposes of obtaining  judgment in any court, it is
necessary  to  convert  a sum  due  hereunder  in any  currency  (the  "ORIGINAL
CURRENCY")  into another  currency (the "OTHER  CURRENCY"),  the parties  hereto
agree,  to the fullest  extent  permitted by law, that the rate of exchange used
shall  be that at  which  in  accordance  with  normal  banking  procedures  the
Administrative  Agent or a Lender could purchase the Original Currency with such
Other Currency in New York, New York on the Business Day  immediately  preceding
the day on which any such judgment, or any relevant part thereof, is given.

                                      112

<PAGE>

         (b)     The  obligations  of the  Borrower  in respect of any sum due
from it to any Agent or Lender hereunder shall,  notwithstanding any judgment in
such Other  Currency,  be discharged only to the extent that on the Business Day
following  receipt by such Agent or Lender of any sum  adjudged  to be so due in
such Other  Currency such Agent or Lender may in accordance  with normal banking
procedures  purchase  the Original  Currency  with such Other  Currency;  if the
Original Currency so purchased is less than the sum originally due such Agent or
Lender in the Original Currency,  the Borrower agrees, as a separate  obligation
and notwithstanding any such judgment, to indemnify such Agent or Lender against
such loss, and if the Original  Currency so purchased exceeds the sum originally
due to such Agent or Lender in the Original Currency, such Agent or Lender shall
remit such excess to such Borrower.


                                      113

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.

                                  LEVI STRAUSS & CO.


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

                                  ADDRESS FOR NOTICES:

                                  Levi Strauss & Co.
                                  Levi's Plaza
                                  1155 Battery Street
                                  San Francisco, CA  94111
                                  Facsimile:   (415) 501-1342
                                  Telephone:  (415) 501-6955


                                      S-1

<PAGE>

                                                                     O'M&M DRAFT
                                                                        01/29/01



                                 $1,050,000,000

                                CREDIT AGREEMENT

                          Dated as of February 1, 2001

                                      Among

                               LEVI STRAUSS & CO.,

                                  AS BORROWER,
                                  -- --------

                                       and

                 THE INITIAL LENDERS, INITIAL ISSUING BANKS AND
                          SWING LINE BANK NAMED HEREIN,

         AS INITIAL LENDERS, INITIAL ISSUING BANKS, AND SWING LINE BANK
         -- ------- -------  ------- ------- -----  --- ----- ---- ----

                                       and

                             BANK OF AMERICA, N.A.,

                  AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT,
                  -- -------------- ----- --- ---------- ----

                                       and

                         BANC OF AMERICA SECURITIES LLC,
                                       and
                           SALOMON SMITH BARNEY INC.,

                  AS CO-LEAD ARRANGERS AND JOINT BOOK MANAGERS
                  -- ------- --------- --- ----- ---- --------

                                       and

                               CITICORP USA, INC.,
                              AS SYNDICATION AGENT
                              -- ----------- -----

                                       and

                            THE BANK OF NOVA SCOTIA,
                             AS DOCUMENTATION AGENT
                             -- ------------- -----



<PAGE>

                                TABLE OF CONTENTS

SECTION                                                                     PAGE
- -------                                                                     ----


SCHEDULES
- ---------
Schedule 1.01(a)  -        Commitments and Applicable Lending Offices
Schedule 1.01(b)  -        Existing Letters of Credit
Schedule 3.01(a)  -        Mortgaged Property
Schedule 4.01(b)  -        Subsidiaries
Schedule 4.01(c)  -        Conflicts
Schedule 4.01(f)  -        Disclosed Litigation
Schedule 4.01(n)  -        ERISA
Schedule 4.01(w)  -        Existing Debt
Schedule 4.01(x)  -        Liens
Schedule 4.01(y)  -        Real Property
Schedule 4.01(z)  -        Restricted Subsidiaries
Schedule 4.01(aa) -        Organizational Structure
Schedule 4.01(bb) -        Material Subsidiaries
Schedule 4.01(cc) -        Investments
Schedule 4.01(dd) -        Intellectual Property


EXHIBITS
- --------
Exhibit A-1                Form of Tranche A Term Note
Exhibit A-2                Form of Tranche B Term Note
Exhibit A-3                Form of Revolving Credit Note
Exhibit A-4                Form of Swing Line Note
Exhibit B-1                Form of Notice of Borrowing
Exhibit B-2                Form of Notice of Conversion/Continuation
Exhibit C                  Form of Assignment and Acceptance
Exhibit D                  Form of Pledge and Security Agreement
Exhibit E                  Form of Subsidiary Guaranty
Exhibit F                  Form of Mortgage
Exhibit G                  Form of Compliance Certificate



<PAGE>

<TABLE>
<CAPTION>


                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

<S>               <C>                                                                                           <C>
Section 1.01      Certain Defined Terms..........................................................................2
Section 1.02      Computation of Time Periods; Other Definitional Provisions....................................31
Section 1.03      Accounting Terms..............................................................................32
Section 1.04      Change in Accounting Principles...............................................................32

                                   ARTICLE II

           AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

Section 2.01      The Advances and the Letters of Credit........................................................32
Section 2.02      Making the Advances...........................................................................35
Section 2.03      Issuance of and Drawings and Reimbursement Under Letters of Credit............................38
Section 2.04      Repayment of Advances.........................................................................41
Section 2.05      Termination or Reduction of the Commitments...................................................43
Section 2.06      Prepayments...................................................................................43
Section 2.07      Interest......................................................................................46
Section 2.08      Fees..........................................................................................47
Section 2.09      Conversion and Continuation of Advances.......................................................48
Section 2.10      Increased Costs, Etc..........................................................................50
Section 2.11      Payments and Computations.....................................................................52
Section 2.12      Evidence of Debt..............................................................................56
Section 2.13      Taxes.........................................................................................56
Section 2.14      Sharing of Payments, Etc......................................................................59
Section 2.15      Use of Proceeds...............................................................................60
Section 2.16      Defaulting Lenders............................................................................60
Section 3.01      Conditions Precedent to Initial Extension of Credit...........................................62
Section 3.02      Conditions Precedent to Each Borrowing and Issuance and Renewal...............................66
Section 3.03      Determinations Under Section 3.01.............................................................67
Section 4.01      Representations and Warranties of the Borrower................................................67
Section 5.01      Affirmative Covenants.........................................................................73
Section 5.02      Negative Covenants............................................................................78
Section 5.03      Reporting Requirements........................................................................89
Section 5.04      Financial Covenants...........................................................................92
Section 6.01      Events of Default.............................................................................93
Section 6.02      Actions in Respect of the Letters of Credit upon Default......................................97
Section 7.01      Appointment, Powers and Immunity..............................................................97
Section 7.02      Reliance by Agent.............................................................................98
Section 7.03      Defaults......................................................................................99
Section 7.04      Bank of America, BAS and Affiliates...........................................................99
Section 7.05      Indemnification..............................................................................100
Section 7.06      Non-Reliance on Agent and Other Lender Parties...............................................101
Section 7.07      Resignation of Administrative Agent..........................................................101
Section 8.01      Amendments, Etc..............................................................................102
Section 8.02      Notices, Etc.................................................................................103

<PAGE>

Section 8.03      No Waiver; Remedies..........................................................................103
Section 8.04      Costs and Expenses...........................................................................104
Section 8.05      Right of Set-off.............................................................................105
Section 8.06      Binding Effect...............................................................................105
Section 8.07      Assignments and Participations...............................................................105
Section 8.08      Execution in Counterparts....................................................................109
Section 8.09      No Liability of the Issuing Banks............................................................109
Section 8.10      Confidentiality..............................................................................110
Section 8.11      Release of Collateral........................................................................110
Section 8.12      Jurisdiction, Etc............................................................................110
Section 8.13      Governing Law................................................................................111
Section 8.14      Waiver of Jury Trial.........................................................................111
Section 8.15      Judgment Currency............................................................................111



</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.58
<SEQUENCE>23
<FILENAME>0023.txt
<DESCRIPTION>PLEDGE AND SECURITY AGREEMENT
<TEXT>




                                    EXHIBIT D

                     [FORM OF PLEDGE AND SECURITY AGREEMENT]

                          PLEDGE AND SECURITY AGREEMENT



                  This PLEDGE AND SECURITY AGREEMENT (this "AGREEMENT") is dated
as of February 1, 2001 and entered into by and among LEVI STRAUSS & CO., a
Delaware corporation (the "BORROWER"), each of THE UNDERSIGNED DIRECT AND
INDIRECT SUBSIDIARIES of the Borrower (each of such undersigned Subsidiaries
being a "SUBSIDIARY GRANTOR" and collectively "SUBSIDIARY GRANTORS") and each
ADDITIONAL GRANTOR that may become a party hereto after the date hereof in
accordance with Section 21 hereof (each of the Borrower, each Subsidiary
Grantor, and each Additional Grantor being a "GRANTOR" and collectively the
"GRANTORS") and BANK OF AMERICA, N.A. ("BANK OF AMERICA"), as Administrative
Agent for and representative of (in such capacities herein called "SECURED
PARTY") the several financial institutions (the "LENDERS") from time to time
party to the Credit Agreement referred to below and any Hedge Bank (as defined
in the Credit Agreement referred to below).

                             PRELIMINARY STATEMENTS

                  A. Pursuant to the Credit Agreement dated as of February 1,
2001 (said Credit Agreement, as it may hereafter be amended, amended and
restated, supplemented or otherwise modified from time to time, being the
"CREDIT AGREEMENT"; the terms defined therein and not otherwise defined herein
being used herein as therein defined), by and among the Borrower, the Lenders,
the financial institutions party thereto as Co-Lead Arrangers and Joint Book
Managers, the financial institution party thereto as Syndication Agent, the
financial institution party thereto as Documentation Agent, and Bank of America,
as Administrative Agent, the Lenders have made certain commitments, subject to
the terms and conditions set forth in the Credit Agreement, to extend certain
credit facilities to the Borrower.

                  B. The Borrower and Levi Strauss & Co. Financial Services,
S.A., a Belgium corporation, or any successor thereto ("FINSERV"), may from time
to time enter, or may from time to time have entered, into one or more Hedge
Bank Hedge Agreements in accordance with the terms of the Credit Agreement, and
it is desired that the Obligations of the Borrower and FinServ under the Hedge
Bank Hedge Agreements, including the obligation of the Borrower and FinServ to
make payments thereunder in the event of early termination or close out thereof,
together with all Obligations of the Borrower under the Credit Agreement and the
other Loan Documents, be secured hereunder until the payment in full of all
Obligations under the Credit Agreement and the other Loan Documents (other than
the Hedge Bank Hedge Agreements), the cancellation or expiration of all Letters
of Credit and the termination of the Commitments.

                  C. Subsidiary Grantors have executed and delivered that
certain Guaranty dated the date hereof (said Guaranty, as it may hereafter be
amended, amended and restated, supplemented or otherwise modified from time to
time, being the "SUBSIDIARY GUARANTY") in favor of Secured Party for the benefit
of the Lenders, Administrative Agent and any Hedge


<PAGE>


Banks, pursuant to which each Subsidiary Grantor has guarantied the prompt
payment and performance when due of all Obligations of the Borrower under the
Credit Agreement and all Obligations of the Borrower and FinServ under the Hedge
Bank Hedge Agreements, including the obligation of the Borrower and FinServ to
make payments thereunder in the event of early termination or close out thereof.

                  D. It is a condition precedent to the initial extensions of
credit by the Lenders under the Credit Agreement that the Grantors listed on the
signature pages hereof shall have granted the security interests and undertaken
the Obligations contemplated by this Agreement.

                  NOW, THEREFORE, based upon the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce the Lenders and Secured Party to enter into
the Credit Agreement and to induce the Hedge Lenders to enter into the Hedge
Bank Hedge Agreements, each Grantor hereby agrees with Secured Party as follows:

SECTION 1.        Grant of Security.
                  -----------------

                  Each Grantor hereby assigns to Secured Party, and hereby
grants to Secured Party a security interest in, all of such Grantor's right,
title and interest in and to the following, in each case whether now or
hereafter existing, whether tangible or intangible, or in which such Grantor now
has or hereafter acquires an interest and wherever the same may be located (the
"COLLATERAL"):

                  (a) all equipment in all of its forms, all parts thereof and
all accessions thereto (any and all such equipment, parts and accessions being
the "EQUIPMENT");

                  (b) all inventory in all of its forms, including (i) all goods
held by such Grantor for sale or lease or to be furnished under contracts of
service or so leased or furnished, (ii) all raw materials, work in process,
finished goods, and materials used or consumed in the manufacture, packing,
shipping, advertising, selling, leasing, furnishing or production of such
inventory or otherwise used or consumed in such Grantor's business, (iii) all
goods in which such Grantor has an interest in mass or a joint or other interest
or right of any kind, and (iv) all goods which are returned to or repossessed by
such Grantor and all accessions thereto and products thereof (collectively the
"INVENTORY") and all negotiable and non-negotiable documents of title (including
documents, warehouse receipts, dock receipts and bills of lading) issued by any
Person covering any Inventory (any such negotiable document of title being a
"NEGOTIABLE DOCUMENT OF TITLE");

                  (c) all accounts, contract rights, chattel paper, documents,
instruments, letter-of-credit rights and other rights and obligations of any
kind owned by or owing to such Grantor and all rights in, to and under all
security agreements, leases and other contracts securing or otherwise relating
to any such accounts, contract rights, chattel paper, documents, instruments,
letter-of-credit rights, or other rights and obligations (any and all such
accounts, contract rights, chattel paper, documents, instruments,
letter-of-credit rights and other rights and obligations being the "ACCOUNTS",
and any and all such security agreements, leases and other contracts being the
"RELATED CONTRACTS");

                                      D-2


<PAGE>


                  (d) all deposit accounts ("DEPOSIT ACCOUNTS"), including the
restricted deposit accounts established and maintained by Secured Party pursuant
to Section 11, together with (i) all amounts on deposit from time to time in
such deposit accounts and (ii) all interest, cash, instruments, securities and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the foregoing, including Deposit
Accounts listed on Schedule 1(d);

                  (e) the "SECURITIES COLLATERAL", which term means:

                        (i) all shares of stock, partnership interests,
         interests in joint ventures, limited liability company interests and
         all other equity interests now or hereafter owned by such Grantor in
         any Person that is, or becomes, a direct Subsidiary of such Grantor,
         including all securities convertible into, and rights, warrants,
         options and other rights to purchase or otherwise acquire, any of the
         foregoing now or hereafter owned by such Grantor, including those owned
         on the date hereof and described on Schedule 1(e)(i), and the
         certificates or other instruments representing any of the foregoing and
         any interest of such Grantor in the entries on the books of any
         securities intermediary pertaining thereto (the "PLEDGED INTERESTS"),
         and all dividends, distributions, returns of capital, cash, warrants,
         options, rights, instruments, rights to vote or manage the business of
         such Person pursuant to organizational documents governing the rights
         and obligations of the stockholders, partners, members or other owners
         thereof and other property or proceeds from time to time received,
         receivable or otherwise distributed in respect of or in exchange for
         any or all of such Pledged Interests; provided, that if the issuer of
         any of such Pledged Interests is a controlled foreign corporation (used
         hereinafter as such term is defined in Section 957(a) or a successor
         provision of the Internal Revenue Code), the Pledged Interests shall
         not include any shares of stock of such issuer in excess of the number
         of shares of such issuer possessing up to but not exceeding 65% of the
         voting power of all classes of capital stock entitled to vote of such
         issuer, and all dividends, cash, warrants, rights, instruments and
         other property or proceeds from time to time received, receivable or
         otherwise distributed in respect of or in exchange for any or all of
         such Pledged Interests;

                        (ii) all indebtedness from time to time owed to such
         Grantor by any obligor that is, or becomes, a direct or indirect
         Subsidiary of such Grantor, or by any obligor of which Grantor is a
         direct or indirect Subsidiary, including, without limitation, the
         indebtedness described on Schedule 1(e)(ii) and issued by the obligors
         named therein, and the instruments evidencing such indebtedness (the
         "PLEDGED DEBT"), and all interest, cash, instruments and other property
         or proceeds from time to time received, receivable or otherwise
         distributed in respect of or in exchange for any or all of the Pledged
         Debt; and

                        (iii) all other investment property, as that term is
         defined in the Uniform Commercial Code (the "UCC") of any relevant
         jurisdiction, of such Grantor;

                  (f) the "INTELLECTUAL PROPERTY COLLATERAL", which term means:

                        (i) all rights, title and interest (including rights
         acquired pursuant to a license or otherwise) in and to all trademarks,
         service marks, designs, logos, indicia,

                                      D-3


<PAGE>


         tradenames, trade dress, corporate names, company names, business
         names, fictitious business names, trade styles and/or other source
         and/or business identifiers and applications pertaining thereto, owned
         by such Grantor, or hereafter adopted and used, in its business
         (including, without limitation, the trademarks listed in Schedule
         1(f)(i), as the same may be amended pursuant hereto from time to time)
         (collectively, the "TRADEMARKS"), all registrations that have been or
         may hereafter be issued or applied for thereon in the United States and
         any state thereof and in foreign countries (including, without
         limitation, the registrations and applications specifically identified
         in Schedule 1(f)(i), as the same may be amended pursuant hereto from
         time to time) (the "TRADEMARK REGISTRATIONS"), all common law and other
         rights in and to the Trademarks in the United States and any state
         thereof and in foreign countries (the "TRADEMARK RIGHTS"), and all
         goodwill of such Grantor's business symbolized by the Trademarks and
         associated therewith (the "ASSOCIATED GOODWILL");

                        (ii) all rights, title and interest (including rights
         acquired pursuant to a license or otherwise) in and to all patents and
         patent applications and rights and interests in patents and patent
         applications under any domestic or foreign law that are presently, or
         in the future may be, owned or held by such Grantor and all patents and
         patent applications and rights, title and interests in patents and
         patent applications under any domestic or foreign law that are
         presently, or in the future may be, owned by such Grantor in whole or
         in part (including, without limitation, the patents and patent
         applications listed in Schedule 1(f)(ii), as the same may be amended
         pursuant hereto from time to time), all rights (but not obligations)
         corresponding thereto (including the right, exercisable only upon the
         occurrence and during the continuation of an Event of Default, to sue
         for past, present and future infringements in the name of such Grantor
         or in the name of Secured Party or the Lenders), and all re-issues,
         divisions, continuations, renewals, extensions and
         continuations-in-part thereof (all of the foregoing being collectively
         referred to as the "PATENTS"); and

                        (iii) all rights, title and interest (including rights
         acquired pursuant to a license or otherwise) under copyright in various
         published and unpublished works of authorship including computer
         programs, computer data bases, other computer software, layouts, trade
         dress, drawings, designs, writings, and formulas owned by such Grantor
         (including, without limitation, the works listed on Schedule 1(f)(iii),
         as the same may be amended pursuant hereto from time to time)
         (collectively, the "COPYRIGHTS"), all copyright registrations issued to
         such Grantor and applications for copyright registration that have been
         or may hereafter be issued or applied for thereon by such Grantor in
         the United States and any state thereof and in foreign countries
         (including, without limitation, the registrations listed on Schedule
         1(f)(iii), as the same may be amended pursuant hereto from time to
         time) (collectively, the "COPYRIGHT REGISTRATIONS"), all common law and
         other rights in and to the Copyrights in the United States and any
         state thereof and in foreign countries including all copyright licenses
         (but with respect to such copyright licenses, only to the extent
         permitted by such licensing arrangements) (the "COPYRIGHT Rights"),
         including each of the Copyrights, rights, titles and interests in and
         to the Copyrights, all derivative works and other works protectable by
         copyright, which are presently, or in the future may be, owned, created
         (as a work for hire for the benefit of such Grantor), authored (as a
         work for hire for the benefit of such Grantor), or acquired

                                      D-4


<PAGE>


         by such Grantor, in whole or in part, and all Copyright Rights with
         respect thereto and all Copyright Registrations therefor, heretofore or
         hereafter granted or applied for, and all renewals and extensions
         thereof, throughout the world, including the right to renew and extend
         such Copyright Registrations and Copyright Rights and to register works
         protectable by copyright and the right, exercisable only upon the
         occurrence and during the continuation of an Event of Default, to sue
         for past, present and future infringements in the name of such Grantor
         or in the name of Secured Party or the Lenders;

                  (g) all information used or useful or arising from the
business including all goodwill, trade secrets, trade secret rights, know-how,
customer lists, processes of production, ideas, confidential business
information, techniques, processes, formulas, and all other proprietary
information;

                  (h) to the extent not included in any other paragraph of this
Section 1, all general intangibles, including tax refunds, payment intangibles,
other rights to payment or performance, CHOSES IN ACTION, software and judgments
taken on any rights or claims included in the Collateral;

                  (i) all plant fixtures, business fixtures and other fixtures
and storage and office facilities, and all accessions thereto and products
thereof;

                  (j) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and

                  (k) all proceeds, products, rents and profits of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.

                  Notwithstanding anything herein to the contrary, in no event
shall the Collateral include, and no Grantor shall be deemed to have granted a
security interest in (i) any of such Grantor's rights or interests in any
license, contract or agreement to which such Grantor is a party or any of its
rights or interests thereunder or any of its rights or interests in other
property to the extent, but only to the extent, that such a grant would, under
the terms of such license, contract or agreement or otherwise, result in a
breach of the terms of, or constitute a default under, any license, contract or
agreement to which such Grantor is a party (other than to the extent that any
such term would be rendered ineffective pursuant to the UCC or any other
applicable law (including the Bankruptcy Code) or principles of equity) or any
agreement permitted by Section 5.02(l) of the Credit Agreement prohibiting or
conditioning the creation or assumption of any Lien upon its property or assets
or such rights or interests; provided, that immediately upon the
ineffectiveness, lapse or termination of any such provision, the Collateral
shall include, and such Grantor shall be deemed to have granted a security
interest in, all such rights and interests as if such provision had never been
in effect, or (ii) any real property

                                      D-5


<PAGE>


leasehold, unless a Grantor has executed a leasehold mortgage or leasehold deed
of trust covering such real property leasehold.

                  Each item of Collateral listed in this Section 1 that is
defined in Articles 8 or 9 of the UCC shall have the meaning set forth in the
UCC, as it exists on the date of this Agreement or as it may hereafter be
amended, it being the intention of the Grantors that the description of the
Collateral set forth above be construed to include the broadest possible range
of assets, except for assets expressly excluded as set forth above.

                  Notwithstanding anything herein to the contrary, neither the
Borrower nor any Grantor shall be deemed to have granted a security interest in
(i) any Principal Property, (ii) any capital stock of any Restricted Subsidiary
or (iii) any Pledged Debt of or issued by any Restricted Subsidiary.

SECTION 2.        Security for Obligations.
                  ------------------------

                  This Agreement secures, and the Collateral assigned by each
Grantor is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including, without limitation, the payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code), of all Secured Obligations of such
Grantor. "SECURED OBLIGATIONS" means:

                  (a) with respect to the Borrower, all Obligations and
liabilities of every nature of the Borrower now or hereafter existing under or
arising out of or in connection with the Credit Agreement and the other Loan
Documents (other than the Hedge Bank Hedge Agreements) and, until the payment in
full of all Obligations under the Credit Agreement and the other Loan Documents
(other than the Hedge Bank Hedge Agreements), the cancellation or expiration of
all Letters of Credit and the termination of the Commitments, all Obligations
and liabilities of every nature of the Borrower and FinServ, now or hereafter
existing under or arising out of or in connection with any Hedge Bank Hedge
Agreement, and

                  (b) with respect to each Subsidiary Grantor and Additional
Grantor, all Obligations and liabilities of every nature of such Grantors now or
hereafter existing under or arising out of or in connection with the Subsidiary
Guaranty;

in each case together with all extensions or renewals thereof, whether for
principal, interest (including, without limitation, interest that, but for the
filing of a petition in bankruptcy with respect to the Borrower or any other
Grantor, would accrue on such Obligations, whether or not a claim is allowed
against the Borrower or such Grantor for such interest in the related bankruptcy
proceeding), reimbursement of amounts drawn under Letters of Credit, payments
for early termination or close out of Hedge Bank Hedge Agreements, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such Obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Secured Party
or any Lender or Hedge Bank as a

                                      D-7


<PAGE>


preference, fraudulent transfer or otherwise, and all Obligations of every
nature of the Grantors now or hereafter existing under this Agreement.

SECTION 3.        Grantors Remain Liable.
                  ----------------------

                  Anything contained herein to the contrary notwithstanding, (a)
each Grantor shall remain liable under any contracts and agreements included in
the Collateral, to the extent set forth therein, to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of its rights hereunder shall
not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and (c) Secured Party shall
not have any obligation or liability under any contracts, licenses, and
agreements included in the Collateral by reason of this Agreement, nor shall
Secured Party be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.

SECTION 4.        Representations and Warranties.
                  ------------------------------

         Each Grantor represents and warrants as follows:

                  (a) OWNERSHIP OF COLLATERAL. Except as expressly permitted by
the Credit Agreement and for the security interest created by this Agreement,
such Grantor owns the Collateral owned by such Grantor free and clear of any
Lien. Except as expressly permitted by the Credit Agreement and such as may have
been filed in favor of Secured Party relating to this Agreement, no effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any filing or recording office.

                  (b) LOCATIONS OF EQUIPMENT AND INVENTORY. All of the Equipment
and Inventory is, as of the date hereof, or in the case of an Additional
Grantor, the date of the applicable counterpart entered into pursuant to Section
21 hereof (each, a "COUNTERPART") located at the places specified in Schedule
4(b), except for Equipment and Inventory which, in the ordinary course of
business, is in transit either (i) from a supplier or a processor to a Grantor,
(ii) between the locations specified in Schedule 4(b), (iii) from a supplier or
a Grantor to a processor, or (iv) to customers of a Grantor.

                  (c) OFFICE LOCATIONS; TYPE AND JURISDICTION OF ORGANIZATION.
The chief place of business, the chief executive office and the office where
such Grantor keeps its records regarding the Accounts and all originals of all
chattel paper that evidence Accounts are, as of the date hereof, and, except as
set forth on Schedule 4(c), have been for the four month period preceding the
date hereof, or, in the case of an Additional Grantor, the date of the
applicable Counterpart, located at the locations set forth on Schedule 4(c); the
type (i.e. corporation, limited partnership, etc.) and jurisdiction of
organization of such Grantor are listed on Schedule 4(c).

                  (d) NAMES. No Grantor (or predecessor by merger or otherwise
of such Grantor) has, within the four month period preceding the date hereof,
or, in the case of an Additional Grantor, the date of the applicable
Counterpart, had a different name from the name of such Grantor listed or the
signature pages hereof, except the names listed in Schedule 4(d).

                                      D-7


<PAGE>


                  (e) DELIVERY OF CERTAIN COLLATERAL. Except as permitted by
Section 5.01(l) of the Credit Agreement, all certificates or instruments
(excluding checks) evidencing, comprising or representing the Collateral
(including, without limitation, the Securities Collateral) have been delivered
to Secured Party duly endorsed or accompanied by duly executed instruments of
transfer or assignment in blank.

                  (f) SECURITIES COLLATERAL. (i) All of the Pledged Interests
described on Schedule 1(e)(i) have been duly authorized and validly issued and
are fully paid and non-assessable; (ii) all of the Pledged Debt described on
Schedule 1(e)(ii) has been duly authorized, authenticated or issued, and
delivered and is the legal, valid and binding obligation of the issuers thereof
and is not in default; (iii) except as set forth in Schedule 1(e)(i), the
Pledged Interests constitute all of the issued and outstanding shares of stock
or other equity interests of each issuer thereof (subject to the proviso to
Section 1(e)(i) hereof with respect to shares of a foreign controlled
corporation), and there are no outstanding warrants, options or other rights to
purchase, or other agreements outstanding with respect to, or property that is
now or hereafter convertible into, or that requires the issuance or sale of, any
Pledged Interests; (iv) the Pledged Debt constitutes all of the issued and
outstanding intercompany indebtedness evidenced by a promissory note of the
respective issuers thereof owing to such Grantor; (v) Schedule 1(e)(i) sets
forth all of the Pledged Interests owned by each Grantor on the date hereof; and
(vi) Schedule 1(e)(ii) sets forth all of the Pledged Debt in existence on the
date hereof.

                  (g) INTELLECTUAL PROPERTY COLLATERAL.

                        (i) a true and complete list of all Trademark
         Registrations and Trademark applications owned by such Grantor, in
         whole or in part, that are material to such Grantor's business is set
         forth in Schedule 1(f)(i);

                        (ii) a true and complete list of all Patents owned by
         such Grantor, in whole or in part, that are material to such Grantor's
         business is set forth in Schedule 1(f)(ii);

                        (iii) a true and complete list of all Copyright
         Registrations and applications for Copyright Registrations owned by
         such Grantor, in whole or in part, that are material to such Grantor's
         business is set forth in Schedule 1(f)(iii);

                        (iv) after reasonable inquiry, such Grantor is not aware
         of any pending or threatened claim by any third party that any of the
         Intellectual Property Collateral owned, held or used by such Grantor is
         invalid or unenforceable that is reasonably likely to have a Material
         Adverse Effect; and

                        (v) after giving effect to the releases delivered on the
         Closing Date in respect of the Existing Credit Agreements, no effective
         security interest or other Lien covering all or any part of the
         Intellectual Property Collateral is on file in the United States Patent
         and Trademark Office or the United States Copyright Office.

                  (h) PERFECTION. The security interests in the Collateral
granted to Secured Party for the ratable benefit of the Lenders and Hedge Banks
hereunder constitute valid Liens on such Collateral, securing the payment of the
Secured Obligations. Upon (i) the filing of UCC

D-8


<PAGE>


financing statements naming each Grantor as "debtor", naming Secured Party as
"secured party" and describing the Collateral in the filing offices with respect
to such Grantor set forth on Schedule 4(i), (ii) in the case of the Securities
Collateral consisting of certificated securities or evidenced by instruments,
delivery of the certificates representing such certificated securities and
delivery of such instruments to Secured Party, in each case duly endorsed or
accompanied by duly executed instruments of assignment or transfer in blank, and
(iii) in the case of the Intellectual Property Collateral, in addition to the
filing of such UCC financing statements, the filing of a Grant of Trademark
Security Interest, substantially in the form of Exhibit I, and a Grant of Patent
Security Interest, substantially in the form of Exhibit II, with the United
States Patent and Trademark Office and the filing of a Grant of Copyright
Security Interest, substantially in the form of Exhibit III, with the United
States Copyright Office (each such Grant of Trademark Security Interest, Grant
of Patent Security Interest and Grant of Copyright Security Interest being
referred to herein as a "GRANT"), the security interests in the Collateral
granted to Secured Party for the ratable benefit of the Lenders and Hedge Banks
will constitute perfected security interests therein, to the extent such
security interests may be perfected by filing in the United States or by
possession, prior to all other Liens (except for Liens expressly permitted by
the Credit Agreement), and all filings and other actions necessary or desirable
to perfect and protect such security interest have been duly made or taken.

SECTION 5.        Further Assurances.
                  ------------------

                  (a) GENERALLY. Each Grantor agrees that from time to time, at
the expense of the Grantors, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that Secured Party may reasonably request, in order
to perfect and protect any security interest granted or purported to be granted
hereby or to enable Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor will: (i) at the reasonable request of
Secured Party, mark conspicuously each item of chattel paper included in the
Accounts, each Related Contract and, at the request of Secured Party, each of
its records pertaining to the Collateral, with a legend, in form and substance
satisfactory to Secured Party, indicating that such Collateral is subject to the
security interest granted hereby, (ii) at the reasonable request of Secured
Party, deliver and pledge to Secured Party hereunder all promissory notes and
other instruments (including checks) and all original counterparts of chattel
paper constituting Collateral, duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
Secured Party, (iii) execute and file such financing or continuation statements,
or amendments thereto, agreements establishing that Secured Party has control of
Deposit Accounts and investment property and such other instruments or notices,
as may be necessary or desirable, or as Secured Party may request, in order to
perfect and preserve the security interests granted or purported to be granted
hereby, (iv) furnish to Secured Party from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as Secured Party may reasonably request, all in
reasonable detail, (v) if requested by Administrative Agent, promptly after the
acquisition by such Grantor of any item of Equipment that is covered by a
certificate of title under a statute of any jurisdiction under the law of which
indication of a security interest on such certificate is required as a condition
of perfection thereof, execute and file with the registrar of motor vehicles or
other appropriate authority in such jurisdiction an application or other
document requesting the notation or other indication of the

                                      D-9


<PAGE>


security interest created hereunder on such certificate of title, (vi) within 45
days after the end of each fiscal quarter of the Borrower, deliver to Secured
Party copies of all such applications or other documents filed during such
fiscal quarter and copies of all such certificates of title issued during such
fiscal quarter indicating the security interest created hereunder in the items
of Equipment covered thereby, (vii) at any reasonable time, upon request by
Secured Party, exhibit the Collateral to and allow inspection of the Collateral
by Secured Party, or persons designated by Secured Party, and (viii) at Secured
Party's request, appear in and defend any action or proceeding that may affect
such Grantor's title to or Secured Party's security interest in all or any part
of the Collateral. Each Grantor hereby authorizes Secured Party to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of any Grantor. Each
Grantor agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement signed by such Grantor shall be sufficient
as a financing statement and may be filed as a financing statement in any and
all jurisdictions.

                  (b) SECURITIES COLLATERAL. Without limiting the generality of
the foregoing Section 5(a), each Grantor agrees that it will, upon obtaining any
additional shares of stock or other securities required to be pledged hereunder,
promptly (and in any event within ten Business Days) deliver to Secured Party a
Pledge Supplement, duly executed by such Grantor, in substantially the form of
Exhibit IV (a "PLEDGE SUPPLEMENT"), in respect of the additional Pledged
Interests or Pledged Debt to be pledged pursuant to this Agreement. Upon each
delivery of a Pledge Supplement to Secured Party, the representations and
warranties contained in clauses (i)-(iv) of Section 4(g) hereof shall be deemed
to have been made by such Grantor as to the Securities Collateral described in
such Pledge Supplement as of the date thereof. Each Grantor hereby authorizes
Secured Party to attach each Pledge Supplement to this Agreement and agrees that
all Pledged Interests or Pledged Debt of such Grantor listed on any Pledge
Supplement shall for all purposes hereunder be considered Collateral of such
Grantor; provided, the failure of any Grantor to execute a Pledge Supplement
with respect to any additional Pledged Interests or Pledged Debt pledged
pursuant to this Agreement shall not impair the security interest of Secured
Party therein or otherwise adversely affect the rights and remedies of Secured
Party hereunder with respect thereto.

                  (c) INTELLECTUAL PROPERTY COLLATERAL. Without limiting the
generality of the foregoing Section 5(a), if any Grantor shall hereafter obtain
rights to any new Intellectual Property Collateral or become entitled to the
benefit of (i) any patent application or patent or any reissue, division,
continuation, renewal, extension or continuation-in-part of any Patent or any
improvement of any Patent or (ii) any Copyright Registration, application for
Copyright Registration or renewals or extension of any Copyright, then in any
such case, the provisions of this Agreement shall automatically apply thereto.
Each Grantor shall, within 45 days after the end of each fiscal quarter of the
Borrower, notify Secured Party in writing of any of the foregoing rights
acquired by such Grantor after the date hereof or the date of the last such
notice, as the case may be, and of (i) any Trademark Registrations issued or
application for a Trademark Registration or application for a Patent made, and
(ii) any Copyright Registrations issued or applications for Copyright
Registration made, in any such case, after the date hereof. Within 45 days after
the end of each fiscal quarter of the Borrower during which any Grantor files an
application for any (1) Trademark Registration; (2) Patent; and (3) Copyright
Registration, each Grantor shall execute and deliver to Secured Party and record
in all places where a Grant is

                                      D-10


<PAGE>


recorded an IP Supplement, substantially in the form of Exhibit V (an "IP
SUPPLEMENT"), pursuant to which such Grantor shall grant to Secured Party a
security interest to the extent of its interest in such Intellectual Property
Collateral; provided, if, in the reasonable judgment of such Grantor, after due
inquiry, granting such interest would result in the grant of a Trademark
Registration or Copyright Registration in the name of Secured Party, such
Grantor shall give written notice to Secured Party on the day on which such
Grantor would otherwise be required to record the IP Supplement and the filing
shall instead be undertaken as soon as practicable but in no case later than
immediately following the grant of the applicable Trademark Registration or
Copyright Registration, as the case may be. Upon delivery to Secured Party of an
IP Supplement, Schedules 1(f)(i), 1(f)(ii), and 1(f)(iii) hereto and Schedule A
to each Grant, as applicable, shall be deemed modified to include reference to
any right, title or interest in any existing Intellectual Property Collateral or
any Intellectual Property Collateral included on Schedule A to such IP
Supplement. Each Grantor hereby authorizes Secured Party to modify this
Agreement without the signature or consent of any Grantor by attaching Schedules
1(f)(i), 1(f)(ii), and 1(f)(iii), as applicable, that have been modified to
include such Intellectual Property Collateral or to delete any reference to any
right, title or interest in any Intellectual Property Collateral in which any
Grantor no longer has or claims any right, title or interest; provided, the
failure of any Grantor to execute an IP Supplement with respect to any
additional Intellectual Property Collateral pledged pursuant to this Agreement
shall not impair the security interest of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder with respect
thereto. Notwithstanding the foregoing, Grantor shall not be required to record
the security interest of Secured Party in any Intellectual Property Collateral,
if such recordation would result in the grant of a Trademark Registration,
Patent, or Copyright Registration, or any application therefor, in the name of
Secured Party.

SECTION 6.        Certain Covenants of the Grantors.
                  ---------------------------------

         Each Grantor shall:

                  (a) not use or permit any Collateral to be used unlawfully or
in violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral,
except where such violation would not have a Material Adverse Effect;

                  (b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 30 days of such change;

                  (c) give Secured Party 30 days' prior written notice of any
change in such Grantor's chief place of business, chief executive office or
residence or the office where such Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts or a
reincorporation, reorganization or other action that results in a change of the
jurisdiction of organization of such Grantor; and

                  (d) if Secured Party gives value to enable such Grantor to
acquire rights in or the use of any Collateral, use such value for such
purposes.

                                      D-11


<PAGE>


SECTION 7.        Special Covenants With Respect to Equipment and Inventory.
                  ----------------------------------------------------------

         Each Grantor shall:

                  (a) If such Grantor is a Subsidiary Grantor, keep the
Equipment and Inventory owned by such Subsidiary Grantor at the places therefor
specified on Schedule 4(b) or, provided that such Subsidiary Grantor gives
Secured Party notice of any transfer of Equipment or Inventory within 60 days
after such transfer, at such other places in jurisdictions where all action that
may be necessary or desirable, or that Secured Party may request, in order to
perfect and protect any security interest granted or purported to be granted
hereby, or to enable Secured Party to exercise and enforce its rights and
remedies hereunder, with respect to such Equipment and Inventory shall have been
taken;

                  (b) except as otherwise expressly permitted by the Credit
Agreement, cause the Equipment owned by such Grantor to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with such Grantor's past practices,
and shall forthwith make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to such
end. Each Grantor shall promptly furnish to Secured Party a statement respecting
any material loss or damage to any of the Equipment owned by such Grantor, but
only to the extent that such loss or damage is material to the Equipment owned
by Company and its Subsidiaries, taken as a whole;

                  (c) keep correct and accurate records of Inventory owned by
such Grantor, itemizing and describing the kind, type and quantity of such
Inventory, such Grantor's cost therefor and (where applicable) the current list
prices for such Inventory;

                  (d) notify all of any of such Grantor's agents or processors
possessing or controlling any Inventory and all public warehouses in which
Inventory is maintained of the Lien of Secured Party in such Inventory;

                  (e) upon the occurrence of an Event of Default, instruct all
agents or processors of such Grantor possessing or controlling any Inventory and
all public warehouses in which Inventory is maintained to hold all such
Inventory for the account of Secured Party and subject to the instructions of
Secured Party; and

                  (f) each Grantor shall, at its own expense, maintain insurance
with respect to the Equipment and Inventory in accordance with the terms of the
Credit Agreement.

SECTION 8.     Special Covenants with respect to Accounts and Related Contracts.
               -----------------------------------------------------------------

                  (a) Each Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper that
evidence Accounts, at the locations therefor set forth on Schedule 4(d), upon 30
days' prior written notice to Secured Party, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any security interest
granted or purported to be granted hereby, or to enable Secured Party to
exercise and enforce its rights and remedies hereunder,

                                      D-12


<PAGE>


with respect to such Accounts and Related Contracts shall have been taken. Each
Grantor will hold and preserve such records and chattel paper and will permit
representatives of Secured Party at any time during normal business hours to
inspect and make abstracts from such records and chattel paper, and each Grantor
agrees to render to Secured Party, at Grantor's cost and expense, such clerical
and other assistance as may be reasonably requested with regard thereto.
Promptly upon the request of Secured Party, each Grantor shall deliver to
Secured Party complete and correct copies of each Related Contract.

                  (b) Each Grantor shall, for not less than three (3) years from
the date on which each Account of such Grantor arose, maintain (i) complete
records of such Account, including records of all payments received, credits
granted and merchandise returned, and (ii) all documentation relating thereto.

                  (c) Except as otherwise provided in this subsection (c), each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor under the Accounts and Related Contracts. In
connection with such collections, each Grantor may take (and, upon the
occurrence and during the continuance of an Event of Default at Secured Party's
direction, shall take) such action as such Grantor or Secured Party may deem
necessary or advisable to enforce collection of amounts due or to become due
under the Accounts; provided, however, that Secured Party shall have the right
at any time, upon the occurrence and during the continuation of an Event of
Default and upon written notice to such Grantor of its intention to do so, to
notify the account debtors or obligors under any Accounts of the assignment of
such Accounts to Secured Party and to direct such account debtors or obligors to
make payment of all amounts due or to become due to such Grantor thereunder
directly to Secured Party, to notify each Person maintaining a lockbox or
similar arrangement to which account debtors or obligors under any Accounts have
been directed to make payment to remit all amounts representing collections on
checks and other payment items from time to time sent to or deposited in such
lockbox or other arrangement directly to Secured Party and, upon such
notification and at the expense of the Grantors, to enforce collection of any
such Accounts and to adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as such Grantor might have done. After
receipt by such Grantor of the notice from Secured Party referred to in the
proviso to the preceding sentence, (i) all amounts and proceeds (including
checks and other instruments) received by such Grantor in respect of the
Accounts and the Related Contracts shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to Secured Party in the same form
as so received (with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 17 hereof, and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any Account, or release
wholly or partly any account debtor or obligor thereof, or allow any credit or
discount thereon.

SECTION 9.        Special Covenants With Respect to the Securities Collateral.
                  ------------------------------------------------------------

                  (a) DELIVERY. Each Grantor agrees that all certificates or
instruments representing or evidencing the Securities Collateral shall be
delivered to and held by or on behalf of Secured Party pursuant hereto and shall
be in suitable form for transfer by delivery or, as applicable, shall be
accompanied by such Grantor's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Secured Party. Secured Party shall have the right at any time to
exchange certificates or

                                      D-13


<PAGE>


instruments representing or evidencing Securities Collateral for certificates or
instruments of smaller or larger denominations.

                  (b) COVENANTS. Each Grantor shall, except as otherwise not
prohibited by the Credit Agreement, (i) not permit any issuer of Pledged
Interests to merge or consolidate unless all the outstanding capital stock or
other equity interests of the surviving or resulting Person is, upon such merger
or consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent
corporation; provided, if the surviving or resulting Person upon any such merger
or consolidation involving an issuer of Pledged Interests which is a controlled
foreign corporation is a controlled foreign corporation, then such Grantor shall
only be required to pledge outstanding capital stock of such surviving or
resulting Person possessing up to but not exceeding 65% of the voting power of
all classes of capital stock of such issuer entitled to vote; (ii) cause each
issuer of Pledged Interests not to issue any stock, other equity interests or
other securities in addition to or in substitution for the Pledged Interests
issued by such issuer, except to such Grantor; (iii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock, other equity interests or other securities of each
issuer of Pledged Interests; (iv) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all shares of stock or
other equity interests of any Person that, after the date of this Agreement,
becomes, as a result of any occurrence, a direct Subsidiary of such Grantor;
provided, notwithstanding anything contained in this clause (iv) to the
contrary, such Grantor shall only be required to pledge the outstanding capital
stock of a controlled foreign corporation possessing up to but not exceeding 65%
of the voting power of all classes of capital stock of such controlled foreign
corporation entitled to vote and any such Grantor shall not be required to
pledge the capital stock of any Restricted Subsidiary; (v) pledge hereunder,
immediately upon their issuance, any and all instruments or other evidences of
additional indebtedness from time to time owed to such Grantor by any obligor on
the Pledged Debt; provided, notwithstanding anything contained in this
subsection (v) to the contrary, any such Grantor shall not be required to pledge
any such instruments or other evidences of additional indebtedness owed to such
Grantor by any Restricted Subsidiary; (vi) pledge hereunder, immediately upon
their issuance, any and all instruments or other evidences of indebtedness from
time to time owed to such Grantor by any Person that after the date of this
Agreement becomes, as a result of any occurrence, a direct or indirect
Subsidiary of such Grantor; provided, notwithstanding anything contained in this
subsection (vi) to the contrary, any such Grantor shall not be required to
pledge any such instruments or other evidences of indebtedness owed to such
Grantor by any Restricted Subsidiary; (vii) promptly notify Secured Party of any
event of which such Grantor becomes aware causing loss or depreciation in the
value of the Securities Collateral that has a Material Adverse Effect; and
(viii), at the request of Secured Party, promptly execute and deliver to Secured
Party an agreement providing for the control, as that term is defined in the
UCC, by Secured Party of all securities entitlements and securities accounts of
such Grantor.

                  (c) VOTING AND DISTRIBUTIONS. So long as no Event of Default
shall have occurred and be continuing, (i) each Grantor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Securities Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement or the Credit Agreement; provided, no Grantor shall
exercise or refrain from exercising any such right if Secured Party shall have
notified such Grantor that, in Secured Party's reasonable judgment, such action
would have a Material

                                      D-14


<PAGE>


Adverse Effect; and provided further, such Grantor shall give Secured Party at
least five Business Days' prior written notice of the manner in which it intends
to exercise, or the reasons for refraining from exercising, any such right (it
being understood, however, that neither (A) the voting by such Grantor of any
Pledged Interests for or such Grantor's consent to the election of directors or
other members of a governing body of an issuer of Pledged Interests at a
regularly scheduled annual or other meeting of stockholders or holders of equity
interests or with respect to incidental matters at any such meeting, nor (B)
such Grantor's consent to or approval of any action otherwise not prohibited
under this Agreement and the Credit Agreement shall be deemed inconsistent with
the terms of this Agreement or the Credit Agreement within the meaning of this
Section, and no notice of any such voting or consent need be given to Secured
Party); (ii) each Grantor shall be entitled to receive and retain, and to
utilize free and clear of the lien of this Agreement, any and all dividends,
other distributions and interest paid in respect of the Securities Collateral;
provided, any and all (A) dividends, distributions and interest paid or payable
other than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, any
Securities Collateral, (B) dividends and other distributions paid or payable in
cash in respect of any Securities Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and (C) cash paid, payable or otherwise
distributed in respect of principal or in redemption of or in exchange for any
Securities Collateral, shall be, and shall forthwith be delivered to Secured
Party to hold as, Securities Collateral and shall, if received by such Grantor,
be received in trust for the benefit of Secured Party, be segregated from the
other property or funds of such Grantor and be forthwith delivered to Secured
Party as Securities Collateral in the same form as so received (with all
necessary endorsements); and (iii) Secured Party shall promptly execute and
deliver (or cause to be executed and delivered) to such Grantor all such
proxies, dividend payment orders and other instruments as such Grantor may from
time to time reasonably request for the purpose of enabling such Grantor to
exercise the voting and other consensual rights which it is entitled to exercise
pursuant to clause (i) above and to receive the dividends, distributions,
principal or interest payments which it is authorized to receive and retain
pursuant to clause (ii) above.

                  Upon the occurrence and during the continuation of an Event of
Default, (x) upon written notice from Secured Party to any Grantor, all rights
of such Grantor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant hereto shall cease, and all
such rights shall thereupon become vested in Secured Party who shall thereupon
have the sole right to exercise such voting and other consensual rights; (y) all
rights of such Grantor to receive the dividends, other distributions and
interest payments which it would otherwise be authorized to receive and retain
pursuant hereto shall cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right to receive and hold as
Securities Collateral such dividends, other distributions and interest payments;
and (z) all dividends, principal, interest payments and other distributions
which are received by such Grantor contrary to the provisions of clause (ii) of
the immediately preceding paragraph or clause (y) above shall be received in
trust for the benefit of Secured Party, shall be segregated from other funds of
such Grantor and shall forthwith be paid over to Secured Party as Securities
Collateral in the same form as so received (with any necessary endorsements).

                  In order to permit Secured Party to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant hereto and
to receive all dividends and other

                                      D-15


<PAGE>


distributions which it may be entitled to receive hereunder, (I) each Grantor
shall promptly execute and deliver (or cause to be executed and delivered) to
Secured Party all such proxies, dividend payment orders and other instruments as
Secured Party may from time to time reasonably request, and (II) without
limiting the effect of clause (I) above, each Grantor hereby grants to Secured
Party an irrevocable proxy to vote the Pledged Interests and to exercise all
other rights, powers, privileges and remedies to which a holder of the Pledged
Interests would be entitled (including giving or withholding written consents of
shareholders or other holders of equity interests, calling special meetings of
shareholders or other holders of equity interests and voting at such meetings),
which proxy shall be effective, automatically and without the necessity of any
action (including any transfer of any Pledged Interests on the record books of
the issuer thereof) by any other Person (including the issuer of the Pledged
Interests or any officer or agent thereof), upon the occurrence of an Event of
Default and which proxy shall only terminate upon the payment in full of the
Secured Obligations.

SECTION 10.       Special Covenants With Respect to the Intellectual Property
                  -----------------------------------------------------------
                  Collateral.
                  ----------

                  (a) Each Grantor shall:

                        (i) diligently keep reasonable records respecting the
         Intellectual Property Collateral and at all times keep at least one
         complete set of its records concerning such Collateral at its chief
         executive office or principal place of business;

                        (ii) use commercially reasonable efforts so as not to
         permit the inclusion in any contract to which it hereafter becomes a
         party of any provision that could or might in any way impair or prevent
         the creation of a security interest in, or the assignment of, such
         Grantor's rights and interests in any property included within the
         definitions of any Intellectual Property Collateral acquired under such
         contracts;

                        (iii) take any and all reasonable steps to protect the
         secrecy of all trade secrets relating to the products and services sold
         or delivered under or in connection with the Intellectual Property
         Collateral, including, without limitation, where appropriate entering
         into confidentiality agreements with employees and labeling and
         restricting access to secret information and documents;

                        (iv) use proper statutory notice in connection with its
         use of any of the Intellectual Property Collateral, except where the
         failure to give such notice would not have a Material Adverse Effect;

                        (v) use a commercially appropriate standard of quality
         (which may be consistent with such Grantor's past practices) in the
         manufacture, sale and delivery of products and services sold or
         delivered under or in connection with the Trademarks; and

                        (vi) furnish to Secured Party from time to time at
         Secured Party's reasonable request statements and schedules further
         identifying and describing any Intellectual Property Collateral and
         such other reports in connection with such Collateral, all in
         reasonable detail.

                                      D-16


<PAGE>


                  (b) Except as otherwise provided in this Section 10, each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor in respect of the Intellectual Property Collateral or
any portion thereof. In connection with such collections, each Grantor may take
(and, after the occurrence and during the continuance of any Event of Default at
Secured Party's reasonable direction, shall take) such action as such Grantor or
Secured Party may deem reasonably necessary or advisable to enforce collection
of such amounts; provided, Secured Party shall have the right at any time, upon
the occurrence and during the continuation of an Event of Default and upon
written notice to such Grantor of its intention to do so, to notify the obligors
with respect to any such amounts of the existence of the security interest
created hereby and to direct such obligors to make payment of all such amounts
directly to Secured Party, and, upon such notification and at the expense of
such Grantor, to enforce collection of any such amounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done. After receipt by any Grantor of the
notice from Secured Party referred to in the proviso to the preceding sentence
and during the continuation of any Event of Default, (i) all amounts and
proceeds (including checks and other instruments) received by each Grantor in
respect of amounts due to such Grantor in respect of the Intellectual Property
Collateral or any portion thereof shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to Secured Party in the same form
as so received (with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 17 hereof, and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any such amount or release
wholly or partly any obligor with respect thereto or allow any credit or
discount thereon.

                  (c) Each Grantor shall have the duty diligently, through
counsel reasonably acceptable to Secured Party, to prosecute, file and/or make,
unless and until such Grantor, in its commercially reasonable judgment, decides
otherwise, (i) any application relating to any of the Intellectual Property
Collateral owned, held or used by such Grantor and identified on Schedules
1(f)(i), 1(f)(ii) or 1(f)(iii), as applicable, that is pending as of the date of
this Agreement, (ii) any Copyright Registration on any existing or future
unregistered but copyrightable works (except for works of nominal commercial
value or with respect to which such Grantor has determined in the exercise of
its commercially reasonable judgment that it shall not seek registration), (iii)
application on any future patentable but unpatented innovation or invention
comprising Intellectual Property Collateral, and (iv) any Trademark opposition
and cancellation proceedings, renew Trademark Registrations and Copyright
Registrations and do any and all acts which are necessary or desirable to
preserve and maintain all rights in all Intellectual Property Collateral. Any
expenses incurred in connection therewith shall be borne solely by the Grantors.
Subject to the foregoing, each Grantor shall, within 45 days after the end of
each Fiscal Quarter of the Borrower, give Secured Party written notice of any
abandonment of any Intellectual Property Collateral registered with a
Governmental Authority or any pending patent application or any Patent.

                  (d) Except as provided herein, each Grantor shall have the
right to commence and prosecute in its own name, as real party in interest, for
its own benefit and at its own expense, such suits, proceedings or other actions
for infringement, unfair competition, dilution, misappropriation or other
damage, or reexamination or reissue proceedings as are necessary to protect the
Intellectual Property Collateral. Secured Party shall provide, at such Grantor's

                                      D-17


<PAGE>


expense, all reasonable and necessary cooperation in connection with any such
suit, proceeding or action including, without limitation, joining as a necessary
party. Each Grantor shall, within 45 days after the end of each Fiscal Quarter
of the Borrower, notify Secured Party of the institution of, or of any adverse
determination that would be reasonably likely to have a Material Adverse Effect
in, any proceeding (whether in the United States Patent and Trademark Office,
the United States Copyright Office or any federal, state, local or foreign
court) or regarding such Grantor's ownership, right to use, or interest in any
Intellectual Property Collateral. Each Grantor shall provide to Secured Party
any information with respect thereto requested by Secured Party.

(e) In addition to, and not by way of limitation of, the granting of a security
interest in the Collateral pursuant hereto, each Grantor, effective upon the
occurrence and during the continuation of an Event of Default, hereby assigns,
transfers and conveys to Secured Party the nonexclusive right and license to use
all trademarks, tradenames, copyrights, patents or technical processes
(including, without limitation, the Intellectual Property Collateral) owned or
used by such Grantor that relate to the Collateral and any other collateral
granted by such Grantor as security for the Secured Obligations, together with
any goodwill associated therewith, all to the extent necessary to enable Secured
Party to realize on the Collateral in accordance with this Agreement and to
enable any transferee or assignee of the Collateral to enjoy the benefits of the
Collateral; provided, however, the license granted under this Section shall not
be construed to limit such Grantor's ability to take reasonable steps, in
accordance with its then current business practices, to protect and preserve the
Trademarks, the Trademark Registrations, the Trademark Rights and the Associated
Goodwill. This right shall inure to the benefit of all successors, assigns and
transferees of Secured Party and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law, assignment, transfer,
foreclosure, deed in lieu of foreclosure or otherwise. Such right and license
shall be granted free of charge, without requirement that any monetary payment
whatsoever be made to such Grantor. In addition, each Grantor hereby grants to
Secured Party and its employees, representatives and agents the right to visit
such Grantor's and any of its Affiliate's or subcontractor's plants, facilities
and other places of business that are utilized in connection with the
manufacture, production, inspection, storage or sale of products and services
sold or delivered under any of the Intellectual Property Collateral (or which
were so utilized during the prior six month period), and to inspect the quality
control and all other records relating thereto upon reasonable advance written
notice to such Grantor and at reasonable dates and times and as often as may be
reasonably requested. If and to the extent that any Grantor is permitted to
license the Intellectual Property Collateral, Secured Party shall promptly enter
into a non-disturbance agreement or other similar arrangement, at such Grantor's
request and expense, with such Grantor and any licensee of any Intellectual
Property Collateral permitted hereunder in form and substance reasonably
satisfactory to Secured Party pursuant to which (i) Secured Party shall agree
not to disturb or interfere with such licensee's rights under its license
agreement with such Grantor so long as such licensee is not in default
thereunder, and (ii) such licensee shall acknowledge and agree that the
Intellectual Property Collateral licensed to it is subject to the security
interest created in favor of Secured Party and the other terms of this
Agreement.

                                      D-18


<PAGE>


SECTION 11.       Cash Collateral Accounts.
                  -------------------------

                  Secured Party is hereby authorized to establish and maintain
as blocked accounts in the name of the Borrower and under the sole dominion and
control of Secured Party, a restricted deposit account designated as "Levi
Strauss & Co. Cash Collateral Account" (the "CASH COLLATERAL ACCOUNT") and a
restricted deposit account designated as "Levi Strauss & Co. L/C Cash Collateral
Account" the "L/C CASH COLLATERAL ACCOUNT"). All amounts at any time held in the
Cash Collateral Account and the L/C Cash Collateral Account shall be
beneficially owned by the Grantors but shall be held in the name of Secured
Party hereunder, for the benefit of the Lenders, as collateral security for the
Secured Obligations upon the terms and conditions set forth herein. The Grantors
shall have no right to withdraw, transfer or, except as expressly set forth
herein, otherwise receive any funds deposited into the Cash Collateral Account
and the L/C Cash Collateral Account. Anything contained herein to the contrary
notwithstanding, the Cash Collateral Account and the L/C Cash Collateral Account
shall be subject to such applicable laws, and such applicable regulations of the
Board of Governors of the Federal Reserve System and of any other appropriate
banking or governmental authority, as may now or hereafter be in effect. All
deposits of funds in the Cash Collateral Account and the L/C Cash Collateral
Account shall be made by wire transfer (or, if applicable, by intra-bank
transfer from another account of a Grantor) of immediately available funds, in
each case addressed in accordance with instructions of Secured Party. Each
Grantor shall, promptly after initiating a transfer of funds to the Cash
Collateral Account, give notice to Secured Party by telefacsimile of the date,
amount and method of delivery of such deposit. Cash held by Secured Party in the
Cash Collateral Account and the L/C Cash Collateral Account shall not be
invested by Secured Party but instead shall be maintained as a cash deposit in
the Cash Collateral Account and the L/C Cash Collateral Account pending
application thereof as elsewhere provided in this Agreement. To the extent
permitted under Regulation Q of the Board of Governors of the Federal Reserve
System, any cash held in the Cash Collateral Account and the L/C Cash Collateral
Account shall bear interest at the standard rate paid by Secured Party to its
customers for deposits of like amounts and terms. Subject to Secured Party's
rights hereunder, any interest earned on deposits of cash in the Cash Collateral
Account and the L/C Cash Collateral Account shall be deposited directly in, and
held in the Cash Collateral Account and the L/C Cash Collateral Account.

SECTION 12.       Secured Party Appointed Attorney-in-Fact.
                  -----------------------------------------

                  Each Grantor hereby irrevocably appoints Secured Party as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, Secured Party or otherwise, from time
to time in Secured Party's discretion to take any action and to execute any
instrument that Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:

                  (a) upon the occurrence and during the continuance of an Event
of Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Administrative Agent pursuant to the Credit Agreement;

                  (b) upon the occurrence and during the continuance of an Event
of Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;

                                      D-19


<PAGE>


                  (c) upon the occurrence and during the continuance of an Event
of Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;

                  (d) upon the occurrence and during the continuance of an Event
of Default, to file any claims or take any action or institute any proceedings
that Secured Party may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of Secured Party with respect
to any of the Collateral;

                  (e) except as otherwise permitted by the Credit Agreement, to
pay or discharge taxes or Liens (other than Liens permitted under this Agreement
or the Credit Agreement) levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by Secured Party in its sole discretion, any
such payments made by Secured Party to become Obligations of such Grantor to
Secured Party, due and payable immediately without demand;

                  (f) upon the occurrence and during the continuance of an Event
of Default, to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and

                  (g) upon the occurrence and during the continuance of an Event
of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Secured Party were the absolute owner thereof for all purposes, and to
do, at Secured Party's option and the Grantors' expense, at any time or from
time to time, all acts and things that Secured Party deems necessary to protect,
preserve or realize upon the Collateral and Secured Party's security interest
therein in order to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do.

SECTION 13.       Secured Party May Perform.
                  -------------------------

                  If any Grantor fails to perform any agreement contained
herein, Secured Party may itself perform, or cause performance of, such
agreement, and the expenses of Secured Party incurred in connection therewith
shall be payable by the Grantors under Section 18(b) hereof.

SECTION 14.       Standard of Care.
                  -----------------

                  The powers conferred on Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Secured Party shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Secured Party accords its own
property.

                                      D-20


<PAGE>


SECTION 15.       Remedies.
                  ---------

                  (a) GENERALLY. If any Event of Default shall have occurred and
be continuing, Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the UCC (whether or not the UCC applies to the affected Collateral), and also
may (i) require each Grantor to, and each Grantor hereby agrees that it will at
its expense and upon request of Secured Party forthwith, assemble all or part of
the Collateral as directed by Secured Party and make it available to Secured
Party at a place to be designated by Secured Party that is reasonably convenient
to both parties, (ii) enter onto the property where any Collateral is located
and take possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Secured Party deems appropriate, (iv) take possession of any
Grantor's premises or place custodians in exclusive control thereof, remain on
such premises and use the same and any of such Grantor's equipment for the
purpose of completing any work in process, taking any actions described in the
preceding clause (iii) and collecting any Secured Obligation, (v) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Secured Party may deem
commercially reasonable, (vi) exercise dominion and control over and refuse to
permit further withdrawals from any Deposit Account maintained with Secured
Party or any Lender constituting a part of the Collateral and (vii) without
notice to any Grantor, transfer to or to register in the name of Secured Party
or any of its nominees any or all of the Securities Collateral. Secured Party or
any Lender or Hedge Bank may be the purchaser of any or all of the Collateral at
any such sale and Secured Party, as agent for and representative of the Lenders
and Hedge Banks (but not any Lender or Hedge Bank in its individual capacity
unless Required Lenders shall otherwise agree in writing), shall be entitled,
for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold at any such public sale, to
use and apply any of the Secured Obligations as a credit on account of the
purchase price for any Collateral payable by Secured Party at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of any Grantor, and each Grantor hereby waives (to
the extent permitted by applicable law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. Each Grantor agrees that,
to the extent notice of sale shall be required by law, at least ten days' notice
to such Grantor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. Each Grantor hereby waives any claims against Secured Party
arising by reason of the fact that the price at which any Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Secured Party accepts the first offer
received and does not offer such Collateral to more than one offeree. If the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all the Secured Obligations, the Grantors shall be jointly and severally
liable for the deficiency and the fees of any attorneys

                                      D-21


<PAGE>


employed by Secured Party to collect such deficiency. Each Grantor further
agrees that a breach of any of the covenants contained in this Section will
cause irreparable injury to Secured Party, that Secured Party has no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section shall be specifically enforceable
against such Grantor, and each Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no default has occurred giving rise to the Secured
Obligations becoming due and payable prior to their stated maturities.

                  (b) SECURITIES COLLATERAL.

                        (i) Each Grantor recognizes that, by reason of certain
         prohibitions contained in the Securities Act of 1933 and the
         regulations promulgated thereunder (the "SECURITIES ACT") and
         applicable state securities laws, Secured Party may be compelled, with
         respect to any sale of all or any part of the Securities Collateral
         conducted without prior registration or qualification of such
         Securities Collateral under the Securities Act and/or such state
         securities laws, to limit purchasers to those who will agree, among
         other things, to acquire the Securities Collateral for their own
         account, for investment and not with a view to the distribution or
         resale thereof. Each Grantor acknowledges that any such private sales
         may be at prices and on terms less favorable than those obtainable
         through a public sale without such restrictions (including a public
         offering made pursuant to a registration statement under the Securities
         Act) and, notwithstanding such circumstances and the registration
         rights granted to Secured Party by such Grantor pursuant hereto, each
         Grantor agrees that any such private sale shall be deemed to have been
         made in a commercially reasonable manner and that Secured Party shall
         have no obligation to engage in public sales and no obligation to delay
         the sale of any Securities Collateral for the period of time necessary
         to permit the issuer thereof to register it for a form of public sale
         requiring registration under the Securities Act or under applicable
         state securities laws, even if such issuer would, or should, agree to
         so register it. If Secured Party determines to exercise its right to
         sell any or all of the Securities Collateral, upon written request,
         each Grantor shall and shall cause each issuer of any Pledged Interests
         to be sold hereunder from time to time to furnish to Secured Party all
         such information as Secured Party may request in order to determine the
         number of shares and other instruments included in the Securities
         Collateral which may be sold by Secured Party in exempt transactions
         under the Securities Act and the rules and regulations of the
         Securities and Exchange Commission thereunder, as the same are from
         time to time in effect.

                        (ii) If Secured Party shall determine to exercise its
         right to sell all or any of the Securities Collateral pursuant to this
         Section, each Grantor agrees that, upon request of Secured Party (which
         request may be made by Secured Party in its sole discretion), such
         Grantor will, at its own expense (A) execute and deliver, and cause
         each issuer of the Securities Collateral contemplated to be sold and
         the directors and officers thereof to execute and deliver, all such
         instruments and documents, and do or cause to be done all such other
         acts and things, as may be necessary or, in the opinion of Secured
         Party, advisable to register such Securities Collateral under the
         provisions of the Securities Act and to cause the registration
         statement relating thereto to become effective

                                      D-22


<PAGE>


         and to remain effective for such period as prospectuses are required by
         law to be furnished, and to make all amendments and supplements thereto
         and to the related prospectus which, in the opinion of Secured Party,
         are necessary or advisable, all in conformity with the requirements of
         the Securities Act and the rules and regulations of the Securities and
         Exchange Commission applicable thereto; (B) use its best efforts to
         qualify the Securities Collateral under all applicable state securities
         or "Blue Sky" laws and to obtain all necessary governmental approvals
         for the sale of the Securities Collateral, as requested by Secured
         Party; (C) cause each such issuer to make available to its security
         holders, as soon as practicable, an earnings statement which will
         satisfy the provisions of Section 11(a) of the Securities Act; (D) do
         or cause to be done all such other acts and things as may be necessary
         to make such sale of the Securities Collateral or any part thereof
         valid and binding and in compliance with applicable law; and (E) bear
         all costs and expenses, including reasonable attorneys' fees, of
         carrying out its Obligations under this Section.

                        (iii) Without limiting the generality of Section 7.05 of
         the Credit Agreement, in the event of any public sale described herein,
         each Grantor agrees to indemnify and hold harmless (to the maximum
         extent permitted under the Securities Act or other applicable law)
         Secured Party, and each Lender and each Hedge Bank and each of their
         respective directors, officers, employees and agents from and against
         any loss, fee, cost, expense, damage, liability or claim, joint or
         several, to which any such Persons may become subject or for which any
         of them may be liable, under the Securities Act or otherwise, insofar
         as such losses, fees, costs, expenses, damages, liabilities or claims
         (or any litigation commenced or threatened in respect thereof) arise
         out of or are based upon an untrue statement or alleged untrue
         statement of a material fact contained in any preliminary prospectus,
         registration statement, prospectus or other such document published or
         filed in connection with such public sale, or any amendment or
         supplement thereto, or arise out of or are based upon the omission or
         alleged omission to state therein a material fact required to be stated
         therein or necessary to make the statements therein not misleading, and
         will (to the maximum extent permitted under the Securities Act or other
         applicable law) reimburse Secured Party and such other Persons for any
         legal or other expenses reasonably incurred by Secured Party and such
         other Persons in connection with any litigation, of any nature
         whatsoever, commenced or threatened in respect thereof (including any
         and all fees, costs and expenses whatsoever reasonably incurred by
         Secured Party and such other Persons and counsel for Secured Party and
         such other Persons in investigating, preparing for, defending against
         or providing evidence, producing documents or taking any other action
         in respect of, any such commenced or threatened litigation or any
         claims asserted). This indemnity shall be in addition to any liability
         which any Grantor may otherwise have and shall extend upon the same
         terms and conditions to each Person, if any, that controls Secured
         Party or such Persons within the meaning of the Securities Act.

                  (c) L/C CASH COLLATERAL ACCOUNT. If an Event of Default has
occurred and is continuing and, in accordance with Section 6.02 of the Credit
Agreement, the Borrower is required to pay to Secured Party an amount (the
"AGGREGATE AVAILABLE AMOUNT") equal to the maximum amount that may at any time
be drawn under all Letters of Credit then outstanding under the Credit
Agreement, the Borrower shall deliver funds in such an amount for deposit in

                                      D-23


<PAGE>


the L/C Cash Collateral Account. If for any reason the aggregate amount
delivered by the Borrower for deposit in the L/C Cash Collateral Account as
aforesaid is less than the Aggregate Available Amount, the aggregate amount so
delivered by the Borrower shall be apportioned among all outstanding Letters of
Credit for purposes of this Section in accordance with the ratio of the maximum
amount available for drawing under each such Letter of Credit (as to such Letter
of Credit, the "MAXIMUM AVAILABLE AMOUNT") to the Aggregate Available Amount.
Upon any drawing under any outstanding Letter of Credit in respect of which the
Borrower has deposited in the L/C Cash Collateral Account any amounts described
above, Secured Party shall apply such amounts to reimburse the Issuing Lender
for the amount of such drawing. In the event of cancellation or expiration of
any Letter of Credit in respect of which the Borrower has deposited in the L/C
Cash Collateral Account any amounts described above, or in the event of any
reduction in the Maximum Available Amount under such Letter of Credit, Secured
Party shall apply the amount then on deposit in the L/C Collateral Account in
respect of such Letter of Credit (less, in the case of such a reduction, the
Maximum Available Amount under such Letter of Credit immediately after such
reduction) first, to the payment of any amounts payable to Secured Party
pursuant to Section 17 hereof, second, to the extent of any excess, to the cash
collateralization pursuant to the terms of this Agreement of any outstanding
Letters of Credit in respect of which the Borrower has failed to pay all or a
portion of the amounts described above (such cash collateralization to be
apportioned among all such Letters of Credit in the manner described above),
third, to the extent of any further excess, to the payment of any other
outstanding Secured Obligations in such order as Secured Party shall elect, and
fourth, to the extent of any further excess, to the payment to whomsoever shall
be lawfully entitled to receive such funds.

                  (d) CASH COLLATERAL ACCOUNT. If an Event of Default has
occurred and is continuing, the Borrower shall deliver any and all cash
dividends paid or payable to it or any of its Subsidiaries from any of its
Subsidiaries from time to time for deposit in the Cash Collateral Account.
Amounts in the Cash Collateral Account shall be applied in accordance with
Section 17 hereof.

SECTION 16.       Additional Remedies for Intellectual Property Collateral.
                  ---------------------------------------------------------

                  (a) Anything contained herein to the contrary notwithstanding,
upon the occurrence and during the continuation of an Event of Default, (i)
Secured Party shall have the right (but not the obligation) to bring suit, in
the name of any Grantor, Secured Party or otherwise, to enforce any Intellectual
Property Collateral, in which event each Grantor shall, at the request of
Secured Party, do any and all lawful acts and execute any and all documents
required by Secured Party in aid of such enforcement and each Grantor shall
promptly, upon demand, reimburse and indemnify Secured Party as provided in
Section 7.05 of the Credit Agreement and Section 18 hereof, as applicable, in
connection with the exercise of its rights under this Section, and, to the
extent that Secured Party shall elect not to bring suit to enforce any
Intellectual Property Collateral as provided in this Section, each Grantor
agrees to use all reasonable measures, whether by action, suit, proceeding or
otherwise, to prevent the infringement of any of the Intellectual Property
Collateral by others and for that purpose agrees to use its commercially
reasonable judgment in maintaining any action, suit or proceeding against any
Person so infringing reasonably necessary to prevent such infringement; (ii)
upon written demand from Secured Party, each Grantor shall execute and deliver
to Secured Party an

                                      D-24


<PAGE>


assignment or assignments of the Intellectual Property Collateral and such other
documents as are necessary or appropriate to carry out the intent and purposes
of this Agreement; (iii) each Grantor agrees that such an assignment and/or
recording shall be applied to reduce the Secured Obligations outstanding only to
the extent that Secured Party (or any Lender) receives cash proceeds in respect
of the sale of, or other realization upon, the Intellectual Property Collateral;
and (iv) within five Business Days after written notice from Secured Party, each
Grantor shall make available to Secured Party, to the extent within such
Grantor's power and authority, such personnel in such Grantor's employ on the
date of such Event of Default as Secured Party may reasonably designate, by
name, title or job responsibility, to permit such Grantor to continue, directly
or indirectly, to produce, advertise and sell the products and services sold or
delivered by such Grantor under or in connection with the Trademarks, Trademark
Registrations and Trademark Rights, such persons to be available to perform
their prior functions on Secured Party's behalf and to be compensated by Secured
Party at such Grantor's expense on a per diem, pro-rata basis consistent with
the salary and benefit structure applicable to each as of the date of such Event
of Default.

                  (b) If (i) an Event of Default shall have occurred and, by
reason of cure, waiver, modification, amendment or otherwise, no longer be
continuing, (ii) no other Event of Default shall have occurred and be
continuing, (iii) an assignment to Secured Party of any rights, title and
interests in and to the Intellectual Property Collateral shall have been
previously made, and (iv) the Secured Obligations shall not have become
immediately due and payable, upon the written request of any Grantor, Secured
Party shall promptly execute and deliver to such Grantor such assignments as may
be necessary to reassign to such Grantor any such rights, title and interests as
may have been assigned to Secured Party as aforesaid, subject to any disposition
thereof that may have been made by Secured Party; provided, after giving effect
to such reassignment, Secured Party's security interest granted pursuant hereto,
as well as all other rights and remedies of Secured Party granted hereunder,
shall continue to be in full force and effect; and provided further, the rights,
title and interests so reassigned shall be free and clear of all Liens other
than Liens (if any) encumbering such rights, title and interest at the time of
their assignment to Secured Party and Liens expressly permitted by the Credit
Agreement.

SECTION 17.       Application of Proceeds.
                  -----------------------

                  Except as expressly provided elsewhere in this Agreement, all
proceeds received by Secured Party in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral shall be applied in
the following order of priority:

                  FIRST: To the payment of all costs and expenses of such sale,
         collection or other realization, including reasonable compensation to
         Secured Party and its agents and counsel, and all other expenses,
         liabilities and advances made or incurred by Secured Party in
         connection therewith, and all amounts for which Secured Party is
         entitled to indemnification hereunder and all advances made by Secured
         Party hereunder for the account of the Grantors, and to the payment of
         all costs and expenses paid or incurred by Secured Party in connection
         with the exercise of any right or remedy hereunder;

                  SECOND: To the payment of all other Secured Obligations (for
         the ratable benefit of the holders thereof) and, as to Obligations
         arising under the Credit Agreement, as provided in the Credit
         Agreement; and

                                      D-25


<PAGE>


                  THIRD: To the payment to or upon the order of the Borrower, or
         to whosoever may be lawfully entitled to receive the same or as a court
         of competent jurisdiction may direct, of any surplus then remaining
         from such proceeds.

SECTION 18.       Indemnity and Expenses.
                  ----------------------

                  (a) The Grantors jointly and severally agree to indemnify
Secured Party, each Lender and each Hedge Bank from and against any and all
claims, losses and liabilities in any way relating to, growing out of or
resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Secured Party's or
such Lender's or Hedge Bank's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.

                  (b) The Grantors jointly and severally agree to pay to Secured
Party upon demand the amount of any and all costs and expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
Secured Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of Secured Party hereunder, or (iv)
the failure by any Grantor to perform or observe any of the provisions hereof.

                  (c) The obligations of the Grantors in this Section 18 shall
(i) survive the termination of this Agreement and the discharge of the Grantors'
other Obligations under this Agreement, the Hedge Bank Hedge Agreements, the
Credit Agreement and the other Loan Documents and (ii), as to any Grantor that
is a party to a Subsidiary Guaranty, be subject to the provisions of Section
1(b) thereof.

SECTION 19.       Continuing Security Interest; Transfer of Loans; Termination
                  --------------------------------------------------------------
                  and Release.
                  -----------


                  (a) This Agreement shall create a continuing security interest
in the Collateral and shall (i) remain in full force and effect until the
payment in full of the Secured Obligations, the cancellation or termination of
the Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (ii) be binding upon the Grantors and their respective successors and
assigns, and (iii) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (iii), (A) but
subject to the provisions of Section 8.07 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to the Lenders herein or otherwise and (B) any Hedge Bank may
assign or otherwise transfer any Hedge Bank Hedge Agreement to which it is a
party to any other Person in accordance with the terms of such Hedge Bank Hedge
Agreement, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Hedge Banks herein or otherwise.

                  (b) Upon the payment in full of all Secured Obligations, the
cancellation  or  termination  of  the  Commitments  and  the   cancellation  or
expiration of all outstanding  Letters of Credit,  the security interest granted
hereby shall terminate and all rights to the Collateral shall

                                      D-26


<PAGE>


revert to the applicable the Grantors.  Upon any such termination  Secured Party
will,  at the  Grantors'  expense,  execute  and  deliver to the  Grantors  such
documents as the Grantors shall reasonably request to evidence such termination.

                  (c) In addition, upon the proposed sale, transfer or other
disposition of any Collateral by a Grantor in accordance with the Credit
Agreement for which such Grantor desires to obtain a security interest release
from Secured Party, such Grantor shall deliver an officer's certificate (x)
stating that the Collateral subject to such disposition is being sold,
transferred or otherwise disposed of in compliance with the terms of the Credit
Agreement and (y) specifying the Collateral being sold, transferred or otherwise
disposed of in the proposed transaction. Upon the receipt of such officer's
certificate, Secured Party shall, at such Grantor's expense, so long as Secured
Party has no reason to believe that the officer's certificate delivered by such
Grantor with respect to such sale is not true and correct, execute and deliver
such releases of its security interest in such Collateral which is to be so
sold, transferred or disposed of, as may be reasonably requested by such
Grantor.

SECTION 20.       Secured Party as Agent.
                  ----------------------

                  (a) Secured Party has been appointed to act as Secured Party
hereunder by the Lenders and, by their acceptance of the benefits hereof, Hedge
Banks. Secured Party shall be obligated, and shall have the right hereunder, to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including, without
limitation, the release or substitution of Collateral), solely in accordance
with this Agreement and the Credit Agreement; provided that Secured Party shall
exercise, or refrain from exercising, any remedies provided for in Section 15
hereof in accordance with the instructions of Required Lenders. In furtherance
of the foregoing provisions of this Section 20(a), each Hedge Bank, by its
acceptance of the benefits hereof, agrees that it shall have no right
individually to realize upon any of the Collateral hereunder, it being
understood and agreed by such Hedge Bank that all rights and remedies hereunder
may be exercised solely by Secured Party for the benefit of the Lenders and
Hedge Banks in accordance with the terms of this Section 20(a).

                  (b) Secured Party shall at all times be the same Person that
is  Administrative   Agent  under  the  Credit  Agreement.   Written  notice  of
resignation  by  Administrative  Agent  pursuant  to Section  7.07 of the Credit
Agreement  shall also  constitute  notice of  resignation as Secured Party under
this Agreement;  and appointment of a successor administrative agent pursuant to
Section 7.07 of the Credit  Agreement  shall also  constitute  appointment  of a
successor  Secured  Party  under  this  Agreement.  Upon the  acceptance  of any
appointment as  Administrative  Agent under Section 7.07 of the Credit Agreement
by a successor  administrative agent, that successor  administrative agent shall
thereupon succeed to and become vested with all the rights,  powers,  privileges
and duties of the retiring Secured Party under this Agreement,  and the retiring
Secured Party under this Agreement shall promptly (i) transfer to such successor
Secured Party all sums, securities and other items of Collateral held hereunder,
together  with all records  and other  documents  necessary  or  appropriate  in
connection  with the  performance  of the duties of the successor  Secured Party
under this  Agreement,  and (ii) execute and deliver to such  successor  Secured
Party such amendments to financing  statements,  and take such other actions, as
may be  necessary or  appropriate  in  connection  with the  assignment  to such
successor Secured Party of the security interests created  hereunder,  whereupon
such retiring  Secured Party shall be discharged from its duties and obligations
under this Agreement. After any retiring

                                      D-27


<PAGE>


administrative agent's resignation hereunder as Secured Party, the provisions of
this Agreement  shall inure to its benefit as to any actions taken or omitted to
be taken by it under this Agreement while it was Secured Party hereunder.

                  (c) Secured Party shall not be deemed to have any duty
whatsoever with respect to any Hedge Bank until it shall have received written
notice in form and substance satisfactory to Secured Party from a Grantor or the
Hedge Bank as to the existence and terms of the applicable Hedge Bank Hedge
Agreement.

SECTION 21.       Additional Grantors.
                  -------------------

                  The initial Subsidiary Grantors hereunder shall be such of the
Subsidiaries of the Borrower as are signatories hereto on the date hereof. From
time to time subsequent to the date hereof, additional Material Domestic
Subsidiaries of the Borrower may become parties hereto as additional Grantors
(each an "ADDITIONAL GRANTOR"), by executing a counterpart substantially in the
form of Exhibit VI annexed hereto. Upon delivery of any such counterpart to
Secured Party, notice of which is hereby waived by the Grantors, each such
Additional Grantor shall be a Grantor and shall be as fully a party hereto as if
such Additional Grantor were an original signatory hereto. Each Grantor
expressly agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Grantor hereunder, nor by any
election of Administrative Agent not to cause any Subsidiary of the Borrower to
become an Additional Grantor hereunder. This Agreement shall be fully effective
as to any Grantor that is or becomes a party hereto regardless of whether any
other Person becomes or fails to become or ceases to be a Grantor hereunder.

SECTION 22.       Amendments; Etc.
                  ----------------

                  No amendment, modification, termination or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Secured Party and, in the case of any such amendment or
modification, by the Grantors; provided this Agreement may be modified by the
execution of a counterpart by an Additional Grantor in accordance with Section
21 hereof and the Grantors hereby waive any requirement of notice of or consent
to any such amendment. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.

SECTION 23.       Notices.
                  --------

                  Any notice or other communication herein required or permitted
to be given shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile, or three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; provided that notices to
Secured Party shall not be effective until received. For the purposes hereof,
the address of each party hereto shall be as provided in Section 8.02 of the
Credit Agreement or as set forth under such party's name on the signature pages
hereof or such other address as shall be designated by such party in a written
notice delivered to the other parties hereto.

                                      D-28


<PAGE>


SECTION 24.       Failure or Indulgence Not Waiver; Remedies Cumulative.
                  ------------------------------------------------------

                  No failure or delay on the part of Secured Party in the
exercise of any power, right or privilege hereunder shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.

SECTION 25.       Severability.
                  -------------

                  In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

SECTION 26.       Headings.
                  ---------

                  Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.

SECTION 27.       Governing Law; Terms; Rules of Construction.
                  --------------------------------------------

                  This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York (including Section
5-1401 of the General Obligations Law of the State of New York) without regard
to conflicts of laws principles that would require application of another law.
Unless otherwise defined herein or in the Credit Agreement, terms used in
Articles 8 and 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined. The rules of construction set forth in Sections
1.02 and 1.04 of the Credit Agreement shall be applicable to this Agreement
MUTATIS MUTANDIS.

SECTION 28.       Consent to Jurisdiction and Service of Process.
                  -----------------------------------------------

                  (a) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or any
of the other Loan Documents to which it is a party, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the fullest extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or any of the other Loan Documents in the courts of
any jurisdiction.

                                      D-29


<PAGE>


                  (b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any of the
other Loan Documents to which it is a party in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

SECTION 29.       Waiver of Jury Trial.
                  --------------------

                  Each of the parties hereto irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of the Loan
Documents, the Advances, the Letters of Credit or the actions of any Agent or
any Lender Party in the negotiation, administration, performance or enforcement
thereof.

SECTION 30.       Counterparts.
                  -------------

                  This Agreement may be executed in one or more counterparts and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.

                  [Remainder of page intentionally left blank]





                                      D-30


<PAGE>


         IN WITNESS WHEREOF, the Grantors and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

                           LEVI STRAUSS & CO.


                           By:_____________________________
                             Name:__________________________
                             Title:___________________________



                           EACH OF THE ENTITIES LISTED ON SCHEDULE A ANNEXED
                                                          ----------
                           HERETO



                               By:   _________________________________
                                     on behalf of each of the entities listed on
                                     Schedule A annexed hereto
                                     ----------

                                     Name:____________________________
                                     Title:____________________________


<PAGE>



                           BANK OF AMERICA, N.A.
                                As Administrative Agent, as Secured Party


                                By:______________________________
                                  Name:__________________________
                                               Title:___________________________



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.59
<SEQUENCE>24
<FILENAME>0024.txt
<DESCRIPTION>FORM OF SUBSIDIARY GUARANTY
<TEXT>



                                    EXHIBIT E

                          [FORM OF] SUBSIDIARY GUARANTY


                  This  GUARANTY  is entered  into as of February 1, 2001 by the
undersigned  (each a  "GUARANTOR",  and  together  with any future  Subsidiaries
executing  this  Guaranty,   being  collectively   referred  to  herein  as  the
"GUARANTORS")  in favor of and for the  benefit  of Bank of  America,  N.A.,  as
Administrative  Agent for and  representative of (in such capacity herein called
the "GUARANTIED PARTY") the several financial  institutions (the "LENDERS") from
time to time party to the Credit Agreement referred to below and any Hedge Bank,
and for the benefit of the other Beneficiaries (as hereinafter defined).

                             PRELIMINARY STATEMENTS

         A.       Levi Strauss & Co., a Delaware corporation (the "BORROWER"),
has entered into that certain  Credit  Agreement,  dated as of February 1, 2001,
with the Lenders,  the several financial  institutions  party thereto as Co-Lead
Arrangers and Joint Book Managers,  the financial  institution  party thereto as
Syndication  Agent,  the financial  institution  party thereto as  Documentation
Agent,  and  Guarantied  Party,  as  Administrative  Agent for the Lenders (said
Credit  Agreement,  as it  may  hereafter  be  amended,  amended  and  restated,
supplemented  or  otherwise  modified  from  time to  time,  being  the  "CREDIT
AGREEMENT"; the terms defined therein being used herein as therein defined).

         B.       The Borrower and Levi Strauss & Co. Financial Services, S.A.,
a Belgian corporation,  or any successor thereto  ("FINSERV"),  may from time to
time enter,  or may from time to time have entered,  into one or more Hedge Bank
Hedge Agreements in accordance with the terms of the Credit Agreement, and it is
desired that the  obligations  of the Borrower and FinServ  under the Hedge Bank
Hedge Agreements,  including, without limitation, the obligation of the Borrower
and FinServ to make  payments  thereunder in the event of early  termination  or
close out thereof,  together  with all  obligations  of the  Borrower  under the
Credit Agreement and the other Loan Documents, be guarantied hereunder until the
payment in full of all Obligations under the Credit Agreement and the other Loan
Documents  (other than the Hedge Bank Hedge  Agreements),  the  cancellation  or
expiration of all Letters of Credit and the termination of the Commitments.

         C.       The Guarantied Party, the Lenders, and each Hedge Bank for
which the  Guarantied  Party has received the notice  required by Section  17(c)
hereof are sometimes referred to herein as "BENEFICIARIES".

         D.       A portion of the proceeds of the Advances may be advanced to
the Guarantors, and thus the Guarantied Obligations (as hereinafter defined) are
being  incurred  for and will  inure to the  benefit  of the  Guarantors  (which
benefits are hereby acknowledged).

         E.       It is a condition precedent to the initial extensions of
credit by the Lenders under the Credit Agreement that the Borrower's obligations
thereunder be guarantied by the Guarantors.

<PAGE>

         F.       The Guarantors are willing irrevocably and unconditionally to
guaranty such obligations of the Borrower.

                  NOW,  THEREFORE,  based upon the  foregoing and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  and in order to induce the  Lenders and the  Guarantied  Party to
enter  into the Credit  Agreement  and to induce  Hedge  Banks to enter into the
Hedge Bank Hedge Agreements, the Guarantors hereby agree as follows:

         1.       Guaranty.  (a) In order to induce  the  Lenders  to extend
                  --------
credit to the Borrower  pursuant to the Credit  Agreement and the entry by Hedge
Banks into the Hedge Bank Hedge Agreements, the Guarantors jointly and severally
irrevocably and unconditionally  guaranty, as primary obligors and not merely as
sureties, the due and punctual payment in full of all Guarantied Obligations (as
hereinafter defined) when the same shall become due, whether at stated maturity,
by acceleration,  demand or otherwise  (including  amounts that would become due
but  for the  operation  of the  automatic  stay  under  Section  362(a)  of the
Bankruptcy  Code, 11 U.S.C. ss. 362(a)).  The term  "GUARANTIED  OBLIGATIONS" is
used herein in its most comprehensive sense and includes any and all Obligations
of the Borrower and all obligations of the Borrower and FinServ under Hedge Bank
Hedge Agreements,  now or hereafter made, incurred or created,  whether absolute
or contingent,  liquidated or unliquidated,  whether due or not due, and however
arising under or in connection with the Credit  Agreement,  the Hedge Bank Hedge
Agreements, this Guaranty and the other Loan Documents,  including those arising
under successive  borrowing  transactions under the Credit Agreement which shall
either  continue the Obligations of the Borrower or from time to time renew them
after they have been satisfied;  PROVIDED,  HOWEVER,  that  obligations  arising
under or in connection with the Hedge Bank Hedge  Agreements shall be Guarantied
Obligations  only until the payment in full of all Obligations  under the Credit
Agreement  and the  other  Loan  Documents  (other  than the  Hedge  Bank  Hedge
Agreements),  the  cancellation  or  expiration of all Letters of Credit and the
termination of the Commitments.

                  Each Guarantor acknowledges that a portion of the Advances may
be advanced  to it, that  Letters of Credit may be issued for the benefit of its
business and that the  Guarantied  Obligations  are being  incurred for and will
inure to its benefit.

                  Any interest on any portion of the Guarantied Obligations that
accrues after the  commencement  of any  proceeding,  voluntary or  involuntary,
involving the bankruptcy, insolvency, receivership,  reorganization, liquidation
or arrangement of the Borrower or FinServ (or, if interest on any portion of the
Guarantied  Obligations  ceases to accrue by  operation  of law by reason of the
commencement  of said  proceeding,  such  interest as would have accrued on such
portion of the Guarantied Obligations if said proceeding had not been commenced)
shall be included in the Guarantied  Obligations  because it is the intention of
each Guarantor and the Guarantied Party that the Guarantied  Obligations  should
be  determined  without  regard to any rule of law or order that may relieve the
Borrower or FinServ of any portion of such Guarantied Obligations.

                  In  the  event  that  all  or any  portion  of the  Guarantied
Obligations is paid, the obligations of each Guarantor hereunder shall continue
and remain in

                                      E-2

<PAGE>

full  force and effect or be  reinstated,  as the case may be, in the event that
all or any  part of such  payment(s)  is  rescinded  or  recovered  directly  or
indirectly from the Guarantied  Party or any other  Beneficiary as a preference,
fraudulent transfer or otherwise, and any such payments that are so rescinded or
recovered shall constitute Guarantied Obligations.

                  Subject to the other  provisions  of this  Section 1, upon the
failure of the Borrower or FinServ to pay any of the Guarantied Obligations when
and as the same shall become due, each  Guarantor will upon demand pay, or cause
to be paid,  in  cash,  to the  Guarantied  Party  for the  ratable  benefit  of
Beneficiaries,  an  amount  equal  to the  aggregate  of the  unpaid  Guarantied
Obligations.

                  (b)  Anything  contained  in  this  Guaranty  to the  contrary
notwithstanding,  the obligations of each Guarantor under this Guaranty shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations  hereunder subject to avoidance as a fraudulent  transfer
or  conveyance  under  Section 548 of Title 11 of the United  States Code or any
applicable  provisions of comparable  state law  (collectively,  the "FRAUDULENT
TRANSFER  LAWS"),  in each case after giving effect to all other  liabilities of
such Guarantor,  contingent or otherwise, that are relevant under the Fraudulent
Transfer  Laws  (specifically  excluding,   however,  any  liabilities  of  such
Guarantor (i) in respect of  intercompany  indebtedness to the Borrower or other
affiliates  of the  Borrower  to the  extent  that  such  indebtedness  would be
discharged in an amount equal to the amount paid by such Guarantor hereunder and
(ii) under any guaranty which contains a limitation as to maximum amount similar
to that set forth in this Section 1(b),  pursuant to which the liability of such
Guarantor  hereunder  is  included  in the  liabilities  taken  into  account in
determining  such maximum amount) and after giving effect as assets to the value
(as determined under the applicable  provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, reimbursement,  indemnification or contribution of
such  Guarantor  pursuant  to  applicable  law or  pursuant  to the terms of any
agreement.

                  (c) Each  Guarantor  under this  Guaranty,  and each guarantor
under other  guaranties,  if any, relating to the Credit Agreement (the "RELATED
GUARANTIES") that contain a contribution  provision similar to that set forth in
this Section 1(c),  together desire to allocate among themselves  (collectively,
the  "CONTRIBUTING   GUARANTORS"),   in  a  fair  and  equitable  manner,  their
obligations arising under this Guaranty and the Related Guaranties. Accordingly,
in the event any  payment  or  distribution  is made on any date by a  Guarantor
under this Guaranty or a guarantor under a Related Guaranty, each such Guarantor
or such other  guarantor  shall be entitled to a  contribution  from each of the
other  Contributing  Guarantors in the maximum amount  permitted by law so as to
maximize  the  aggregate   amount  of  the   Guarantied   Obligations   paid  to
Beneficiaries.

                  2. Guaranty Absolute;  Continuing Guaranty. The obligations of
                     ---------------------------------------
each   Guarantor   hereunder  are   irrevocable,   absolute,   independent   and
unconditional and shall not be affected by any circumstance  which constitutes a
legal or equitable discharge of a guarantor or surety other than payment in full
of the  Guarantied  Obligations.  In  furtherance  of the  foregoing and without
limiting the generality  thereof,  each Guarantor agrees that: (a) this Guaranty
is a guaranty of payment when due and not of collectibility;  (b) the Guarantied
Party may enforce this Guaranty upon the occurrence of an Event of Default under
the Credit  Agreement  notwithstanding  the existence of any dispute between the
Borrower or FinServ and any

                                      E-3

<PAGE>

Beneficiary  with respect to the existence of such event; (c) the obligations of
each  Guarantor  hereunder are  independent  of the  obligations of the Borrower
under the Loan  Documents or of the  Borrower  and FinServ  under the Hedge Bank
Hedge  Agreements  and the  obligations  of any other  Guarantor  and a separate
action or actions may be brought and prosecuted  against each Guarantor  whether
or not any action is brought against the Borrower,  FinServ or any of such other
Guarantors  and  whether  or not the  Borrower  or FinServ is joined in any such
action  or  actions;  and  (d) a  payment  of a  portion,  but not  all,  of the
Guarantied  Obligations by one or more Guarantors shall in no way limit, affect,
modify or abridge the  liability of such or any other  Guarantor for any portion
of the  Guarantied  Obligations  that  has not been  paid.  This  Guaranty  is a
continuing  guaranty and shall be binding upon each Guarantor and its successors
and  assigns,  and each  Guarantor  irrevocably  waives any right to revoke this
Guaranty as to future transactions giving rise to any Guarantied Obligations.

                  3. Actions by Beneficiaries.  Any Beneficiary may from time to
                     ------------------------
time,   without  notice  or  demand  and  without   affecting  the  validity  or
enforceability of this Guaranty or giving rise to any limitation,  impairment or
discharge of any Guarantor's liability hereunder, (a) renew, extend,  accelerate
or  otherwise  change  the  time,  place,  manner  or  terms of  payment  of the
Guarantied Obligations, (b) settle, compromise,  release or discharge, or accept
or refuse any offer of performance  with respect to, or  substitutions  for, the
Guarantied  Obligations or any agreement relating thereto and/or subordinate the
payment of the same to the  payment of any other  obligations,  (c)  request and
accept other guaranties of the Guarantied Obligations and take and hold security
for the payment of this  Guaranty or the  Guarantied  Obligations,  (d) release,
exchange, compromise,  subordinate or modify, with or without consideration, any
security for payment of the Guarantied Obligations,  any other guaranties of the
Guarantied  Obligations,  or any other  obligation of any Person with respect to
the Guarantied Obligations,  (e) enforce and apply any security now or hereafter
held by or for the benefit of any Beneficiary in respect of this Guaranty or the
Guarantied  Obligations  and  direct  the order or manner  of sale  thereof,  or
exercise  any  other  right  or  remedy  that  Guarantied  Party  or  the  other
Beneficiaries, or any of them, may have against any such security, as Guarantied
Party in its discretion may determine consistent with the Credit Agreement,  the
Hedge Bank Hedge  Agreements and any applicable  security  agreement,  including
foreclosure on any such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially  reasonable,
and (f) exercise any other rights available to the Guarantied Party or the other
Beneficiaries,  or any of them, under the Loan Documents or the Hedge Bank Hedge
Agreements.

                  4. No  Discharge.  This  Guaranty and the  obligations  of the
                     -------------
Guarantors  hereunder shall be valid and enforceable and shall not be subject to
any  limitation,  impairment  or discharge for any reason (other than payment in
full  of  the  Guarantied  Obligations),   including,  without  limitation,  the
occurrence of any of the following,  whether or not any Guarantor shall have had
notice or  knowledge  of any of them:  (a) any  failure  to assert or enforce or
agreement not to assert or enforce, or the stay or enjoining, by order of court,
by operation of law or otherwise,  of the exercise or enforcement  of, any claim
or  demand  or any  right,  power  or  remedy  with  respect  to the  Guarantied
Obligations  or any  agreement  relating  thereto,  or with respect to any other
guaranty of or security for the payment of the Guarantied  Obligations,  (b) any
waiver or modification of, or any consent to departure from, any of the terms or
provisions of the Credit Agreement,  any of the other Loan Documents,  the Hedge
Bank Hedge Agreements or any agreement or instrument  executed pursuant thereto,
or of any other  guaranty or security for the

                                      E-4

<PAGE>

Guarantied  Obligations,  (c)  the  Guarantied  Obligations,  or  any  agreement
relating  thereto,   at  any  time  being  found  to  be  illegal,   invalid  or
unenforceable in any respect,  (d) the application of payments received from any
source to the payment of  indebtedness  other than the  Guarantied  Obligations,
even though Guarantied Party or the other  Beneficiaries,  or any of them, might
have  elected  to  apply  such  payment  to any  part  or all of the  Guarantied
Obligations,  (e) any  failure to perfect or continue  perfection  of a security
interest in any collateral which secures any of the Guarantied Obligations,  (f)
any defenses, set-offs or counterclaims which the Borrower or FinServ may assert
against the  Guarantied  Party or any  Beneficiary  in respect of the Guarantied
Obligations,  including but not limited to failure of  consideration,  breach of
warranty,  payment,  statute  of  frauds,  statute  of  limitations,  accord and
satisfaction and usury, and (g) 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 a  Guarantor  as an  obligor  in  respect  of the  Guarantied
Obligations.

                  5.  Waivers.   Each  Guarantor  waives,  for  the  benefit  of
                      -------
Beneficiaries:  (a) any  right to  require  the  Guarantied  Party or the  other
Beneficiaries,  as a condition of payment or performance by such  Guarantor,  to
(i) proceed against the Borrower or FinServ,  any other guarantor (including any
other Guarantor) of the Guarantied Obligations or any other Person, (ii) proceed
against or exhaust any  security  held from the  Borrower or FinServ,  any other
guarantor of the  Guarantied  Obligations  or any other  Person,  (iii)  proceed
against or have resort to any  balance of any  deposit  account or credit on the
books of any Beneficiary in favor of the Borrower,  FinServ or any other Person,
or (iv) pursue any other remedy in the power of any Beneficiary; (b) any defense
arising by reason of the  incapacity,  lack of  authority or any  disability  or
other  defense of the Borrower or FinServ  including,  without  limitation,  any
defense based on or arising out of the lack of validity or the  unenforceability
of the Guarantied Obligations or any agreement or instrument relating thereto or
by reason of the  cessation of the liability of the Borrower or FinServ from any
cause other than payment in full of the Guarantied Obligations;  (c) any defense
based upon any statute or rule of law which  provides  that the  obligation of a
surety must be neither  larger in amount nor in other  respects more  burdensome
than that of the principal; (d) any defense based upon the Guarantied Party's or
any  other  Beneficiary's  errors  or  omissions  in the  administration  of the
Guarantied  Obligations,  except  behavior  that amounts to gross  negligence or
willful  misconduct;  (e) (i) any principles or provisions of law,  statutory or
otherwise,  that are or might be in conflict with the terms of this Guaranty and
any legal or equitable discharge of such Guarantor's obligations hereunder, (ii)
the benefit of any statute of limitations  affecting such Guarantor's  liability
hereunder or the enforcement hereof,  (iii) any rights to set-offs,  recoupments
and counterclaims,  and (iv) promptness,  diligence and any requirement that any
Beneficiary protect,  secure, perfect or insure any Lien or any property subject
thereto;  (f)  notices,  demands,  presentments,  protests,  notices of protest,
notices of dishonor and notices of any action or inaction,  including acceptance
of this  Guaranty,  notices of default  under the Credit  Agreement,  notices of
default,  close out or early termination under any Hedge Bank Hedge Agreement or
any agreement or instrument related thereto,  notices of any renewal,  extension
or modification of the Guarantied  Obligations or any agreement related thereto,
notices of any extension of credit to the Borrower or FinServ and notices of any
of the  matters  referred to in Sections 3 and 4 hereof and any right to consent
to any thereof;  and (g) to the fullest extent permitted by law, any defenses or
benefits  that may be derived from or afforded by law which limit the  liability
of or exonerate guarantors or sureties,  or which may conflict with the terms of
this Guaranty.

                                      E-5

<PAGE>

                  As used in this  paragraph,  any reference to "the  principal"
includes the Borrower and FinServ,  and any reference to "the creditor" includes
the Guarantied Party and each other Beneficiary. In accordance with Section 2856
of the California  Civil Code (a) each  Guarantor  waives any and all rights and
defenses available to it by reason of Sections 2787 to 2855, inclusive, 2899 and
3433 of the California Civil Code,  including,  without limitation,  any and all
rights or defenses such  Guarantor may have by reason of protection  afforded to
the principal with respect to any of the Guarantied Obligations, or to any other
guarantor  of any of the  Guarantied  Obligations  with  respect  to any of such
guarantor's  obligations  under its  guaranty,  in either  case  pursuant to the
antideficiency or other laws of the State of California  limiting or discharging
the principal's indebtedness or such guarantor's obligations, including, without
limitation,  Section 580a,  580b,  580d, or 726 of the California  Code of Civil
Procedure;  and (b) each Guarantor waives all rights and defenses arising out of
an election of remedies by the creditor,  even though that election of remedies,
such as a  nonjudicial  foreclosure  with  respect to security  for a Guarantied
Obligation,   has  destroyed  such   Guarantor's   rights  of  subrogation   and
reimbursement against the principal by the operation of Section 580d of the Code
of Civil  Procedure or  otherwise;  and even though that election of remedies by
the creditor,  such as nonjudicial  foreclosure  with respect to security for an
obligation  of any other  guarantor of any of the  Guarantied  Obligations,  has
destroyed such Guarantor's rights of contribution  against such other guarantor.
No  other  provision  of this  Guaranty  shall  be  construed  as  limiting  the
generality of any of the covenants and waivers set forth in this  paragraph.  As
provided  below,  this Guaranty shall be governed by, and shall be construed and
enforced in accordance with, the internal laws of the State of New York, without
regard to conflicts of laws principles. This paragraph is included solely out of
an  abundance  of caution,  and shall not be  construed  to mean that any of the
above-referenced  provisions of California law are in any way applicable to this
Guaranty or to any of the Guarantied Obligations.

                  6.  Guarantors'  Rights of  Subrogation,  Contribution,  Etc.;
                      ----------------------------------------------------------
Subordination of Other Obligations.  Until the Guarantied Obligations shall have
- ----------------------------------
been paid in full,  the  Commitments  shall have  terminated  and all Letters of
Credit shall have expired or been  cancelled,  no Guarantor  shall  exercise any
claim, right or remedy,  direct or indirect,  that such Guarantor now has or may
hereafter  have  against the  Borrower,  FinServ or their  respective  assets in
connection  with this  Guaranty  or the  performance  by such  Guarantor  of its
obligations  hereunder,  in each case whether such claim, right or remedy arises
in equity,  under contract,  by statute (including,  without  limitation,  under
California Civil Code Section 2847, 2848 or 2849), under common law or otherwise
and including,  without limitation, (a) any right of subrogation,  reimbursement
or indemnification that such Guarantor now has or may hereafter have against the
Borrower or FinServ,  (b) any right to enforce, or to participate in, any claim,
right or remedy that any  Beneficiary  now has or may hereafter have against the
Borrower or FinServ,  and (c) any benefit of, and any right to  participate  in,
any  collateral  or security  now or  hereafter  held by any  Beneficiary.  Each
Guarantor further agrees that, to the extent the waiver or agreement to withhold
the exercise of its rights of subrogation,  reimbursement,  indemnification  and
contribution  as set forth herein is found by a court of competent  jurisdiction
to be void or voidable for any reason, any rights of subrogation,  reimbursement
or  indemnification  such  Guarantor may have against the Borrower or FinServ or
against  any  collateral  or  security,  and any  rights  of  contribution  such
Guarantor  may have  against  any such  other  guarantor,  shall be  junior  and
subordinate to any rights the Guarantied  Party or the other  Beneficiaries  may
have  against the  Borrower or FinServ,  to all right,  title and  interest  the
Guarantied Party or the other

                                      E-6

<PAGE>

Beneficiaries may have in any such collateral or security,  and to any right the
Guarantied  Party  or the  other  Beneficiaries  may  have  against  such  other
guarantor.

                  Any  indebtedness  of the Borrower or FinServ now or hereafter
held by any  Guarantor  is  subordinated  in right of payment to the  Guarantied
Obligations, and any such indebtedness of the Borrower or FinServ to a Guarantor
collected or received by such  Guarantor  after an Event of Default has occurred
and is  continuing,  and  any  amount  paid to a  Guarantor  on  account  of any
subrogation,  reimbursement,  indemnification or contribution rights referred to
in the preceding paragraph when all Guarantied Obligations have not been paid in
full, shall be held in trust for the Guarantied Party on behalf of Beneficiaries
and shall  forthwith  be paid over to the  Guarantied  Party for the  benefit of
Beneficiaries to be credited and applied against the Guarantied Obligations.

                  7.  Expenses.  The Guarantors  jointly and severally  agree to
                      --------
pay, or cause to be paid, on demand,  and to save the  Guarantied  Party and the
other  Beneficiaries  harmless  against  liability  for,  any and all  costs and
expenses  (including  reasonable fees and  disbursements of counsel) incurred or
expended by the Guarantied Party or any other Beneficiary in connection with the
enforcement of or preservation of any rights under this Guaranty.

                  8.  Financial   Condition  of  the  Borrower  or  FinServ.  No
                      -----------------------------------------------------
Beneficiary shall have any obligation, and each Guarantor waives any duty on the
part of any  Beneficiary,  to  disclose  or  discuss  with  such  Guarantor  its
assessment,  or such Guarantor's  assessment,  of the financial condition of the
Borrower or FinServ or any matter or fact relating to the  business,  operations
or condition of the Borrower or FinServ.  Each  Guarantor has adequate  means to
obtain information from the Borrower or FinServ on a continuing basis concerning
the  financial  condition  of the Borrower or FinServ and its ability to perform
its obligations under the Loan Documents and the Hedge Bank Hedge Agreement,  as
the case may be, and each  Guarantor  assumes the  responsibility  for being and
keeping  informed of the  financial  condition of the Borrower or FinServ and of
all  circumstances  bearing  upon  the  risk  of  nonpayment  of the  Guarantied
Obligations.

                  9.  Representations and Warranties.  Each Guarantor makes, for
                      ------------------------------
the benefit of Beneficiaries, each of the representations and warranties made in
the Credit Agreement by the Borrower as to such Guarantor, its assets, financial
condition,  operations,  organization,  legal  status,  business  and  the  Loan
Documents to which it is a party.

                  10. Covenants. Each Guarantor agrees that, so long as any part
                      ---------
of the Guarantied Obligations shall remain unpaid, any Letter of Credit shall be
outstanding  and any Lender  shall have any  Commitment,  such  Guarantor  will,
unless Required Lenders shall otherwise consent in writing,  perform or observe,
and cause its  Subsidiaries to perform or observe,  all of the terms,  covenants
and  agreements  that the Loan  Documents  state that the Borrower is to cause a
Guarantor and such Subsidiaries to perform or observe.


                  11. Set Off. In addition to any other  rights any  Beneficiary
                      -------
may have  under law or in  equity,  if any  amount  shall at any time be due and
owing by a Guarantor to any Beneficiary under this Guaranty, such Beneficiary is
authorized  at any time or from time to time,  without  notice  (any such notice
being expressly waived),  to set off and to appropriate and to

                                      E-7

<PAGE>

apply any and all  deposits  (general or special,  including  but not limited to
indebtedness evidence by certificates of deposit,  whether matured or unmatured)
and any other  indebtedness  of such  Beneficiary  owing to a Guarantor  and any
other  property of such  Guarantor held by a Beneficiary to or for the credit or
the  account  of  such  Guarantor  against  and on  account  of  the  Guarantied
Obligations  and  liabilities  of such Guarantor to any  Beneficiary  under this
Guaranty.

                  12.  Discharge of Guaranty Upon Sale of  Guarantor.  If all of
                       ---------------------------------------------
the  stock of a  Guarantor  or any of its  successors  in  interest  under  this
Guaranty  shall  be sold or  otherwise  disposed  of  (including  by  merger  or
consolidation)  in a sale not  prohibited  by the Credit  Agreement or otherwise
consented to by Required  Lenders,  the  obligations  of such  Guarantor or such
successor in interest,  as the case may be,  hereunder  shall  automatically  be
discharged  and released  without any further  action by any  Beneficiary or any
other Person  effective as of the time of such sale;  provided that, if the sale
of such stock  constitutes a disposition  of assets as a condition  precedent to
such discharge and release,  the Guarantied  Party shall have received  evidence
satisfactory  to it that  arrangements  satisfactory  to it have  been  made for
delivery to the  Guarantied  Party of the Net Cash Proceeds (if any) as required
by the Credit Agreement.

                  13.  Amendments  and  Waivers.  No  amendment,   modification,
                       ------------------------
termination or waiver of any provision of this  Guaranty,  and no consent to any
departure by any Guarantor  therefrom,  shall in any event be effective  without
the written  concurrence  of the  Guarantied  Party and, in the case of any such
amendment or modification,  the Guarantors.  Any such waiver or consent shall be
effective only in the specific  instance and for the specific  purpose for which
it was given.

                  14.      Miscellaneous.  It is not necessary for Beneficiaries
                           -------------
to inquire into the capacity or powers of any Guarantor, the Borrower or FinServ
or the  officers,  directors or any agents acting or purporting to act on behalf
of any of them.

                  The rights, powers and remedies given to Beneficiaries by this
Guaranty  are  cumulative  and shall be in  addition to and  independent  of all
rights,  powers and remedies given to  Beneficiaries by virtue of any statute or
rule of law or in any of the Loan Documents or Hedge Bank Hedge Agreement or any
agreement  between  one or more  Guarantors  and one or  more  Beneficiaries  or
between the Borrower or FinServ and one or more  Beneficiaries.  Any forbearance
or failure to exercise,  and any delay by any  Beneficiary  in  exercising,  any
right,  power or remedy  hereunder  shall not  impair any such  right,  power or
remedy or be construed to be a waiver thereof, nor shall it preclude the further
exercise of any such right, power or remedy.

                  In case any  provision in or  obligation  under this  Guaranty
shall be invalid,  illegal or unenforceable in any  jurisdiction,  the validity,
legality and  enforceability of the remaining  provisions or obligations,  or of
such provision or obligation in any other jurisdiction,  shall not in any way be
affected or impaired thereby.

                  THIS   GUARANTY   SHALL  BE  GOVERNED  BY,  AND  CONSTRUED  IN
ACCORDANCE  WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING  SECTION
5-1401 OF THE GENERAL  OBLIGATIONS  LAW OF THE STATE OF NEW YORK) WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.

                                      E-8

<PAGE>

                  This Guaranty shall inure to the benefit of Beneficiaries and
their respective successors and assigns.

                  Each   of  the   parties   hereto   hereby   irrevocably   and
unconditionally  submits,  for  itself  and its  property,  to the  nonexclusive
jurisdiction  of any New York State court or Federal  court of the United States
of America  sitting in New York City, and any appellate  court from any thereof,
in any action or  proceeding  arising out of or relating to this Guaranty or any
of the  other  Loan  Documents  to which it is a party,  or for  recognition  or
enforcement of any judgment,  and each of the parties hereto hereby  irrevocably
and  unconditionally  agrees  that all claims in  respect of any such  action or
proceeding  may be heard and  determined in any such New York State court or, to
the fullest extent permitted by law, in such Federal court.  Each of the parties
hereto agrees that a final  judgment in any such action or  proceeding  shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner  provided by law.  Nothing in this Guaranty shall affect any
right  that any  party may  otherwise  have to bring  any  action or  proceeding
relating to this  Guaranty or any of the other Loan  Documents  in the courts of
any jurisdiction.

                  Each of the parties  hereto  irrevocably  and  unconditionally
waives,  to the  fullest  extent  it may  legally  and  effectively  do so,  any
objection  that it may now or hereafter have to the laying of venue of any suit,
action or  proceeding  arising out of or relating to this Guaranty or any of the
other  Loan  Documents  to which it is a party in any New York  State or Federal
court.  Each of the parties  hereto hereby  irrevocably  waives,  to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

                  Each of the  parties  hereto  irrevocably  waives all right to
trial  by jury in any  action,  proceeding  or  counterclaim  (whether  based on
contract,  tort or otherwise)  arising out of or relating to the Guaranty or the
actions of any Agent,  any  Lender  Party or any Hedge Bank in the  negotiation,
administration, performance or enforcement thereof.

                  15. Additional Guarantors.  The initial Guarantor(s) hereunder
                      ---------------------
shall be such of the  Material  Domestic  Subsidiaries  of the  Borrower  as are
signatories hereto on the date hereof.  From time to time subsequent to the date
hereof,  Subsidiaries of the Borrower may become parties  hereto,  as additional
Guarantors (each an "ADDITIONAL GUARANTOR"),  by executing a counterpart, a form
of which is attached as Exhibit A, of this  Guaranty.  Upon delivery of any such
                        ---------
counterpart  to the  Guarantied  Party,  notice of which is hereby waived by the
Guarantors,  each such Additional Guarantor shall be a Guarantor and shall be as
fully a party hereto as if such Additional  Guarantor were an original signatory
hereof.  Each Guarantor  expressly agrees that its obligations arising hereunder
shall not be  affected  or  diminished  by the  addition or release of any other
Guarantor  hereunder,  nor by any election of the Guarantied  Party not to cause
any Subsidiary of the Borrower to become an Additional Guarantor hereunder. This
Guaranty shall be fully effective as to any Guarantor that is or becomes a party
hereto  regardless  of whether  any other  Person  becomes or fails to become or
ceases to be a Guarantor hereunder.

                  16. Counterparts; Effectiveness. This Guaranty may be executed
                      ---------------------------
in any number of  counterparts  and by the different  parties hereto in separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken  together shall

                                      E-9

<PAGE>

constitute one and the same agreement.  This Guaranty shall become  effective as
to each Guarantor  upon the execution of a counterpart  hereof by such Guarantor
(whether  or not a  counterpart  hereof  shall have been  executed  by any other
Guarantor)  and  receipt  by the  Guarantied  Party  of  written  or  telephonic
notification of such execution and authorization of delivery  thereof.  Delivery
by telecopier of an executed  counterpart  of a signature  page to this Guaranty
shall be  effective  as  delivery of an original  executed  counterpart  of this
Guaranty.

                  17.      The Guarantied Party as Agent.
                           -----------------------------

                  (a) The  Guarantied  Party  has been  appointed  to act as the
Guarantied  Party  hereunder  by the  Lenders.  The  Guarantied  Party  shall be
obligated, and shall have the right hereunder, to make demands, to give notices,
to exercise or refrain from  exercising any rights,  and to take or refrain from
taking  any  action,  solely in  accordance  with this  Guaranty  and the Credit
Agreement.

                  (b) The Guarantied Party shall at all times be the same Person
that is the Administrative  Agent under the Credit Agreement.  Written notice of
resignation by the  Administrative  Agent pursuant to Section 7.07 of the Credit
Agreement  shall also constitute  notice of resignation as the Guarantied  Party
under  this  Guaranty;  and  appointment  of a  successor  administrative  agent
pursuant  to  Section  7.07  of  the  Credit  Agreement  shall  also  constitute
appointment  of a  successor  Guarantied  Party  under this  Guaranty.  Upon the
acceptance of any appointment as administrative  agent under Section 7.07 of the
Credit   Agreement  by  a  successor   administrative   agent,   that  successor
administrative  agent  shall  thereupon  succeed to become  vested  with all the
rights,  powers,  privileges and duties of the retiring  Guarantied  Party under
this  Guaranty,  and the retiring  Guarantied  Party under this  Guaranty  shall
promptly  (i)  transfer  to  such  successor  Guarantied  Party  all  sums  held
hereunder,   together  with  all  records  and  other  documents   necessary  or
appropriate  in connection  with the  performance of the duties of the successor
Guarantied Party under this Guaranty, and (ii) take such other actions as may be
necessary or  appropriate  in connection  with the  assignment to such successor
Guarantied  Party of the  rights  created  hereunder,  whereupon  such  retiring
Guarantied Party shall be discharged from its duties and obligations  under this
Guaranty.  After any retiring  Guarantied Party's  resignation  hereunder as the
Guarantied Party, the provisions of this Guaranty shall inure to its benefits as
to any actions taken or omitted to be taken by it under this  Guaranty  while it
was the Guarantied Party hereunder.

                  (c) The Guarantied  Party shall not be deemed to have any duty
whatsoever  with respect to any Hedge Bank until it shall have received  written
notice in form and  substance  satisfactory  to the  Guarantied  Party  from the
Borrower,  a Guarantor  or the Hedge Bank as to the  existence  and terms of the
applicable Hedge Bank Hedge Agreement.


             [The remainder of this page intentionally left blank.]


                                      E-10

<PAGE>


                  IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be duly executed and delivered by its officer  thereunto  duly  authorized as of
the date first written above.

                                           BATTERY STREET ENTERPRISES, INC.

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


                                           Address: --------------------------
                                                    --------------------------
                                                    --------------------------



                                           LEVI STRAUSS FINANCIAL CENTER
                                           CORPORATION

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


                                           Address: --------------------------
                                                    --------------------------
                                                    --------------------------



                                           LEVI STRAUSS FUNDING, LLC

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

                                           Address: --------------------------
                                                    --------------------------
                                                    --------------------------



                                           LEVI STRAUSS GLOBAL FULFILLMENT
                                           SERVICES, INC.

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

                                           Address: --------------------------
                                                    --------------------------
                                                    --------------------------

                                      E-11

<PAGE>



                                           LEVI STRAUSS GLOBAL
                                           OPERATIONS, INC.

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

                                           Address: --------------------------
                                                    --------------------------
                                                    --------------------------



                                           LEVI STRAUSS INTERNATIONAL

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

                                           Address: --------------------------
                                                    --------------------------
                                                    --------------------------



                                           LEVI STRAUSS LATIN AMERICA, INC.

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

                                           Address: --------------------------
                                                    --------------------------
                                                    --------------------------


                                      E-12

<PAGE>



                                           LEVI'S ONLY STORES, INC.

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

                                           Address: --------------------------
                                                    --------------------------
                                                    --------------------------



                                           NF INDUSTRIES, INC.

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

                                           Address: --------------------------
                                                    --------------------------
                                                    --------------------------



ACKNOWLEDGED AND FOR PURPOSES
OF THE WAIVER OF JURY TRIAL SET
FORTH IN SECTION 14 ONLY, AGREED
AS OF THE DATE FIRST WRITTEN ABOVE
Bank of America, N.A., as Administrative Agent

By:_____________________________
Title: ___________________________




E-13

<PAGE>



                                  Exhibit A to

                               Subsidiary Guaranty

                 [Form of] Counterpart for Additional Guarantors


                  This COUNTERPART (this "COUNTERPART"),  dated _______,  _____,
is  delivered  pursuant to Section 15 of the  Guaranty  referred  to below.  The
undersigned hereby agrees that this Counterpart may be attached to the Guaranty,
dated as of January  __, 2001 (as it may be from time to time  amended,  amended
and restated,  supplemented or otherwise  modified,  the  "GUARANTY";  the terms
defined  therein  being used herein as therein  defined),  among the  Guarantors
named  therein  and  Bank  of  America,  N.A.,  as  the  Guarantied  Party.  The
undersigned,  by executing and delivering  this  Counterpart,  hereby becomes an
Additional  Guarantor  under the Guaranty in accordance  with Section 15 thereof
and agrees to be bound by all of the terms thereof.

                  IN  WITNESS   WHEREOF,   the   undersigned   has  caused  this
Counterpart  to be duly  executed and  delivered by its officer  thereunto  duly
authorized as of ______________, ____.

                                           [NAME OF ADDITIONAL GUARANTOR]

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

                                           Address: --------------------------
                                                    --------------------------
                                                    --------------------------





                                      E-1


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.60
<SEQUENCE>25
<FILENAME>0025.txt
<DESCRIPTION>FORMS OF AMENDMENTS TO EUROPEAN RECEIVABLES
<TEXT>



                              [LETTERHEAD OF TAPCO]



To:      LEVI STRAUSS  (U.K.) LIMITED
         100 New Bridge Street
         London EC4V 6JA

         LEVI STRAUSS & CO.
         1155 Battery Street
         San Francisco
         CA 94120
         USA

                                                                28 December 2000



Dear Sirs,

EUROPEAN SECURITISATION

We refer to:

o    a Receivables  Purchase  Agreement  dated 29 February 2000 and made between
     yourselves  as  Seller,  Levi  Strauss  & Co. as Parent  and  ourselves  as
     Purchaser (the "RECEIVABLES PURCHASE AGREEMENT"); and

o    a Servicing Agreement dated 29 February 2000 and made between yourselves as
     Servicer,  Levi Strauss & Co. as Parent and  ourselves  as  Purchaser  (the
     "SERVICING AGREEMENT").

We are hereby adding the following Clause to the Receivables Purchase Agreement:

5.       CLEAN-UP CALL

5.1      On any  Collection  Payment Date after the  occurrence of a Termination
         Date (the  "RETRANSFER  DATE"),  the Seller shall be  entitled,  at its
         option,  on giving not less than 5 days' prior notice to the Purchaser,
         to  repurchase  all  outstanding  Purchased  Receivables  if,  on  such
         Retransfer  Date,  the  Outstanding  Nominal  Amount  of all  Purchased
         Receivables is less than 15% of the  Outstanding  Nominal Amount of all
         Purchased  Receivables  at the date on which  the  Termination  Date is
         declared.

5.2      For the  purpose  of Clause  5.1  above,  upon  exercise  of the option
         granted  to it in Clause  5.1  above,  the  Seller  shall  provide  the
         Purchaser with satisfactory  evidence of the Outstanding Nominal Amount
         of all Purchased  Receivables on the date on which the Termination Date
         is declared.



<PAGE>

5.3      The repurchase price ("REPURCHASE  PRICE") payable by the Seller if it
         wishes to execute  the option  granted  to it  pursuant  to Clause 5.1
         above,  shall  be the  Outstanding  Nominal  Amount  of all  Purchased
         Receivables.  Such  Repurchase  Price  will be  payable in full on the
         Retransfer  Date  and  shall  be  deemed  to be  Collections  of  such
         Purchased  Receivables.  The re-transfer of such Purchased Receivables
         shall  take  effect  upon  receipt  of  the  Repurchase  Price  by the
         Purchaser.

5.4      Any  repurchase  pursuant  to this  Clause 5 shall be without  recourse
         against or warranty or  representation on the part of the Purchaser and
         at the sole cost and expense of the Seller.

This Clause should be added as Clause 5 to the Receivables  Purchase  Agreement,
with Clause 5 becoming  clause 6 etc. The other  provisions  of the  Receivables
Purchase Agreement and the Servicing Agreement remain unchanged.

This letter will be effective as from 22 November 2000.

Please countersign this letter if you agree with its content.

Yours faithfully,

TULIP ASSET PURCHASE COMPANY



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

                                WE AGREE WITH THE CONTENT OF THIS LETTER

                                LEVI STRAUSS (U.K.) LIMITED



                                _____________________              DATE:
                                NAME
                                TITLE:

                                LEVI STRAUSS & CO.



                                _____________________              DATE:
                                NAME
                                TITLE:



                                      -2-



<PAGE>


                              [LETTERHEAD OF TAPCO]



To:      LEVI STRAUSS  GERMANY GMBH
         Levi Strauss Allee
         63150 Heusenstamm
         Germany

                                                                28 December 2000



Dear Sirs,

EUROPEAN SECURITISATION

We refer to:

o     a Receivables  Purchase  Agreement dated 29 February 2000 and made between
      yourselves as Seller and ourselves as Purchaser (the "RECEIVABLES PURCHASE
      AGREEMENT"); and

o     a Servicing  Agreement dated 29 February 2000 and made between yourselves
      as Servicer,  Levi Strauss & Co. as Parent and ourselves as Purchaser (the
      "SERVICING AGREEMENT").

We are hereby adding the following Clause to the Receivables Purchase Agreement:

5.       CLEAN-UP CALL

5.1      On any  Collection  Payment Date after the  occurrence of a Termination
         Date (the  "RETRANSFER  DATE"),  the Seller shall be  entitled,  at its
         option,  on giving not less than 5 days' prior notice to the Purchaser,
         to  repurchase  all  outstanding  Purchased  Receivables  if,  on  such
         Retransfer  Date,  the  Outstanding  Nominal  Amount  of all  Purchased
         Receivables is less than 15% of the  Outstanding  Nominal Amount of all
         Purchased  Receivables  at the date on which  the  Termination  Date is
         declared.

5.2      For the  purpose  of Clause  5.1  above,  upon  exercise  of the option
         granted  to it in Clause  5.1  above,  the  Seller  shall  provide  the
         Purchaser with satisfactory  evidence of the Outstanding Nominal Amount
         of all Purchased  Receivables on the date on which the Termination Date
         is declared.

5.3      The repurchase price  ("REPURCHASE  PRICE") payable by the Seller if it
         wishes to execute  the  option  granted  to it  pursuant  to Clause 5.1
         above,  shall  be the  Outstanding  Nominal  Amount  of  all  Purchased
         Receivables.  Such  Repurchase  Price  will be  payable  in full on the
         Retransfer Date and shall be deemed to be Collections of such Purchased
         Receivables.  The re-transfer of such Purchased  Receivables shall take
         effect upon receipt of the Repurchase Price by the Purchaser.

                                      -3-

<PAGE>

5.4      Any  repurchase  pursuant  to this  Clause 5 shall be without  recourse
         against or warranty or  representation on the part of the Purchaser and
         at the sole cost and expense of the Seller.

This Clause should be added as Clause 5 to the Receivables  Purchase  Agreement,
with Clause 5 becoming  clause 6 etc. The other  provisions  of the  Receivables
Purchase Agreement and the Servicing Agreement remain unchanged.

This letter will be effective as from 22 November 2000.

Please countersign this letter if you agree with its content.

Yours faithfully,

TULIP ASSET PURCHASE COMPANY



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

                                        WE AGREE WITH THE CONTENT OF THIS LETTER

                                        LEVI STRAUSS GERMANY GMBH



                                        _____________________              DATE:
                                        NAME
                                        TITLE:






                                      -4-

<PAGE>


                              [LETTERHEAD OF TAPCO]



To:      LEVI STRAUSS  DE ESPANA
         Avda Diagonal 605, 3(degree) PLANTA
         Barcelona
         Spain

         LEVI STRAUSS & CO.
         1155 Battery Street
         San Francisco
         CA 94120
         USA

                                                                28 December 2000



Dear Sirs,

EUROPEAN SECURITISATION

We refer to:

o     a Receivables Purchase  Agreement  dated 29 February 2000 and made between
      yourselves  as Seller,  Levi Strauss & Co. as Parent and ourselves as
      Purchaser (the "RECEIVABLES PURCHASE AGREEMENT");  and

o     a Servicing  Agreement dated 29 February 2000 and made between yourselves
      as Servicer,  Levi Strauss & Co. as Parent and ourselves as Purchaser (the
      "SERVICING AGREEMENT").

We are hereby adding the following Clause to the Receivables Purchase Agreement:

5.       CLEAN-UP CALL

5.1      On any  Collection  Payment Date after the  occurrence of a Termination
         Date (the  "RETRANSFER  DATE"),  the Seller shall be  entitled,  at its
         option,  on giving not less than 5 days' prior notice to the Purchaser,
         to  repurchase  all  outstanding  Purchased  Receivables  if,  on  such
         Retransfer  Date,  the  Outstanding  Nominal  Amount  of all  Purchased
         Receivables is less than 15% of the  Outstanding  Nominal Amount of all
         Purchased  Receivables  at the date on which  the  Termination  Date is
         declared.

5.2      For the  purpose  of Clause  5.1  above,  upon  exercise  of the option
         granted  to it in Clause  5.1  above,  the  Seller  shall  provide  the
         Purchaser with satisfactory  evidence of the Outstanding Nominal Amount
         of all Purchased  Receivables on the date on which the Termination Date
         is declared.



                                      -5-

<PAGE>

5.3      The repurchase price  ("REPURCHASE  PRICE") payable by the Seller
         if it wishes to execute  the option  granted to it pursuant to Clause
         5.1 above, shall be the  Outstanding  Nominal  Amount of all  Purchased
         Receivables.  Such Repurchase  Price will be payable  in full on the
         Retransfer Date and shall be deemed to be Collections of such Purchased
         Receivables.  The re-transfer of such Purchased  Receivables shall take
         effect upon receipt of the Repurchase Price by the Purchaser.

5.4      Any  repurchase  pursuant  to this  Clause 5 shall be without  recourse
         against or warranty or  representation on the part of the Purchaser and
         at the sole cost and expense of the Seller.

This Clause should be added as Clause 5 to the Receivables  Purchase  Agreement,
with Clause 5 becoming  clause 6 etc. The other  provisions  of the  Receivables
Purchase Agreement and the Servicing Agreement remain unchanged.

This letter will be effective as from 22 November 2000.

Please countersign this letter if you agree with its content.

Yours faithfully,

TULIP ASSET PURCHASE COMPANY



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

                                        WE AGREE WITH THE CONTENT OF THIS LETTER

                                        LEVI STRAUSS  DE ESPANA



                                        _____________________              DATE:
                                        NAME
                                        TITLE:

                                        LEVI STRAUSS & CO.



                                        _____________________              DATE:
                                        NAME
                                        TITLE:






                                      -6-

<PAGE>


               [LETTERHEAD OF ABN AMRO BANK N.V. (BELGIAN BRANCH)]



To:      LEVI STRAUSS  ITALIA SRL
         Corso Como 15
         20154 Milan
         Italy

         LEVI STRAUSS & CO.
         1155 Battery Street
         San Francisco
         CA 94120
         USA

         TULIP ASSET PURCHASE COMPANY BV
         Gustav Mahlerlaan 10
         1082 PP Amsterdam
         The Netherlands

                                                                28 December 2000



Dear Sirs,

EUROPEAN SECURITISATION

We refer to:

o     a  Receivables  Purchase Agreement dated 29 February 2000 and made between
      yourselves  as Seller,  Levi Strauss & Co. as Parent and ourselves as
      Purchaser (the "RECEIVABLES PURCHASE AGREEMENT");  and

o     a Servicing  Agreement dated 29 February 2000 and made between yourselves
      as Servicer,  Levi Strauss & Co. as Parent and ourselves as Purchaser (the
      "SERVICING AGREEMENT").

We are hereby adding the following Clause to the Receivables Purchase Agreement:

5.       CLEAN-UP CALL

5.1      On any  Collection  Payment Date after the  occurrence of a Termination
         Date (the  "RETRANSFER  DATE"),  the Seller shall be  entitled,  at its
         option,  on giving not less than 5 days' prior notice to the Purchaser,
         to  repurchase  all  outstanding  Purchased  Receivables  if,  on  such
         Retransfer  Date,  the  Outstanding  Nominal  Amount  of all  Purchased
         Receivables is less than 15% of the  Outstanding  Nominal Amount of all
         Purchased  Receivables  at the date on which  the  Termination  Date is
         declared.

                                         -7-
<PAGE>

5.2      For the  purpose  of Clause  5.1 above,  upon  exercise  of the option
         granted to it in Clause  5.1  above,  the  Seller  shall  provide  the
         Purchaser with satisfactory evidence of the Outstanding Nominal Amount
         of all Purchased Receivables on the date on which the Termination Date
         is declared.

5.3      The repurchase price  ("REPURCHASE  PRICE") payable by the Seller if it
         wishes to execute  the  option  granted  to it  pursuant  to Clause 5.1
         above,  shall  be the  Outstanding  Nominal  Amount  of  all  Purchased
         Receivables.  Such  Repurchase  Price  will be  payable  in full on the
         Retransfer Date and shall be deemed to be Collections of such Purchased
         Receivables.  The re-transfer of such Purchased  Receivables shall take
         effect upon receipt of the Repurchase Price by the Purchaser.

5.4      Any  repurchase  pursuant  to this  Clause 5 shall be without  recourse
         against or warranty or  representation on the part of the Purchaser and
         at the sole cost and expense of the Seller.

This Clause should be added as Clause 5 to the Receivables  Purchase  Agreement,
with Clause 5 becoming  clause 6 etc. The other  provisions  of the  Receivables
Purchase Agreement and the Servicing Agreement remain unchanged.

This letter will be effective as from 22 November 2000.

Please countersign this letter if you agree with its content.

Yours faithfully,

ABN AMRO BANK N.V. (BELGIAN BRANCH)



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

                                        WE AGREE WITH THE CONTENT OF THIS LETTER

                                        LEVI STRAUSS  ITALIA SRL



                                        _____________________              DATE:
                                        NAME
                                        TITLE:

                                        LEVI STRAUSS & CO.



                                        _____________________              DATE:
                                        NAME
                                        TITLE:

                                        TULIP ASSET PURCHASE COMPANY BV



                                        _____________________              DATE:
                                        NAME
                                        TITLE:


                                      -8-

<PAGE>


               [LETTERHEAD OF ABN AMRO BANK N.V. (BELGIAN BRANCH)]



To:      LEVI  STRAUSS CONTINENTAL S.A.
         Avenue Arnaud Fraiteur 15-23
         1050 Brussels
         Belgium

         LEVI STRAUSS & CO.
         1155 Battery Street
         San Francisco
         CA 94120
         USA

         TULIP ASSET PURCHASE COMPANY BV
         Gustav Mahlerlaan 10
         1082 PP Amsterdam
         The Netherlands

                                                                28 December 2000



Dear Sirs,

EUROPEAN SECURITISATION

We refer to:

o     a  Receivables Purchase Agreement  dated 29 February 2000 and made between
      yourselves  as Seller,  Levi Strauss & Co. as Parent and ourselves as
      Purchaser (the "RECEIVABLES PURCHASE AGREEMENT");  and

o     a Servicing  Agreement dated 29 February 2000 and made between yourselves
      as Servicer,  Levi Strauss & Co. as Parent and ourselves as Purchaser (the
      "SERVICING AGREEMENT").

We are hereby adding the following Clause to the Receivables Purchase Agreement:

5.       CLEAN-UP CALL

5.1      On any  Collection  Payment Date after the  occurrence of a Termination
         Date (the  "RETRANSFER  DATE"),  the Seller shall be  entitled,  at its
         option,  on giving not less than 5 days' prior notice to the Purchaser,
         to  repurchase  all  outstanding  Purchased  Receivables  if,  on  such
         Retransfer  Date,  the  Outstanding  Nominal  Amount  of all  Purchased
         Receivables is less than 15% of the  Outstanding  Nominal Amount of all
         Purchased  Receivables  at the date on which  the  Termination  Date is
         declared.

5.2      For the  purpose  of Clause  5.1  above,  upon  exercise  of the option
         granted  to it in Clause  5.1  above,  the  Seller  shall  provide  the
         Purchaser with satisfactory  evidence of the

                                      -9-

<PAGE>

         Outstanding Nominal Amount of all Purchased  Receivables on the date on
         which the Termination Date is declared.

5.3      The repurchase price  ("REPURCHASE  PRICE") payable by the Seller if it
         wishes to execute  the  option  granted  to it  pursuant  to Clause 5.1
         above,  shall  be the  Outstanding  Nominal  Amount  of  all  Purchased
         Receivables.  Such  Repurchase  Price  will be  payable  in full on the
         Retransfer Date and shall be deemed to be Collections of such Purchased
         Receivables.  The re-transfer of such Purchased  Receivables shall take
         effect upon receipt of the Repurchase Price by the Purchaser.

5.4      Any  repurchase  pursuant  to this  Clause 5 shall be without  recourse
         against or warranty or  representation on the part of the Purchaser and
         at the sole cost and expense of the Seller.

This Clause should be added as Clause 5 to the Receivables  Purchase  Agreement,
with Clause 5 becoming  clause 6 etc. The other  provisions  of the  Receivables
Purchase Agreement and the Servicing Agreement remain unchanged.

This letter will be effective as from 22 November 2000.

Please countersign this letter if you agree with its content.

Yours faithfully,

ABN AMRO BANK N.V. (BELGIAN BRANCH)



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

                                        WE AGREE WITH THE CONTENT OF THIS LETTER

                                        LEVI STRAUSS CONTINENTAL S.A.



                                        _____________________              DATE:
                                        NAME
                                        TITLE:

                                        LEVI STRAUSS & CO.



                                        _____________________              DATE:
                                        NAME
                                        TITLE:

                                        LEVI STRAUSS  ITALIA SRL


                                        _____________________              DATE:
                                        NAME
                                        TITLE:


                                      -10-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>26
<FILENAME>0026.txt
<DESCRIPTION>STATEMENTS RE: COMPUTATION OF RATIOS
<TEXT>



<TABLE>
<CAPTION>



Ratio of Earnings to Fixed Charges                                                                                        EXHIBIT 12
For Fiscal Years Ended 1996 - 2000
(000's)
                                                                                            Fiscal Year Ended
                                                                        -----------------------------------------------------------
                                                                           11/26/00    11/28/99    11/29/98   11/30/97    11/24/96
                                                                        -----------------------------------------------------------
<S>                                                                       <C>         <C>         <C>        <C>         <C>

FIXED CHARGES:
Interest:
     Interest expense (includes amortization of debt discount and costs)  $ 234,098   $ 182,978   $ 178,035  $ 212,358   $ 145,234
     Capitalized debt costs                                                  34,769      15,729      27,447     25,221      33,941
     Interest factor in rental expense                                       26,026      28,700      26,733     32,600      29,733
                                                                        -----------------------------------------------------------
          Total fixed charges                                               294,893     227,407     232,215    270,179     208,908
                                                                        -----------------------------------------------------------

EARNINGS:
Income before income taxes                                                  343,680       8,499     162,700    184,281     619,906

Add:  Fixed charges                                                         294,893     227,407     232,215    270,179     208,908

Subtract:  Capitalized debt costs                                           (34,769)    (15,729)    (27,447)   (25,221)    (33,941)

                                                                        -----------------------------------------------------------
                     Total Earnings                                         603,804     220,177     367,468    429,239     794,873
                                                                        -----------------------------------------------------------


Ratio of Earnings to Fixed Charges                                              2.0         1.0         1.6        1.6         3.8


In computing the ratio of earnings to fixed charges: (1) earnings have been based on income from continuing operations before income
taxes and fixed charges (exclusive of capitalized debt costs) and (2) fixed charges consist of interest and debt discount and cost
expenses (including amounts capitalized) and the estimated interest portion of rents.

</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>27
<FILENAME>0027.txt
<DESCRIPTION>SUBSIDIARIES OF THE REGISTRANT
<TEXT>



                                                                      EXHIBIT 21


                               LEVI STRAUSS & CO.
                       SUBSIDIARIES AS OF JANUARY 25, 2001


Battery Street Enterprises, Inc.
         Levi Strauss Services Inc.
Hartwell Commodities Group
Levi Strauss (Geneva) S.A.
Levi Strauss (Hong Kong) Limited
Levi Strauss (India) Private Limited
Levi Strauss Brasil Representacoes Ltda
Levi Strauss Dominicana S.A.
Levi Strauss Eximco (Asia) Pte Ltd
Levi Strauss Eximco Chile Limitada
Levi Strauss Eximco de Columbia Limitada
Levi Strauss Financial Center Corporation
         Levi Strauss Funding Corp.
Levi Strauss Foreign Sales Corporation
Levi Strauss Global Fulfillment Services, Inc.
Levi Strauss International
         Levi Strauss & Co. (Canada) Inc.
         Levi Strauss & Co. Europe S.A.
                  Casualwear Direct B.V.
                  Levi Strauss & Co. Financial Services S.A.
         Levi Strauss (Australia) Pty. Ltd.
         Levi Strauss (Far East) Ltd.
                  Levi Strauss do Brasil Industria e Comercio Ltda
                  PT Levi Strauss Indonesia
         Levi Strauss (Malaysia) Sdn. Bhd.
         Levi Strauss (New Zealand) Ltd.
         Levi Strauss (Phil.) Inc. II
         Levi Strauss (Philippines) Inc.
         Levi Strauss (Suisse) S.A.
         Levi Strauss (U.K.) Limited
                  Farvista Limited
                  Levi Strauss Pension Trustee Ltd.
                  Middlebrook Ltd.
                  Retailindex Limited
         Levi Strauss Asia Pacific Division Pte Ltd
         Levi Strauss Belgium, S.A.
         Levi Strauss Chile Limitada
         Levi Strauss Continental S.A.
                  Levi Strauss International Group Finance
                  B.V.B.A./S.P.R.L.

<PAGE>

                           Levi Strauss International Group Finance
                           Coordination Services C.V.A./S.C.A.
                  Paris - O.L.S.S.A.R.L.
         Levi Strauss de Espana S.A.
         Levi Strauss de Mexico, S.A. de C.V.
         Levi Strauss France, S.A.
         Levi Strauss Germany GmbH
         Levi Strauss Global Operations, Inc.
                  Levi Strauss Nederland B.V.
                           Dockers Europe BV
                                    Casual Wear Co. A/S
                                    Dockers Portugal Clothing, Lda
                           Levi Strauss Hellas S.A.
                           Levi Strauss Polska Sp.zo.o.
                           Levi Strauss Praha, Spol.Sro. (Levi Strauss Prague,
                             Ltd)
                           Levi Strauss South Africa (Proprietary) Limited
         Levi Strauss Hungary Trading Ltd.
         Levi Strauss Instanbul Konfeksiyon Sanayi ve Ticaret A.S.
         Levi Strauss Italia, Srl
                  Flagstore Srl
         Levi Strauss Korea Ltd.
         Levi Strauss Latin America, Inc.
                  Levi Strauss Latin America, Inc. & CIA
         Levi Strauss Mauritius Limited
                  Levi Strauss (India) Private Limited
         Levi Strauss Norway, A/S
                  Buksehjornet A/S (Joint Stock Company)
         Levi Strauss, U.S.A., LLC
         Levi Strauss-Argentina, LLC
         Saddleman South America, Inc.
         Suomen Levi Strauss OY
Levi Strauss Japan K.K.
Levi's Only Stores, Inc.
         LDJV, Inc.
Majestic Insurance International Ltd.
Miratrix, S.A.
NF Industries, Inc.
         Levi Strauss Funding, LLC

<PAGE>


January 19, 2001



To:      TULIP ASSET PURCHASE COMPANY B.V.
         Gustav Mahlerlaan 10
         1082 PP Amsterdam
         The Netherlands

Dear Sirs,

EUROPEAN SECURITISATION - GUARANTEE AGREEMENT

We refer to a Guarantee  Agreement  dated 29 February 2000 and made between
ourselves as Parent and yourselves as Purchaser.

The Guarantee  Agreement relates to a Receivables  Purchase Agreement dated
29  February  2000 and  made  between  Levi  Strauss  Germany  GmbH,  a  company
registered under HRB 6223 at Amtsgericht  Offenbach am Main, Federal Republic of
Germany, acting through its principal office at Heusenstamm, Federal Republic of
Germany  as Seller  and  yourselves  as  Purchaser  (the  "RECEIVABLES  PURCHASE
AGREEMENT").


Terms defined in the Guarantee  Agreement and in the  Receivables  Purchase
Agreement shall have the same meaning herein.

Pursuant to the guarantee  agreement we provide a limited guarantee,  up to
the  guarantee  cap,  for the  payment  obligations  of the  debtors  under  the
purchased receivables.

We  acknowledge  receipt of a copy of a letter dated 28 December  2000 from
Levi Strauss  Germany GmbH and  countersigned  by yourselves  entitled  European
Securitisation (the "AMENDMENT  LETTER"),  whereby a Clause 5 (Clean-Up Call) is
added to the Receivables  Purchase Agreement.  We confirm our agreement with the
content of the  Amendment  Letter  and the  consequential  modifications  to the
Receivables  Purchase  Agreement.  We also  confirm  that the limited  guarantee
described in the Guarantee  Agreement shall remain in full force and effect, and
shall related to the Receivables  Purchase  Agreement as amended pursuant to the
Amendment Letter.

Yours faithfully,

LEVI STRAUSS & CO.



_______________________
Joseph M. Maurer
Vice President & Treasurer




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>28
<FILENAME>0028.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>






<ARTICLE>               5
<CIK>                   0000094845
<NAME>                  Levi Strauss & Co.
<MULTIPLIER>                                                    1,000

<S>                                                             <C>
<PERIOD-TYPE>                                                   12-MOS
<FISCAL-YEAR-END>                                               NOV-26-2000
<PERIOD-END>                                                    NOV-26-2000
<CASH>                                                          117,058
<SECURITIES>                                                    0
<RECEIVABLES>                                                   689,845
<ALLOWANCES>                                                    29,717
<INVENTORY>                                                     652,249
<CURRENT-ASSETS>                                                1,848,873
<PP&E>                                                          1,070,025
<DEPRECIATION>                                                  495,986
<TOTAL-ASSETS>                                                  3,205,728
<CURRENT-LIABILITIES>                                           1,293,811
<BONDS>                                                         1,895,140
<COMMON>                                                        373
<PREFERRED-MANDATORY>                                           0
<PREFERRED>                                                     0
<OTHER-SE>                                                      (1,098,946)
<TOTAL-LIABILITY-AND-EQUITY>                                    3,205,728
<SALES>                                                         4,645,126
<TOTAL-REVENUES>                                                4,645,126
<CGS>                                                           2,690,170
<TOTAL-COSTS>                                                   2,690,170
<OTHER-EXPENSES>                                                1,481,718
<LOSS-PROVISION>                                                12,171
<INTEREST-EXPENSE>                                              234,098
<INCOME-PRETAX>                                                 343,680
<INCOME-TAX>                                                    120,288
<INCOME-CONTINUING>                                             223,392
<DISCONTINUED>                                                  0
<EXTRAORDINARY>                                                 0
<CHANGES>                                                       0
<NET-INCOME>                                                    223,392
<EPS-BASIC>                                                     5.99
<EPS-DILUTED>                                                   5.99



</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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